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A thought provoking read.
Isn't it Time to Stop Calling it “The National Debt”? - Evonomics
What those scare-mongers don’t tell you, and generally don’t even understand: it actually makes almost no sense to call that figure “the national debt.” And no, you’re not on the hook to pay it back.
Imagine this: you’re the queen or king of a sovereign country. You decide to mint and issue a bunch of tin coins that your people will find useful. You use those coins to buy stuff from people in the private sector, and pay them to do work. Voilà, the people have money.
Is your government now in “debt” as a result of that “deficit spending”? Does it have to “pay” something to somebody at some point in the future? Do you have to redeem those coins for wheat or pigs or anything else? Obviously not. There’s just a bunch of money out there that people can use. You’ve made no promise that your treasury will ever redeem those coins for anything. They just circulate.
Those government-issued assets, held by the private sector, are only “liabilities” to the government in the most pettifogging accounting sense. If you “owed” some money that you would never, ever have to pay, would you put that on your balance sheet as a liability? Would it be anything beyond a pro formaentry designed to satisfy some obsessive impulse for accounting closure? A debt that will never be paid off is a very questionable “liability.”
That’s essentially the situation with the U.S. national “debt.” The U.S. issues money by deficit spending. It puts more money into private accounts than it takes out via taxes. The private sector has more balance-sheet assets (but no more liabilities, so it has more “net worth,” the balancing item on the righthand side of its balance sheet). The treasury has made no promises to redeem that new money for…anything (except maybe…different government-issued assets). It’s just out there.
Now it’s true that the U.S. et al operate under an arguably archaic and purely self-imposed rule: their treasuries are required to issue bonds equal to that deficit spending. This is a straightforward asset swap: the private sector gives checking-account deposits (back) to the government, and the government gives bonds in return. Private sector assets and net worth are unaffected by that accounting swap; it just changes the private-sector portfolio mix — more bonds, less “cash.” (Treasury “forces” the private sector to make that collective portfolio-adjusting swap through the simple expedient of selling bonds at an attractive price — a point or two below similar deals in the private sector.)
The same kind of asset swap happens when the Fed “prints money” for quantitative easing. The private sector gives bonds (back) to the government, and the Fed gives “reserves” in return — deposits in banks’ Fed accounts. Sure, the Fed creates those reserves ab nihilo, but they’re not a money injection into the private sector, like deficit spending. They’re just swapped for bonds. That accounting event doesn’t increase private-sector assets or net worth. It just changes the private-sector portfolio mix (more reserves, less bonds).
In any case, the private sector is holding government-issued assets. Whether they consist of bonds, “cash,” or reserves, is it realistic to call that money originally spent into private accounts a “debt” for the government? Is it in any real sense a government “liability” if it will never be redeemed for anything? Would a better term be “government-issued assets,” or similar?
Look at the U.S. and the U.K. as examples. The stock of government-issued assets from those sovereigns has been steadily (though fitfully) increasing for more than two centuries and three centuries, respectively. (And in the handful of cases where the stock was reduced significantly, the result was major economic depressions.) That centuries-long growth pattern could conceivably change at some point, but…why would governments stop issuing financial instruments all of a sudden — exchangeable instruments that their economies need to operate fluidly, and grow — while their economies continue to expand?
The government has committed itself to issuing bonds for archaic reasons, so it needs to roll over its “debt.” Old bonds mature, the government pays them off and issues new ones to replace them. Unendingly, for decades and centuries. But the stock of government-issued assets just keeps growing — as it should and must in a growing economy.
Those government-issued assets are a necessary lubricant for the operation of the private-sector economy. As the economy gets bigger, more of those assets are needed, as a kind of giant “pool” or buffer stock to avoid transactional lockups. (See: Paul Krugman’s babysitting co-op.) Realistically: will government stop issuing that necessary lubricant, or withdraw what it’s already issued, when the economic consequences of doing so are so dire?
It’s common parlance to say that the private sector is “holding government debt.” That’s understandable, since the private sector is holding bonds. But it’s a misnomer, and a pernicious, confusing one. The private sector is (obviously) holding assets on its balance sheet. The “debt,” such as it is, only exists as an offsetting accounting liability on the righthand side of the government balance sheet. (While “holding debt” is a handy verbal shorthand, if you think about it for a moment the usage makes no sense at all. How can you own something you owe? Debt can’t be an asset that you “hold.” It’s a liability.)
