http://www.users.cyberone.com.au/myers/money-masters.html
" A $10,000 bond purchase by the Fed on the open market results in a $10,000 deposit to the bond seller's bank account. Under a 10% (i.e. fractional) reserve requirement, the bank need keep only $1,000 in reserve, and may lend out $9,000. This $9,000 is ordinarily deposited by the borrower in either the same bank or in other banks, which then must keep 10% ($900) reserve, and may lend out the other $8,100. This $8,100 is in turn deposited in banks, which must keep 10% ($810) in reserve, and then may lend out $7,290, and so on.
Carried to the theoretical limits, the initial $10,000 created by the Fed, is deposited in numerous banks in the banking system, which gives rise (in roughly 20 repeated stages) to expansion of $90,000 in new loans, in addition to the $10,000 in reserves.
In other words, the banking system, collectively, multiplies the $10,000 created by the
{p. 11} Fed by a factor of 10. However, less than 1% of the banks create over 75% of this money. In other words, a handful of the largest Wall Street banks create money, as loans, literally by the hundred billion, charging interest on these loans, leaving crumbs for the rest of the banks to create. But because those crumbs represent billions too, the lesser bankers rarely grumble. Rather, they too support this corrupt system, with rare exceptions.
In actual practice, due to numerous exceptions to the 10% reserve requirement, the banking system multiplies the Fed's money creation by several magnitudes over 10 times (e.g. the Fed requires only 3% reserves on deposits under c. $50 million, and no reserves on Eurodollars and nonpersonal time deposits).
Thus the U.S. currency and bank reserve total of roughly $600 billion, supports a total debt structure in the U.S. of over $20 trillion in debt - roughly $80,000 in debt for every American, man, woman and child, which includes the national debt, bank debt, credit card debt, home mortgages, etc.
The Fed created only roughly 3% of this total, private banks created roughly 97% (including intra-government debt). All of this could and should have been created by the U.S. government, without the parallel creation of an equivalent quantity of interest-bearing debt, over the years and used to pay for government expenditures, thus reducing taxes accordingly. "
