I don't know about the legal issue. But this is how it works as an operational issue
At the individual bank level: banks make loans. They then either borrow the reserves they need at the discount window or overnight market, OR the grow their deposit base to meet their reserve requirements. But the banks make the loans first, and then do whatever to hit their reserve target at the end of the day in order to balance their books.
At a macro level: the banking system makes loans, which in turn create deposits.
You have to look at banking as a balance sheet operation to understand it.
Technically speaking when a bank takes your deposit and pay you interest i.e interest savings or CDs. You are lending them the money. That money becomes part of their reserves that they lend from.
For checking account I'm not sure.
Topic: Hidden Secrets of Money (Read 6724 times)
Actually, banks are prohibited from using consumer deposits to make loans.
That can't be true. Why would there be FDIC insurance?If the bank wants to loan out your money, they need your permission because a deposit is not property; it is a debt owed to the depositor.
In order to understand past and present Law, you must first understand the British and American definitions of words used and based in common law prior to 1900.
Actually, banks are prohibited from using consumer deposits to make loans.
That can't be true. Why would there be FDIC insurance?
If the bank wants to loan out your money, they need your permission because a deposit is not property; it is a debt owed to the depositor.
In order to understand past and present Law, you must first understand the British and American definitions of words used and based in common law prior to 1900.
One of the most accurate sources is the Dictionary of Law consisting of Judicial Definitions and Explanations of Words, Phrases and Maxims.
https://archive.org/details/cu31924022836534
Therein you will find defined the word "deposit" just as I have described.
Actually, banks are prohibited from using consumer deposits to make loans.
That can't be true. How would a savings bank make money? Why would there be FDIC insurance? Do you have a source to back up that statement?
They believe that the government will guarantee fiat money's value, then fiat money will keep their value. They believe that banks will protect their money, then they hand over money to banks. In fact the government can not guarantee anything in return for fiat money, except accept it as a tax payment,
Govt doesn't guarantee value. They back the money as the issuer. They accept it as legal tender. Its the only accepted tender for taxes. Which is legal obligation. The taxes guarantees demand.
and banks just loaned out those money to someone else
Actually, banks are prohibited from using consumer deposits to make loans.When banks create loan the deposit is created simultaneuously as a balance sheet entry. Asset & liability
and banks just loaned out those money to someone else
Actually, banks are prohibited from using consumer deposits to make loans. In principle all those scams depend on people's belief: They believe that the government will guarantee fiat money's value, then fiat money will keep their value. They believe that banks will protect their money, then they hand over money to banks. In fact the government can not guarantee anything in return for fiat money, except accept it as a tax payment, and banks just loaned out those money to someone else
Government is also part of society. Government plays an important role to keep society stable. Anarchists down play government but when shit hits the fan they all go running to government
In principle all those scams depend on people's belief: They believe that the government will guarantee fiat money's value, then fiat money will keep their value. They believe that banks will protect their money, then they hand over money to banks. In fact the government can not guarantee anything in return for fiat money, except accept it as a tax payment, and banks just loaned out those money to someone else
is a Ponzi scheme... simple as that... whats tha matter? just like gov have the monopoly of the force (violence), it has the monopoly of economics (Ponzi)
What is a ponzi? all economics? money?
Well I understand a definition of Ponzi - this is why I asked this question.
If someone tells me that money, economy, bitcoin and perhaps a bank account are ponzi
Maybe I did misunderstood a meaning of main topic?
But I think there is nothing from Ponzi scheme here. in this what was called a ponzi above.
is a Ponzi scheme... simple as that... whats tha matter? just like gov have the monopoly of the force (violence), it has the monopoly of economics (Ponzi)
What is a ponzi? all economics? money?
Well I understand a definition of Ponzi - this is why I asked this question.
If someone tells me that money, economy, bitcoin and perhaps a bank account are ponzi
Maybe I did misunderstood a meaning of main topic?
But I think there is nothing from Ponzi scheme here. in this what was called a ponzi above.
is a Ponzi scheme... simple as that... whats tha matter? just like gov have the monopoly of the force (violence), it has the monopoly of economics (Ponzi)
What is a ponzi? all economics? money?
is a Ponzi scheme... simple as that... whats tha matter? just like gov have the monopoly of the force (violence), it has the monopoly of economics (Ponzi)
What is a ponzi? all economics? money?
is a Ponzi scheme... simple as that... whats tha matter? just like gov have the monopoly of the force (violence), it has the monopoly of economics (Ponzi)
The ponzi will last as long as exponential growth is possible with finite resources and the allotted environmental space allows.Just hope it's natural disaster that triggers reform not ego, and war.
