Bill Still's Money Masters

[joewp]

The bank tells you that you can have 100% of your money in those accounts at any time, but yet (on the books) they've loaned out up to 90% of it (or more, actually), actually creating new money.

But you can have 100% of your money in those accounts.
So what problem do you imagine you're fixing?
And any loan actually creates new money, not just loans from time deposits.

Um, you never heard of bank runs? You never heard of bank holidays? No, if every depositor went to Bank A to get their money, Bank A would have to close their doors. So you can't have 100% of your money.

No, when it's a time deposit, "your" money is lent out and you can't have it, so it's not inflationary, No new money is created because 100% of your deposit is lent out.

And in that case, it's not inflationary because it's the "same" money in the account that's being lent out, not bookkeeping created money.

Loans from time deposits are just as inflationary as loans from demand deposits.

In our current system, the banks have the power to inflate assets with liberal loan policy and then deflate the assets with tight loan policy.

You can't have a liberal loan policy funded with CDs? That's funny.

No, not really. Since the money in CDs has to be paid back by the bank within a certain time, loan policies would be stricter to ensure that money is paid back on time.

Why are you defending this corrupt system?

 

[BillSPrestonEsq]

That's why it's wrong and that is why it's fraud

When you deposit money in the bank, you don't know that they're going to loan some of it to other people? How old are you?

I'm glad you think it's funny but it's still true that on demand deposits are inflationary if at the same time the money is being loaned out. The money is two places at once

Exactly the same with time deposits.

regardless of how you would like to calculate money supply.

I'm calculating it the right way. If you did the same, you'd realize your error.

the money is both in someone's bank account and being loaned out therefor it is in two different places, it is like taking one dollar and turning it into two.

Any bank loan does the same, regardless of the source of the funds.

You don't get it. IT IS ******* FRAUD. Does that spell it out? Nothing else matters, not it's justification, not the results, consequences, it doesn't matter because it's still FRAUD. THAT IS THE POINT.

Yes stupid I realize that money in on demand accounts are counted the same as timed deposits. The difference is that you cannot get to timed deposits and you know it, you plan around it. That is the key difference. It is the way you spend money based on what you have available to you at any given time. Money is not in two places at once when it is being loaned out of a timed deposit because you can't have it, because it is being loaned out. That is not the case for an on demand deposit.

 

[Toddsterpatriot]

Congress is supposed to oversee the Fed. They can't properly oversee the body they created if they don't have access to the most important information.

This is why the Fed is referred to as not being federal. They operate independently and with VERY little oversight, and they hide behind the excuse that their monetary policy would be compromised if certain information was made public.

**** that. The congress and the people have every right to know what is being done with their money.

Congress is supposed to oversee the Fed.

They do.

They can't properly oversee the body they created if they don't have access to the most important information.

If only Alan Grayson had more info, everything would be better.

Great over sight.
[ame=http://youtu.be/CY8xz3Q7aig]Federal Reserve Lost 9 TRILLION Dollars. - YouTube[/ame]

No one asks nonsense questions like Grayson. At least since Ron Paul retired.

 

[Toddsterpatriot]

Congress is supposed to oversee the Fed.

They do.

They can't properly oversee the body they created if they don't have access to the most important information.

If only Alan Grayson had more info, everything would be better.

Great over sight.
[ame=http://youtu.be/CY8xz3Q7aig]Federal Reserve Lost 9 TRILLION Dollars. - YouTube[/ame]

This woman pretty clearly states what her job is. She oversees the operations of the Board of Governors. Grayson asks her about the trillion dollar expansion of OMOs, an operation of the FOMC, not the Board of Governors; and an unsubstantiated bloomberg report.

If you want to know about the expansion of the Fed's OMOs, just go to their ******* website; or ask an FOMC member during their testimony to congress. If you want to know about some mysterious $9 trillion off-balance sheet activity, specify what the **** you're talking about. Seriously, what response can we expect anybody to have to "tell me about some sort of $9 trillion in lending I heard about from a friend of a friend of mine" other than "... huh?".

If you want to know about some mysterious $9 trillion off-balance sheet activity, specify what the **** you're talking about.

Bingo!
Congressman, I don't know what the **** you're asking because you clearly have no clue.

 

[joewp]

Anyway, if you ask me, just get rid of the whole LoLR thing. Or if people insist that it exist, have the Treasury do it instead of the Fed.

If banks were engaged in an honest business instead of fraud, they wouldn't need a "lender of last resort".

Some of these "broken banks" attempted to fool bank inspectors by keeping a barrel of nails with a top layer of gold coin as their "reserves." The Bank of Battle Creek, Michigan, had its teller, Tolman W. Hall, run out the back door whenever a noteholder would enter the bank. Another unscrupulous tactic was to locate banks' main offices in remote wilderness areas. These "wildcat banks" would often shuttle the same sack of coins from one location to another to convince the occasional bank inspector that the bank was solvent.

