When you deposit £1 in your bank the bank keeps a small portion of it and
re-lends the remainder of your £1 several times over.
This is because the bank is lending credit, not cash. This stimulates the
economy since money is literally conjured up out of thin air!
When governments needed to rein in the economy they could simply require the
banks to put more cash with the Bank of England, and this would decelerate the
economy as the banks had to get back several times the amount of cash lodged.
Often this would result in profit falls and companies going bust, people
unemployed thus depressing the economy.
The modern day equivalent of this is the money we pay into the EU. It is sent
as cash and then multiplied several times over as it is lodged with EU banks
stimulating their economies. But, it severely depresses the UK; which has to
borrow from us and foreigners in order to pay out this money which, together
with a similar sum of “bribe” money thinly disguised as “aid to overseas
governments”, means we can only cut and cut and cut vital services and
investment -private and public -desperately attempting bring our income and
expenditure in line.
This explains why great chunks of the UK have been bought out by EU firms. Just
one example was a Spanish building firm, flush with EU infrastructure money,
taking over Heathrow, Stansted, Gatwick and 3 other airports a few years
ago. Our money (EU contributions) was being used to take over our firms! Now
think how prosperous we would be now if every year we had kept that money to
invest in the UK – quite a lot more I should say.