[Conversation starter] Where do banks get the money they lend to people in the private sector?

Discussion in 'Economy' started by Econ4Every1, Aug 8, 2017.

  1. Econ4Every1
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    Econ4Every1 Member

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    It's off topic. You'd like to start a new thread, please, I'd be happy to comment.
     
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  2. Econ4Every1
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    Econ4Every1 Member

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    Yep, unless you think the sellers are putting the money they earn under their mattresses. What would change is the velocity of money and who possessed it.

    Nope.

    How does that invalidate what I said?

    People who demand savings must acquire it. If everyone is saving, then how can anyone acquire money to save?

    The Paradox of Thrift.
     
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  3. Toddsterpatriot
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    Toddsterpatriot Platinum Member

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    If all current savings were "spent into the economy", would new savings be zero?

    Yep, unless you think the sellers are putting the money they earn under their mattresses.

    You want to restate your answer?

    If savings in the economy are $1000 and the depositors withdraw $1000 and spend it, savings in the economy are now zero? Unless they put the money under their mattress?
     
  4. Econ4Every1
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    Econ4Every1 Member

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    Explain to me how banks do that.
     
  5. Econ4Every1
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    Econ4Every1 Member

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    Apologies, I thought you meant the net difference in savings.
     
  6. Toddsterpatriot
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    Toddsterpatriot Platinum Member

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    So the net difference is zero?
     
  7. Econ4Every1
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    Econ4Every1 Member

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    What I'm saying is that most of the money that in circulation in this country is already saved. When people save rather than spend, doesn't increase or decrease the level of savings. It simply shifts who holds that savings.
     
  8. Toddsterpatriot
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    Toddsterpatriot Platinum Member

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    When people save rather than spend, doesn't increase or decrease the level of savings.

    When people spend rather than save, doesn't increase or decrease the level of savings.
     
  9. Econ4Every1
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    Econ4Every1 Member

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    So then you'd agree that savings (or not saving) don't increase or decrease the availability of lendable funds?
     
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  10. EdwardBaiamonte
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    EdwardBaiamonte Platinum Member

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    money is fungible so thats nonsense. The real issue does standard monetary policy work, does QE work. It might be cute to point that in one sense reserves are not lent out but that avoids the important issue.
     

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