Topic: Fractional Reserve Lending IS NOT bad - its unavoidable - page 7. (Read 12751 times)

It is Fraud, plain and simple.

Since all fiat money is created out of debt (the central bank creates money by lending to banks or, in certain countries, directly to the State), interest creates new debt that can only be paid by borrowing more, supposedly supported in future income grow (think about corporations).

It's because of this that no modern economy is prepared for a long economic stagnation. Interest debt can only be paid by someone getting more loans and that can only be supported by economic grow or inflation (nominal grow). Any long stagnation creates a financial crisis, solved by inflation or defaults.

lolwut?  Are you still saving monyz on recreational chemistry by stealing stuff from under my sink?  Come on, bro, put down teh bag

So at which point is the "money" to repay the interest on a debt created?

I cannot speak for Ozziecoin, but I was indoctrinated at a .gov DOE facility. I was taught all about the three equal and opposing pillars that allegedly maintain balance in US government, which was then still billed as a Republic(I'm old). Interestingly the FRBNY and the fourth branch of government were not discussed.

I'm also critic of the FR, but from a formal point of view it doesn't destroy the link between credit and debit. One man debit is another man/entity credit.

The bank lends the money someone deposited to another person by crediting the account of this second person, that might use the money to pay a debt to a third person that decides to keep the money on the bank, allowing it to lend again a big part of it. But the link between debit and credit isn't affected.

The problem is on their guaranty, the "real" money. If one of the debtors of the bank defaults that is going to have a bigger impact because of the FR.

I take it the two of you have successfully avoided brainwashing?  While other children were being corrupted by teh banksters, you finance revolutionaries were busy huffing household solvents?

Outstanding trolling, well played

@ twiifm

I don't know what you're following.  But you understand nothing of what you are following.  I'm sorry but it's a fact.

http://www.businessspectator.com.au/article/2013/12/16/economy/oh-my-paul-krugman-edition


It would appear the ignorant people are the ones talking about the Loanable Funds model.  It's a myth!!!  

Krugman is WRONG.  One person's liability is NOT another person's asset.  Due to FRB.  Minsky was RIGHT.

Hah! An economics student.  I should've known.  I rest my case - you are a complete dumbass.  Enjoy school fees buddy.

FYI: keynesians, monetarists and neo-classical economics all prescribe to the same belief of efficient markets, supply and demand and FRB.

Hyman Minsky on the other hand told them they're all idiots.  The GFC taught us that Minsky was right.  So were the Austrians.

Taleb bets against idiots like you and Soros is the 1% because he used leverage to prove that the system is not efficient.  I don't support him but he exploited the system. And you have to respect that.

Shiller knows it's behavioural but Soros understood you need leverage to create a bubble. (Please read his theory of reflexivity. It is similar to Minsky's disequilibrium theory but much easier to read.)

Private debt and gov't debt are not the same thing but who cares about the price of rice in China.

The problem is FRB.  Take your head out of your ass.  

@ozziecoin

Again you know not of what you speak.  

Keynesians are not neoclassicists.  Keynes wasn't a monetarist either although a monetarist like Bernanke could also be Keynesian.  However, Friedman, the father of monetarism, was definitely not Keynesian

LOL. I don't have solutions to the worlds economics problems and never claimed to have. However, at the least I understand economics so I don't go around talking about "evils of FRB".  That would be plain ignorant.  The only thing I try to post on these boards are factual knowledge and I debate those who post misinformation.

Wait so now you are quoting Soros and Shiller?  LOL cause I happen to follow Soros Institute for New Economic Thinking and I'm taking Shillers Coursera class.  How can you follow these people and be so misguided?  You do realize that Soros is part of the 1% that you seem to hold so much contempt for.

Weren't you the guy who told me to follow Taleb cause you think options trading is for schmucks not realizing Taleb got famous as a renegade options trader?

Are you just pulling these names put of your ass to sound intelligent or do you actually read what they write?  

