Should and will the Fed be abolished?

[ShackledNation]

It's not believable that people at the banks conspire to delude their customers into believing all of the deposits are in the bank always and never is one penny loaned out. I know that's not true and you must know that this is not true and you're not thinking about what you're stating. Everyone's heard James Stewart tell the mob in the Bailey Savings and Loan that the deposits were loaned out to the neighbors. Kids learn this in school.

When signing a bank contract, you are told you can withdraw your money on demand despite the fact only 10% of it is actually on reserve. No matter how you spin it, that is not completely honest. Here is an interesting article discussing why fractional reserve banking is fraudulent business behavior:
Fraud Is the Root of Fractional Reserve Banking, Part I

A bank run brings the fraud to light. People put money into banks for safekeeping. But when they try to get the money out, it is not there. The money is not there. The understanding is that we can access our money on demand, hence the term demand deposit. But if everyone tried to do this, we couldn't. Worsening the problem, money would just be printed to cover up the gap. The dollar you get back is worth less than the dollar you put in. I am not trying to say banks are evil, but what they are doing is fraud whether they acknowledge it or not.

The money created by banks and backed by collateral in accordance with law is the chosen legal tender in most countries including the US.

Are you saying if I decided to counterfeit US dollars in my home it would be ok so long as I loaned that money out and made sure to back the loan with collateral? Why can individuals not engage in the same behavior banks do if there is nothing fraudulent about it?

Gold is not. A man was recently arrested for counterfeiting because he said the gold coins he made could be used as actual dollars and he attempted to use and convince others to use them as US dollars. That's what counterfeiting is.

Can you link to that story? Because your description makes little sense. A man owns gold and he decided to put that gold into the shape of coins. Are you saying he trying to put them in the form of US silver dollars? Because that makes no sense whatsoever because a gold coin of that size would be worth far more. Are you saying he tried to use gold as money and was prevented from doing so? In that case, the story makes apparent the reality that government prevents us from using what we desire as money in transactions.

 

[ShackledNation]

You said banks loan out more than their deposits. In your example, you have 2 loans totalling $1710 based on 2 deposits totalling $1900. The only "real money" is the original $1000? LOL!
I just deposited $1000 in the bank, is my deposit real? If my employer paid me the $1000 from a loan, is my deposit now fake?

Well, yes. The other money has been created out of thin air. Welcome to modern banking. The economy will treat than newly created money just like all other money. But because the money supply has increased, prices will increase. We allow the banks to counterfeit money so they can have larger profits. But those profits are ultimately paid for by a devalued dollar. Again, it is easier to understand when you look at a fixed currency example. When the currency is the receipt, it becomes much harder to understand, but money is still created that exceeds the initial deposit.

Banks don't create money out of thin air. Banks lend out a portion of their deposits.
No deposits, no loans, no money creation.
What's a fixed currency and why do you think it's better?

Of course if you didn't deposit money it couldn't be created out of thin air. And if you can't loan demand deposits there is no money creation. Money created out of "thin air" is an expression. Because banks can simply create more money at will by changing numbers on ledger sheets, the expression is used.

A fixed currency is one in which the currency is backed by a commodity that is actual money, say cold. For example, $1=1 ounce of gold. So if a bank prints more dollars, it will still be forced to give customers the same amount of gold per each dollar. If a bank creates too much money, it will lose all of its gold. But advocating a gold standard or free market money is more of another topic. Here I am talking about fractional reserve banking and money creation.

 

[Toddsterpatriot]

Well, yes. The other money has been created out of thin air. Welcome to modern banking. The economy will treat than newly created money just like all other money. But because the money supply has increased, prices will increase. We allow the banks to counterfeit money so they can have larger profits. But those profits are ultimately paid for by a devalued dollar. Again, it is easier to understand when you look at a fixed currency example. When the currency is the receipt, it becomes much harder to understand, but money is still created that exceeds the initial deposit.

Banks don't create money out of thin air. Banks lend out a portion of their deposits.
No deposits, no loans, no money creation.
What's a fixed currency and why do you think it's better?

Of course if you didn't deposit money it couldn't be created out of thin air. And if you can't loan demand deposits there is no money creation. Money created out of "thin air" is an expression. Because banks can simply create more money at will by changing numbers on ledger sheets, the expression is used.

