Whether the model works or not is not the real problem. The problem is that the big banks have the capability to lend ten to hundred times the amount of money they actually have on hand. In effect they can create as much money as they need to lend out AND earn interest on money they don't have! To see how this is possible watch the video 'Money as Debt' (Google it) and then watch the video 'The Crisis of Credit Visualized' (http://www.crisisofcredit.com/) and you will be shocked - I guarantee it - unless you are one of 'them'.
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Whether the model works or not is not the real problem. The problem is that the big banks have the capability to lend ten to hundred times the amount of money they actually have on hand. In effect they can create as much money as they need to lend out AND earn interest on money they don't have! To see how this is possible watch the video 'Money as Debt' (Google it) and then watch the video 'The Crisis of Credit Visualized' (http://www.crisisofcredit.com/) and you will be shocked - I guarantee it - unless you are one of 'them'.