That's from the Fed bank of San Francisco. I can't post the link cause I'm too much of a newbie yet, but the Fed is the modern day barrel of nails, and they don't even have a layer of gold coins on top.

The whole fractional reserve banking system is a fraud and must go.

One of my favorite quotes: "The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks." - Lord Acton

And the banks are winning cause the people don't even know they're in a battle.

 

[Toddsterpatriot]

The bank tells you that you can have 100% of your money in those accounts at any time, but yet (on the books) they've loaned out up to 90% of it (or more, actually), actually creating new money.

But you can have 100% of your money in those accounts.
So what problem do you imagine you're fixing?
And any loan actually creates new money, not just loans from time deposits.

Um, you never heard of bank runs? You never heard of bank holidays? No, if every depositor went to Bank A to get their money, Bank A would have to close their doors. So you can't have 100% of your money.

No, when it's a time deposit, "your" money is lent out and you can't have it, so it's not inflationary, No new money is created because 100% of your deposit is lent out.

And in that case, it's not inflationary because it's the "same" money in the account that's being lent out, not bookkeeping created money.

Loans from time deposits are just as inflationary as loans from demand deposits.

In our current system, the banks have the power to inflate assets with liberal loan policy and then deflate the assets with tight loan policy.

You can't have a liberal loan policy funded with CDs? That's funny.

No, not really. Since the money in CDs has to be paid back by the bank within a certain time, loan policies would be stricter to ensure that money is paid back on time.

Why are you defending this corrupt system?

Um, you never heard of bank runs?

I have heard of banks runs. Maybe no bank should lend a dollar of their deposits, just in case there is a run.

So you can't have 100% of your money.


Shut down the banking system, you've discovered the flaw. LOL!

No, when it's a time deposit, "your" money is lent out and you can't have it, so it's not inflationary, No new money is created because 100% of your deposit is lent out.

Interesting claim. Do you feel time deposits are counted in the money supply?
If so, where?

No, not really. Since the money in CDs has to be paid back by the bank within a certain time, loan policies would be stricter to ensure that money is paid back on time.

And when it wasn't paid back on time, or at all, what's your point?

Why are you defending this corrupt system?

A bank lending a portion of deposits makes it corrupt? LOL!
You're funny.

 

[Toddsterpatriot]

That's why it's wrong and that is why it's fraud

When you deposit money in the bank, you don't know that they're going to loan some of it to other people? How old are you?

I'm glad you think it's funny but it's still true that on demand deposits are inflationary if at the same time the money is being loaned out. The money is two places at once

Exactly the same with time deposits.

regardless of how you would like to calculate money supply.

I'm calculating it the right way. If you did the same, you'd realize your error.

the money is both in someone's bank account and being loaned out therefor it is in two different places, it is like taking one dollar and turning it into two.

Any bank loan does the same, regardless of the source of the funds.

You don't get it. IT IS ******* FRAUD. Does that spell it out? Nothing else matters, not it's justification, not the results, consequences, it doesn't matter because it's still FRAUD. THAT IS THE POINT.

Yes stupid I realize that money in on demand accounts are counted the same as timed deposits. The difference is that you cannot get to timed deposits and you know it, you plan around it. That is the key difference. It is the way you spend money based on what you have available to you at any given time. Money is not in two places at once when it is being loaned out of a timed deposit because you can't have it, because it is being loaned out. That is not the case for an on demand deposit.

You don't get it. IT IS ******* FRAUD. Does that spell it out?

Yes, your ignorance is very clear.

Yes stupid I realize that money in on demand accounts are counted the same as timed deposits.

Excellent! I put $1000 in a CD and you borrow it. The money supply increases by $1000.
I put $1000 in a checking account and you borrow it. The money supply increases by $1000.

OMG! In each case the money supply increased by $1000. Despite your whining, the impact is identical.

Money is not in two places at once when it is being loaned out of a timed deposit because you can't have it,

Money is not in two places at once when it is being loaned out of a checking deposit either.

 

[DSGE]

Anyway, if you ask me, just get rid of the whole LoLR thing. Or if people insist that it exist, have the Treasury do it instead of the Fed.

If banks were engaged in an honest business instead of fraud, they wouldn't need a "lender of last resort".

Some of these "broken banks" attempted to fool bank inspectors by keeping a barrel of nails with a top layer of gold coin as their "reserves." The Bank of Battle Creek, Michigan, had its teller, Tolman W. Hall, run out the back door whenever a noteholder would enter the bank. Another unscrupulous tactic was to locate banks' main offices in remote wilderness areas. These "wildcat banks" would often shuttle the same sack of coins from one location to another to convince the occasional bank inspector that the bank was solvent.

