Where Does Your Money Come From (cont'd)

A process in which our job is simply to swipe a card and walk out with a tv?

 

It is authorized in our federal Constitution, if it is necessary and proper to promoting and providing for the general welfare and common defense.

 

Lie #1: According to his crooked theory, banks do not need reserves/deposits to make loans. Well then how could the Fed figure out the mandatory reserve ratio requirement for banks? A reserve ratio requirement for non-reserve banking?

Lie # 2: Fractional reserve banking system, fundamentally, banks are allowed to make loans by multiplying the deposits. If there is no reserves/deposits, there would be no loans to be made. You can't multiply anything with zero can you? Still don't believe me? Let's refresh our kindergarden math skill shall we.... I'm now multiplying $1,000,000,000 by zero .........it's equal zero At this point, I can only assume that he does not even understand what does "FRACTION" mean...

Lie #3: In fractional reserve banking system, checking/saving deposits are major lending facility for banks. According to his crooked theory, if banks do not use checking/saving deposit to make loans, ultimately, that would be called FULL RESERVE banking system which is the system back in old days. Banks were simply a safeguard for depositors funds and the depositors actually had to pay banks to keep their money safe and secure.

In fact, given a current extremely low loan demands, major banks start to charge a fee on checking accounts because they can't utilize demand deposits for profits as much as they used to.

Lie #4: Using his crooked theory, if banks do not use checking/saving deposits as a lending facility, then why do checking/saving deposits have to be insured by FDIC? Currently it's $250K/$500K for checking/saving respectively...

Where is the risk that associates with checking/saving deposits if banks simply sitting on the fund?

Lie #5: This is a classic desperate lying attempt to justify his crooked position, what an epic failure.

And lastly, lie #6:

This is where I laughed so hard

Keep in mind that these statements came from our resident self-proclaimed Modern Monetary Theorist.

Thank you for your Modern Fantasy Monetary Cluelessness using exclusively by Alaskan residents presentation akphidelt2007.

If I have to grade this presentation, it would be triple F

Thanks for the laughs. LMAO!!! I can't stop laughing.........

 

What's "your job" doesn't tell the whole story.

 

It is absolutely not authorized in the Constitution. It is absolutely not necessary and proper to promoting and providing for the general welfare and common defense.

 

Every single one of these points you make has been proven to be false to him by myself and others in the thread. Yet he continues to press his lies that there is no difference between swiping a debit card and paying in cash.

 

Am I beating a dead horse you mean?

 

How do you account for any market for derivatives supplied for any demand by the private sector?

Letters of credit can be very convenient.

How does your point of view account for any speculation and time value.

 

Why do you believe it is not more convenient and practical to employ a central than to not employ a central bank for the United States; when engaging in public sector intervention in private sector sector markets and creating public sector means of production?

Our federal Congress can create a central bank for the US and delegate sufficient fiscal authority for it to carry out its responsibilities.

 

Letters of credit come from private banks, in that sense, banks do have funds available to fulfill their promises. Not sure that answer your question.

My opinion on derivative trading, credit default swaps, interest rate swaps... if they're done right, they could add "some" value to the investments. Right now, they're nothing but gambling tools for Wall Street casino. Paper assets in general adds zero value to a country productivity and economic growth.

I rather have banking system back in the old days with prudent underwriting approach than this rigged casino. Banks are making tons of money on speculative financial products while leveraging themselves to death, when they fail, there is uncle Sam and Bernanke available to bail them out at the expense of taxpayers and value of the dollar. What kind of financial system is that?

 

Why does it seem like the private sector doesn't really know what to do with easy money (policies).

 

Derivatives also utilize resources that may otherwise not be in circulation, such as surplus capital that could generate a better return on a more active investment.

 

There are not any easy money as we speak. Banks have tightening up lending practices since the housing collapse. Businesses/individuals who is having a steady positive cashlows/incomes still have access to credit market. Not many businesses and individuals meet that criteria nowadays, effectively, all credits available to them were dried up or being cutoff.

 

Are you claiming that an artificial boom created through arbitrary command economics as a form of shell game with Statism, finally went bust. How many persons would have been more eligible for credit without that "shell game" to begin with?

Adding several trillion dollars to our economy is what I am referring to.

 

In the last 40 yrs, US economy has been artificially inflated with easy credit, the growth has been largely unnatural and unsustainable. Many jobs created during housing boom were by products of the bubble such as homebuilders, carpenters, loan clerks, mortgages processors....etc...those jobs are gone forever, well they should not exist if there was not a housing bubble in the first place.

If you look at the trend in the last 40 yrs, after inflation adjustment, consumers real disposable income has been steadily declined. They earn less, save less, work less hours. They're barely keeping up with inflation, so they have to go into debts to maintain their standard of living. At this point, I think consumers debts have hit the ceiling, they're already saturated in debts, they're barely keeping up with current debts let alone taking out new ones.

As of Dec, there is $53 trillion outstanding debts which include public, businesses, individuals debts, a 349% of the GDP.

Since 1970, on average, 14% increase in public debt is equivalent to only 1% growth in GDP. There is no country can sustain that massive disproportion debt growth economy.

Whether we like it or not, the consumerist debt growth economy is coming to an end. Keynesian theory is dead, it's waiting to be buried.

 

Every single one of those points is obvious when you understand the banking system. There isn't a difference between swiping a debit card and paying with cash. Both of them you are transferring over your money to the recipient and walking out with a good or a service.

The fact you guys don't understand how banks create loans and how the money multiplier is a myth, is not my problem. I'm just here to educate and unfortunately you guys don't want to be educated.

 

That's a good one.

 

You guys are thinking of the banking system as it were 200 years ago. Banks don't need you to deposit money in them in order to make loans. They don't use your savings or your money to make loans. They create a loan out of thin air by simply creating a deposit (aka a liability) and an asset (aka the loan).

None of this process involves your money.

But I will explain to you why banks do try to attract your money.

1) It is cheap liquidity. The reserves they get from deposits do not come with any interest.

2) Building relationships. If you have money in a bank you are more than likely to take out a loan with that bank, which is how banks make their money.

 

Why do checking/saving deposits have to be insured by FDIC when banks simply sit on it? Where are the risks?

 

AKA ZIMBABWE

 

There's no need for centralized control over the money supply. It doesn't work. There's no authority for it.

 

Which you don't.

Fabrication; previously disproven.

Fabrication; previously disproven.

The money multiplier is a "myth"? Now you're just trolling.

Substitute the word "educate" with the word "troll" and I'd agree.

 

The Fed didn't exist 200 years ago. Trolling again, akphidelt?

Correct. They need reserves in order to make loans.

Wrong. When you deposit into a bank (liability), the money you put in goes into their reserves, which they use as a base to manufacture more loans (assets).
If they make a loan using the money you deposited, the process most certainly does involve your money.

Off-topic babbling. Not even worth addressing.

 

Now you're the one who is beating the dead horse.

 

You may be resorting to a fallacy of false cause regarding Keynesian theory. It is not the theory that is bad, but the public policies enacted which are not very efficacious. Compare and contrast our current nationalized and socialized public policies with those which enabled a Space Race.