New greek finance minister.
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01-02-2015, 05:05 PM
RE: New greek finance minister.
(01-02-2015 04:46 PM)earmuffs Wrote:  The idea that banks create money out of thin air is not more true than any other business creating money from thin air.

Sorry, muffs, but you're dead wrong on this one.

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01-02-2015, 05:10 PM
RE: New greek finance minister.
(01-02-2015 04:54 PM)Chas Wrote:  The gold/diamonds/oil have actual value even in the absence of money. I can trade it for goods and services. You give far too much importance to money over wealth.

Well; as I said, money is only supposed to represent "value". Not that value is a particularly well-defined term, subjective and contextually sensitive as it is.
(and anyone referring to intrinsic value is most definitely full of shit)

To denominate that value by some external means involves money - or, at least, some sort of credit. So yes, money is "created" by the extension of credit, but that doesn't really matter.

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01-02-2015, 09:26 PM
RE: New greek finance minister.
(01-02-2015 05:00 PM)Bucky Ball Wrote:  
(01-02-2015 04:46 PM)earmuffs Wrote:  OMG, not this shit again. Are we really gonna go there again?


Yip, looks like we're going there.


Banks giving out loans and mortgages is recycling money just as tax is.
Banks don't create money, they offer a service and they charge you for that service.

It's the exact same principle as coke cola. They produce a product for X amount of dollars and they charge you X+Y amount of dollars. That Y value is just a made up number by Coke (taking into account many factors) so that they make a profit.

With the bank, they lend you N amount of dollars and charge you X+Y interest rate.
X being their costs, Y being their profit.


The idea that banks create money out of thin air is not more true than any other business creating money from thin air.

Um. I think banks loan out MORE money than they have to maintain in reserves.
IF you put 2,000,000 in a bank they only need to keep a fraction in reserve. They LOAN (example) 10,000,000. THAT is creating money.

Of course they loan out more money they have to keep in reserve, they loan out the rest.. if you put in $2mil, they keep $200k and loan out $1.8mil at whatever interest. They can't physically loan you $10mil because they don't have $10mil.
If 6 people put in $2mil than they would have $10mil to loan out.

Quote:Sorry, muffs, but you're dead wrong on this one.

No I'm not. They can lend money that someone has borrowed and puts back into the bank (a rather pointless endeavor), but that's not creating money.
No money has been created because people have debt that 'balances the books'.

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01-02-2015, 10:11 PM
RE: New greek finance minister.
(01-02-2015 09:26 PM)earmuffs Wrote:  
(01-02-2015 05:00 PM)Bucky Ball Wrote:  Um. I think banks loan out MORE money than they have to maintain in reserves.
IF you put 2,000,000 in a bank they only need to keep a fraction in reserve. They LOAN (example) 10,000,000. THAT is creating money.

Of course they loan out more money they have to keep in reserve, they loan out the rest.. if you put in $2mil, they keep $200k and loan out $1.8mil at whatever interest. They can't physically loan you $10mil because they don't have $10mil.
If 6 people put in $2mil than they would have $10mil to loan out.

Quote:Sorry, muffs, but you're dead wrong on this one.

No I'm not. They can lend money that someone has borrowed and puts back into the bank (a rather pointless endeavor), but that's not creating money.
No money has been created because people have debt that 'balances the books'.

The (put back) money does not STAY in the bank. It's loaned out AGAIN. It's called the "multiplier effect". en.wikipedia.org/wiki/Multiplier_(economics)
Sorry. You are wrong here. See "money multiplier. More money is loaned than is deposited. THAT is money creation.

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02-02-2015, 03:32 AM
RE: New greek finance minister.
Muffs we have had this arguement before. I made a thread called 'somebody prove this wrong' and i gave links out to a group called 'positive money' who had assembled and collaberated with some of the most prominent economists in the UK to put an end to misconceptions and to educate.

Back then you said you dont need to read any 'conspiracy bullshit' to prove me wrong. Please revisit that thread and see what the information says.

Failing that muffs google 'modern money mechanics in the modern economy' to read a 14 page pdf that is written on behalf of the bank of england, that outlines the things i have said.

