[MrBill]

$this->bbcode_second_pass_quote('Yvan', 'M')r. Bill, I think the math is slightly wrong. The system is based on an infinite geometric series. So with 5% reserve requirement, a $1000 initial deposit allows $19950 in loans. 10% allows $9900, etc...

[MacG]

$this->bbcode_second_pass_quote('Yvan', 'W')hich could not happen under your hypothesis that banks can create as much money as they want out of thin air.

[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.

[MrBill]

$this->bbcode_second_pass_quote('joewp', '
')
Boy, you guys are thick. Read again what the Fed says:
$this->bbcode_second_pass_quote('', 'B')y making loans commercial banks increase their liabilities
(demand deposits ) and assets (loans ) , and in a
sense “create” money...

[MrBill]

MMASTERS several times you said that DEBT = ASSETS and therefore money created on the back of debt is created out of thin air.

That is paraphrasing, so if I got that wrong let me know? I do not want to misrepresent the facts.

In fact

DEBT loaned out = Asset based on the promise to repay

DEBT taken on = Liability based on the obligation to repay

sloppy languaging leads to confusion about what we are talking about here.

BUT we are in agreement that the quelle of all that debt that is created is on the back of government debt.

So given we said the money multiplier effect of $100 was approximately $1000 using 10% reserves, and with no slippage, then one can only attempt to do the math of what happens when the Federal government runs a large budget deficit year after year, which is then exacerbated by a trade deficit paid for in US dollars as well.

A combined current account of close to $1 trillion dollars. Which by itself is made worse by China's ability to sterlize US dollars, re-invest them in America, or at least in US dollar assets, and then create yuan in their place for use within the Chinese economy.

The problem is clearly too much money supply creation from government debt and not as many here are hung-up about commercial banks creating credit.

Because at the end of the day SAVINGS = INVESTMENT and a current account SURPLUS = DEFICIT in someone else's current account. And one country's trade DEFICIT = SURPLUS of another. It has to be. Even the US government has to find someone to buy its DEBT. Which represent its liabilities not its assets.

[MacG]

$this->bbcode_second_pass_quote('MrBill', 'E')ven the US government has to find someone to buy its DEBT. Which represent its liabilities not its assets.

[MrBill]

$this->bbcode_second_pass_quote('MacG', '')$this->bbcode_second_pass_quote('MrBill', 'E')ven the US government has to find someone to buy its DEBT. Which represent its liabilities not its assets.

[MacG]

$this->bbcode_second_pass_quote('MrBill', ' ')Call it the Seven Steps to Financial Hell if you will.

[MrBill]

$this->bbcode_second_pass_quote('MacG', '')$this->bbcode_second_pass_quote('MrBill', ' ')Call it the Seven Steps to Financial Hell if you will.

[mmasters]

$this->bbcode_second_pass_quote('MrBill', 'M')MASTERS several times you said that DEBT = ASSETS and therefore money created on the back of debt is created out of thin air.

[mmasters]

$this->bbcode_second_pass_quote('MrBill', '
')Well, what mere mortals sometimes have a hard time to understand is that the whole system whether it is based on gold or debt is still just a matter of trust.

[MrBill]

$this->bbcode_second_pass_quote('mmasters', '')$this->bbcode_second_pass_quote('MrBill', '
')Well, what mere mortals sometimes have a hard time to understand is that the whole system whether it is based on gold or debt is still just a matter of trust.

[MacG]

$this->bbcode_second_pass_quote('mmasters', 'T')his whole system with monetization of debt, adjustable reserve ratios and so forth is essentially just one big printing press because there is nothing behind the created money in terms of tangible assets.

[joewp]

$this->bbcode_second_pass_quote('Yvan', '[')
$this->bbcode_second_pass_quote('', 'A')ctually, it's worse than that, since the same piece says that reserve requirements are virtually extinct, there's nothing to prevent banks from making as many loans as they can.

[mmasters]

$this->bbcode_second_pass_quote('MacG', '')$this->bbcode_second_pass_quote('mmasters', 'T')his whole system with monetization of debt, adjustable reserve ratios and so forth is essentially just one big printing press because there is nothing behind the created money in terms of tangible assets.

[mmasters]

$this->bbcode_second_pass_quote('MrBill', '')$this->bbcode_second_pass_quote('mmasters', '')$this->bbcode_second_pass_quote('MrBill', '
')Well, what mere mortals sometimes have a hard time to understand is that the whole system whether it is based on gold or debt is still just a matter of trust.

[MacG]

$this->bbcode_second_pass_quote('mmasters', '
')Sure collateral is claimed in exchange for the loan money in case of default, but there is no collateral (or tangible asset) behind the money itself.

[bshirt]

$this->bbcode_second_pass_quote('MacG', '
')Banking is largely a parasitic activity, and thus there is a need for a host. The banks cant run companies and they don't want to be landlords. They would not gain from a collapse, since they would lose the host.

The only thing the people behind the banks had to do to gain their "rights" was to pull wool over the eyes of the majority of the people, and then ally themselves with the guys with the guns and the soldiers. That's how it got started in 1694.

[joewp]

$this->bbcode_second_pass_quote('mmasters', '
')Here's Jefferson again:

"If the American people ever allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their property until their children will wake up homeless on the continent their fathers conquered."

[mmasters]

$this->bbcode_second_pass_quote('MacG', '
')Banking is largely a parasitic activity, and thus there is a need for a host. The banks cant run companies and they don't want to be landlords. They would not gain from a collapse, since they would lose the host.