A fixed currency is one in which the currency is backed by a commodity that is actual money, say cold. For example, $1=1 ounce of gold. So if a bank prints more dollars, it will still be forced to give customers the same amount of gold per each dollar. If a bank creates too much money, it will lose all of its gold. But advocating a gold standard or free market money is more of another topic. Here I am talking about fractional reserve banking and money creation.

Money created out of thin air is an expression, an incorrect expression.
Banks cannot create money at will by changing numbers on ledger sheets.
Banks don't print dollars, even under a gold standard.
Even under a gold standard, the money supply increased when loans were made.

 

[ShackledNation]

When you say time deposits which have a 0% requirement are better than demand deposits which have a 10% requirement. As I have shown, time deposits are included in M2 so loans from time deposits do increase the money supply.

Again, I reject the notion that time deposits count as money. Please tell me why time deposits should be counted as money. When you have money in a time deposit, it is simply being transferred from owner to owner. You have 100 pieces of paper that can be used as money in a time deposit. That paper is loaned to someone else, who puts it in another time deposit. But there are not magically 200 pieces of paper used as money in existence now. The same 100 pieces have only shifted owners.

Please explain to me how more money is created. Then kindly tell me why transferring the same money from one account to another is money creation.

When you deposit $100 in the bank, you get your 1 year CD statement. That is included in M2. When the bank loans me the 5 $20s you deposited, those $20s are now included in M1 (and therefore M2). The money supply has increased by $100. You should probably stop using the term "full reserve system", when time deposits have a 0% requirement. It would be less confusing.

Again, full reserve or 100% reserve banking applies to DEMAND DEPOSITS. If you understood the difference between the demand side and the loan side of banks you would understand why calling the system full reserve is not confusing at all. Time deposits do not involve the demand side of the bank. Demand deposits do not involve the loan side of the bank unless their is fractional reserve banking. Which means any money you put in a bank to access on demand will always be accessible on demand because it never leaves the bank.

Yes, Bob has an account with 100 ounces of gold and Sue has 100 ounces in her hand. It's true, there was fractional reserve banking, even under the gold standard.

So you have 100 ounces of gold and magically another 100 ounces appeared? Do you realize how nonsensical that sounds? This should prove to you why it makes no sense at all to call time deposits money. There are still only 100 ounces of gold! Bob does not have 100 ounces of gold, Sue does. Sue owes Bob 100 ounces of gold indirectly. When you loan a time deposit, you do not create more money and keep the originally deposited money in the account. You transfer money out of the account. Nothing is created. Time deposits would only create money if they were redeposited into demand deposits that were also being loaned out.

Your money stops being money when you deposit it in the bank?
It doesn't stop being money, it is transferred to someone else. Sounds like your argument makes less sense than the Fed's argument. The creation in your example is based on the IOUs being treated as money. If you in your example don't want to do that, feel free. In the real world, people (and the Fed) treat the money in your bank account as money. Sorry if that is so difficult to grasp.

So you into the store with a certificate of deposit and buy eggs with it? The currency we use is the dollar. When you deposit dollars into a time deposit, the bank does not give you the depositor dollars. When you have money in a time deposit, you the depositor cannot access it because someone else is using it. The debtor has the IOU that we use as currency called the dollar, you the depositor do not.Their use of your dollars does not multiply the quantity of your dollars. Ownership is merely transferred. It is such a simple reality that I can't believe it is so difficult for you to grasp it.

Time deposits merely represent the bank's record of who needs to be paid. Once the money in a time deposit is loaned out, there is no longer money in the time deposit account. Let me repeat the library example. I donate a book to the library for a short period of time. The library stocks the book in its shelves. A patron is then loaned the book. The library has on its record that I lent it 1 book (time deposit). Currently that book is being used by a patron (hard currency). There are not two copies of the book.

Only unloaned time deposits should count as money, because once they are loaned out the money is no longer in the account at the bank. The bank simply has a record that it owes the depositor a certain amount of money. You are confusing a transfer of ownership of the same quantity of money with the creation of more quantities of money.

