Where Does Your Money Come From (cont'd)

I see you ran away and hid when I concluded that you'd have no problem providing me with a major economist who says that the economy is not in recession or depression.

Not money that is spendable outside of the banks. The "money" banks create are deposits that are not spendable. This has been proven to you countless times in the other thread. Only reserves/cash are spendable. No cash/reserves = no transaction.

That's not the only difference at all. Government is not as efficient at allocating resources as the private sector is. What sort of public sector job are we referring to? Jobs involved in sustaining unnecessary wars? When govt spends money on these things, it allocates resources from the private sector that would have been used otherwise on more efficient things that the market was calling for. It creates an unnatural flow of capital into the military industrial complex than what have occured otherwise.

The government creates absolutely no money. This has been proven to you countless times by Iriemon and myself. Depsite being educated, you are still demonstrating a gross misunderstanding of how money is created and what the different types of money are.

Please explain how banks can perform transactions if they don't have any reserves.
Please explain how the only difference between reserves and cash is not that reserves are cash that exist within a bank vault, and cash exists outside of the bank vault.

Repetetive. We established this weeks ago. There is absolutely no need to keep repeating this point.

Here is where you are wrong. Deposits are only spendable if there are reserves to back them. No reserves = no transaction. If deposits were always spendable, then there would be no need for reserves. There would be no need for the FDIC. Please think about why your position makes no sense for these reasons.

You conveniently ignored their list of major economists who are in a Depression. Your only argument is essentially that they are a blog, therefore they are uncredible. This is not a valid argument, but rather is an ad hominem logical flaw. Another reason you don't grasp the concept of basic logical debate. You are retaliating this way because your worldview has been shattered. You ran away and hid when I concluded that you'd have no problem providing me with a major economist who says that the economy is not in recession or depression. I'll take the combination of these things as an admission of your defeat.

What causes them to want to save more?

Keep telling yourself that. Your logical flaws prove otherwise.

No. It was the only one I thought of off the top of my head. Bear Stearns, Washington Mututal, and Wachovia are a few other major ones that have happened in the last few years. The Fed didn't do a very good job preventing the runs.

I hope you're right. The evidence suggests otherwise.

Making an economic decision to approve others' economic decisions is an economic decision.

Deposits != Cash. You have admitted this in the other thread and yet you continue to backtrack and profess things which you know to not be true. Why?

 

Define "major" economists. The only economist you know is Krugman and some Austrian's lol. I have plenty of economist that I read and listen to that are academic economists who understand that we are not in a depression. Krugman just made that crap up to attract readers. We are not in a depression, you can't just make up what you think a depression is. Liar!!!

This has NEVER been proven to me. It is actually quite silly! When the bank credits an account with $1,000 they now have $1,000 more to spend. It doesn't matter if it's a claim on reserves or whatever you want to call it. They have $1,000 in money that they can now purchase real goods and services with. The fact you can't comprehend this is crazy.

Says who? You?? Yea, that's what I thought. The Govt is much more efficient at allocating resources to things that benefit America rather than purchasing iPhones and Girls Gone Wild DVD's.

They don't create the money themselves because they aren't a bank. But their decisions lead to the creation of money. Which has been proven a million times.

When you withdraw cash from a bank it is no longer a reserve. It is cash in the hands of the public. That is why it is included in every money supply along with deposits. When you deposit the money back in the bank it becomes a reserve for the bank and you now have a deposit. The amount of money the public has is unchanged. Only the amount of reserves the banks have.

So they are spendable. Thanks for clarifying what I have been telling you a million times.

You can't just say we are in a depression lol. There is an actual calculation used to determine depressions. You are simply making up your own definition now.

They don't have as much money as they thought.

Sure it is, lol!

You continue to lie. I have established over and over again the relationship between deposits and cash. Now you are just getting purposely annoying.

 

Once again, you are arguing about this like you are a bank. I'm sitting right here about to purchase something from ebay with my debit card. I type in my debit cards numbers and I click Confirm PAYMENT. This recipient of this payment receives it immediately and I get an automated Feedback return.

I just PURCHASED something with my debit card. I don't care what the bank is doing in the background. All I know is I have less money in my account and I have a product coming my way. I am transferring MY money to the recipient. I am not transferring reserves, I am not transferring cash. I am transferring little electronic bytes.

At the end of the day the banks reconciles all it's transactions and deposits and manages their reserve position then. There is a week or two lag between how much reserves a bank needs to satisfy their requirement with the Fed based on how many transactional deposits they have.

When I just made this payment online there was no transfer of reserves from one bank to another. Simply money left my account and went in to another account. All the other stuff you are talking about is what banks do in the background.

 

Why does it seem that Dr. Rightioues is trying to sell us some medicinal snake oil?.

Can he explain why we would be better off without the functionality of a central bank for the United States?

In my opinion, any gains from derivative markets could be considered a form of "natural" right for artificial persons.

 

Any economist with a doctorate.

Baseless claim. lol. lol. lol.

