[MrBill]

$this->bbcode_second_pass_quote('ashurbanipal', '')$this->bbcode_second_pass_quote('', 'S')o you asked a banker? There are bankers of many stripes each with their own individual specialization. I would seriously like to talk to any banker who pretends to understand all there is to know about finance, capital markets, economics and other related topics. Talk to any two bankers and you're likely to have two different points of view. That is why they may both look at the same data and one decides to buy and one to sell.

[azreal60]

Well, you do have me with the bankers being different comment. The banker in question is the VP of the local credit union, but he stood by the comment he made.

I do have to say my point wasn't that there wasn't bias in the person you where critising. There was, it was very easy to read in the last paragraph of his statement. The point i wanted to make was in the rest of his statement what he had to say about fractional reserve banking was virtually identical to what you said. And you too displayed a bias regaurding the system. It was obvious in your confidence and how you described it as sophisticated and having many systems of back ups. (not an exact quote, but damn, i'm sick and can barely see this screen)

You sir probably have a whole wealth of experence in the banking industry. When you do something like that, yes, you know alot more than the average bear. But you also start to Assume that your automatically right when it comes to things about this topic. I know. I do the same thing about a few topics because i've done them before and have a wealth of experience in them. What i don't wanna see is you losing someones point just because you don't like their bias.

Because i don't like your bias, but you raise excellent points. Gego also raised a excellent point, you just perhaps didn't like his conclusion because it has an image of the financial system as corrupting by nature. I can understand your defensiveness as it's obvious you work there and your like " i'm not corrupt, so of course he's wrong". The problem is he was refering to the whole system at large, and he also was probably cranking in the idea of resource depletion at a large scale.

On this point, I agree with him. Our banking system as sophisticated as it is, is very vulnerable if many major variables disrupt those "run on the bank" reserve calculations. I'm not just talking about peak oil, or inflation, or what china is doing, or a bunch of other things. I'm talking about their effect all at once if we ignore them. The markets aren't invincible, that's all i'm saying.

But likewise, it's always nice to hear your point of view, because you tend to include about 40 things i didn't know. I am abysmal about some issues of finance simply because they never really interested me. But i'll try to play catch up as i can just because it does seem to have alot to do about when peak oil will hit. And that Does interest me.

[MrBill]

Azreal60, I trade emerging market debt. I have seen too many countries blow up to think the system is immune from disaster. Before every default I hear the mantra, they're too big to fail, but guess what they do (Russia, Argentina, Asian Crisis, Tequilla Crisis, etc.). And there have been a lot of near misses to, where afterwards you wonder how they swerved to miss the oncoming bus and by doing so came dangerously close to crashing through the barrier and driving over the cliff (Brazil, Turkey and others).

Basically there are those too close to the trees to see the forest and those who can see the big picture, but are powerless to stop the events from playing out once they are in motion.

So, sue me if sometimes my defense of the system clashes with your views on resource depletion and peak oil. Peak oil the geological event will play out, but if has less to do with finance and markets than, well, demand.

Quite often people say, woe is us, we're screwed because we are over indepted and cannot pay our bills. I say, no problem, raise interest rates, increse personal savings, raise taxes, cut spending, eliminate the deficit and reduce the debt. And problem solved. Then they say, you have no idea? If we did that the value of homes will go down, there will be a recession, people may lose their jobs and the working poor will suffer the most. Well, yes, you didn't ask for a painless solution. I don't have one either

If you ever think I am talking bullshit, prove me wrong. I would never hold that against anyone

[MacG]

$this->bbcode_second_pass_quote('falser', 'I') just have to comment that, in fact, yes people can pretend they have 100 times the money they have. That's how they buy houses these days with 105% mortgages. Heck, you can have a net worth in the negative, and buy a half million dollar house. I guess the Fed turned every homeowner into a bank.

[MacG]

$this->bbcode_second_pass_quote('MrBill', '&')lt;snip>Therefore, I think it is very dangerous to read a few books or articles or get your information 2nd and 3rd hand and then pass it along as insight or the absolute truth.<snip>

[azreal60]

No, you don't seem to be Bsing to me. That was never the issue. I just wanted to make sure you wheren't "not seeing the forest for the trees", to quote you. My post while i may have started before you, you posted first. See, what you said there i have no issue with.

Like you, i have been dealing with alot of people recently who see peak oil as no big deal. Forgive me for making uncharitable assumptions as to weither you could accept outside points of view. And your correct in saying their are things we can do to help the problem, but all of them will be very painful indeed.

Arrg, ok, i'm losing my train of thought to quickly. I guess i really am sick. Back to sleep for me.

[CrudeAwakening]

$this->bbcode_second_pass_quote('', 'T')herefore your example that banks can just create money out of thin air is not even close to reality.