 

[Toddsterpatriot]

Again, I reject the notion that time deposits count as money. Please tell me why time deposits should be counted as money. When you have money in a time deposit, it is simply being transferred from owner to owner. You have 100 pieces of paper that can be used as money in a time deposit. That paper is loaned to someone else, who puts it in another time deposit. But there are not magically 200 pieces of paper used as money in existence now. The same 100 pieces have only shifted owners.

LOL!
What can I tell you?
Here's M1:
Ml includes funds that are readily accessible for spending. M1 consists of: (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of depository institutions; (2) traveler's checks of nonbank issuers; (3) demand deposits; and (4) other checkable deposits (OCDs), which consist primarily of negotiable order of withdrawal (NOW) accounts at depository institutions and credit union share draft accounts. Seasonally adjusted M1 is calculated by summing currency, traveler's checks, demand deposits, and OCDs, each seasonally adjusted separately.
Here's M2:
M2 includes a broader set of financial assets held principally by households. M2 consists of M1 plus: (1) savings deposits (which include money market deposit accounts, or MMDAs); (2) small-denomination time deposits (time deposits in amounts of less than $100,000); and (3) balances in retail money market mutual funds (MMMFs). Seasonally adjusted M2 is computed by summing savings deposits, small-denomination time deposits, and retail MMMFs, each seasonally adjusted separately, and adding this result to seasonally adjusted M1.

Please explain to me how more money is created. Then kindly tell me why transferring the same money from one account to another is money creation.

If each account is a component of the money supply, then the money supply increased.

Yes, Bob has an account with 100 ounces of gold and Sue has 100 ounces in her hand. It's true, there was fractional reserve banking, even under the gold standard.

So you have 100 ounces of gold and magically another 100 ounces appeared? Do you realize how nonsensical that sounds? This should prove to you why it makes no sense at all to call time deposits money. There are still only 100 ounces of gold! Bob does not have 100 ounces of gold, Sue does. Sue owes Bob 100 ounces of gold indirectly. When you loan a time deposit, you do not create more money and keep the originally deposited money in the account. You transfer money out of the account. Nothing is created. Time deposits would only create money if they were redeposited into demand deposits that were also being loaned out.

Do you understand that the money supply is more than just FRNs? If you do, then you should be able to understand that under the gold standard, the money supply was more than just the number of ounces of gold. Maybe you should look up credit money?

Your money stops being money when you deposit it in the bank?
It doesn't stop being money, it is transferred to someone else. Sounds like your argument makes less sense than the Fed's argument. The creation in your example is based on the IOUs being treated as money. If you in your example don't want to do that, feel free. In the real world, people (and the Fed) treat the money in your bank account as money. Sorry if that is so difficult to grasp.

So you into the store with a certificate of deposit and buy eggs with it? The currency we use is the dollar. When you deposit dollars into a time deposit, the bank does not give you the depositor dollars. When you have money in a time deposit, you the depositor cannot access it because someone else is using it. The debtor has the IOU that we use as currency called the dollar, you the depositor do not.Their use of your dollars does not multiply the quantity of your dollars. Ownership is merely transferred. It is such a simple reality that I can't believe it is so difficult for you to grasp it.

No, I have never gone into a store and made a purchase with a CD. So what? I've never made a purchase with my savings account either.

Time deposits merely represent the bank's record of who needs to be paid. Once the money in a time deposit is loaned out, there is no longer money in the time deposit account. Let me repeat the library example. I donate a book to the library for a short period of time. The library stocks the book in its shelves. A patron is then loaned the book. The library has on its record that I lent it 1 book (time deposit). Currently that book is being used by a patron (hard currency). There are not two copies of the book.

It's true, banks and the money supply are different than libraries and books.

Only unloaned time deposits should count as money, because once they are loaned out the money is no longer in the account at the bank.

Does that mean only unloaned demand deposits should count as money?

The bank simply has a record that it owes the depositor a certain amount of money. You are confusing a transfer of ownership of the same quantity of money with the creation of more quantities of money.

The confusion isn't mine, it's every modern economist for the last few hundred years. Apparently everyone but you.

 

[ShackledNation]

Banks don't create money out of thin air. Banks lend out a portion of their deposits.
No deposits, no loans, no money creation.
What's a fixed currency and why do you think it's better?

Of course if you didn't deposit money it couldn't be created out of thin air. And if you can't loan demand deposits there is no money creation. Money created out of "thin air" is an expression. Because banks can simply create more money at will by changing numbers on ledger sheets, the expression is used.

