If everyones deposit is 100% backed by cash in the vaults, then please tell me how it is possible to have a run on the banks. Even that fella who borrowed 2 billion dollars to buy American Airlines will have 2 tons of cash in the vault correct? The only facts that have been shown in this post are the facts that I have shown, you've shown nothing, just because you say it isn't so is no proof of anything but your own ignorance.
I have never said this, you cannot bury me with this lie. I have always said they hold 10%.
How is it possible to not have 10% reserves if 100% of the loan is backed by full cash in the vault? A bank would never ever ever fall below 10% reserves if all the cash is in the bank. And if banks truly do back all loans with cash in the vault, please explain the differences between M1, M2, and M3. According to you all the loans are backed by 100% cash, therefore M1 MUST be equal to the sum of all m1, m2 and m3 together. Can't have any thing else according to you.
Again they are not lending the fund where the deposit is 10% of like you have said repeatedly. The only amount the bank can lend is the full amount of the money the customers deposited minus the 10% reserve requirement.
Where are you pulling this I have said they are backed 100% by cash from? Point to where I have said that.
And you are again wrong, you don't get that M3 and M2 have huge bonds. Those show America's true wealth! That is the money that is lent out in deposit form to the government and to corporations to help grow the country! They are bonds that the government has sold to the public (the majority are purchased by banks and huge corporations, but we do buy some of them too).
That is money that we have purchased, banks have used deposits to buy them, companies use unspent funds, and other countries buy them so that they can earn money on their unspent funds. And we use this money to build our infrastructure (highways, schools, stupid shit that is a waste, ect).
This is entirely a different topic though, and we could move to that later, but lets try to get back to deposits and how they work with banks.
The Fed does not take over banks, the FDIC does. Where do you get your info? Can you provide ANY proof of your statements any at all? And make sure its not being misread by you, because so far all of your links only prove my position and disprove yours.
Yup everything I have said falls apart because I said the Fed, and not the FDIC, seriously? It is not like I am cutting and pasting my argument.
Now let me link this again because I know you did not read it, this was created by the Chicago branch of the Federal Reserve, and if you think I just made this up I beg you to try and prove it came from some other source than the Fed itself. Give it your best shot cuz your going to fall flat on your face.
http://www.rayservers.com/images/Mod...yMechanics.pdf
Really the link is provided by the Chicago bank? The link, not the paper, the link? That is a quack website and you know it, go to the homepage like I had said before:
And that last website is a joke, and I will watch your youtube videos later, after I get home from my imaginary classes, that will allow me to get a very well paid imaginary career. I just wish I learned economics from youtube and quack websites so that I could have a real chance.
Maybe you should take a couple seconds and read whats written instead of making shit up, or deciding what it says before you do. Here is that websites homepage:
http://www.rayservers.com/index.html
Its all in black and white. It might be hard for you to understand, maybe its over your head and thats why you won't read it, its just too much for you to handle.
Where did you come up with something that I said I didn't read it?
Maybe if you dove deeper than words 'money creation' you would see the only amount a bank can loan is up to 90% of what they have deposited into them. And money creation only occurs as people decide to take out loans and that money is 'created' what gets back into a bank can then be re-loaned.
Did you watch any of those videos I linked? any at all? Do you have even 1 single shred of evidence to back your argument uP even 1?
Yeah I have seen the greenspan one before, and everything he has said is what I have, Only they are trying to make it seem like he is somehow duping the public, but it is accurate. Maybe this is some alteration, but I am sure the concept is the same, the other two have cartoons for pictures, so I was not too worried about them, and said that I had no time yesterday, so give me some time I will get to them.
I have linked multiple sites, from the Gov't itself to the fed itself, you have provided a wiki article, and the wiki article proves my point not yours.
Nope, because you said this, and this is where you are wrong, and this is the central point to the dilema:
1) no, the amount they would be able to lend out is about 10 times what the deposit is, your trying to make it look like I said the banks turn your money into 1000 times its value, won't work.
Right there, here is the fed's website:
If the reserve requirement is 10%, for example, a bank that receives a $100 deposit may lend out $90 of that deposit.
See you are wrong, a deposit of $100 multiplied by 10 (what you just said (100 x 10 = 1,000)) is $90!
your trying to make it look like I said the banks turn your money into 1000 times its value, won't work. FWIW 10 x 1million is 10 million not 1 trillion. Go back to grade school math. Or were you taught that 10% of 1 trillion is 1 million, and if so you are going to fail most college courses.
Ok I am going to help you out, what you are saying is that 100 is now multiplied by 10 to get the number they can loan. That is false.
