How the banks create money

[The Central Scrutinizer]

There is a lot I could say about people who vote for politicians that use pork barrel, and then complain about said politicians.

If it's a project in your district, it's great. If it's in someone else's district, it's pork.

 

[Loss Leader]

That was one of my favorite things about the teabaggers - they were screaming "taxation without representation!!!" - not more than 3 months after a national election. And they wonder why people laugh at them.

I think it's mostly the outfits.

 

[psionl0]

There is a lot I could say about people who vote for politicians that use pork barrel, and then complain about said politicians.

Too true. We deserve the government we get. Our children don't however (but who cares about debt?)

 

[psionl0]

If it's a project in your district, it's great. If it's in someone else's district, it's pork.

Unless you live in a marginal electorate, it will never be in your district.

 

[Sceptic-PK]

According to http://www.usdebtclock.org/ as of now, there is $45,177 of debt per US citizen, and $127,264 of debt per US taxpayer. Assuming that you're a taxpayer, you are on the hook for the servicing of this debt that politicians have created, and every effort will be made by the US government to coerce you into servicing it. Do you consider this voluntary?

Deficit spending is a completely separate issue from fractional lending.

 

[tensordyne]

money system

Deficit spending is a completely separate issue from fractional lending.

Not so sure if that is completely correct. FRB is part and parcel with the idea of central banks and how they operate. Since congress gets its money on loan from the Fed, at the very least FRB and deficit spending are related. It is possible to have FRB, but with a different type of central banking system. The two systems go quite strongly together in the system we currently have, at the very least.

I have always found the idea that the Federal Government gets a loan from the Fed, which just makes up the money in the loan (as also happens in FRB, but this time without any Reserve Requirements, not that FRB banks follow reserve requirements all that strictly as well), as oddly undefensible. Why not just cut out the middle man and print up the money yourself? Oh yeah, if that were to happen congress and the pres might have to be accountable for what happens in a way the Fed never will have to be. That's right. Leave it to a quasi-governmental body made up of bankers so that everyones interests, not just the bankers are seen to. That makes so much more sense.

 

[Chaos]

Too true. We deserve the government we get. Our children don't however (but who cares about debt?)

Then quit whining about politicians and vote for different ones.

 

[psionl0]

Then quit whining about politicians and vote for different ones.

As if I would ever vote for tweedle-dee or tweedle-dum.

 

[Sceptic-PK]

Not so sure if that is completely correct.

Of course it is completely correct. Your attempt to conflate the two is just wrong.

FRB is part and parcel with the idea of central banks and how they operate.

You can have central banks without FRB and FRB banking without central banks. They are not reliant on each other in any way. They are both facets of modern banking sure (as you note below), but in the context I referred to it above, deficits and fractional lending are unrelated. A government does not rely on FRB in order to spend more than it takes in tax receipts.

I have always found the idea that the Federal Government gets a loan from the Fed, which just makes up the money in the loan (as also happens in FRB, but this time without any Reserve Requirements, not that FRB banks follow reserve requirements all that strictly as well), as oddly undefensible.

Of course you do. You have a conspiratorial mindset where things you don't understand properly are given secret nefarious properties as you attempt to make sense out of them.

Why not just cut out the middle man and print up the money yourself?

You could do that, and then you'd just have another middle man that prints up the money. Call it the Mint or something. For all intents and purposes that's already exactly what happens. The Fed "charges" like 3% of its entire profit margin in order to run its day-to-day operations, and the remainder is given back to Congress. The Fed charges the government in the same way that every government agency charges for its services. There is nothing exciting happening here.

Oh yeah, if that were to happen congress and the pres might have to be accountable for what happens in a way the Fed never will have to be.

Yeah, let's turn monetary policy over to the whim of the electorate or political party holding power! That sounds like a perfectly rational and sensible decision don't you think? So, instead of guiding decisions carried out by relevant experts we'd get the partisan clusterF that is political debate in the houses of government. Let's have politicians in control of both the spending AND the price of the money they're spending. Can't see that being a problem! I hear Zimbabwe have achieved this with great success.

That's right. Leave it to a quasi-governmental body made up of bankers so that everyones interests, not just the bankers are seen to. That makes so much more sense.

Well sure, if I were in high school still I might share your sentiments. As it stands however I've grown up since then. You should try it.

 

[webb5]

Deficit spending is a completely separate issue from fractional lending.

No it is not. In a debt based monetary system, every nation sooner or later will continue to run on a budget deficit. The result of fractional reserve banking has indebted just about every nation to the hilt. These nations no longer have the ability to cover its spending and must keep borrowing to keep their economies going. This debt is so high that only interest payments are possible. We cannot keep going this way. We need to change the monetary system or go bankrupt. What ever new system we use, it must remove fractional reserve banking.

 

[webb5]

Yep. If there's anything wrong that can be said, it looks like he said it.

And you believed it all, too, which is even more pathetic.