A fixed currency is one in which the currency is backed by a commodity that is actual money, say cold. For example, $1=1 ounce of gold. So if a bank prints more dollars, it will still be forced to give customers the same amount of gold per each dollar. If a bank creates too much money, it will lose all of its gold. But advocating a gold standard or free market money is more of another topic. Here I am talking about fractional reserve banking and money creation.

Money created out of thin air is an expression, an incorrect expression.
Banks cannot create money at will by changing numbers on ledger sheets.
Banks don't print dollars, even under a gold standard.
Even under a gold standard, the money supply increased when loans were made.

Not all loans create money. A depositor puts $100 in a checking account. His account reads $100. The bank loans out $90 of that account. The debtor's account reads $90. What does the depositor's account read now? Still $100. If banks were simply loaning without creating money, the depositor's account would read $10 after the loan was made. The reason money is created is because it appears that no money was taken out of the depositor's account to finance the loan. You have both a depositor account that says the bank has $100 to give and a debtor account that says the bank has $90 to give (which, via a loan, the debtor gets and uses). But the bank only has $100 in hard cash to give. It creates money by telling the debtor and the creditor it has $190 to give when it has only $100. This is why bank runs are possible. The bank really doesn't have the cash to give.

Look at it this way. In the past when gold was money, people deposited gold in banks. Banks then printed receipts and gave those receipts to depositors. So long as the value of receipts did note exceed the amount of gold in the banks, no money was created. Eventually, people just used the receipts instead of the gold out of convenience. It really didn't matter, because the value of receipts was identical to the amount of gold. It was when banks started printing receipts to gold that did not exist that money was created, for people used the new receipts as money even though they were not backed by gold. Both the receipts and gold would be accepted as money.

Today, receipts are electronic, and our currency is the dollar. We deposit dollars into the bank, and the bank rather than print a receipt that says "this receipt can be cashed for x amount of dollars" gives us an electronic account that says "this account can be turned into cash." What the banks yesterday did by printing receipts, the banks today do electronically. Banks issue more electronic receipts to money than exist in actual hard currency. Just like the past, we use the electronic receipts as money in the form of ATM, online transactions, etc.

 

[Toddsterpatriot]

Of course if you didn't deposit money it couldn't be created out of thin air. And if you can't loan demand deposits there is no money creation. Money created out of "thin air" is an expression. Because banks can simply create more money at will by changing numbers on ledger sheets, the expression is used.

A fixed currency is one in which the currency is backed by a commodity that is actual money, say cold. For example, $1=1 ounce of gold. So if a bank prints more dollars, it will still be forced to give customers the same amount of gold per each dollar. If a bank creates too much money, it will lose all of its gold. But advocating a gold standard or free market money is more of another topic. Here I am talking about fractional reserve banking and money creation.

Money created out of thin air is an expression, an incorrect expression.
Banks cannot create money at will by changing numbers on ledger sheets.
Banks don't print dollars, even under a gold standard.
Even under a gold standard, the money supply increased when loans were made.

Not all loans create money. A depositor puts $100 in a checking account. His account reads $100. The bank loans out $90 of that account. The debtor's account reads $90. What does the depositor's account read? $100. If banks were simply loaning without creating money, the depositor's account would read $10 after the loan was made. Get it? The reason money is created is because it appears that no money was taken out of the depositor's account to finance the loan.

Which loans do you feel don't create money?
Where do you imagine I said banks were loaning without increasing the money supply?

 

[ShackledNation]

Which loans do you feel don't create money?
Where do you imagine I said banks were loaning without increasing the money supply?

I was in the process of editing my post while you were replying, and by the time I finished my response edit you had already finished responding to the unfinished reply of mine.

We were on at the same time lol, so usually when I edit it nobody has seen it yet. I explain the answer to your question in the edited post. And to be clear, I never made the claim that you said banks were loaning money without increasing the money supply. I am saying that time deposit financed loans do not increase the money under a 100% reserve banking system because:
1. If the money is deposited in demand accounts, it cannot be reloaned
2. If it is redeposited in a time deposit, the actual amount of money still will not change, as ownership has only transferred. (I explained this in the post talking about electronic banking methods and comparing them to the old fashioned printing of bank receipts. Now the receipts are the currency, and the receipts to dollars are electronic values representing the number of dollars you supposedly have saved, even though those dollars are not actually in the bank). Anyway, just check my posts again, sorry for that.

