Do private banks perform a service in buying Government bonds?
No, because they create money an obligation of Government simply to buy bonds guaranteed by the Government. There is no risk involved, as there is in loans to businessmen and consumers. The banks traditional functions are to lend to private borrowers and assume the risks of creditors. Their reward for buying bonds with money they create is the subsidized profits they enjoy. 132. What Is the burden of U.S. Government bonds, held by the private banking system? The burden is the heavy bond interest payments, borne by the taxpayers, that go to private bankers when the same amount of money could be created by an agency of Government . Then the taxpayers would not bear this tremendous cost on Government bonds purchased with reserves given to the private bankers.