That's from the Fed bank of San Francisco. I can't post the link cause I'm too much of a newbie yet, but the Fed is the modern day barrel of nails, and they don't even have a layer of gold coins on top.

The whole fractional reserve banking system is a fraud and must go.

One of my favorite quotes: "The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks." - Lord Acton

And the banks are winning cause the people don't even know they're in a battle.

It's not fraud, because we know that banks do it and agree to it. Why do we agree to it? Because it greatly reduces fees for services and transaction costs, and frequently even earns us interest on our accounts.

There is nothing at all stopping a bank from seizing market share by advertising that it holds full reserve. It doesn't happen because it's insane and everybody recognises it. The fact that we can have access to liquidity but still earn a return by pooling risk is an amazing thing that everybody wants. Nobody wants to pay a bank to hold their currency and pay them again for transaction services. Not a significant quantity anyway.

 

[Toddsterpatriot]

Anyway, if you ask me, just get rid of the whole LoLR thing. Or if people insist that it exist, have the Treasury do it instead of the Fed.

If banks were engaged in an honest business instead of fraud, they wouldn't need a "lender of last resort".

Some of these "broken banks" attempted to fool bank inspectors by keeping a barrel of nails with a top layer of gold coin as their "reserves." The Bank of Battle Creek, Michigan, had its teller, Tolman W. Hall, run out the back door whenever a noteholder would enter the bank. Another unscrupulous tactic was to locate banks' main offices in remote wilderness areas. These "wildcat banks" would often shuttle the same sack of coins from one location to another to convince the occasional bank inspector that the bank was solvent.

That's from the Fed bank of San Francisco. I can't post the link cause I'm too much of a newbie yet, but the Fed is the modern day barrel of nails, and they don't even have a layer of gold coins on top.

The whole fractional reserve banking system is a fraud and must go.

One of my favorite quotes: "The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks." - Lord Acton

And the banks are winning cause the people don't even know they're in a battle.

The whole fractional reserve banking system is a fraud and must go.

Modern banking has always been fractional reserve banking. For hundreds of years.
Even under a gold standard. Feel free to start a 100% reserve bank.
You can take deposits and never make a loan. Let me know how you do. LOL!

 

[joewp]

The whole fractional reserve banking system is a fraud and must go.

Modern banking has always been fractional reserve banking. For hundreds of years.

That doesn't make it right. That fact is more indicative of an elite who craves control and imposed a system on us for their benefit.

Even under a gold standard. Feel free to start a 100% reserve bank.
You can take deposits and never make a loan. Let me know how you do. LOL!

Of couse, this statement shows you're confusiing "banking" and "investing", which is what today's banks also do. True "banking" involves money storage only, for which a small fee is charged. If someone wants a return on their money, they have to pledge it for a certain time and then that money is invested in individuals and businesses as loans. In an honest banking system, those functions would be strictly separated. Today, the banks use the investment income (interest on loans) to offset the costs of money storage, so they can offer "free" or interest bearing checking accounts.

I understand your confusion, as the bankers have used the media and politicians to confuse and befuddle the populace and confuse the issue.

Don't worry, I'll help you understand!

 

[Toddsterpatriot]

The whole fractional reserve banking system is a fraud and must go.

Modern banking has always been fractional reserve banking. For hundreds of years.

That doesn't make it right. That fact is more indicative of an elite who craves control and imposed a system on us for their benefit.

Even under a gold standard. Feel free to start a 100% reserve bank.
You can take deposits and never make a loan. Let me know how you do. LOL!

Of couse, this statement shows you're confusiing "banking" and "investing", which is what today's banks also do. True "banking" involves money storage only, for which a small fee is charged. If someone wants a return on their money, they have to pledge it for a certain time and then that money is invested in individuals and businesses as loans. In an honest banking system, those functions would be strictly separated. Today, the banks use the investment income (interest on loans) to offset the costs of money storage, so they can offer "free" or interest bearing checking accounts.

I understand your confusion, as the bankers have used the media and politicians to confuse and befuddle the populace and confuse the issue.

Don't worry, I'll help you understand!

That doesn't make it right.

That's funny. Banks take deposits and loan out a portion of those deposits.
Sorry if that makes you and Ron Paul sad.

That fact is more indicative of an elite who craves control and imposed a system on us for their benefit.

Keep your money under your bed....fight the power!


True "banking" involves money storage only, for which a small fee is charged.

Please start a "true bank" and let me know how you do.

 

[joewp]

The whole fractional reserve banking system is a fraud and must go.