I don't subscribe to EMH.  But the GFC had nothing to do w FRB and something like BTC won't prevent bubbles and crashes either.  If youre so keen on Shiller you would already understand that bubbles are the result of psychology and behavioral economics not monetary policies.  The QE came after as a response to bubble crash

Also you keep interchanging private debt and govt debt.  They are not the same thing

And do you know how they paid off those debts with interest? They took the money that was supposed to be for making loans and getting the economy moving and create jobs and they used it to speculate on food commodities. That's right. They used that money to drive the price of food up so they could make a profit. People were hungry in this country and they made it worse so they could make a buck off of it.

Yes you are taxed on all of that. Have you taken the time to look at the value of the money in your pocket? Have you noticed that it doesn't go as far as it used to? Do you know why? In order to support this house of debt we have been living in the fed has been printing money at record rates in order to lower the value of the dollar to reduce the size of the debt. That is also a tax.

And what perspective do you offer? The same keynesian/neo-classical/monetarist clap trap that got us into this mess?  I studied all that. And I reject it all because it is false.  

I offer zero FRB money.  All on the Blockchain.  We are going to get ozziecoin to the community so parasites, which appear to include you, do not get to benefit from the rest of us.  

You say the Occupy Movement is disorganised and ignorant - well I'm not.  

I don't believe I'm the misguided one here.  I believe you offer zero solutions.  You have massive debt.  You accept massive debt.  You speak for the 1%.  And you think it is okay for FRB to inflate money.  

It is those academics running the Fed that are teaching at those ivy league schools you so glorify.  And at what cost? Hundred of thousands in fees? Please, they know nothing so they can teach you nothing.

Soros rejected neo-classical economics, citing there is no perfect market and proceeded to make billions with his theory of reflexivity.  Fama works for a company that exploits market inefficiencies.  Schiller says housing bubbles appear all the time.  Richard Fisher says they are juicing the markets.

You go study the Efficient Market Hypothesis.  I point out to you, if the markets were efficient then how come we had a market crash?  

If markets were efficient and self correcting then how come the Fed needs to intervene and print trillions?

There is a MASSIVE HOLE in economic theory right now.  You would be blind not to realise that.

I don't despise Occupy Movement.  I just think they are disorganized and ignorant.  I get that they are hurting but they are directing their energies in the wrong direction.  They are loud but they have no clear message.

I know you are trying to do something w ozziecoin. Good luck to you but you are just so misguided. Instead of learning shit from the wackos here why don't you use Cousera.org and take some free classes from legit schools.  You can even find classes from Ivy League or elite schools like Stanford.  Seriously, check it out cause your knowledge of economics and finance is like high school level.

But I really don't care what you do.  Just stop repeating the same thing ad nauseum.  Its really boring.  Its not like a fresh perspective that nobody has heard before

This is supposed to be about arguments, not ad hominem attacks

Mate, does this mean you're not part of the 99%?  Why are you so in love with the 1%?  Go the occupy movement!

I speak for the young, disenfranchised and asset poor people.  I make no apologies for that.

You speak of the Occupy movement as if they were to be despised.  I speak of them as brothers.

You've been given a massive load of debt and you're thankful for that?  Mate, wise up.  If no one had massive debts, houses would be cheaper for everyone.

Christ dude, just stop w your "Occupy" cliches.  Clearly you don't know how banking or finance or taxes or stocks work.  Some banker screw your girlfriend or something?

Believe the answer is the Blockchain.  Post Great Depression various rules were implemented to prevent the exact scenario we are now in.  Things like separation of investment from savings banks.  Reserve requirements. 

Every single rule was broken down over time.  The most egregious was Alan Greenspan's mob in allowing investment banks to have virtually unlimited leverage.  As a consequence Lehman was able to leverage up 40 to 1.  The free market failed to perceive the risks until it was too late.

Even a little FRB is a slippery slope.  If all money was on the Blockchain, this will never be a problem ever again.