What you need to realize is you are asking "What is a $100 loan multiplied by ten (100 x 10 = 1000)", or if you prefer: "What is $100 dollars ten percent of? (100 = 10% x Deposit (or 100/.10 = deposit))".
What you should be asking is "What is $100 - 10% to find what can be lend out (Deposit minus the reserve requirement = loanable amount)"
I may have gotten a bit zero happy, but it is because I am trying to figure out your crazy math. I am actually trying to figure out why you feel that this is how things happen. It amazes me that you can read something and not get that it directly counters what you are believing happens, and think that it is making your argument correct.
2) Cash comes from deposits and interest earned on loans or investments made.
Ok so let me figure out the next part.
2a) You are saying yes/no that the vault cash is all of the deposits made + interest/principle payment paid by people that have a loan.
2b) Are you thinking that this is the total amount of deposits? Because I am saying it is 10%, and the other 90% of deposits is what has been lent out.
3) Electronically or in the form of a check.
Ok yes I agree, now where does that check or electronic payment go to next? Can the people cash that check and receive cash from their bank? And if so doesn't that show that if there are all these loans out there that are only based on the idea that someone lent them 10% wouldn't that be impossible? I have shown how it will turn 10 dollars into (shit this is where those zero's came from, 10 x 10 = 100, I kept doubling everything (100X100 ect,) my bad on that now I see where you are getting 10x, but it is still wrong.
You are multiplying everything by 10, and should instead be minusing 10% for the deposit for the loanable amount.
It is still infinite growth, just at a lower rate. That is not how the banks do it.
4)The loan becomes an asset upon which more money is created.
Ok so you believe that the bank can now in turn say that the loan is an asset, and inturn make another loan based on that (yes/no).
5) $900 and the person who gets the 900$ can now deposit that in a bank and a further 810 can be loaned out, and with just the first 2 loans you have loaned out $1710 on an original deposit of 1000. Very easy to figure out, but somewhere along the way you are getting lost.
Ok so you believe that the bank does not have to move (another thing the Fed does) the money received from a check from their reserves and place it into the other banks reserves. Because if they did that bank would then be below the 10% reserve requirement and have to be bankrupt (and the FDIC would have to take them over).
But instead the original bank keeps the cash, and the second bank takes the "$810 Check" of bank one, says that it now has money in its reserves and then can inturn, lend a loan for $736? without having any money put into their account?
Because I am saying through the reserve system, the Fed can pull the money out of one banks vault, and place it into another banks vault. This means that there is no additional money 'created', that it is instead 'moved', but money mover is not as good of a name as money multiplier. The money multiplier just shows how much a dollar can reach around the entire economy when moved bank to bank, because remember the person receiving it, now has the funds to buy something they want, which is made by someone else who receives that check, and the Fed moves the Reserves into the others account, ect.
And this is why even though gold is a pain in the ass wouldn't bother me if we went to a "Gold standard", because the cash, and the system in place to move it for us is what is so nice. It is so instant and fluid, this is why we are a super power, we are just so quick to respond to opportunities, if I want something BOOM I buy it with a check, the company has its funds
If I paid with a check that was backed by gold and no Fed imagine my bank would have to get the gold to the bank that the company I am buying from has an account, then I could get the equipment, imagine if it was a bank several states away, and it was snowing, it would never work quickly, and I would have to wait weeks for confirmation to be able to get what I want, unless I carried cash, which has different issues over a check.
http://www.rayservers.com/images/Mod...yMechanics.pdf
you will see a phone number there on the first page, call it and ask the Feds them self.
Again the Website that is hosted on is a scam. And your paper directly fits with what I am saying.
For example, if reserves of 20 percent were required, deposits could expand only until they were five times as large as reserves. Reserves of $10 million could support deposits of $50 million. The lower the percentage requirement, the greater the deposit expansion that can be supported by each additional reserve dollar. Thus, the legal reserve ratio together with the dollar amount of bank reserves are the factors that set the upper limit to money creation.
So this can be confusing, but maybe we will get there.
The original deposit is $1000, I can go to the bank, and they can lend me $909 of it, I take that and buy a laptop, Dell takes that $900 pays their people (lets pretend they are all in america for this please). The Federal reserve takes those funds from the bank that I took the loan out from, and moves those reserves to Dells bank. Where The fed moves the amount from Dells bank into its customers bank accounts (For simpleness lets assume Dell and all its workers use the same bank to keep the numbers clumped together).
So now Dell's Bank has the full $909, That bank now lends out $909 - 10% (RR) to person 2 (760 I forget exactly) who buys something, ect. So it is not that money is created from nothing, it is created by the origional deposit, and shifted around the economy.