 

[Toddsterpatriot]

Which loans do you feel don't create money?
Where do you imagine I said banks were loaning without increasing the money supply?

I was in the process of editing my post while you were replying, and by the time I finished my response edit you had already finished responding to the unfinished reply of mine.

We were on at the same time lol, so usually when I edit it nobody has seen it yet. I explain the answer to your question in the edited post. And to be clear, I never made the claim that you said banks were loaning money without increasing the money supply. I am saying that time deposit financed loans do not increase the money under a 100% reserve banking system because:
1. If the money is deposited in demand accounts, it cannot be reloaned
2. If it is redeposited in a time deposit, the actual amount of money still will not change, as ownership has only transferred. (I explained this in the post talking about electronic banking methods and comparing them to the old fashioned printing of bank receipts. Now the receipts are the currency, and the receipts to dollars are electronic values representing the number of dollars you supposedly have saved, even though those dollars are not actually in the bank). Anyway, just check my posts again, sorry for that.

When you make a time deposit the borrower can spend the money to buy a car.
With me so far?
The car seller now has cash in his hand. Still with me?
Now the car seller goes to the bank and deposits the exact amount of your deposit, also in a time deposit.
Sounds like your deposit has resulted in a doubling of the amount of your deposit.
What's the error in my logic?

 

[ShackledNation]

Again, I reject the notion that time deposits count as money. Please tell me why time deposits should be counted as money. When you have money in a time deposit, it is simply being transferred from owner to owner. You have 100 pieces of paper that can be used as money in a time deposit. That paper is loaned to someone else, who puts it in another time deposit. But there are not magically 200 pieces of paper used as money in existence now. The same 100 pieces have only shifted owners.

LOL!
What can I tell you?
Here's M1:
Ml includes funds that are readily accessible for spending. M1 consists of: (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of depository institutions; (2) traveler's checks of nonbank issuers; (3) demand deposits; and (4) other checkable deposits (OCDs), which consist primarily of negotiable order of withdrawal (NOW) accounts at depository institutions and credit union share draft accounts. Seasonally adjusted M1 is calculated by summing currency, traveler's checks, demand deposits, and OCDs, each seasonally adjusted separately.
Here's M2:
M2 includes a broader set of financial assets held principally by households. M2 consists of M1 plus: (1) savings deposits (which include money market deposit accounts, or MMDAs); (2) small-denomination time deposits (time deposits in amounts of less than $100,000); and (3) balances in retail money market mutual funds (MMMFs). Seasonally adjusted M2 is computed by summing savings deposits, small-denomination time deposits, and retail MMMFs, each seasonally adjusted separately, and adding this result to seasonally adjusted M1.

For the millionth time, I reject counting time deposits as money. I along with many others consider M2 WRONG. I am asking you why you think time deposits should be included in the money supply. All you are doing is saying "They should be included because they are." That is not an argument, that is circular logic. So again, why do you feel time deposits should be included in the money supply?

Please explain to me how more money is created. Then kindly tell me why transferring the same money from one account to another is money creation.

If each account is a component of the money supply, then the money supply increased.[/quote]
Time deposits should not be part of the money supply. You need to explain why you think they create money if you want to argue they are part of the money supply. So far your argument is that time deposits add to the money supply because they are counted in the money supply. Circular reasoning, my friend.

Do you understand that the money supply is more than just FRNs? If you do, then you should be able to understand that under the gold standard, the money supply was more than just the number of ounces of gold. Maybe you should look up credit money?

Of course I do. I said time deposits should not be counted as money supply, and you go and say "OMG therefore you must be saying only FRNs are money!!!" Could you at least respond to what I am actually saying? All of that is completely irrelevant because I am talking about Time Deposits. You need to explain why they specifically are part of the money supply.

No, I have never gone into a store and made a purchase with a CD. So what? I've never made a purchase with my savings account either.

It's true, banks and the money supply are different than libraries and books.

