They are creating money out of thin air. The Fed cannot print money, so they have other methods for creating money. When the banks open in Cyprus, it should be pretty interesting to see what happens.
Who is creating money out of thin air? If I deposit $100 with a bank, the bank can only loan $80 of that money -- provided the reserve requirement is 20%.
The Fed cannot print money, so they have other methods for creating money.
The Fed cannot print money, but they can create money. That's one of their functions. So what?
When the banks open in Cyprus, it should be pretty interesting to see what happens.
Yes, people who don't want their savings going to bailing out bad behavior will be pissed. What does that have to do with the fact that a bank cannot create money from thin air?