Since you're making this claim, I'm sure you'll have no problem finding at least one major economist that claims that we are not in a depression. But we've already been over this, and you still have not provided me with any names. It's safe to assume at this point that you're just talking out of your ass.

Since you're making such an outrageous claim, I assume you'll have no problems backing it up with evidence.

Unfortunately for you, every major economist disagrees with you. You are not in a very good position right now.

I've done no such thing. Liar!!!

The bank can create $1,000 in deposit money, but only if they have at least $100 in reserves to back it. If they have less than $1000 in reserves and I try to make a transaction of more than $100, the transaction will be declined because the bank will have insufficient reserves. Insufficient reserves = no transaction. The fact that you can't comprehend this is crazy.

It's basic logic. There is no profit motive with government, therefore it has no incentive to be efficient at allocation of resources.

Allocating resources for things that "benefit America"? Like what? Illegal wars? Corporate Bailouts? Corruption?

It's good to see you are admitting that you were completely wrong about your claim that "the govt creates money".

This point has never once, in the "million times" that it's been "proven", been in dispute. Illogical of you to bring this up. Or perhaps it's just another strawman of yours.

This does not explain your dubious claim that there is a difference between reserves and cash (aside from cash existing inside and outside of banks, and reserves existing only inside banks).
This does not explain your dubious claim that banks can perform transactions if they don't have reserves.

Only if the bank has the reserves. If the bank doesn't have any reserves, then the deposits are not spendable. Your theory is that deposits are always spendable, regardless of the reserves the bank has. This viwpoint is incorrect and flawed.

I'm simply repeating the conclusions based upon the scientific, logical, and mathematical analyses of every major economist.

What "calculation" are you referring to?

Why don't they have as much money as they thought?

It's good to see you are admitting that you were completely wrong about your claim that Obama "doesn't make economic decisions."

Your description of the relationship between deposits and cash is incorrect. There are more differences between cash and deposits aside from their physical attributes. Proven countless times.

 

Sure, that's because your bank approved the transaction because it has sufficient reserves to transfer to the recipient bank.

You did no such thing. You used your debit card to authorize the bank to perform the transaction between your deposit account and the recipient's account. Since the bank approved the transaction, that means you purchased something with money. You didn't give the seller your debit card as a form of payment.

Your individual perspective on the situation has absolutely no relevence to what is actually happening.

You are transferring nothing. The bank is transferring your money to the recipient. You have only requested the transfer.

This is 100% correct.

You are transferring nothing. See above.

Sure. It's all a matter of book-keeping. If the bank wasn't confident that it is able to balance its books (regarding reserves) at the end of the day, the transaction would not be authorized.

Source please.

This is only true if you have the same bank as the recipient. Otherwise, it's 100% false.

Which is why what I'm saying is 100% accurate. Your personal perspective on the situation is absolutely irrelevent to what is actually happening behind the scenes.

 

Read this thread. In Part 1 there is a lengthy debate between Iriemon and myself about free banking vs. central banking.

 

He's an Austrian. They don't believe in logic. They simply just "believe". It's more like a religion than an economic theory.

 

Random, inaccurate, misleading, ad hominem attack. Stick to the facts please. The ones that you have been incapable of disproving so far.

 

So let me get this straight. Your theory is there is nothing in my account, it's not spendable, and I do not transfer anything when I use my debit card?

So then explain what they mean by this...

If money is viewed simply as a tool used to facilitate transactions, only those media that are readily accepted in exchange for goods, services, and other assets need to be considered. Many things - from stones to baseball cards - have served this monetary function through the ages. Today, in the United States, money used in transactions is mainly of three kinds - currency (paper money and coins in the pockets and purses of the public); demand deposits (non-interest bearing checking accounts in banks); and other checkable deposits, such as negotiable order of withdrawal (NOW) accounts, at all depository institutions, including commercial and savings banks, savings and loan associations, and credit unions.

The actual process of money creation takes place primarily in banks.(1) As noted earlier, checkable liabilities of banks are money. These liabilities are customers' accounts. They increase when customers deposit currency and checks and when the proceeds of loans made by the banks are credited to borrowers' accounts.

Transaction deposits are the modern counterpart of bank notes. It was a small step from printing notes to making book entries crediting deposits of borrowers, which the borrowers in turn could "spend" by writing checks, thereby "printing" their own money.

If my deposit account doesn't really have anything in it, then how can I use it to purchase real goods and services?

 

Well the scenario is very unlikely. Of all the wars we have been in, I struggle to think of one that could not have easily been avoided or was necessarily for our defense.

 

Here's an even better example. Yesterday I went to deposit a check in my bank account. I gave them the check, they entered the digits in to the computer. They put the check with all the other checks until they send it to the clearinghouse. I then took my debit card to the store to purchase something with the money I just deposited. So if the check hasn't cleared yet, then how does the bank put money in to my account if it hasn't received the reserves from the bank the check originated from?

 

That argument doesn't work with me because a central bank can be considered necessary and proper to promoting and providing for the general welfare and common defense.

 

This is a blatant lie. Banks do not credit full amount of the check until your check is cleared. Most banks credit $100 to your checking regardless amount of the check, then the rest of the check when it is cleared.

