How the banks create money

[respect]

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.

Where did you get the idea that everyone who understands economics has gifts bestowed on them by banks?

 

[webb5]

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.

Totally Wrong! I provided you with information that showed you that our foreign debt exploded. We did not pay all our debt you fool! You fail to mention this.

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

Wrong again. While it is true some governments do waste money, the large bulk of this comes from fractional lending. It is fools like you, who cannot do the math’s

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.

This figure is not accurate at all because the government has been selling Australia assets at an alarming rate. This sell of major publicly traded enterprises has given a false reading

And this debt has nothing to do with fractional lending. Wrong again Governments can always print more money to satisfy their debt obligations Why is there so much debt then (well, not if you're in the Euro, unlucky!) as long as people are willing to accept that currency as payment.



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

You need to do more research in this area before making silly remarks like this!

 

[webb5]

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!"

Not everyone is brainwashed like you. You need to review everything you have been tought and question the bits that don't add up.

 

[respect]

You need to do more research in this area before making silly remarks like this!

Do you care to explain why it is exactly that you think that the existence of fractional reserve lending forces governments to spend more than their revenues so that they have to issue bonds and other securities to raise money? Is spending less somehow banned by fractional reserve lending? Is a government unable to sell bonds without it?

 

[Sceptic-PK]

Totally Wrong! I provided you with information that showed you that our foreign debt exploded. We did not pay all our debt you fool! You fail to mention this.

Incorrect once again. Australia paid off its debts. It’s a matter of public record. Stop lying.

Wrong again. While it is true some governments do waste money, the large bulk of this comes from fractional lending. It is fools like you, who cannot do the math’s.

Explain to me the process whereby fractional lending is the cause of government debt.

This figure is not accurate at all because the government has been selling Australia assets at an alarming rate. This sell of major publicly traded enterprises has given a false reading.

Haha. Well I suppose you can make the figure mean anything if you can just change the definition of “national debt”, lol. The national debt of Australia is ~5%. The fact that previous governments sold off publically-owned assets to pay off that debt doesn’t mean there’s a magical amount of debt hiding behind the 5% figure. Wrong again!

You need to do more research in this area before making silly remarks like this!

Hey man, at least I have 2 degrees. You’re just a student of youtube et al.

 

[webb5]

Incorrect once again. Australia paid off its debts. It’s a matter of public record. Stop lying.

Australia did not pay all its debts! Australia did manage to pay off its national debt by selling off its national assets, hardly a good thing. But Australia’s foreign debt remained high. Opposition treasury spokesman Wayne Swan said at the time, that the government had nothing to be proud of, with Australia's foreign debt expected to hit half a trillion dollars.” To pompously declare tomorrow Australia's debt-free day on the day our foreign debt hits half a trillion dollars requires a level of complacency that is verging dangerously close to delusion. This is a matter of public record. Who is lying now?
http://www.theage.com.au/news/Busin...f-national-debt/2006/04/20/1145344197792.html


Explain to me the process whereby fractional lending is the cause of government debt.
I have explained this many times through this forum go to www.bleedingindebt.com


Haha. Well I suppose you can make the figure mean anything if you can just change the definition of “national debt”, lol. The national debt of Australia is ~5%. The fact that previous governments sold off publically-owned assets to pay off that debt doesn’t mean there’s a magical amount of debt hiding behind the 5% figure. Wrong again!

This magical figure has been dropped by selling of assets, it doe not mean this country is any richer for it, in fact it is much poorer. The income potential of these lost assets is now leaving the country. But for the short term it looks good for politicians, long term very bad for the country

Hey man, at least I have 2 degrees. You’re just a student of youtube et al.

Hey I need a medal for being so patient with you!

 

[webb5]

Do you care to explain why it is exactly that you think that the existence of fractional reserve lending forces governments to spend more than their revenues so that they have to issue bonds and other securities to raise money? Is spending less somehow banned by fractional reserve lending? Is a government unable to sell bonds without it?

97 percent of all money is created by the banks out of nothing through fractional reserve banking. When a loan is made it increases the money supply to the economy. When a loan is paid off it reduces the money supply. Every loan has been created as debt, and this must be paid back with interest. Remember the interest part has not been created.
So say at 10% interest how much money would you have paid the banks after 10 years?

If the banks stop creating money right now the economy would collapse as there is not enough money in circulation. So we must continue to borrow an ever growing amount of debt to just maintain enough money in the system. When the banks reduce the money supply we have recessions and even depressions. We are at the mercy of the banks

Ever played the monopoly game? In real life you borrow at the start of the game just like all the other players and each time you pass go you pay interest. The money supply that each player borrowed at the start of the game will dwindle each time they pass go as yearly interest is paid. Each player can earn money from other players but this from the money already owed. What ever the players do the game will end before the players go round the board 10 times. The bank is the winner here.