The private sector holds (owns) government-issued assets, not liabilities. And even the offsetting liabilities themselves are rather dodgy and iffy accounting entries. The government issues those assets as a public good. In the big picture over decades and centuries, that’s the end of it.
Another key understanding: Those different types of government-issued assets (bonds, “cash,” reserves, etc.) are straightforwardly fungible in the private market — at least at the margin, where it counts. The private sector couldn’t swap all its government bonds for currency or checking deposits at once (nor, realistically, would it). But if an individual bondholder needs cash for real-goods transactions or whatever else, the necessary asset-swap transaction happens with a mouse click. Likewise holders of checking-account deposits: if they want physical currency, their bank stands ready to make the swap; it’s called “withdrawing cash.” If the bank runs short on physical currency, the Federal Reserve provides it on demand in exchange for the bank’s reserves, its account deposits at the Fed. (With the Bureau of Engraving and Printing standing behind the Fed, presses ready to roll as the transactional economy expands.)
Now the private sector’s portfolio mix certainly has economic import (and even more so, changes in that portfolio mix). But that mix is secondary and subsequent to the total stock of various government-issued assets in play — be they bonds, checking deposits, whatever. Without a sufficient pool of those lubricatory assets, the financial economy binds up and freezes.
Which is why you, as queen or king, issued those tin coins in the first place. The economy needs them to operate smoothly. Sure, you got some one-time free labor out of the deal — “seignorage” and all that. But did you benefit? Maybe you used the labor to build roads. Both the roads and the coins are public goods. You just end up, still, as queen or king — of a more prosperous country. That one-time transaction happens — you issue coins and pay people to build roads or whatever (you “deficit spend”). But those coins (or bonds, or whatever) remain out there forever, for generations, doing the good work that needs doing in the economy. Money makes the world go round.
There’s really no reason to call those coins, or any other financial instrument the queen or king chooses to manufacture out of thin air and swap for those coins, “national debt.” Let’s switch to a term that actually describes the things that we ultimately tally up on the lefthand side of our private-sector balance sheets — something like “government-issued assets.”
There are deep political and economic implications to this kind of rethinking and renaming, but I’ll leave those implications to the ruminations of my gentle readers.
Come come. After Bernie seizes all property of the 1%, deb will not an issue .... until after he spends it all.On second thought its not "the national debt" it's only applicable to those that actually pay taxes. No wonder liberals love debt, others flip the bill.
Yep.......Democrats never were into Tax & Spend......only Dick Cheney.....he forced them to double the debt after he left office.The debt is owed by USA.INC and it's subsidiaries. USA.INC was taken into recievership by the IMF in 1950 to provide the 19 essential "gubermint" services and it is a for profit venture....unfortunately, they hide the profits and give us the bill on the corporate credit card to us to pay off.....great business model when you have a country full of dullards.
Yes, the 1% know how to siphon the Treasury and leave us with the debt. Ask Dick Cheney about that. And BTW, where's all the gold that used to be in Fort Knox? Maybe we should ask Cheney about that too...? Why are Congressional committees who ask for access to audit Fort Knox being denied access by ??? persons...?
That was OUR gold and OUR representatives must be allowed access to audit it.
Because, in reality, bank loans create deposits. The majority of all money originated from banks.It does matter. Because banks originate.Who said they didn't need deposits?A commercial bank, when it loans, simply creates a deposit. Reserves include vault cash, which is used when an individual with the bank wants to withdraw paper. But there really isn't a difference between money and credit these days. Paper dollars are government IOU'S.
Stop right there. Every asset has a liability that comes along with it. Banks, for the most part, need deposits because they need to balance their books and attract customers.
They also have to fulfill requirements.
Loans create the deposits. Now, to expand on this, I say some things to make a point. If you want to get technical, banks need to manage their balance sheets and do in fact need deposits to do this, but can you show me a bank that has enough dollars to match its liabilities at any given time? (I'm not talking about PROM. notes.)
Banks do need them. The statement 'Loans create deposits' doesn't mean banks don't need deposits.