You keep getting it wrong Kitten! How on earth can any one think fractional reserve banking is so great? It’s so pathetic! The true cause of the economic problems facing the world is the debt based monetary system. This fraudulent system needs to be shut down!

 

[Sceptic-PK]

In a debt based monetary system, every nation sooner or later will continue to run on a budget deficit.

This is nonsense of course. I have already demonstrated to you that your own damn country paid off all its debt only a few short years ago. I provided you with the information earlier in this thread. Countries only go into debt when they spend more than they generate in taxation. End of story. There is no inherent relationship between debts, deficits and fractional lending.

The result of fractional reserve banking has indebted just about every nation to the hilt.

No.

These nations no longer have the ability to cover its spending and must keep borrowing to keep their economies going.

This has nothing to do with fractional lending, and everything to do with politicians unable to do math.

This debt is so high that only interest payments are possible.

Some countries may be in this situation, but it is wrong to say that it is the norm. Your own country, Australia, has only ~5% of GDP in debt. And this debt has nothing to do with fractional lending. Governments can always print more money to satisfy their debt obligations (well, not if you're in the Euro, unlucky!) as long as people are willing to accept that currency as payment.

We cannot keep going this way. We need to change the monetary system or go bankrupt. What ever new system we use, it must remove fractional reserve banking.

Get off the internet and take some classes. Every single post you make is wrong.

 

[drkitten]

How on earth can any one think fractional reserve banking is so great?

Because they understand high-school level economics.

A more interesting question is how anyone could think that "The true cause of the economic problems facing the world is the debt based monetary system. This fraudulent system needs to be shut down!"

 

[psionl0]

A more interesting question is how anyone could think that "The true cause of the economic problems facing the world is the debt based monetary system. This fraudulent system needs to be shut down!"

Obviously people who have updated their education since high school and realize that the only supporters of FRB are banks and the beneficiaries of banking largesse.

Students certainly don't learn about FRB at school. As a private tutor I sometimes get to put the following question to a student: "When you pay for something with a credit card, the bank puts money in your merchant's account. Given that the bank didn't give the merchant any of its cash and it didn't take the money out of your account, where did this money come from"?

When I tell them the answer, the reaction is invariably shock followed by "Wow"!

 

[The Central Scrutinizer]

Obviously people who have updated their education since high school and realize that the only supporters of FRB are banks and the beneficiaries of banking largesse.

Students certainly don't learn about FRB at school. As a private tutor I sometimes get to put the following question to a student: "When you pay for something with a credit card, the bank puts money in your merchant's account. Given that the bank didn't give the merchant any of its cash and it didn't take the money out of your account, where did this money come from"?

When I tell them the answer, the reaction is invariably shock followed by "Wow"!

I'd be shocked too if someone who was supposed to be teaching me gave me the wrong abswer.

 

[tensordyne]

Obviously people who have updated their education since high school and realize that the only supporters of FRB are banks and the beneficiaries of banking largesse.

Students certainly don't learn about FRB at school. As a private tutor I sometimes get to put the following question to a student: "When you pay for something with a credit card, the bank puts money in your merchant's account. Given that the bank didn't give the merchant any of its cash and it didn't take the money out of your account, where did this money come from"?

When I tell them the answer, the reaction is invariably shock followed by "Wow"!

From nowhere. The problem is not that it comes from nowhere though, it is that the interest, that also does not come from nowhere, does not disappear in the same way that the principal does. Don't worry about the statists on this forum, they can only play ad hom games. When it comes to facts, most of them do not have any abilities there.

 

[The Central Scrutinizer]

From nowhere. The problem is not that it comes from nowhere though, it is that the interest, that also does not come from nowhere, does not disappear in the same way that the principal does. Don't worry about the statists on this forum, they can only play ad hom games. When it comes to facts, most of them do not have any abilities there.

 

[Sceptic-PK]

From nowhere. The problem is not that it comes from nowhere though, it is that the interest, that also does not come from nowhere, does not disappear in the same way that the principal does. Don't worry about the statists on this forum, they can only play ad hom games. When it comes to facts, most of them do not have any abilities there.

Inability to answer your critics noted.

 

[respect]

No it is not. In a debt based monetary system, every nation sooner or later will continue to run on a budget deficit. The result of fractional reserve banking has indebted just about every nation to the hilt. These nations no longer have the ability to cover its spending and must keep borrowing to keep their economies going. This debt is so high that only interest payments are possible. We cannot keep going this way. We need to change the monetary system or go bankrupt. What ever new system we use, it must remove fractional reserve banking.

Obviously. National debts have nothing to do with governments spending more than their revenues. No sir, banks do it. It infuriates me that C-Span never shows the congressional meetings where bankers take politicians hostage and force the Treasury to sell T-Bonds to China.

 

[respect]

How on earth can any one think fractional reserve banking is so great?

The same reasons that people who understand biology accept evolution.