Im sorry that you did an economic degree and that you were not fully taught money creation, your not the only one though and if you do google 'positive money' you will see plenty of other people with degrees in economics scratchin their heads wondering why.

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02-02-2015, 04:16 AM
RE: New greek finance minister.
(01-02-2015 10:11 PM)Bucky Ball Wrote:  The (put back) money does not STAY in the bank. It's loaned out AGAIN. It's called the "multiplier effect". en.wikipedia.org/wiki/Multiplier_(economics)
Sorry. You are wrong here. See "money multiplier. More money is loaned than is deposited. THAT is money creation.

Argh. The article wasn't very illuminating. Illuminati really need to communicate better.

But let's look at this:

Bank has $100.
Bank loans $100 to X who puts it in the bank again under his name.
Bank loans X's $100 to Y who puts it in the bank again under *his* name.

Bank records show that X owes the Bank $100 and Y also owes the Bank $100. The Bank has $100 sitting there itself. Both X and Y can withdraw $100 although if they do that at the same time the bank is screwed... but the Bank is OK as long as they only withdraw up to $50 each 'cos the bank actually *has* $50.

So I don't see money being created here? Is my example wrong?

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(06-02-2014 03:47 PM)Momsurroundedbyboys Wrote:  And I'm giving myself a conclusion again from all the facepalming.
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02-02-2015, 05:19 AM
RE: New greek finance minister.
(02-02-2015 04:16 AM)morondog Wrote:  Argh. The article wasn't very illuminating. Illuminati really need to communicate better.

But let's look at this:

Bank has $100.
Bank loans $100 to X who puts it in the bank again under his name.
Bank loans X's $100 to Y who puts it in the bank again under *his* name.

Bank records show that X owes the Bank $100 and Y also owes the Bank $100. The Bank has $100 sitting there itself. Both X and Y can withdraw $100 although if they do that at the same time the bank is screwed... but the Bank is OK as long as they only withdraw up to $50 each 'cos the bank actually *has* $50.

So I don't see money being created here? Is my example wrong?

I'm confused. Banks do not only give out money, they also receive money. Depending on the interest rate, they can receive much more than they have loaned.

Doesn't the interest rate somehow balance this? I mean, if banks only had 100$ and could only loan that 100$, they wouldn't actually work. Am I missing something? Consider

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02-02-2015, 05:52 AM
RE: New greek finance minister.
(02-02-2015 05:19 AM)undergroundp Wrote:  I'm confused. Banks do not only give out money, they also receive money. Depending on the interest rate, they can receive much more than they have loaned.

Doesn't the interest rate somehow balance this? I mean, if banks only had 100$ and could only loan that 100$, they wouldn't actually work. Am I missing something? Consider

If you can see from my example, the bank only *actually* has $100 but has loaned out $200...

Then again, it's a toy example and I have no idea what I'm talking about, I wanna see what the others say about the example - it's possibly I've got the way things work entirely wrong...

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(06-02-2014 03:47 PM)Momsurroundedbyboys Wrote:  And I'm giving myself a conclusion again from all the facepalming.
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02-02-2015, 06:47 AM
RE: New greek finance minister.
(02-02-2015 04:16 AM)morondog Wrote:  
(01-02-2015 10:11 PM)Bucky Ball Wrote:  The (put back) money does not STAY in the bank. It's loaned out AGAIN. It's called the "multiplier effect". en.wikipedia.org/wiki/Multiplier_(economics)
Sorry. You are wrong here. See "money multiplier. More money is loaned than is deposited. THAT is money creation.

Argh. The article wasn't very illuminating. Illuminati really need to communicate better.

But let's look at this:

Bank has $100.
Bank loans $100 to X who puts it in the bank again under his name.
Bank loans X's $100 to Y who puts it in the bank again under *his* name.

Bank records show that X owes the Bank $100 and Y also owes the Bank $100. The Bank has $100 sitting there itself. Both X and Y can withdraw $100 although if they do that at the same time the bank is screwed... but the Bank is OK as long as they only withdraw up to $50 each 'cos the bank actually *has* $50.