[nero]

$this->bbcode_second_pass_quote('CrudeAwakening', '
')$this->bbcode_second_pass_quote('', 'T')herefore your example that banks can just create money out of thin air is not even close to reality.

[Free]

The problem is that the term "money" isn't clearly defined even among the "professionals", and that, although theoretically credit is not money (or at least shouldn't be), it is often called money and understood as money.

$this->bbcode_second_pass_quote('', '
')What Do People Believe Is Money?

This question is not difficult to answer for the common man. Money is, what he has in his wallet or at home in a drawer: coins and bank notes. On the market there are hardly any misunderstandings either: A bill is paid with money or with a transfer of deposits from an account. In practical life money is a neutral anonymous medium of exchange that circulates in economy.

With this idea of money students of economy get into difficulties after a few semesters. They are taught to count positive accounts in the banks for money, too. They talk about savings accounts, term accounts and giro accounts and comprise them within the term »book-money«. And this notion of money gets extended farther and farther. The former banker von Bethmann, whose critical analysis usually hits the target, even ›creates‹ money with every unpaid bill which will be ›destroyed‹ after the bill had been paid. »Basically nobody knows any more, where money ends«, an official of the National bank said in facing this situation. Note, these are the words of an official of the institution which is responsible for the amount of money in circulation.

[Free]

$this->bbcode_second_pass_quote('dhfenton', 'T')he only thing that I would add to the discussion is that the multiplier effect creates new capital for spending at the same time it creates new liabilites. The net of the multiplier effect is also the net of liability.

[CrudeAwakening]

$this->bbcode_second_pass_quote('nero', '')$this->bbcode_second_pass_quote('CrudeAwakening', '
')$this->bbcode_second_pass_quote('', 'T')herefore your example that banks can just create money out of thin air is not even close to reality.

[lakeweb]

$this->bbcode_second_pass_quote('rolypolyman', 'A')nyhow I am trying to understand the money multiplier, which makes no sense....

[nero]

$this->bbcode_second_pass_quote('', '
')It's more of a semantic quibble, really, but your comment suggests that it is the original deposit which is loaned out, when really the original deposit is left untouched and credit is advanced against that amount. e.g. a deposit of $1000 allows the bank to create, say, $900 of credit, leaving the original deposit balance unchanged.

[MrBill]

RE Read Carefully

$this->bbcode_second_pass_quote('', 'R')ead carefully....
How do open market purchases add to bank reserves and deposits? Suppose
the Federal Reserve System, through its trading desk at the Federal
Reserve Bank of New York, buys $10,000 of Treasury bills from a dealer
in U. S. government securities.(3) In today's world of computerized
financial transactions, the Federal Reserve Bank pays for the
securities with an "telectronic" check drawn on itself.(4) Via its
"Fedwire" transfer network, the Federal Reserve notifies the dealer's
designated bank (Bank A) that payment for the securities should be
credited to (deposited in) the dealer's account at Bank A. At the same
time, Bank A's reserve account at the Federal Reserve is credited for
the amount of the securities purchase. The Federal Reserve System has
added $10,000 of securities to its assets, which it has paid for, in
effect, by creating a liability on itself in the form of bank reserve
balances. These reserves on Bank A's books are matched by $10,000 of
the dealer's deposits that did not exist before.

[lakeweb]

$this->bbcode_second_pass_quote('MrBill', '
')Now read carefully....

If the FED conducted repurchase operations whereby its bought back its own debt then by definition they would be buying back securities that they issued in the first place via primary dealers. The primary dealers would have paid the FED in full at time of purchase.

Next?

[bobbyald]

Excellent link LakeWeb.

It appears that my basic explaination for a newbie on page 1 that Mr Bill didn't understand was actually correct.

[lakeweb]

$this->bbcode_second_pass_quote('bobbyald', 'E')xcellent link LakeWeb.

It appears that my basic explaination for a newbie on page 1 that Mr Bill didn't understand was actually correct.

[gego]

$this->bbcode_second_pass_quote('bobbyald', 'E')xcellent link LakeWeb.

It appears that my basic explaination for a newbie on page 1 that Mr Bill didn't understand was actually correct.

[nero]

$this->bbcode_second_pass_quote('', ' ')This is a hugh scam; pure and simple one of the ways that the power elite in DC shift wealth out of the pocket of the average man into the pockes of those granted this privelege to create new money.

[MrBill]

$this->bbcode_second_pass_quote('nero', '')$this->bbcode_second_pass_quote('', ' ')This is a hugh scam; pure and simple one of the ways that the power elite in DC shift wealth out of the pocket of the average man into the pockes of those granted this privelege to create new money.