‘Loans Create Deposits’ – in Context – Monetary Realism
In the modern banking system, deposits are a liability for a commercial bank. Banks hold them for balance sheet management/to meet requirements and vault cash/reserve transfers. If banks could only loan out money they had, well, you'll have to explain this:
FRB: Z.1 Release--L.1--Credit Market Debt Outstanding--June 11, 2015
Deposits are always a liability for a bank. I've already mentioned why commercial banks seek deposits, but when a bank decides to make a loan, they simply mark up an account. This is how banks 'create money.' They worry about reserves later.
I'm saying that banks originate.
Deposits have value, for balance sheet management and attracting customers.
The individual who has the deposit earns money.
Banks need to properly manage their balance sheets, attract customers, and they need reserves.
I want you to look at this:
FRB: Z.1 Release--L.1--Credit Market Debt Outstanding--June 11, 2015
I also want you to look at this:
http://www.bankofengland.co.uk/publ...lletin/2014/qb14q1prereleasemoneycreation.pdf
Now, when talking about a bank run, you're referring to customers in large numbers attempting to withdraw government IOU'S, where a bank only keeps a small portion of its assets in cash. This does nothing to go against my point. The majority of money is electronic and originated from banks.
Pretty much.
Because deposits are still a liability for a bank, and banks never have enough cash if a majority of customers decide to withdraw at the same time. Cash is only a small part of their assets. Banks can't simply give out promissory notes to customers during a bank run.
No, because when a bank originates, it's bank credit for a customer.
Never said this.
Why would the rich leave? I suppose the real question is, why would the capitalist ever decide to build 10,000 new cars if there isn't any demand?
When has mass production ever occurred in a capitalist economy without demand for the product being produced?
What makes you think capitalists are going to flee? We're specifically talking about capitalist economies. If we were facing a supply side problem, you'd have a point, but historically, downturns are due to a drop in aggregate demand.
Venezuela is a socialist hell hole with an energy crisis, a horrible currency exchange system, import problems, dealing with low oil prices..
Cuba is a literal dictatorship where the government doesn't allow businesses to meet demand for products, which is clearly there.
Greece? Their problems stem from them abandoning their own currency and dealing with a trade deficit that originated from their growth before the crisis. I don't really see where Greece ran off capitalists.
No, I've never once claimed demand can function without supply.
It wasn't better. But you're arguing against an invisible strawman that has never once claimed that the rich are evil.
I agree, let's make things even better.
Banks, for the most part, need deposits because they need to balance their books
Yes, they need to balance the books by having deposits to lend.
No deposit, no cleared check.
and attract customers.
If they didn't need deposits, they would only need to attract borrowers, not depositors.
Because deposits are still a liability for a bank, and banks never have enough cash if a majority of customers decide to withdraw at the same time.
And if they never lent deposits, they'd still be there to satisfy the run.
Who said the loan created deposits mattered?
‘Loans Create Deposits’ – in Context – Monetary Realism
It does matter
Why?
Because, in reality, bank loans create deposits. The majority of all money originated from banks.It does matter. Because banks originate.Who said they didn't need deposits?Banks, for the most part, need deposits because they need to balance their books
Yes, they need to balance the books by having deposits to lend.
No deposit, no cleared check.
and attract customers.
If they didn't need deposits, they would only need to attract borrowers, not depositors.
Because deposits are still a liability for a bank, and banks never have enough cash if a majority of customers decide to withdraw at the same time.
And if they never lent deposits, they'd still be there to satisfy the run.
Who said the loan created deposits mattered?
‘Loans Create Deposits’ – in Context – Monetary Realism
It does matter
Why?
Because, in reality, bank loans create deposits. The majority of all money originated from banks.It does matter. Because banks originate.Who said they didn't need deposits?Banks, for the most part, need deposits because they need to balance their books
Yes, they need to balance the books by having deposits to lend.
No deposit, no cleared check.
and attract customers.
If they didn't need deposits, they would only need to attract borrowers, not depositors.
Because deposits are still a liability for a bank, and banks never have enough cash if a majority of customers decide to withdraw at the same time.
And if they never lent deposits, they'd still be there to satisfy the run.
Who said the loan created deposits mattered?
‘Loans Create Deposits’ – in Context – Monetary Realism
It does matter
Why?
Well, half of it belongs to Obama now. The rest you can split between Democrats and Republicans.It should be called the Reagan National Debt.
It should be called the Reagan National Debt.
Because, in reality, bank loans create deposits. The majority of all money originated from banks.It does matter. Because banks originate.Who said they didn't need deposits?