All electronic deposits are cleared prior day, so when you receive electronic deposit, you receive a full amount.

Got caught lying to your teeth again aki? This is getting very embarrassing.

 

Our economy is way to sophisticated for Dr. Righteous and Ron Paul. With out a central bank we would drive ourselves back to the 18th century. They do not understand that. They think life will be just fine by letting people do whatever they want. Gosh, have they ever read a history book?

 

What book do you read? Can you figure out how to fill out 1040EZ yourself yet? If you need help, just let me know.

 

This is absolutely no difference than the day of the bank notes. Someone with a bank note or a "claim" as you call it could walk in to a store and purchase a good or service and leave. They transferred their banknote (or "claim") to the person who provided the good or service. This is what we in the real world call "money".

Just because this process has become automated doesn't mean it's any different. The store ACCEPTS my swiping of a debit card for payment for a good or a service. What the banks do in the background is irrelevant to what the store accepts. The store does not accept reserves, it accepts cash, check, or an electronic check. That is what we call money.

This layered claims theory you have is irrelevant. It doesn't matter if deposits are a claim on a claim, or if they invent something else that's a claim on a claim on a claim. They are all claims on goods and services. The store owner allows me to swipe my debit card or allows me to give them a check in return for their goods or services.

 

Alright, in an attempt to try to get you to understand this.... let's try another example. So you and I both have $1,000 in our bank accounts. We both want to go to Best Buy to buy a tv.

On the way to Best Buy you go to your bank to get $1,000 in cash to purchase a tv deducting your account by $1,000.

I go to Best Buy with my debit card to purchase a tv.

You walk out with a tv by giving Best Buy $1,000 in cash.

I walk out with a tv by swiping my debit card and deducting my account by $1,000.

What is the difference?

 

Banks simply create deposit from nothing eh?

Wait wait wait! Banks multiplying deposit to make loans? If there is no reserve/deposit, there would be no loans to be made.

Let's do some conceptualized kindergarden math shall we....

If banks have zero reserve/deposit, so we have zero multiplying by $1,000,000,0000 = zero

Bahahahaaaaaaaaaaaaahahhaha

How could you multiplying anything with zero?

 

What a blatant lie that is. How old are you? Seriously?

Banks never credit your checking account for the full amount of the check immediately. Assuming the checks >>>$100, most banks would credit $100 to your checking, then the rest of the check when it is cleared.

All electronic deposits/transfers are cleared prior day, when banks receive electronic deposit, they credit your checking a full amount.

Who are you trying fool with your bull(*)(*)(*)(*)? If banks can credit a full amount when the you deposit the check, then there is no need to send that check to clearinghouse. Each bank would have its own clearinghouse.....behind customer deposit boxes........

akphidelt got caught lying through his teeth yet again,

 

Here is a better example, why don't you try to go a local dealer to buy a used car let saying.........$4,000 car. Next step is trying to pay for it with your personal check to see what the dealer says....

Most likely, they will ask for real cash or equivalent of cash such as money order/cashier check.

Or another option is to sign a loan agreement before they would allow you to live the parking lot with that car.

I've never seen a guy with so many faulty understanding about econ/banking system like you. The more you post, the desperate you become....what are you trying to prove really?

Stop making yourself look like a complete fool everyday, it's getting very very very embarrassing.

 

Silly people ...money isn't real.

 

Wrong. There is no cash in your account. Depending on how you define money, there is money in your account.

There is no spendable cash in your account. Depending on how you define money, there is spendable money in your account.

Correct. You transfer absolutely nothing when you use your debit card. The bank does the transfering, you are simply requesting the transfer by using your debit card.

It's good to see that you're finally admitting that cash != deposits.

Depends on how you define "money". Your source establishes at the beginning that it chooses to define "money" in that particular manner. If you use another definition of "money", this does not apply because deposits would not equal money if the money supply is defined as the monetary base.

Misrepresentation of my position. See above.

 

What argument are you referring to?

If that were true, then it would have been authorized in the Constitution.

 

I agree. I don't even pretend to understand the inner workings of the economy, much less believe that it can be effectively controlled by central economic planners.

Nonsense. Central banking is a pre-enlightenment concept. It employs the same techniques of coin clipping that tyrannical governments used, but only through a more sophisticated and modern method that is much more easily disguised. Its use is driving us back to the dark ages, and is only holding us back from what our standard of living could be.

The idea that abolishing central banking would drive us back to the 18th century is silly and inaccurate. The solution that I support is free banking, which has never been tried in the United States. It is a move toward the future and abandoning the chains that the central bank has bound on our economy. I know it's hard for you to wrap your mind around because people like you are typically afraid of fundamental changes which you don't understand. Sort of like a caged animal who is given the option of freedom but chooses to stay within the confines of his cage because he feels safe.

Absurd, over the top, inaccurate misrepresentation of my beliefs. I don't believe life will be just fine letting people do "whatever they want".

Yeah its riddled with stories of government oppression like the style you advocate.