Modern banking has always been fractional reserve banking. For hundreds of years.

That doesn't make it right. That fact is more indicative of an elite who craves control and imposed a system on us for their benefit.

Even under a gold standard. Feel free to start a 100% reserve bank.
You can take deposits and never make a loan. Let me know how you do. LOL!

Of couse, this statement shows you're confusiing "banking" and "investing", which is what today's banks also do. True "banking" involves money storage only, for which a small fee is charged. If someone wants a return on their money, they have to pledge it for a certain time and then that money is invested in individuals and businesses as loans. In an honest banking system, those functions would be strictly separated. Today, the banks use the investment income (interest on loans) to offset the costs of money storage, so they can offer "free" or interest bearing checking accounts.

I understand your confusion, as the bankers have used the media and politicians to confuse and befuddle the populace and confuse the issue.

Don't worry, I'll help you understand!

That doesn't make it right.

That's funny. Banks take deposits and loan out a portion of those deposits.
Sorry if that makes you and Ron Paul sad.

That fact is more indicative of an elite who craves control and imposed a system on us for their benefit.

Keep your money under your bed....fight the power!


True "banking" involves money storage only, for which a small fee is charged.

Please start a "true bank" and let me know how you do.

Ya know, I don't like people cutting up what I said and then arguning against only part of my point. If you notice, the banks can make loans when money is deposited for that purpose with the lender (who you might think of as a "depositor") knowing full well his money is tied up for a period of time and in return, he gets a higher return. What they shouldn't do is play the lending casino with the money people placed with them for safekeeping and to write checks against in the immediate future.

And your little "fight the power" quote doesn't add a thing to the conversation, except perhaps the knowledge that you can't answer the fact that the bankers have rigged the system in their favor, and against the citizen. But you probably think that banks are good and we can't live without them. If so, please explain...

 

[Toddsterpatriot]

That doesn't make it right. That fact is more indicative of an elite who craves control and imposed a system on us for their benefit.



Of couse, this statement shows you're confusiing "banking" and "investing", which is what today's banks also do. True "banking" involves money storage only, for which a small fee is charged. If someone wants a return on their money, they have to pledge it for a certain time and then that money is invested in individuals and businesses as loans. In an honest banking system, those functions would be strictly separated. Today, the banks use the investment income (interest on loans) to offset the costs of money storage, so they can offer "free" or interest bearing checking accounts.

I understand your confusion, as the bankers have used the media and politicians to confuse and befuddle the populace and confuse the issue.

Don't worry, I'll help you understand!

That doesn't make it right.

That's funny. Banks take deposits and loan out a portion of those deposits.
Sorry if that makes you and Ron Paul sad.

That fact is more indicative of an elite who craves control and imposed a system on us for their benefit.

Keep your money under your bed....fight the power!


True "banking" involves money storage only, for which a small fee is charged.

Please start a "true bank" and let me know how you do.

Ya know, I don't like people cutting up what I said and then arguning against only part of my point. If you notice, the banks can make loans when money is deposited for that purpose with the lender (who you might think of as a "depositor") knowing full well his money is tied up for a period of time and in return, he gets a higher return. What they shouldn't do is play the lending casino with the money people placed with them for safekeeping and to write checks against in the immediate future.

And your little "fight the power" quote doesn't add a thing to the conversation, except perhaps the knowledge that you can't answer the fact that the bankers have rigged the system in their favor, and against the citizen. But you probably think that banks are good and we can't live without them. If so, please explain...

If you notice, the banks can make loans when money is deposited for that purpose with the lender

If you don't like banks lending your funds, feel free not to deposit them.

bankers have rigged the system in their favor, and against the citizen.

By lending a portion of deposits? That's just silly.

But you probably think that banks are good and we can't live without them.

You can certainly live without banks. Lot's of primitive societies manage to live without the benefits of a modern banking system.

Feel free to stop using the banking system. Please keep me informed of your progress.

 

[joewp]

If you notice, the banks can make loans when money is deposited for that purpose with the lender

If you don't like banks lending your funds, feel free not to deposit them.

OK, Todd. I know Pete Townshend has a hearing problem, sorry to see Roger has a seeing or reading problem.

If you would have read in context, I would only have to put my money in demand accounts (money storage) to satisfy my desire to not let them lend under a full reserve system.

Speaking of "free", in today's society I'm mostly not "free" to avoid banks at all. The utility bills I have to pay pretty much demand some form of bank check as payment. My paycheck is deposited in my bank account with no alternative available.

bankers have rigged the system in their favor, and against the citizen.

By lending a portion of deposits? That's just silly.