Who said the loan created deposits mattered?
‘Loans Create Deposits’ – in Context – Monetary Realism
It does matter
Why?
Because, in reality, bank loans create deposits.
And in reality, so what?
The deposits created by the loans don't reduce the need for other deposits by a single dollar.
That's why I keep coming back to it.
Someone says a bank needs deposits to make a loan, you dishonestly say, no, the loan itself creates the deposit.
The majority of all money originated from banks.
It would be more accurate to look at the original deposit account, not the loan account.
I deposit five $20 FRNs into a new bank.
You come to borrow $80.
The money supply doesn't grow because your "deposit account" has $80 in it for 5 minutes.
It grows because when you're holding the four $20s in your hand, my savings account still has $100 in it.
Where did I say it did? Look, the majority of all money originated from loans, which created deposits. So overall, the loans create the deposits. I heard it was 97% somewhere, endogenous money.The deposits created by the loans don't reduce the need for other deposits by a single dollar.
I never said banks don't need deposits. They still need reserves and have to manage their balance sheet.Someone says a bank needs deposits to make a loan, you dishonestly say, no, the loan itself creates the deposit.
It should be called the Reagan National Debt.
But see, every time you guys talk about the national debt, it screams hypocrisy. How can you, even mention the national debt at all.... when everyone on the left-wing, has no plans whatsoever, to pay it back, or even balance the budget..... every single one of the left-wing candidates, has proposed more spending, more programs, more bloated budgets.
Free health care. Free phones. Free tuition. Free everything.
And you want to try and blame Republicans for any debt at all, while planning to increase the debt yourself?
If you want to even mention debt as an attack, you first have to show you actually want to do something about it. Otherwise, you are still just a hypocritical joke.
A balanced budget is a recipe for disaster when the economy isn't running hot.How can you, even mention the national debt at all.... when everyone on the left-wing, has no plans whatsoever, to pay it back, or even balance the budget.....
Good.every single one of the left-wing candidates, has proposed more spending, more programs, more bloated budgets.
We need more government debt.And you want to try and blame Republicans for any debt at all, while planning to increase the debt yourself?
Because, in reality, bank loans create deposits. The majority of all money originated from banks.It does matter. Because banks originate.Who said the loan created deposits mattered?
‘Loans Create Deposits’ – in Context – Monetary Realism
It does matter
Why?
Because, in reality, bank loans create deposits.
And in reality, so what?
The deposits created by the loans don't reduce the need for other deposits by a single dollar.
That's why I keep coming back to it.
Someone says a bank needs deposits to make a loan, you dishonestly say, no, the loan itself creates the deposit.
The majority of all money originated from banks.
It would be more accurate to look at the original deposit account, not the loan account.
I deposit five $20 FRNs into a new bank.
You come to borrow $80.
The money supply doesn't grow because your "deposit account" has $80 in it for 5 minutes.
It grows because when you're holding the four $20s in your hand, my savings account still has $100 in it.Where did I say it did? Look, the majority of all money originated from loans, which created deposits. So overall, the loans create the deposits. I heard it was 97% somewhere, endogenous money.The deposits created by the loans don't reduce the need for other deposits by a single dollar.
I never said banks don't need deposits. They still need reserves and have to manage their balance sheet.Someone says a bank needs deposits to make a loan, you dishonestly say, no, the loan itself creates the deposit.
Because, in reality, bank loans create deposits. The majority of all money originated from banks.It does matter. Because banks originate.Who said the loan created deposits mattered?
‘Loans Create Deposits’ – in Context – Monetary Realism
It does matter
Why?
Because, in reality, bank loans create deposits.
And in reality, so what?
The deposits created by the loans don't reduce the need for other deposits by a single dollar.
That's why I keep coming back to it.
Someone says a bank needs deposits to make a loan, you dishonestly say, no, the loan itself creates the deposit.
The majority of all money originated from banks.
It would be more accurate to look at the original deposit account, not the loan account.
I deposit five $20 FRNs into a new bank.
You come to borrow $80.
The money supply doesn't grow because your "deposit account" has $80 in it for 5 minutes.
It grows because when you're holding the four $20s in your hand, my savings account still has $100 in it.Where did I say it did? Look, the majority of all money originated from loans, which created deposits. So overall, the loans create the deposits. I heard it was 97% somewhere, endogenous money.The deposits created by the loans don't reduce the need for other deposits by a single dollar.