It is an illusion of money, like after you deposit your money at MTGOX, the web interface shows you a number on your account, and you think that money is real
When the Federal Reserve buys a U.S. Treasury bond, it credits the U.S. Treasury with new money, created out of thin air. The only collateral is "the good faith and credit of the U.S. Government." The Treasury can spend that money, illusory or not, for real goods and services. It does this over and over again, thus causing inflation, a hidden tax on everyone who holds dollars.
What you are talking about is base money, it is real money and spendable. Do not mix it up with checkbook money, which is just a number on your account.
You deposit 100 dollars into a bank, then bank loaned out 90 dollars to other people and keep 10 dollars. Your account statement still shows that you have 100 dollars in your bank account, but 90% of those dollars are illusion and can not be spent by you (Double spend is not possible). When you withdraw those 100 dollars, banks will have to find another 90 dollars to give you
In reality there are many different type of accounts, money in most liquid accounts might not get loaned out by banks, but money in those long term saving accounts definitely get loaned out
Most of the video (except the FRB part) is correct
...
What is wrong about the FRB part?...
FRB does not create money, it just created larger amount of checkbook numbers in bank's account, prove that money has been stored there, but those numbers can not be spent, if there is a bank run, those numbers will vanish quickly. The base money will never increase by means of FRB
A larger amount of checkbook numbers is money.
It is an illusion of money, like after you deposite your money at MTGOX, the web interface shows you a number on your account, and you think that money is real
Even with so called tapering, or totally removing QE, the govenment could continue money productions in the semi private bond market. For instance, the USPS could issue a bond with implicit government insurance, or through a newly created empty company. This is what happened to the Reichsmark.
Edit: http://en.wikipedia.org/wiki/Reichsmark
"Dummy Company Currency Expansion"
Absolutely right! If you don't own a wheelbarrow, better get one right away. You'll need one to carry enough fiat currency to buy a loaf of bread.
Most of the video (except the FRB part) is correct
...
What is wrong about the FRB part?...
FRB does not create money, it just created larger amount of checkbook numbers in bank's account, prove that money has been stored there, but those numbers can not be spent, if there is a bank run, those numbers will vanish quickly. The base money will never increase by means of FRB
A larger amount of checkbook numbers is money.
It is an illusion of money, like after you deposite your money at MTGOX, the web interface shows you a number on your account, and you think that money is real
Even with so called tapering, or totally removing QE, the govenment could continue money productions in the semi private bond market. For instance, the USPS could issue a bond with implicit government insurance, or through a newly created empty company. This is what happened to the Reichsmark.
Edit: http://en.wikipedia.org/wiki/Reichsmark
"Dummy Company Currency Expansion"
Most of the video (except the FRB part) is correct
...
What is wrong about the FRB part?...
FRB does not create money, it just created larger amount of checkbook numbers in bank's account, prove that money has been stored there, but those numbers can not be spent, if there is a bank run, those numbers will vanish quickly. The base money will never increase by means of FRB
A larger amount of checkbook numbers is money.
It is an illusion of money, like after you deposite your money at MTGOX, the web interface shows you a number on your account, and you think that money is real
There are two excellent books that describe the history of the central bankers of Europe and how they loaned money to the various governments, and how they played one government against another by financing wars, often financing both sides -- profiting from both.
The first book is a short, quick read at only 136 pages. It is: "None Dare Call It Conspiracy"
The second book provides much more detail and is 588 pages, but still very readable. It is "The Creature From Jekyll Island"
Neither of those books will tell you how money is actually created.
Every new loan must be collateralized by something, so where is this collateral being held?
Did those authors tell you it is held at the DTC? Did they tell you how to get that collateral back and liquidate the bonds that were written against it?
Nope, uncollateralized loans are made all the time. Large companies can get loans without collateral based on cash flow alone. High net worth individuals can also serve as guarantors in lieu of collateral.
This discussion is about how banks create money, not private lending.
What's the difference? A loan is a loan and you said "every new loan must be collateralized." Every loan doesn't have to be collateralized (I don't care what you're talking about) every loan needs to weigh risk (interest rate) along with the borrower(s) ability to repay. That's no different for a government or any individual.
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