Because each time the banks lend us money we are saying we will pay you back from the work we earn money from with interest. This keeps everyone getting interest that has deposits to keep them wanting to have money in the bank, and it helps the people that have something they wish to purchase that they feel is worth the interest payment to get it now. And the bank that gets what is in between.
You have posted a lot while I was typing.
No , you said the bank has every loan backed by 100% cash, in fact you have said this repeatedly. Have you changed your mind?
So if only 10% of the cash is on hand, Where the F%$&*# is my other $900? If the bank has NO MONEY how is it possible to pay me? Are you saying that the Bank president is going to reach into his own pocket and give me his own money? If the Bank has NO MONEY they cannot pay me, they will be taken over by the FDIC for fraud and failing to keep a 10% reserve.
You missed this, the post right before you I wrote this:
Easy you are falsely assuming that the banks only keep 10%. The banks do not keep ONLY 10%, they usually have far more than that in RR.
In banking your $1000 is nothing, the reserves they hold is so huge that people can easily take out their money, it is only when there is a severe bank run that the system gets in trouble. But even that is generally overcome nowadays.
So what happens if i am the banks ONLY depositor and I deposit $1000, in turn that bank loans $900 of it to someone else. The very next day i come to withdraw the whole $1000 out and close my account. Explain how its possible please because people do it all the time. Now remember your assertion is that only 10% has been kept by the bank as a reserve and the rest was lent out. Does the bank go bankrupt? Do you get your $1000? Say the person who borrowed the money used the $900 to buy a home and is on a 30 year mortgage. The bank cannot legally call in that loan for 30 years, yet real banks have this happen all the time and always have the money, explain please.
Answered in the above post, and this one. The banks don't keep exactly 10% they don't usually loan all 90%.
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I mean seriously, this guy is talking in circles, Here is my breakdown of the first three minutes:
44seconds. Guy1 Borrows 100 dollars, it is an liability to the borrower, and an asset to the lender. (leaves out that that money came from someone who deposited money).
1min. Bank transfers that money into guy1's checking account.
1min 10 sec. Now guy1 is a different person that you loaned to??
1:20 He agrees to pay you and you agree to pay him, on a second loan?
1:32 Your paying interest
1:50, everything is all over the place now. Not well explained at all. Watched it a fourth time and finally see where it is he was trying to explain without the you and him, and you back thing.
2:16, With trying to figure out better where he went wrong I am editing this, because I found it.
He put the 100 that you took out to loan to the other guy (lower right hand corner) under assets, when the 100 loan you had was under liabilities. That should equal -100 loan (liability) -100 from taking money out of savings (liability) and +100 in the loan (Asset) meaning person 2 still owes $100 to the original lender. And that is where the money moves on, he canot be erased, because he still has to pay back the original loan.
He talks about having to capture the interest, but that is why the lender doesn't normally loan to people with no income, because that interest is what they are paying the depositor and their wages.
When you take out a loan, you know what you produce in wealth (by working) is paid to you, and that is what you pay them back with, they don't care if your buying a tv or if you put it into a bank. The money is yours for now, but you have time to pay it back to get even.
4.22 he is back on track!
But he left the 10 bucks on the bottom right guys liabilities, will he catch it!
6.06:
He is still doing well, he is getting to how money inflates, but is missing a central point that when people work, they are building capital. And the inflation is the way to keep all this undercontrol.
See some inflation is great, it keeps money moving, things being produced and built, because it keeps the depositors with their money growing, and businesses making more money because they are selling.
There is a balance, but that is why the Fed can use the open market operations to keep everything in balance. Put money in when needed, or pull it out when needed.
Without banks operating the way they do, we would have zero to negative economic advancement, and hyper-Deflation, which is something that would stagnate the system even more, since why invest money if it is going to be worth more later?
And we would go back to boom and bust. People would save up a huge amount of wealth, feel safe, buy a lot for a while, meaning new businesses would open to try to capture the money, people would get to the point they want to save, quit buying and bust the new companies, until the next business cycle.
Just like it was before when every 5-7 years there would be devastating movements of money, and only the wealthy would make it (because they could then buy up all the assets of the doomed entrepreneurs).
Now we have a system that still goes through this cycle, but now it is less devastating for everyone, because there are tools in place to curb this. Although we can still make many stupid decisions and derail it.
6:52, completely ignores that the banks are part of a system too, they use that money to buy things, to pay its workers, who then spend it in the economy. That money is not sucked into some dark hole. The only way to take money out of the system (for banks or people) is to pull out cash, bury it, and never spend it.