I never said banks don't need deposits. They still need reserves and have to manage their balance sheet.Someone says a bank needs deposits to make a loan, you dishonestly say, no, the loan itself creates the deposit.
It should be called the Reagan National Debt.
But see, every time you guys talk about the national debt, it screams hypocrisy. How can you, even mention the national debt at all.... when everyone on the left-wing, has no plans whatsoever, to pay it back, or even balance the budget..... every single one of the left-wing candidates, has proposed more spending, more programs, more bloated budgets.
Free health care. Free phones. Free tuition. Free everything.
And you want to try and blame Republicans for any debt at all, while planning to increase the debt yourself?
If you want to even mention debt as an attack, you first have to show you actually want to do something about it. Otherwise, you are still just a hypocritical joke.A balanced budget is a recipe for disaster when the economy isn't running hot.How can you, even mention the national debt at all.... when everyone on the left-wing, has no plans whatsoever, to pay it back, or even balance the budget.....
Good.every single one of the left-wing candidates, has proposed more spending, more programs, more bloated budgets.
We need more government debt.And you want to try and blame Republicans for any debt at all, while planning to increase the debt yourself?
Because, in reality, bank loans create deposits. The majority of all money originated from banks.It does matter. Because banks originate.
‘Loans Create Deposits’ – in Context – Monetary Realism
It does matter
Why?
Because, in reality, bank loans create deposits.
And in reality, so what?
The deposits created by the loans don't reduce the need for other deposits by a single dollar.
That's why I keep coming back to it.
Someone says a bank needs deposits to make a loan, you dishonestly say, no, the loan itself creates the deposit.
The majority of all money originated from banks.
It would be more accurate to look at the original deposit account, not the loan account.
I deposit five $20 FRNs into a new bank.
You come to borrow $80.
The money supply doesn't grow because your "deposit account" has $80 in it for 5 minutes.
It grows because when you're holding the four $20s in your hand, my savings account still has $100 in it.Where did I say it did? Look, the majority of all money originated from loans, which created deposits. So overall, the loans create the deposits. I heard it was 97% somewhere, endogenous money.The deposits created by the loans don't reduce the need for other deposits by a single dollar.
I never said banks don't need deposits. They still need reserves and have to manage their balance sheet.Someone says a bank needs deposits to make a loan, you dishonestly say, no, the loan itself creates the deposit.
And you said it again in post #42.
They loan money they have. From the deposits. <andylusion
Nonsense. Deposits are liabilities on the banks balance sheet, and there's nothing in a deposit to lend out
And holy crap, the money deposited is the asset, the depositor account is the liability.
Keep getting that wrong and I'm gonna keep mocking your idiocy.
If someone deposits physical cash, the cash goes into the vault (reserves) and the bank simply marks up their account. The bank doesn't worry about loaning out reserves when it originates, it simply creates the deposit and gets the reserves overnight to meet the requirement.
They have reserves in the vault and you think instead of lending them out, they go out and borrow additional reserves to make good on their loan?
Why in the hell would they do that?
That's over 100% , your quote has a total percentage of 122%The debt is owed by USA.INC and it's subsidiaries. USA.INC was taken into recievership by the IMF in 1950 to provide the 19 essential "gubermint" services and it is a for profit venture....unfortunately, they hide the profits and give us the bill on the corporate credit card to us to pay off.....great business model when you have a country full of dullards.
Yes, the 1% know how to siphon the Treasury and leave us with the debt. Ask Dick Cheney about that. And BTW, where's all the gold that used to be in Fort Knox? Maybe we should ask Cheney about that too...? Why are Congressional committees who ask for access to audit Fort Knox being denied access by ??? persons...?
That was OUR gold and OUR representatives must be allowed access to audit it.
What are you smoking? 37% of taxes are paid by the top 1%. The top 25% pay 85% of all taxes. If it wasn't for them, we wouldn't have a government at all.
It's not OUR gold, it's their gold you stole from them. Our representatives are doing exactly what we tell them to.
That's over 100% , your quote has a total percentage of 122%The debt is owed by USA.INC and it's subsidiaries. USA.INC was taken into recievership by the IMF in 1950 to provide the 19 essential "gubermint" services and it is a for profit venture....unfortunately, they hide the profits and give us the bill on the corporate credit card to us to pay off.....great business model when you have a country full of dullards.