This is how the world runs right now. You and just every one else in this world has been conned! Poverty in this world is getting worse. People are dying. There is a solution, but it means people must wake up.

The two links below will help you understand.

http://www.positivemoney.org.uk/whats-wrong-fractional-reserve-banking/

www.bleedingindebt.com

 

[Sceptic-PK]

Australia did not pay all its debts! Australia did manage to pay off its national debt by selling off its national assets, hardly a good thing. But Australia’s foreign debt remained high. Opposition treasury spokesman Wayne Swan said at the time, that the government had nothing to be proud of, with Australia's foreign debt expected to hit half a trillion dollars.” To pompously declare tomorrow Australia's debt-free day on the day our foreign debt hits half a trillion dollars requires a level of complacency that is verging dangerously close to delusion. This is a matter of public record. Who is lying now?

All you've done here is prove you don't know what foreign debt means. Swan says as much in your source:

"To start reducing our foreign debt Australia needs to lift exports and to do so we have to become more competitive."

What he is actually referring to is the balance of payments, and it unrelated to FRB and goverment borrowing (in the context we're speaking about). It is not the government's fault if I choose to import lots of good from overseas, either to sell in my shop or put in my house. This process affects the level of foreign debt, and has nothing to do with national debt, which is far more important to your topic. The debt you constantly refer to in this thread, ie currency creation, is mostly related to national debt. So you really just attempted to move the goalposts here when you're proven wrong.

Australia didn't owe other countries any substantial amounts of money due to loans, but due to negative trade balances (which your imaginary "social credit" would have no effect on). This has nothing to do with FRB.

I have explained this many times through this forum go to www.bleedingindebt.com

That site is complete gibberish, explains nothing, and I was not surprised when I discovered you created it. Answer the question. How does FRB create government debt?

This magical figure has been dropped by selling of assets, it doe not mean this country is any richer for it, in fact it is much poorer. The income potential of these lost assets is now leaving the country. But for the short term it looks good for politicians, long term very bad for the country.

This is only half-right of course. Selling assets was part of the process, the government also changed taxation laws and cut spending. This "long term very bad for the country", would that include full employment levels, large increases in productivity and wealth generation, low inflation and, until recently, balanced budgets? Are you alleging that Australia was better off before these assets were sold, than they are in 2011? If so, then you'd be wrong again.

You are a waste of space.

 

[Sceptic-PK]

Ever played the monopoly game? In real life you borrow at the start of the game just like all the other players and each time you pass go you pay interest.

Gee man, you can't even get board game economics right. You don't borrow at the start of the game, you are provided money that represent your savings/liquid assets in order to start the game. You don't pay interest as you pass Go, you receive money which imitates your base salary.

The money supply that each player borrowed at the start of the game will dwindle each time they pass go as yearly interest is paid.

Haha, wrong again. Your money dwindles when other players charge you rent (excluding Chance/Community Chest cards and other one-off payments).

Each player can earn money from other players but this from the money already owed. What ever the players do the game will end before the players go round the board 10 times. The bank is the winner here.

The bank doesn't play (or win) in Monopoly. The game occurs between the players, and I've had plenty of games that lasted longer than 10 trips around the board. The bank's role has no impact on the outcome of the game. It makes no decisions, charges no (regular) interest, plays no part (which is why it is fine for a player to act as the Banker).

This is how the world runs right now.

I would be embarrassed if I was unable to explain/understand the economics of a board game designed for children.

 

[respect]

97 percent of all money is created by the banks out of nothing through fractional reserve banking. When a loan is made it increases the money supply to the economy. When a loan is paid off it reduces the money supply. Every loan has been created as debt, and this must be paid back with interest. Remember the interest part has not been created.
So say at 10% interest how much money would you have paid the banks after 10 years?

If the banks stop creating money right now the economy would collapse as there is not enough money in circulation. So we must continue to borrow an ever growing amount of debt to just maintain enough money in the system. When the banks reduce the money supply we have recessions and even depressions. We are at the mercy of the banks

Ever played the monopoly game? In real life you borrow at the start of the game just like all the other players and each time you pass go you pay interest. The money supply that each player borrowed at the start of the game will dwindle each time they pass go as yearly interest is paid. Each player can earn money from other players but this from the money already owed. What ever the players do the game will end before the players go round the board 10 times. The bank is the winner here.

This is how the world runs right now. You and just every one else in this world has been conned! Poverty in this world is getting worse. People are dying. There is a solution, but it means people must wake up.

The two links below will help you understand.

positivemoney.org.uk/whats-wrong-fractional-reserve-banking/

bleedingindebt.com

Besides the errors, you didn't answer the question at all.

