Harrekin
Well-Known Member
The loan isn't repayable because if Iv only ever made 100 Harredollars, where does the 2% come from? The interest doesnt exist as currency because it was never made.
Keep derping through with your lack of understanding.
Impossible! The deficit is falling as well as unemployment Obama wrecking economy
- Thread starter ChesusRice
- Start date
Keep derping through with your lack of understanding.
Then you aren't talking about fractional reserve banking. Otherwise your original 100 becomes 1,000 with the multiplier, which means 900 of new money is in existence. Your 2% interest rate would certainly be payable.
I don't think it matters what the legal fiction is. The purpose is just to monetize value. Lending enables value creation, and that's what the amount of currency in circulation reflects. If we stick with that 100, the multiplier transforms it into 1,000. Let's say I build 10 houses with it; these undoubtedly have real economic value that someone else will trade for. Yes, there are 900 extra dollars in existence, but there are also 9 extra houses versus full reserve banking, which would have 100 in circulation and only 1 house. The extra 900 isn't just an accounting fiction that enables banks to obtain obscene profits; it represents the creation of new value that didn't previously exist, just like the currency didn't previously exist. This is not a 1-for-1 trade because the increased number of dollars in circulation forces adjustments in dollar denominated prices for goods, which is inflation, but it shouldn't matter--the goal should be to make everyone better off. The economic development--the growth and innovation--that credit enables must certainly, on net, be better than the stability and reliability of a precious metals regime, if your goal is to actually make people wealthier, in real terms. Perhaps the difference between us is that you don't have that goal, preferring stability to gambling on economic development. In the long run, though, economic development isn't gambling, it's real.
The interest rate is a control mechanism, not a profit mechanism. You use the interest rate to adjust the money supply as economic conditions require. How could it possibly be about profit when the Fed doesn't make any?
Harrekin
Well-Known Member
No no, Im talking about the production of currency at source.
Where do you think they get the money to loan out the additional 90%?
They borrow it from a central bank or another bank, the 10% is just a capital requirement from the lending bank to the receiving bank.
When will your fail-train come to a halt?
Your central bank makes 100, but it doesn’t lend it to the banks. If the 100 is created by buying a bond from the treasury, the treasury spends the money, putting it into the hands of the public. The public deposits the money, enabling the banks to create more money. Alternatively, the 100 could be created by the central bank just by crediting the bank with new money that it can then lend out. The bank withdraws notes from its account (since it now has excess reserves) and lends them out. Where's the endless debt cycle?
Value exists before your central bank does anything. $1 may have been whatever measure of gold, but it was also $1; when you say your paper is also $1, it's $1. The fiat currency originates from settling previously valued obligations in fiat currency, through government spending or bank lending. The new fiat currency (ideally) merely reflects the value that previously existed. From then on, everything is valued in fiat currency, with prices adjusting to reflect the real purchasing power of that currency. Deposits aren't cancelled out by a debt somewhere else; they reflect real value that's denominated in dollars. Currency is merely a means of exchanging this value.
If only 100 dollars exists in the system and you borrow that $100 at 5% interest, when you are done paying the loan off in a year it would have cost you a total of $105. But only $100 exists.
You still owe $5 and since you cannot pay it off, you default.
The essence of the Great Depression.
They do not create the interest, the interest in the system only grows ever larger creating debt slaves that can never pay off the debt.
Think the USA can pay off the $16 trillion deficit. NEver can, never will.
$3.1 trillion is not the governments spending on purchases. 15% of that number is the purchases, the rest is transfer payments. You don't count transfer payments as they are just going from one person to another, government isn't spending that money on its own.
SS, MEdicare, MEdicaid and other mandatory schemes account for 60% of all government expenditures.
Who is G Edward Griffin?
That initial $100 isn't lent, as already noted. This question of where interest payments come from is nonsense, pretending that no value exists at the beginning and that currency must be loaned to be distributed.
So long as it doesn't need to be paid off, there's really no incentive to pay it off. That's not damning. Just as a business increases its profits with an optimal debt load, a country can increase its prosperity the very same way.
I don't think it makes any sense to differentiate what the government spends on the military from what it spends on Medicare. Labeling it a transfer payment doesn't mean that it isn't funded with taxes levied by the federal government that could otherwise be spent on other things.
The Creature from Jekyll Island, so often mentioned and echoed here.
Not for the Fed, which hands all of its profit over to the treasury. They have no reason to care about what their own profits are.
twostrokenut
Well-Known Member
If it doesn't matter what the legal fiction is then why have it?? That's like saying the fine print on contracts don't matter.
Whatever the legal (admiralty) fiction, the lawful(Constitutional) remedy that must remain in place is the option to buy sell and trade in gold and silver, for states and individuals.....to "save the suitors".
We, as a nation, chose to use paper notes...they weren't technically forced on us.