So I don't see money being created here? Is my example wrong?

If you give 100 units to a bank and they have a reserve ratio of 10% then that means they have to hold back 10 units and can lend out 90 units.

The money you deposit is then put into your account,as a liability on the banks balance sheet as they owe you the units. They do not physically deduct 90 units from your account nor do they move it anywhere. Your account will show 100 units.

When next man comes along to lend 90 units they credit those 90 units into that persons account, it is this crediting (based upon you depositing 100 units) that is the creation of new money, as they have not moved nor touched the accounting entries that make up your account and your 100 units.

If all money existed physically and only physically then they would of course have to move 90 units from your account into somebody elses, unless they made 90 brand new units. Of all of the money flowing around the world only a tiny majority of that is actually real money you can hold in your hand. The rest is just accounts.

That in my opinion, is how it works.

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02-02-2015, 07:02 AM
RE: New greek finance minister.
Quote:Muffs we have had this arguement before. I made a thread called 'somebody prove this wrong' and i gave links out to a group called 'positive money' who had assembled and collaberated with some of the most prominent economists in the UK to put an end to misconceptions and to educate.

Back then you said you dont need to read any 'conspiracy bullshit' to prove me wrong. Please revisit that thread and see what the information says.

I know what you're talking about.

Quote:Im sorry that you did an economic degree


I didn't do an economics degree I did a commercial law degree.

Quote:I'm confused. Banks do not only give out money, they also receive money. Depending on the interest rate, they can receive much more than they have loaned.

Doesn't the interest rate somehow balance this? I mean, if banks only had 100$ and could only loan that 100$, they wouldn't actually work. Am I missing something? Consider

Allow me to explain.

What Bemore, Bucky and cjlr are saying and which is entirely accurate and not what I'm disputing happens is this.

Person A puts $100 into the bank.
The bank must keep 10% in reserve by law. This is to cover that person withdrawing money and to ensure the bank always has money that people can withdraw. It's balanced because Person A might only ever withdraw 5% of his $100 at a time, while someone else might withdraw 15% of their $100. Collectively the two have withdrawn 20% of $200, or 10% each of 2 $100 lots balanced out.

So the bank takes Person A's $100 and puts $10 aside. It than lends $90 of their $100 to Person B.

So the current situation is:
The bank owes Person A $100
Person B owes the bank $90.
The bank has $10 on hand.

So far no new money has been created out of thin air.
Person A is neutral. They are up $100 as a creditor and down $100 liquid cash.
The Bank is neutral. It is down $100 (as a debt to Person A). But it is up $10 liquid cash. And it is up $90 as a creditor to Person B.
Person B is neutral. They're down $90 as a debt to the bank but up $90 liquid cash.

Not taking into account interest rates for simplicity.

Lets say Person B than buys a car with the $90. They buy a car off Person C who than puts the $90 into the bank.

The situation is now:
Person A is neutral, they are up $100 as creditor to the bank, down $100 liquid cash.

The bank is neutral.
- It is down $100 as debt to Person A. It is up $10 cash. It is up $90 creditor to Person B.
- It is up $90 liquid cash. It is down $90 debt to Person C.

Person B is neutral, they are down $90 as debt to the bank but up $90 car asset.

Person C is neutral, they are up $90 as creditor to the bank, down $90 car asset.


Absolutely zero money has been created out of thin air. A whole lot of shuffling around has taken place, but nothing has been created. How the bank makes money is when interest rates are applied. But as I said before, that is no different to coke making a profit on the bottle of coke you buy at the store. The bank offers a service and so charges you for that service. It is just fortune enough that it makes a lot of profit because it's not making 6% off your $100, it's making 6% of your $90 that it lends out over and over that money shifts between people.
ie: In the example above they would charge Person B interest to lend them the money. Person C than puts that $90 in the bank which the bank lends out again and they (the bank) than charge Person D interest to borrow that money. In the above example only $100 has been put into the system but the bank has charged interest on $90 and again on $81. So yeah they do make a lot of money, but they don't create new money out of thin air like these guys are trying to say.

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