Topic: Why a block chain type distribution principal type of issuance is important.... (Read 845 times)

when you (& bank manager) signed contract saying you going to pay back 100,000$ to small/big bank that contract is a good as paper money as they give you in return in essense you just created the 100,000 bank just exchanged it into bills can use other places

and only reaosn can use them other places is most dont realize how screwed system is and actually trust the banks

Anyway I'm sure it will all turn out for the best don't you think ?

"With the smaller-bigger bank thing? The way I understand it the bigger banks loan money to the smaller banks (think credit unions and small local banks) at a low rate (like .8-1.2% interest) which they then loan out in addition to depositors funds in the form of credit cards and short term loans, stuff they can make money on quickly."

I think you might be getting confused with the bank re-discount rate ?

here is someone asking the same question 4 years ago - and amazingly and amusingly the best answer is also deceptive and incorrect as the answer seems to vaguely trying to imply that loans come from deposits.

http://answers.yahoo.com/question/index?qid=20091016113056AA5zTAe


loans do not come from deposits {in theory they could but they do not.} - loans are issued out of new money though debt issuance , the signature authorizes the new loan it is the " promise to pay"

A new loan is "Credit creation" it is new money , can and will go to deposit and be treated as "money" to justify new loans, which are "credit creation" , and new money....
 
in the same way the Government issues a "bond" which is just an IOU and then turns that into "currency"  but borrows it , you will laugh if you finally understand this .

most citizens of the world are being slapped in the face 3 times before then they are asked to pay "tax" and pay "interest" .

its a pretty funny situation .

In Iran? I don't know for sure, but at least some of the loans are 0 interest development funds, used as a way to get more money into the economy to help it grow, rather than just printing it, and paying government workers with it.

With the smaller-bigger bank thing? The way I understand it the bigger banks loan money to the smaller banks (think credit unions and small local banks) at a low rate (like .8-1.2% interest) which they then loan out in addition to depositors funds in the form of credit cards and short term loans, stuff they can make money on quickly.

That is very relevant , also I was thinking about where does say , oh , interest play a part ?

As always, it's possible I could be proven wrong, but to the best of my knowledge, the smaller banks get loans from the larger banks at preferable rates in order to lend it out, in addition to the deposits. I don't know anyone who runs a smaller bank, so I can't be 100% sure, but that's the way it works to the best of my knowledge.

Iran, Syria, and North Korea do not have Fractional reserve banks. Iran's bank is government controlled, it's basically a more flexible version of the U.S. Mint. I believe Syria is much the same. I don't think I need to describe North Korea's banking situation, do I?

Walking glitch , you seem to have gotten one.

You need to explain what , then,  they do partake in ? 

You linked to two long winded documentary that explain in a long winded way , they they do exactly that.

I will leave it at that .


Anyone want to add the best part ? 

You might be asmused,  scared and entertained .

Anyone else want to add anything very relevant ? 

People don't already know this?

I seemed to have mis-interpreted what you said earlier, as for the most part I am in agreement with what you stated here, however, the small banks and credit unions themselves do not actuaklly partake in fractional reserve banking at their level, it's the banks above them that do.

A good video explaining this: http://www.youtube.com/watch?v=jqvKjsIxT_8
Another one: http://www.youtube.com/watch?v=Itn1P4KpZpU

...... and your life is a lie and most of the population are destined to be the working poor, and other matters.


First forum moderator , this is relevant to cryptocurrency, and specifically to alternative cryptocurrency, for the following reason , it was brought up in the Caps thread with relation to Proof of stake .

I was amused, scared and  entertained at how little is known of this simple process.

If investors and owners or creators of cryptocurrency do not understand the basics of modern money mechanics .

How are we as humans , meant to progress?  , do we just " take for granted" that someone else will understand and make sure everything is functioning ?

What a sad existance , why this relates to alternatives is because  a fork of the evolution of cryptocurrency is moving away from the blockchain system as we traditionally understand it .

With this in mind and the ignorance that abounds , what stops us docile creatures from making the same sheep like mistakes ?

So with no further delay......


From our friends at wikipedia

http://en.m.wikipedia.org/wiki/Fractional_reserve_banking



Fractional-reserve banking is the practice whereby a bank retains only a portion of its customers' deposits as readily available reserves from which to satisfy demands for payment.

Reserves are held at the bank as currency or held as deposits in the bank's accounts at the central bank. The remainder of customer-deposited funds is used to fund investments or loans that the bank makes to other customers.[1]

 Most of these loaned funds are later redeposited into banks, allowing further lending. Because bank deposits are usually considered money in their own right, fractional-reserve banking permits the money supply to grow to a multiple of the underlying reserves of base money originally created by the central bank.[2][3]

To mitigate the risks of bank runs (when a large proportion of depositors seek withdrawal of their demand deposits at the same time) or, when problems are extreme and widespread, systemic crises, the governments of most countries regulate and oversee commercial banks, provide deposit insurance and act as lender of last resort to commercial banks.[2][3]


In most countries, the central bank (or other monetary authority) regulates bank credit creation, imposing reserve requirements and other capital adequacy ratios. This limits the amount of money creation that occurs in the commercial banking system, and helps ensure that banks have enough funds to meet the demand for withdrawals.


[3]Fractional-reserve banking is the current form of banking in all countries worldwide.[4]


Now I expect most have not let the gravity of the situation sink in , im happy  with that , all we need is a general understanding at least from the Peer level.