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The debt time bomb that is Britain. Lesson 4: The solution: debt-free money issued by society. The cost of servicing the public debt increases proportionally to the debt, since it is a percentage of this same debt.

Lesson 4: The solution: debt-free money issued by society

To finance its debt, the Federal Government sells Treasury Bills and other bonds, most of them being bought by chartered banks. On September 30, 1941, a revealing exchange took place between Mr. Wright Patman, Chairman of the U.S. House of Representatives Banking and Currency Committee, and Mr. Fractional reserve banking. Fractional-reserve banking is the practice whereby a bank holds reserves in an amount equal to only a portion of the amount of its customers' deposits to satisfy potential demands for withdrawals.

Fractional reserve banking

Reserves are held at the bank as currency, or as deposits reflected in the bank's accounts at the central bank. Because bank deposits are usually considered money in their own right, fractional-reserve banking permits the money supply to grow to a multiple (called the money multiplier) of the underlying reserves of base money originally created by the central bank.[1][2]