Question: I have a question that I have not heard discussed directly. If the banks have created M2 and M3 with the fractional lending, could the QE project be just filling the fake dollars that the fractional loans created. If the banks stopped loaning their currency, and started parking it at the fed. They would be receiving cash payments from interest on loans already out their. and interest on the currency parked at the fed. This gives them a cash flow while they are parked. Could all this digital QE be just back filling the already created currency. Kind of replacing all the fake bank currency with new real fed created currency. If, as a loan is paid down currency is destroyed as Mike Maloney explains than currency is being created at the fed and the currency is being destroyed as loans are being paid down or land and buildings and cars are being foreclosed on. If these loans to the public are being destroyed at the same time as the fed is creating new currency, than we would not see inflation unless the QE was larger than the land and buildings and cars, that had their value destroyed. How would someone find our how much value is being destroyed in the U.S.A. as the banks call in loans and take property away and destroy value to every mortgaged property in the U.S.A. It would not matter if a property was mortgaged or not, this process would change the values and still destroy dollars that were equity in real property. Am I forgetting some part of this process or does this partly explain why we have not seen much inflation yet. Thanks from Dave S

P.S. I have read everything I can get my hands on that you and Mike Maloney say or write. I am a new [6 months] member with you.

Comment: It does partly explain why "inflation" by official numbers is low. The true inflation is based upon an increase in the money supply--regardless of whether it is parked in banks or being circulated. Thus we know the money supply has been inflated massively. The "destruction" you outline is taking place and the banks are sitting on the money. However, there is a huge potential for the velocity of money (circulation) to pick up dramatically. Many countries most recently Russia are dong their best to remove themselves from the U.S. dollar. As this trend continues at some point those U.S. currency holders will want to dump their holdings and the velocity will pick up, this would indicate the beginning of the end for the U.S. dollar. At that point things could accelerate and we would expect the precious metals sector to pick up in volume and then price significantly.

David Morgan