By creating deposit accounts from thin air and charging interest on it. What you don't seem to understand is that the newly created money from a loan eventually lands in another bank account, where it will too be used as a basis for more created money. And on and on. (Hint: Look up 'money multiplier'). And for every dollar in existence, be it physical money or bank credit, someone is paying interest. Banks operate on about the same level as leeches. But I could be insulting leeches.

But you probably think that banks are good and we can't live without them.

You can certainly live without banks. Lot's of primitive societies manage to live without the benefits of a modern banking system.

Feel free to stop using the banking system. Please keep me informed of your progress.

I have stopped, except for those uses imposed on me. I keep enough in the bank to pay immediate bills, keep the rest in real assets and some cash, and I'm doing fine, thank you.

Um, I asked you explain how banks are good for us. Where's your response to that direct question? I get testy when people don't answer my questions.

 

[Toddsterpatriot]

If you notice, the banks can make loans when money is deposited for that purpose with the lender

If you don't like banks lending your funds, feel free not to deposit them.

OK, Todd. I know Pete Townshend has a hearing problem, sorry to see Roger has a seeing or reading problem.

If you would have read in context, I would only have to put my money in demand accounts (money storage) to satisfy my desire to not let them lend under a full reserve system.

Speaking of "free", in today's society I'm mostly not "free" to avoid banks at all. The utility bills I have to pay pretty much demand some form of bank check as payment. My paycheck is deposited in my bank account with no alternative available.

bankers have rigged the system in their favor, and against the citizen.

By lending a portion of deposits? That's just silly.

By creating deposit accounts from thin air and charging interest on it. What you don't seem to understand is that the newly created money from a loan eventually lands in another bank account, where it will too be used as a basis for more created money. And on and on. (Hint: Look up 'money multiplier'). And for every dollar in existence, be it physical money or bank credit, someone is paying interest. Banks operate on about the same level as leeches. But I could be insulting leeches.

But you probably think that banks are good and we can't live without them.

You can certainly live without banks. Lot's of primitive societies manage to live without the benefits of a modern banking system.

Feel free to stop using the banking system. Please keep me informed of your progress.

I have stopped, except for those uses imposed on me. I keep enough in the bank to pay immediate bills, keep the rest in real assets and some cash, and I'm doing fine, thank you.

Um, I asked you explain how banks are good for us. Where's your response to that direct question? I get testy when people don't answer my questions.

If you would have read in context, I would only have to put my money in demand accounts (money storage) to satisfy my desire to not let them lend under a full reserve system.

We don't have a full reserve system, so the account you put them in is irrelevant.

Speaking of "free", in today's society I'm mostly not "free" to avoid banks at all.

That's awful. Society has seen the benefits of modern banking and has organized itself to take advantage of those benefits.

By creating deposit accounts from thin air and charging interest on it.

But they don't create deposit accounts out of thin air.

What you don't seem to understand is that the newly created money from a loan eventually lands in another bank account, where it will too be used as a basis for more created money. And on and on. (Hint: Look up 'money multiplier')

What's the money multiplier on a time deposit? (Hint: Look up 'reserve requirement')LOL!

And for every dollar in existence, be it physical money or bank credit, someone is paying interest.

Another silly claim. I have a $20 bill in my hand, who do you imagine is paying interest on it?

Um, I asked you explain how banks are good for us.

Um, people are free to decide for themselves whether they are good for us or not.
The fact that they are so widely used in modern societies seems to be a vote in their favor. The fact that there is a strong correlation between those societies with a weak or non-existent banking system and failed societies seems to be another vote in their favor. YMMV.

 

[joewp]

If you would have read in context, I would only have to put my money in demand accounts (money storage) to satisfy my desire to not let them lend under a full reserve system.

We don't have a full reserve system, so the account you put them in is irrelevant.

Duh, no kidding. I was talking about how it would be different under full reserve banking.

Speaking of "free", in today's society I'm mostly not "free" to avoid banks at all.

That's awful. Society has seen the benefits of modern banking and has organized itself to take advantage of those benefits.

Nope, bankers have arranged the system to their benefit. When the US government says that commercial bank credit is legal tender, you don't have much of a choice, now do you?

By creating deposit accounts from thin air and charging interest on it.

But they don't create deposit accounts out of thin air.

Sure they do. "Banks create money when they lend the rest of the money depositors give them. This money can be used to purchase goods and services and can find its way back into the banking system as a deposit in another bank, which then can lend a fraction of it. The process of relending can repeat itself a number of times in a phenomenon called the multiplier effect." - That's from the IMF. I think they would know, don't you?

What you don't seem to understand is that the newly created money from a loan eventually lands in another bank account, where it will too be used as a basis for more created money. And on and on. (Hint: Look up 'money multiplier')

What's the money multiplier on a time deposit? (Hint: Look up 'reserve requirement')LOL!