 

[webb5]

Gee man, you can't even get board game economics right. You don't borrow at the start of the game, you are provided money that represent your savings/liquid assets in order to start the game. You don't pay interest as you pass Go, you receive money which imitates your base salary.

Haha, wrong again. Your money dwindles when other players charge you rent (excluding Chance/Community Chest cards and other one-off payments).

The bank doesn't play (or win) in Monopoly. The game occurs between the players, and I've had plenty of games that lasted longer than 10 trips around the board. The bank's role has no impact on the outcome of the game. It makes no decisions, charges no (regular) interest, plays no part (which is why it is fine for a player to act as the Banker).



I would be embarrassed if I was unable to explain/understand the economics of a board game designed for children.

You should be embarrassed! You’re lack of understanding of something so simple is pathetic. I merely showed how the world of economics works through the illustration of the monopoly game. In today’s world 97% of all money is created as debt hence in real life monopoly you must borrow in the beginning of game.

The interest part reduces the money supply for each player as the game continues. The only money available is earned from other players such as rent or payment for a product they produced or as wages. This money comes from debt already borrowed. If the banks do not give further loans’ to players the game will end.

It is mathematically impossible for the game to last more than 10 trips around the board as all money would be used up in interest. The games you play do not mirror this illustration so you cannot compare. This game shows how the debt base monetary system affects the economies of the world.

 

[webb5]

All you've done here is prove you don't know what foreign debt means. Swan says as much in your source:

Are you saying that foreign debt is not debt! You are trying to slip out of your original statement that Australia has paid off all its debt which is untrue


What he is actually referring to is the balance of payments, and it unrelated to FRB and goverment borrowing (in the context we're speaking about). It is not the government's fault if I choose to import lots of good from overseas, either to sell in my shop or put in my house. This process affects the level of foreign debt, and has nothing to do with national debt, which is far more important to your topic. The debt you constantly refer to in this thread, ie currency creation, is mostly related to national debt. So you really just attempted to move the goalposts here when you're proven wrong.

What a load of rot. Fractional reserve banking is our only source of new money supply. Every single product we purchase comes from this money, regardless if it is purchased from this country or overseas, what a foolish thing to say. Governments are also major importers and exporters. Yes Governments are responsible for managing the balance of payments. Our overseas debt can explode if we ignore this. All this debt whether national or external as foreign debt comes from fractional reserve banking you fool!

Australia didn't owe other countries any substantial amounts of money due to loans, but due to negative trade balances (which your imaginary "social credit" would have no effect on). This has nothing to do with FRB.

Are you saying that all foreign debt will be payed by cash then? Because fractional reserve banking has nothing to do with it?
You are getting worse!




That site is complete gibberish, explains nothing, and I was not surprised when I discovered you created it. Answer the question. How does FRB create government debt?

Already explained, it's just you cannot comprehend the facts that's all

This is only half-right of course. Selling assets was part of the process, the government also changed taxation laws and cut spending. This "long term very bad for the country", would that include full employment levels, large increases in productivity and wealth generation, low inflation and, until recently, balanced budgets? Are you alleging that Australia was better off before these assets were sold, than they are in 2011? If so, then you'd be wrong again.

Any fool knows that you can increase employment and productivity by adding money into the economy. The problem here is that this money was made available from debt and the selloff of assets. Balancing budgets also came from further asset sales and reductions on government spending. Are we better off? If you don't need to use a hospital and don't mind a reduction on infrastructure spending, then sure for the short term but in the long term future generations will have to pay the price.

You are a waste of space.

Its about time you looked at your self

 

[webb5]

Besides the errors, you didn't answer the question at all.

I'm sorry I thought I did. Try looking at the sites I mentioned and it is possible for you to understand if you really want to know.

 

[Sceptic-PK]

You should be embarrassed! You’re lack of understanding of something so simple is pathetic. I merely showed how the world of economics works through the illustration of the monopoly game. In today’s world 97% of all money is created as debt hence in real life monopoly you must borrow in the beginning of game.

no, you conflated two completely different systems and made a terrible analogy in the process.

The interest part reduces the money supply for each player as the game continues.

Are you talking about real life or Monopoly? Either way you're wrong.

Interest charges do not reduce the money supply because the banks spend it employing staff, making investments, cleaning the office, lending, paying shareholders, advertising, polishing their golden yachts. For whatever reason, you seem to think the banks destroy all their interest payments. Your entire ideology is based on assertions that are demonstrably wrong.

There is no interest in monopoly, other than Chance & Community Chest.

It is mathematically impossible for the game to last more than 10 trips around the board as all money would be used up in interest.

So, the interest just disappears from the money supply, right? What happens to the interest?

The games you play do not mirror this illustration so you cannot compare.