Care to explain the difference in the scenario? Because money is not created through time deposits any more than it is created through loaning books. A loan is a loan. Time deposits are just plain old normal loans. Demand deposits create money because they are loans in which depositors and debtors use the same money. It would be like if I loaned you $100 (assume that is all the money I have) and still could somehow spend that $100 while you had it. In order to cover both demand deposits and their financed loans, you have to create money. For time deposits, you don't have a lender trying to use the same money as the debtor at the same time. It is a transfer, not a dual usage. This is what you don't get, and you have yet to make an argument why a transfer should count as an increase in the money supply. If your savings account is accessible on demand, you could make a purchase with it by withdrawing funds. You can never make a purchase with your time deposit until the time is up because you can't withdraw the funds, the borrow is using them.

Only unloaned time deposits should count as money, because once they are loaned out the money is no longer in the account at the bank.

Does that mean only unloaned demand deposits should count as money?

Clearly you really do not recognize the difference between time and demand deposits. If you did, my above statement would make perfect sense. I have said this a million times, but I don't think you have understood it yet. A $100 demand deposit (under fractional reserve banking) finances both a $100 loan and the spending it provides and the $100 worth of spending from the depositor at the same time. A $100 time deposit will only fund a $100 loan. The depositor cannot at the same time use the money deposited to consume.

The bank simply has a record that it owes the depositor a certain amount of money. You are confusing a transfer of ownership of the same quantity of money with the creation of more quantities of money.

The confusion isn't mine, it's every modern economist for the last few hundred years.

Not every, but most, because most have been heavily influence by Keynes. Before, fractional reserve banking was not even understood.

Apparently everyone but you.

Nope. I did not make up these ideas. You are just confused because it is the first you have heard them. These ideas have been around for over a century. Your response has simply included circular reasoning and ad hominem, as well as insinuations that I believe something that I don't (you do realize FRNs...).

It really is difficult to discuss any topic under such conditions. First and foremost, here is what you need to do: Explain how time deposits under a 100% reserve system (that refers to DEMAND deposits. 100% reserve system always refers to that) create money. And no, you can't explain saying "because they are counted in M2." Why are they counted? I am saying they should not be. Good luck.

 

[percysunshine]

The 'Fed' is a good ol'e boys club. As soon as we can get some 8 year olds in there, things will improve.

 

[Toddsterpatriot]

A $100 demand deposit (under fractional reserve banking) finances both a $100 loan and the spending it provides and the $100 worth of spending from the depositor at the same time. A $100 time deposit will only fund a $100 loan. The depositor cannot at the same time use the money deposited to consume.

Wrong, a $100 demand deposit finances a $90 loan. And if the depositor spends the $100, the bank needs to either raise another $100 in deposits, borrow a different banks excess reserves or sell their outstanding loan.

In neither case can the depositor and borrower use the funds at the same time.

Here's a different way to look at it that you may understand. If you put your money under your pillow, you're subtracting from the money supply. Your money is not available to purchase goods and increase the price level. The same thing occurs if you put the money in the bank under a 100% reserve regime.
As it stands now, 90% of your deposit is lent out from a demand account or 100% is lent out from a time deposit.
Suddenly your money is available to purchase goods and increase the price level.

Explain how time deposits under a 100% reserve system (that refers to DEMAND deposits. 100% reserve system always refers to that) create money.

Already did. It doesn't matter if the loan is from a time deposit or a demand deposit.
If it's from a gold deposit or a fiat deposit. When your deposit is lent, the borrower now has money TOO. Money which he can also use to make a time deposit. You can hold your breathe and insist that M2 doesn't count as real money if you'd like. Let me know how that works out for you.
Maybe Anna can help you?

Money Supply: The Concise Encyclopedia of Economics | Library of Economics and Liberty

 

[sparky]

http://www.youtube.com/watch?feature=player_detailpage&v=3HdmA3vPbSU

 

[editec]

Live and learn, editec. The Fed turned over about $78.4 billion to the Treasury, based on 2010 earnings. The "private owners", on the other hand, received dividends on $1.6 billion.

FRB: Press Release--Reserve Bank income and expense data and transfers to the Treasury for 2010--January 10, 2011

Ah, thanks, Kevin. Always nice to learn something new.

So for the paltry sum of $78.4 billion dollars the member banks of the FED get first shot at the new money.