Why, don't you know?

And for every dollar in existence, be it physical money or bank credit, someone is paying interest.

Another silly claim. I have a $20 bill in my hand, who do you imagine is paying interest on it?

The guy it was originally lent to, of course. Since all our money is borrowed into existence with interest, then yes, someone somewhere is paying interest on that $20

Um, I asked you explain how banks are good for us.

Um, people are free to decide for themselves whether they are good for us or not.
The fact that they are so widely used in modern societies seems to be a vote in their favor. The fact that there is a strong correlation between those societies with a weak or non-existent banking system and failed societies seems to be another vote in their favor. YMMV.

Banks don't bother to go into failed societies. You're putting the cart before the horse.

Look, obviously I'm not going to convince you so I'll stop now. One day the light will dawn on you that banks are a special class of corporate person that's allowed to lend money it doesn't have so they can make obscene profits, while you're not able to do the same thing. If somebody has to create the medium of exchange, it's better we all do it through the government, for the benefit of all rather than the few.

You know, like it says in the Constitution.
"Congress shall have the power.... To coin money and regulate the value thereof..."

 

[Toddsterpatriot]

If you would have read in context, I would only have to put my money in demand accounts (money storage) to satisfy my desire to not let them lend under a full reserve system.

We don't have a full reserve system, so the account you put them in is irrelevant.

Duh, no kidding. I was talking about how it would be different under full reserve banking.

Speaking of "free", in today's society I'm mostly not "free" to avoid banks at all.

That's awful. Society has seen the benefits of modern banking and has organized itself to take advantage of those benefits.

Nope, bankers have arranged the system to their benefit. When the US government says that commercial bank credit is legal tender, you don't have much of a choice, now do you?



Sure they do. "Banks create money when they lend the rest of the money depositors give them. This money can be used to purchase goods and services and can find its way back into the banking system as a deposit in another bank, which then can lend a fraction of it. The process of relending can repeat itself a number of times in a phenomenon called the multiplier effect." - That's from the IMF. I think they would know, don't you?



Why, don't you know?

And for every dollar in existence, be it physical money or bank credit, someone is paying interest.

Another silly claim. I have a $20 bill in my hand, who do you imagine is paying interest on it?

The guy it was originally lent to, of course. Since all our money is borrowed into existence with interest, then yes, someone somewhere is paying interest on that $20

Um, I asked you explain how banks are good for us.

Um, people are free to decide for themselves whether they are good for us or not.
The fact that they are so widely used in modern societies seems to be a vote in their favor. The fact that there is a strong correlation between those societies with a weak or non-existent banking system and failed societies seems to be another vote in their favor. YMMV.

Banks don't bother to go into failed societies. You're putting the cart before the horse.

Look, obviously I'm not going to convince you so I'll stop now. One day the light will dawn on you that banks are a special class of corporate person that's allowed to lend money it doesn't have so they can make obscene profits, while you're not able to do the same thing. If somebody has to create the medium of exchange, it's better we all do it through the government, for the benefit of all rather than the few.

You know, like it says in the Constitution.
"Congress shall have the power.... To coin money and regulate the value thereof..."

But they don't create deposit accounts out of thin air.

Sure they do. "Banks create money when they lend the rest of the money depositors give them.

Lending out deposits creates new money out of deposits, not out of thin air.
If your claim were true, they'd have no need of deposits.

Another silly claim. I have a $20 bill in my hand, who do you imagine is paying interest on it?

The guy it was originally lent to, of course.

I get $20s all the time from the bank, they get them straight from the Fed, nobody borrowed them. Try again?

One day the light will dawn on you that banks are a special class of corporate person that's allowed to lend money it doesn't have

But they don't lend money they don't have, or else they'd have no need to lend your checking account deposits.

What's the money multiplier on a time deposit? (Hint: Look up 'reserve requirement')LOL!

Why, don't you know?

I know, don't you?

 

[joewp]

But they don't create deposit accounts out of thin air.

Sure they do. "Banks create money when they lend the rest of the money depositors give them.

Lending out deposits creates new money out of deposits, not out of thin air.
If your claim were true, they'd have no need of deposits.

Actually, there really isn't a need for deposits, because the bank actually lends you money based on your signature on the note. It puts the note on the assets side of the ledger, because it produces income, and puts the bank credit it put in your account on the liabilities side, because they might (note, MIGHT) have to actually come up with some retained capital some day to cover it. But probably not. What the reserve requirement is is just another way to drive small and medium sized banks out of business, so the bigger banks can take over their assets and leave their liabilities to the FDIC(and ultimately, to the taxpayers). Ever notice that when little banks get in trouble, they get closed, while the biggest banks get bailed out (too big too fail)? What are you missing?