At first they made sense, who wants to carry around 3oz of gold vs 3 $20 notes..........that is a slightly different story now due to inflation........14 $100 bills or one coin......start spending the Bens and the wad gets huge to make change.
The evil bankers didn't make us choose, but they, along with progressive government sure as fuck "nudged" a lot.
Just like my truck in California....I am required to volunteer to be a Commercial Vehicle and pay as such or I must leave my camper on, under duress I might add, lest I get a $500 ticket. Because my truck is capable of hauling heavy loads, I must pay as if I haul loads for profit on public roads.
The goal is the same and yes I prefer stability. Gambling on economic development is not something that is intended for your "average" person. The average joe is supposed to be able to just save his money to endure economic downturns.............like when Warren G Harding was in office.
Also I am not saying there is not lots of money to be made in paper markets, especially foreign markets that produce goods and manage to save dollars, it just can't last forever...us just receiving things on credit from everyone. I have chosen commodities for the long term.
twostrokenut
Well-Known Member
He wrote a book called "The Creature from Jekyll Island".......as for the quack cancer cure lol if I had cancer I would give Salvestrols a serious look.....heard of them listening to David Icke......along with conventional methods I am deemed worthy of by insurance.
twostrokenut
Well-Known Member
On interest rates being a control mechanism.........why aren't they really high as they have been in the past during similar circumstances?? The Fed set interest rates high to deal with downturns in the past, what's so special now?
On the Fed handing all profits over the the Treasury.....
They are funded on interest from their portfolio of.........securities.....they supposedly hand over all that is left after they cover their expenses.
On the Fed handing all profits over the the Treasury.....
They are funded on interest from their portfolio of.........securities.....they supposedly hand over all that is left after they cover their expenses.
Pretending that value can be made into money at a whim is called counterfeiting. Objects/labor CANNOT be money in the USA, law has decreed that ONLY Federal Reserve Notes are legal tender. Thinking that the Bank will accept something of value from you in lieu of interest is ABSURD!!
The government doesn't HAVE to spend a penny on the military. IT MUST Spend the medicare/ss/medicaid money, it has no choice.
What is the "Optimal" debt load for the USA?
The USA is not a corporation.
Jekyll island means nothing to me. I assume you have read that book?
Have you read "Secrets of The Temple?" Nancy Pelosi recommends you read it.
When you have the power to create any amount of currency at the push of a key, profits in dollar sense are immaterial.
If I could turn lead into gold with nothing more than a few cents worth of chemicals, how would I ensure gold didn't become worthless?
And interest is being charged on $1,000. not the original $100. $1,000 in existence, $20 in interest due. $1,000 in existence, $1,020 due to be paid to the banks.
The university from which you got your degree must not have had any accounting requirements.
cannabineer
Ursus marijanus
Okay a naïve question. Interest was originally devised as a way of offsetting the risk of lending, e.g. defaults and total loss. In that instance, money goes away. Ideally, interest is a zero-sum proposition; it's assessed to offset the risk, leaving overall even money. Is it still a case of generating value where there was none? cn
Then the risk free rate of .03% must mean that there is very very little risk in the system.
It does not, it represents the fact that the banks aren't really lending money at all, not when they can earn 10 times the risk free rate with another risk free rate of .25% interest on fed reserve account deposit overages. Only Banks can do this, you or I cannot earn this money since we are not a bank which is part of the Fed Reserve system.
Since the Fed purchases nearly all of the Treasuries bonds, and since the fed has no limit to the amount of money it may create, the Government in essence has no limit to the amount they can borrow.
Of course interest is infinitely compounded, people tend to forget that. The power of the exponent I am sure you will agree is quite large.
Capital will be destroyed very quickly by such low rates, only when the ability to save your hard earned dollar and not take a loss on it will value return to the country.
Harrekin
Well-Known Member
Banks don't create money, are you fucking retarded?
They borrow it from a Central Bank who "make it" on a computer at an extremely low interest rate, they then loan this money out.
How do you think money makes it down the line from Central Bank to people's/business' pockets?
Money faeries drop it in the meadows?
Harrekin
Well-Known Member
I derped, they obviously don't make it at a low interest rate, they make it and loan it to the commercial bank at a really low interest rate.
Least I know how it works tho
What's printed on the notes doesn't matter. People probably have no idea what the words are, let alone knowing what they actually mean. The statute that permits the creation of notes defines them in a certain way, so that's how they're defined.
We elected and kept electing the people who created the Fed and eliminated the gold standard; we don't take seriously anyone who proposes otherwise. These facts suggest that the people who had lived under the old regimes were perfectly content under the new ones.
You don't have to gamble to save money and not lose value to inflation. According to most of the people here, you need only buy gold and silver and not only will you be inflation proof, you'll see huge returns. Anyone who believes that will yield stability and profit has the option, no other gambling required.