PeakOil is You
Neat little video about the monetary system
Re: Neat little video about the monetary system
by firestarter » Thu 22 Feb 2007, 19:39:26
$this->bbcode_second_pass_quote('MonteQuest', '')$this->bbcode_second_pass_quote('Bas', 't')he fed sells bonds to extract high powered money from the market. And why is it then, MQ, that so many people on this thread think that a bank with a 100$ in deposits can create a 900$ loan and a $8100 loan out of that?
Perhaps they missed the part where the difference between loans from deposits and loans based upon reserves was explained?
As it clearly was.
Yes, clearly, at between the fourteen through sixteen minute point of the video.
I found the video to be an exceptionally well done and very understandable presentation. Wouldn't mind seeing it permanently linked on the home page here.
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firestarter - Heavy Crude
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Re: Neat little video about the monetary system
by MacG » Thu 22 Feb 2007, 21:05:15
$this->bbcode_second_pass_quote('bshirt', 'H')owever, how and where did they successfully pull the wool over the eyes of the majority of the people?
Sorry, I was unclear. The way I wrote it it look like I think it was a calculated and intentional thing. Not so. Sorry again.
This will be a long and complex one. Sorry a third time.
Enter memetics. Memes are the stuff that make us human. We have a unique capability to copy behavior. The ability to watch and copy a successful behavior gives absolutely breathtaking advantages over those who are stuck with pure genetic evolution. A successful mutation can take hundreds of generations to spread, while a successful behavior can spread itself in just weeks. If it can be watched and copied at will.
Anyone who is interested should read Susan Blackmore's "The Meme Machine". Some 80-100 000 years ago, the memes ended up in the drivers seat, and started to push the genes ahead of them.
Memetics is really simple: We are hardwired to look at successful people, and to try to copy their behavior. There is simply no escape. It's in our genes nowadays. Those who failed to do this are no longer in the gene pool. As simple as a skull.
When it comes to "successful behavior", there is no escape from Charles "Big Chuck" Darwin. Whatever works works, no matter what we think about it. I would encourage everyone to read Machiavelli's "The Prince". Machiavelli was a diplomat, a shy and quiet guy who worked for the powerful guys in Italy in the 1400's. He documented what he had seen as working and non-working behavior, and among the working stuff we find: "The prince should NEVER reveal his true intentions, but ALWAYS disclose them and give misleading explanations.
Please note that I don't attach any values to this observation. It's an OBSERVATION, not a moral statement.
Apparently it's successful to hide your true intentions, but the people who observe you and try to copy your behavior will only see the image you want to give, not your true intentions! And the observers will believe that it's a virtue to not care about factual things!
When the rich and powerful do everything they can to pretend that "real stuff" like stockpiles of salted meat, weapons and allies are "boring", privately they don't bother about anything BUT salted meat, weapons and allies. Simple people watch their behavior and try to copy it, but they copy what they SEE, not the real stuff.
Sorry if this seem like a long and irrational posting, but it took me a lifetime to gather the understanding. I don't expect to be able to express it in a few lines on a bulletin board.
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MacG - Heavy Crude
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Re: Neat little video about the monetary system
by mmasters » Thu 22 Feb 2007, 21:09:53
Just watched it too, not bad.
IMO there's a better video that just came out called "Fiat Empire"
IMO there's a better video that just came out called "Fiat Empire"
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mmasters - Intermediate Crude
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Re: Neat little video about the monetary system
by MonteQuest » Fri 23 Feb 2007, 01:27:35
$this->bbcode_second_pass_quote('MrBill', '')$this->bbcode_second_pass_quote('Yvan', '')$this->bbcode_second_pass_quote('joewp', 'Y')ep, they "create" money out of nothing. You deposit $100 then the bank loans out $900 based on the reserve you've given them, and they count the loan paper as an "asset" to offset the "liabilities" of those new dollars in demand deposit accounts they just created.
This is not true and it is a shame that this movie leads people to believe that a bank can loan more than it has as deposit.
If you deposit $100 then the bank can only lend $100*(1-RR). So if the reserve requirement is 10% your bank can only lend $90!
The multiplier effect is only obtained through the successive deposits that this loan generates.
A bank NEVER loans more money than it has as deposit. Otherwise liabilities and assets would not balance each other.
Correct and that is what MonteQuest and others refuse to get! And it is so simple too?
The video does not portray this as you state. Watch it again.
Banks that have reserves on deposit with the Federal Reserve may create money based upon this reserve at a ratio of 9 to 1. They may multiply that reserve by a factor of 9.
Deposits made to the bank by customers may be loaned out based upon the same reserve requirement, but not multiplied by a factor of 9, but divided by a factor of 9. Thus, it plays out as quoted above:
$this->bbcode_second_pass_quote('', 'I')f you deposit $100 then the bank can only lend $100*(1-RR). So if the reserve requirement is 10% your bank can only lend $90! The multiplier effect is only obtained through the successive deposits that this loan generates.
As the video says, even some front-line banking people are in the dark.