Another silly claim. I have a $20 bill in my hand, who do you imagine is paying interest on it?

The guy it was originally lent to, of course.

I get $20s all the time from the bank, they get them straight from the Fed, nobody borrowed them. Try again?

Now you're just being silly. Of course someone borrowed them. How do you think our money is created? Either the federal government borrows from the Fed (which literally poofs it out of nothing based on entering the purchased treasuries on the asset side of the ledger), or you and I borrow into existence from commercial banks or the favored commercial banks borrow it from the Fed.

One day the light will dawn on you that banks are a special class of corporate person that's allowed to lend money it doesn't have

But they don't lend money they don't have, or else they'd have no need to lend your checking account deposits.

Ok, if you insist on thinking that way, let me put it another way. You work hard and save $100 and put it in the bank. Now the bank takes your $100, pays you a piddling 0.5%, and then loans out $90 to someone else at 6%, who now has to work hard to pay back that loan plus interest. Nice margin, ain't it? For what? For telling you that you can have your money at any time, meanwhile 90% has actually been loaned out, and if you and depositors that hold more than 10% of the deposits at the bank want it, they CANNOT pay and have to close their doors.

Of course, you'll say, "The FDIC will cover all the deposits!". And if enough banks fail, the FDIC goes to... wait for it.... the TAXPAYERS to cover the bank's losses.

This doesn't seem like a screwed up system, made for the benefit of the large banks?

What's the money multiplier on a time deposit? (Hint: Look up 'reserve requirement')LOL!

Why, don't you know?

I know, don't you?

Ok, I'll tell you. Since the reserve requirement is close to 0%, the theoretical money multiplier approaches, of course, infinity if the proceeds from the loan end up in a bank somewhere as a CD.

Crap, doesn't it bother you in the least that banks are allowed by law to multiply our money and make profits from interest on it, instead of the government issuing silver certificates or even United States Notes that bear no interest charges?

 

[Toddsterpatriot]

But they don't create deposit accounts out of thin air.

Sure they do. "Banks create money when they lend the rest of the money depositors give them.

Lending out deposits creates new money out of deposits, not out of thin air.
If your claim were true, they'd have no need of deposits.

Actually, there really isn't a need for deposits, because the bank actually lends you money based on your signature on the note. It puts the note on the assets side of the ledger, because it produces income, and puts the bank credit it put in your account on the liabilities side, because they might (note, MIGHT) have to actually come up with some retained capital some day to cover it. But probably not. What the reserve requirement is is just another way to drive small and medium sized banks out of business, so the bigger banks can take over their assets and leave their liabilities to the FDIC(and ultimately, to the taxpayers). Ever notice that when little banks get in trouble, they get closed, while the biggest banks get bailed out (too big too fail)? What are you missing?

Another silly claim. I have a $20 bill in my hand, who do you imagine is paying interest on it?

The guy it was originally lent to, of course.

I get $20s all the time from the bank, they get them straight from the Fed, nobody borrowed them. Try again?

Now you're just being silly. Of course someone borrowed them. How do you think our money is created? Either the federal government borrows from the Fed (which literally poofs it out of nothing based on entering the purchased treasuries on the asset side of the ledger), or you and I borrow into existence from commercial banks or the favored commercial banks borrow it from the Fed.

One day the light will dawn on you that banks are a special class of corporate person that's allowed to lend money it doesn't have

But they don't lend money they don't have, or else they'd have no need to lend your checking account deposits.

Ok, if you insist on thinking that way, let me put it another way. You work hard and save $100 and put it in the bank. Now the bank takes your $100, pays you a piddling 0.5%, and then loans out $90 to someone else at 6%, who now has to work hard to pay back that loan plus interest. Nice margin, ain't it? For what? For telling you that you can have your money at any time, meanwhile 90% has actually been loaned out, and if you and depositors that hold more than 10% of the deposits at the bank want it, they CANNOT pay and have to close their doors.

Of course, you'll say, "The FDIC will cover all the deposits!". And if enough banks fail, the FDIC goes to... wait for it.... the TAXPAYERS to cover the bank's losses.

This doesn't seem like a screwed up system, made for the benefit of the large banks?

What's the money multiplier on a time deposit? (Hint: Look up 'reserve requirement')LOL!

Why, don't you know?

I know, don't you?

Ok, I'll tell you. Since the reserve requirement is close to 0%, the theoretical money multiplier approaches, of course, infinity if the proceeds from the loan end up in a bank somewhere as a CD.

Crap, doesn't it bother you in the least that banks are allowed by law to multiply our money and make profits from interest on it, instead of the government issuing silver certificates or even United States Notes that bear no interest charges?