Yeah, no ****!

This game shows how the debt base monetary system affects the economies of the world.

Or it shows what one with mental illness might believe if left to their own devices on the internet.

 

[Tippit]

Do you care to explain why it is exactly that you think that the existence of fractional reserve lending forces governments to spend more than their revenues so that they have to issue bonds and other securities to raise money? Is spending less somehow banned by fractional reserve lending? Is a government unable to sell bonds without it?

The Federal Reserve has the legal right to create checkbook money out of nothing. It uses this to monetize US Government debt (as well as make loans to private banks), which is what enables the US Congress to spend not only more than it receives in conventional taxes, but more than creditors are willing to lend. This has little to do with fractional reserve banking, and everything to do with the inflation tax. FRB enables the high powered money the Fed creates to expand by the money multiplier, and it also creates systemic risk in the form of deposit risk which exacerbates recessions and depressions by either creating bank runs, or the need to bail out banks at everyone else's expense.

Without Fed funny money, and without foreign central banks who debase their own currencies in order to finance the purchase of US Treasuries, there is no doubt that US politicians would have to spend far less.

 

[respect]

I'm sorry I thought I did. Try looking at the sites I mentioned and it is possible for you to understand if you really want to know.

Your nonsense links don't answer the question either. How does the existence of fractional reserve lending force governments to spend more than their revenues? Why do you think it makes it impossible for them to balance their budgets?

 

[respect]

The Federal Reserve has the legal right to create checkbook money out of nothing. It uses this to monetize US Government debt (as well as make loans to private banks), which is what enables the US Congress to spend not only more than it receives in conventional taxes, but more than creditors are willing to lend. This has little to do with fractional reserve banking, and everything to do with the inflation tax. FRB enables the high powered money the Fed creates to expand by the money multiplier, and it also creates systemic risk in the form of deposit risk which exacerbates recessions and depressions by either creating bank runs, or the need to bail out banks at everyone else's expense.

Without Fed funny money, and without foreign central banks who debase their own currencies in order to finance the purchase of US Treasuries, there is no doubt that US politicians would have to spend far less.

Well, at least you acknowledge that fractional reserve lending doesn't force governments to borrow money unlike that other guy, although I am not clear on why you seem to think that the government couldn't do similar things without the Fed.

 

[Tippit]

Well, at least you acknowledge that fractional reserve lending doesn't force governments to borrow money unlike that other guy, although I am not clear on why you seem to think that the government couldn't do similar things without the Fed.

I didn't say it couldn't. Congress is responsible for the debt, the Fed is merely the lender of last resort. But we need neither the Fed, nor Congress to issue debt, when the US Treasury could simply issue its own money to fund deficits. Of course, the argument against this is the intellectually and logically bankrupt argument for Fed "independence". The idea is that politicians would mismanage the ability to tax us by inflation (print money), so this needs to be delegated to private Fed bankers, who of course have a longstanding reputation of being fair and impartial, and would never use this immense power for their self-interest or the interest of their colleagues.

Every bad asset they buy, every bank they bailout, and every loan they make is drawn from their legal right to counterfeit, which is the most powerful and regressive tax of all. Fractional reserve banking resulted in the systemic risk that created the premise for why we "need" the Fed in the first place, so that is the only sense in which it can be construed to have increased government borrowing, to the extent that it facilitates government borrowing by the monetization of debt.

 

[Sceptic-PK]

I didn't say it couldn't. Congress is responsible for the debt, the Fed is merely the lender of last resort. But we need neither the Fed, nor Congress to issue debt, when the US Treasury could simply issue its own money to fund deficits. Of course, the argument against this is the intellectually and logically bankrupt argument for Fed "independence".

This isn't necessarily true; the independence of the Fed is much more important when we're talking about setting the price of money (and other areas like regulation but we'll ignore that for now). The Fed's independence is largely irrelevant to its role as the government's deficit enabler, because the central bank will always provide as much as the government wants. It just makes sense to include this responsibility with all the others that the Fed manages, in the same way it makes sense for any other government agency to have authority over areas of similarity. As you correctly point out, Treasury could perform the same function. The point though is what difference would it make?*

*Additionally, since you're so obsessed with currency devaluation, exactly what do you think happens to the confidence in, and value of currency if a country just prints more money to fund its deficits, without any obligation to later pay that money back? In essence, you're basically advocating a system that is more akin to, say, Zimbabwe than the US?

 

[psionl0]

*Additionally, since you're so obsessed with currency devaluation, exactly what do you think happens to the confidence in, and value of currency if a country just prints more money to fund its deficits, without any obligation to later pay that money back? In essence, you're basically advocating a system that is more akin to, say, Zimbabwe than the US?

Doesn't Zimbabwe have fractional reserve banking?