Plus they get some small divident on their original investment, too.

Good deal for them, a crappy deal for the rest of us.

The name is Todd, not Kevin. Paltry sum? LOL!

Oh, sorry, Todd.

I confess I don't pay close attention to who posts, rather I try to focus on what the post says.

Please explain how they get "first shot at the new money" and why you feel it matters.

How much does the banksters pay in interest when they borrow money?

Now what do you pay when you borrow that same dollar from them?

There's the difference.

 

[sparky]

[ame=http://www.youtube.com/watch?v=ualKVFhScBM&feature=player_detailpage]YouTube - ‪Corrupt Banking System 1 of 5‬‏[/ame]

 

[sparky]

A key element of our system that is hard to get one's head around is the monetary theory of currency being viewed and dealt with as valuation, to being viewed and dealt with as debt.

 

[expat_panama]

...When signing a bank contract, you are told you can withdraw your money on demand despite the fact only 10% of it is actually on reserve. No matter how you spin it, that is not completely honest....

The definitions of the words 'spin' and 'honest' are corrupted dishonestly here and this constant straying from the facts is childlike. Let's stick to facts. One fact is you appear to have made up the 10% number. We can say 'a portion' until we have a linked reference.

...A bank run brings the fraud to light......

--and the fact that banks don't run makes continued corruption of the word 'fraud' even more silly because everyone here knows that--

...The last wave of bank runs in the US was in 1933. From here: "Since the start of FDIC insurance on January 1, 1934, no depositor has lost a single cent of insured funds as a result of a failure. " ...

...Are you saying if I decided to counterfeit US dollars in my home it would be ok so long as I loaned that money out...

Here we go again with the word "counterfeit". Then again, mangling word definitions is a long standing tradition with mindless political banter going back to Lewis Carroll's "Alice in Wonderland"--

“When I use a word,” Humpty Dumpty said, in a rather a scornful tone, “it means just what I choose it to mean—neither more nor less.”
“The question is,” said Alice, “whether you can make words mean so many different things.”
“The question is,” said Humpty Dumpty, “which is to be master that’s all.”​

The fact that it's funny makes it a lot less tedious.

 

[editec]

You said banks loan out more than their deposits. In your example, you have 2 loans totalling $1710 based on 2 deposits totalling $1900. The only "real money" is the original $1000? LOL!
I just deposited $1000 in the bank, is my deposit real? If my employer paid me the $1000 from a loan, is my deposit now fake?

Well, yes. The other money has been created out of thin air. Welcome to modern banking. The economy will treat than newly created money just like all other money. But because the money supply has increased, prices will increase. We allow the banks to counterfeit money so they can have larger profits. But those profits are ultimately paid for by a devalued dollar. Again, it is easier to understand when you look at a fixed currency example. When the currency is the receipt, it becomes much harder to understand, but money is still created that exceeds the initial deposit.

Banks don't create money out of thin air. Banks lend out a portion of their deposits.

Wrong. They lend MULTIPLES of their capitalization. For example if their capitalization is 10% and the miltiple they are allowed by law to lend is 10 times that amount then when they lend our that $90, they are creating it based on the borrowers' promise to pay.

That's why its called the FRACTAL BANKING system.

No deposits, no loans, no money creation.

I can see from the above that you are truly confused by this issue.

 

[Toddsterpatriot]

Ah, thanks, Kevin. Always nice to learn something new.

So for the paltry sum of $78.4 billion dollars the member banks of the FED get first shot at the new money.

Plus they get some small divident on their original investment, too.

Good deal for them, a crappy deal for the rest of us.

The name is Todd, not Kevin. Paltry sum? LOL!

Oh, sorry, Todd.

I confess I don't pay close attention to who posts, rather I try to focus on what the post says.

Please explain how they get "first shot at the new money" and why you feel it matters.

How much does the banksters pay in interest when they borrow money?

Now what do you pay when you borrow that same dollar from them?

There's the difference.

How much do they pay when they borrow from the Fed? Why does that matter, if you're talking about the creation of new money?
Is 2% still the lions share?

 

[Toddsterpatriot]

YouTube - ‪Corrupt Banking System 1 of 5‬‏

Thanks for the links to the videos.
Unfortunately, when discussing modern banking, they're full of errors.