Actually, there really isn't a need for deposits, because the bank actually lends you money based on your signature on the note.

Try starting a bank and making loans with no deposits.
Let me know which federal prison they send you to, I'll write.

Now you're just being silly. Of course someone borrowed them.

Really? Someone borrowed $20s from the Fed?

Either the federal government borrows from the Fed

The government borrows $20s from the Fed?

You work hard and save $100 and put it in the bank. Now the bank takes your $100, pays you a piddling 0.5%, and then loans out $90 to someone else at 6%,

That's awful, but at least you stopped claiming they can create money out of thin air or that they don't need a deposit.

Nice margin, ain't it?

Yes, until the borrower defaults.

and if you and depositors that hold more than 10% of the deposits at the bank want it, they CANNOT pay and have to close their doors.


Or they can stay open and borrow from the Fed until they sell some of their loans.

Ok, I'll tell you. Since the reserve requirement is close to 0%, the theoretical money multiplier approaches, of course, infinity if the proceeds from the loan end up in a bank somewhere as a CD.

Excellent! So in your "full reserve" system, the money multiplier is higher than in a fractional reserve system. How is that better?

Crap, doesn't it bother you in the least that banks are allowed by law to multiply our money and make profits from interest on it,

It's awful! They take $100 in deposits and "multiply" it into $90 in loans. The horror!
And those profits sure are great! Just look at all the dough they made in 2008 and 2009.

instead of the government issuing silver certificates or even United States Notes that bear no interest charges?

I pay exactly the same interest on my FRNs as I do on my US Notes and silver certificates, 0%.

 

[joewp]

Actually, there really isn't a need for deposits, because the bank actually lends you money based on your signature on the note.

Try starting a bank and making loans with no deposits.
Let me know which federal prison they send you to, I'll write.

Um, a bunch of guys back in 1913 did exactly that. The Fed doesn't take deposits, and it makes billions in loans every day.

Now you're just being silly. Of course someone borrowed them.

Really? Someone borrowed $20s from the Fed?

Yep, every day in massive quantities. I guess you don't realize that your $20 bill only represents bank debt, do you?
"Federal Reserve" - a bank
"Note" - debt.

Either the federal government borrows from the Fed

The government borrows $20s from the Fed?

Um, yeah. Why do you think not?

You work hard and save $100 and put it in the bank. Now the bank takes your $100, pays you a piddling 0.5%, and then loans out $90 to someone else at 6%,

That's awful, but at least you stopped claiming they can create money out of thin air or that they don't need a deposit.

No, they don't create loans from a deposit, hence your deposit is still there, the bank still owes it to you, along with now owing the $90 to the borrower.
Cause all "cash" is these days is a physical manifestation of what a bank owes you, as in "Federal Reserve Note". --- Bank debt.

Nice margin, ain't it?

Yes, until the borrower defaults.

So what? They just take the collateral.

and if you and depositors that hold more than 10% of the deposits at the bank want it, they CANNOT pay and have to close their doors.


Or they can stay open and borrow from the Fed until they sell some of their loans.

You really don't understand the process, do you? The Fed doesn't just make a loan, they buy debt. When Citibank gets a loan from the Fed, they sell treasuries or other assets like CDOs and MBSs to the Fed.

If you think banks are so wonderful, maybe it's simply because you don't understand the whole process.

Ok, I'll tell you. Since the reserve requirement is close to 0%, the theoretical money multiplier approaches, of course, infinity if the proceeds from the loan end up in a bank somewhere as a CD.

Excellent! So in your "full reserve" system, the money multiplier is higher than in a fractional reserve system. How is that better?

Only in theory, because most money in banks isn't in deposited in CDs, it's in demand accounts.

Crap, doesn't it bother you in the least that banks are allowed by law to multiply our money and make profits from interest on it,

It's awful! They take $100 in deposits and "multiply" it into $90 in loans. The horror!

Again, you don't understand the process. That $90 becomes a deposit, and $81 is loaned out, which then becomes a new deposit, and $72 is loaned out. The process continues until nearly $1000 is created based on the initial $100. That's the money multiplier. And please note that every single one of those dollars was created with an interest charge.

And those profits sure are great! Just look at all the dough they made in 2008 and 2009.

Citibank was profitable in 2009, what are you talking about?
A few billion in losses in 2008 were taken care of with a barrel of nails covered in a thin layer of gold coins, also known as the Fed buying MBSs, CDOs and other crappy investments from them at interest.

instead of the government issuing silver certificates or even United States Notes that bear no interest charges?

I pay exactly the same interest on my FRNs as I do on my US Notes and silver certificates, 0%.

Goodness me, you sure do pay interest on FRNs every day. You pay taxes, don't you?