Topic: Why There Should Be A Bitcoin Central Bank - page 12. (Read 18307 times)

My mistake is considering the monetary base to be money and the rest to be imaginary. In a way that is true, but if it walks like a duck and it quacks like a duck ...

Bitcoin is simliar in a way. Bitcoins don't exist in the sense that they are tangible or that they are even stored somewhere, but somehow you can still transfer them.

That is because they _do_ both have the money. New money is absolutely created by the act of making the loan. I do not take the expression too literally. You are mistaken. Please read what is occurring before you make further incorrect assertions.

I think you take the "create money out of thin air" expression too literally. They get money from depositors and they loan it out. That's how money appears to be created since both the depositor and the borrower act as if they have the money.

That is because they _do_ both have the money. New money is absolutely created by the act of making the loan. I do not take the expression too literally. You are mistaken. Please read what is occurring before you make further incorrect assertions.

banks create money whenever they lend to someone in the economy or buy an asset from consumers.

I think you take the "create money out of thin air" expression too literally. They get money from depositors and they loan it out. That's how money appears to be created since both the depositor and the borrower act as if they have the money.

There are two possibilities when it comes to Bitcoin banking, fractional reserve and central banking:

1) People in general never accept Bitcoin substitues as money.  In otherwords, people want to have and to hold real Bitcoins in their hot little hands and do not use and accept Bitcoin IOUs as money (notes representing a future claim on an amount of BTC held on an account somewhere).

In this scenario:

     Bitcoin banking is relegated to "Bitcoin warehousing"
     Fractional reserve banking is somewhat limited
     Central banking (central control of the number of Bitcoin notes in circulation) is not really needed

2) People in general do accept Bitcoin substitues as money.  In otherwords, people do not really care if they have and hold real Bitcoins, they accept Bitcoin notes to be as good as or almost as good as the real thing and they accept Bitcoin IOUs as money.

In this scenario:

     Bitcoin banking can develop and grow
     Fractional reserve banking can develop and grow
     Central banking (central control of the number of Bitcoin notes in circulation) would probably be necessary to limit and control the fractional reserve Bitcoin banks - keep them from printing too many Bitcoin notes

Note that even in scenario #2 you personally can decide to not participate in the Bitcoin substitute market and demand and use only the real thing so even if a vast market in Bitcoin substitutes develops you personally do not have to participate in it.

Writers, like everyone else need to pay bills. If you are implying that the writer of the article in the OP should write only on his own site, then he would likely end up finding a new career because this would likely not be enough to support himself. Publications like Forbes will hire freelance writers because of their ability to write and draw in readers.

But honestly, if this guy was a truly independent and freethinker, do you think Forbes would post his article? If he was the right kind of person and genuine he wouldn't be writing articles for Forbes in the first place. That's more than enough clues for me.

Forbes contributors aren't some unified body. They freelance contribute. I've read many good articles by contributors and many really terrible (and grammatically error-ridden) ones like this.

Forbes contributors aren't some unified body. They freelance contribute. I've read many good articles by contributors and many really terrible (and grammatically error-ridden) ones like this.

Bullshit. The fractional part is created out of thin air. That is what makes it fractional. They don't pay any interest on this newly created money.

Fractional reserves are not free to banks. The bank must pay it's deposit holders and bond holders interest on the money on deposit and lent. When a bank lends money to someone, they need to make sure they are an appropriate risk and price the loan accordingly. When a borrower falls behind on their payments they need to make collection efforts to collect what is owed by the borrower. All of these things cost money.

I cannot believe so many people accept this idea.

Here's the issue: by making fractional reserve loans, the banks are creating money out of nothing. Then they lend this newly created out at interest. This money that cost them nothing. The increase in the money supply reduces the purchasing power of every bit of money that existed before the loan was made. This reduction in purchasing power is a very real theft of very real wealth from each and every person that held money at t=0-.

And who benefits from this theft of wealth? Temporarily, the loanee. But by the first payment, the bank is receiving net positive income from this stolen wealth.

Theft is theft. Whether by gunpoint or by fractional reserve banking.

I cannot believe so many "free market" people are against this idea. If this is what consumers want, someone should provide it, for a fee. More to the point, lending is important, especially when buying a house. Fractional reserves allows others to earn interest on their savings.

... conveniently located down the road to augment their scat needs.