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The Federal Reserve controls "money" by an arbitrary inter-bank interest rate. When the Fed set its "rate", if it's higher, it shrinks "money" available to lend; likewise, when it's lower it increases "money" available to lend.
Over the entire system is a concept called "fractional reserve banking". That means that if you deposit $10,000 into a bank, that bank can CREATE money by lending out $100,000 at a 10 to 1 reserve ratio. Banks pay you 4% interest on your $10,000, yet make 7% or more on $100,000 (You get $400 from the bank, they make $7,000 (less $400) from your money).
The banks are not making loans because they have to power not to. They have collected a lot of capital since the last minor recession. A sharp recession or depression will reduce the price of all sorts of properties...and the banks will begin buying them up. Along the way, sheer individual financial pain will put the banks into an even stronger position as governments come to them, in time, with hat in hand.
When that happens, who do you think will be calling the shots? (Of course, we've reached that point already.)
We have a debt-based economy. That means that nothing happens unless somebody borrows from somebody else. In our structure, borrowing generally happens between an individual and an institution. (If a private individual charged the same rate that credit card companies do it's called loan-sharking and usery)
Taking a loan from a bank doesn't mean they have $100,000 in their safe. They write a check drawn from the Federal Reserve based on your signed note (which is their asset). The interest on the note doesn't go the Federal Reserve it goes to the private owners (i.e. stockholders) of the bank...after expenses...employee wages, executive compensation, golden parachutes, luxurious marketing "retreats" and etcetera.
This is massive corporate welfare (I always hated that term, but this is the real thing) and governmental malfeasance at all levels...executive, legislative and judicial. The cap on dividends shafts the private citizen stockholder to the benefit of the executives and board. Also, as all capital is locked away and steadily increases...what was once deflation switches to hyper-inflation when the banks begin to dump cash into the economy.
Our fiat money is already valueless, meaning there is no inherent wealth in our money. It is paper and coins made of various worthless alloys. The only time money had a true inherent value was when Andrew Jackson produced the Greenback, green paper backed by gold. This money was phased out by the institution of the Federal Reserve. This money was backed by Congress and was limited in issue by statute.
Pull out a dollar and read it. It says it is a Federal Reserve Note, not a United States Note. Our money is not regulated by Congress as it was intended to be by our nations' founders. We do not have the full faith and credit of the United States in our currency. We have a loan from the Federal Reserve made to banks that was then loaned to someone else who used it to pay some sort of debt. You are the current holder of that original loan.