Yes, the 1% know how to siphon the Treasury and leave us with the debt. Ask Dick Cheney about that. And BTW, where's all the gold that used to be in Fort Knox? Maybe we should ask Cheney about that too...? Why are Congressional committees who ask for access to audit Fort Knox being denied access by ??? persons...?
That was OUR gold and OUR representatives must be allowed access to audit it.
What are you smoking? 37% of taxes are paid by the top 1%. The top 25% pay 85% of all taxes. If it wasn't for them, we wouldn't have a government at all.
It's not OUR gold, it's their gold you stole from them. Our representatives are doing exactly what we tell them to.
Then why be redundant?That's over 100% , your quote has a total percentage of 122%The debt is owed by USA.INC and it's subsidiaries. USA.INC was taken into recievership by the IMF in 1950 to provide the 19 essential "gubermint" services and it is a for profit venture....unfortunately, they hide the profits and give us the bill on the corporate credit card to us to pay off.....great business model when you have a country full of dullards.
Yes, the 1% know how to siphon the Treasury and leave us with the debt. Ask Dick Cheney about that. And BTW, where's all the gold that used to be in Fort Knox? Maybe we should ask Cheney about that too...? Why are Congressional committees who ask for access to audit Fort Knox being denied access by ??? persons...?
That was OUR gold and OUR representatives must be allowed access to audit it.
What are you smoking? 37% of taxes are paid by the top 1%. The top 25% pay 85% of all taxes. If it wasn't for them, we wouldn't have a government at all.
It's not OUR gold, it's their gold you stole from them. Our representatives are doing exactly what we tell them to.
The 1% is included in the 25%. The top 25% of all wage earners in the country, pay 85% of all taxes.
You don't add the 37% of taxes paid by the top 1%, with the 85% paid by the top 25%. The 1%, is part of the top 25%.
Because, in reality, bank loans create deposits. The majority of all money originated from banks.It does matter
Why?
Because, in reality, bank loans create deposits.
And in reality, so what?
The deposits created by the loans don't reduce the need for other deposits by a single dollar.
That's why I keep coming back to it.
Someone says a bank needs deposits to make a loan, you dishonestly say, no, the loan itself creates the deposit.
The majority of all money originated from banks.
It would be more accurate to look at the original deposit account, not the loan account.
I deposit five $20 FRNs into a new bank.
You come to borrow $80.
The money supply doesn't grow because your "deposit account" has $80 in it for 5 minutes.
It grows because when you're holding the four $20s in your hand, my savings account still has $100 in it.Where did I say it did? Look, the majority of all money originated from loans, which created deposits. So overall, the loans create the deposits. I heard it was 97% somewhere, endogenous money.The deposits created by the loans don't reduce the need for other deposits by a single dollar.
I never said banks don't need deposits. They still need reserves and have to manage their balance sheet.Someone says a bank needs deposits to make a loan, you dishonestly say, no, the loan itself creates the deposit.
And you said it again in post #42.
They loan money they have. From the deposits. <andylusion
Nonsense. Deposits are liabilities on the banks balance sheet, and there's nothing in a deposit to lend out
And holy crap, the money deposited is the asset, the depositor account is the liability.
Keep getting that wrong and I'm gonna keep mocking your idiocy.
If someone deposits physical cash, the cash goes into the vault (reserves) and the bank simply marks up their account. The bank doesn't worry about loaning out reserves when it originates, it simply creates the deposit and gets the reserves overnight to meet the requirement.
They have reserves in the vault and you think instead of lending them out, they go out and borrow additional reserves to make good on their loan?
Why in the hell would they do that?
Yeah, that is what makes no sense whatsoever.
I'm a bank. I have $10,000 in my bank vault. I am going to lend out $9,000.
Now I'm already paying interest on the deposits of $10,000.
But I'm not going to loan that out. No no, I'm going to borrow cash reserves from another bank, and pay interest to them as well, and loan that money, not the money I already have.... and am already paying interest on.... but rather the new money I am going to borrow from someone else, to lend to someone else...
WHY?!?!?!?
He is either incorrect, and has been mis-informed... or there is a ton more to this, that we don't know. If he's right, then banks are doing this because of some insane regulation, we are not aware of. It makes no logical sense.
