Stupid World

[Ocean1]

It isn't a copy as they cannot do anything with it unless it is paid back. It is an asset though, which is why the money multiplier term is a thing, but it is an asset offset by a debt, and thus not an asset that is immediately accessible.

Fuck, your forehead must be a mess by now.

[Brian d marge]

Fuck, your forehead must be a mess by now.

Its not the part which one thinks with , u may and i often use differing apendages especially in the morning
But one assume young mr b is using the correct organ

[bogan]

One of the reasons austrian school economists have issues with FRB

Issues/theories etc count for naught when the numbers are so simple.

https://www.google.co.jp/url?sa=t&so...vqDH8EnIWMnFzw

Cant get any moredefinitive than the bank of england explaination of how money is created
All of which i have pointed out
Except the the use of loans to created new money which is then loaned out at the fractional reserve rate which in turn creates more new money
This is held in check . . .kind of
By the inflation rate
Which is why the frb introduced a new law in 2008 allowing interest to be paid on central bank reserves allowing new money toenter the system without increasing the inflation rate . ,which it would if it was just dumped or released into the economy

So, looking through that I think figure 1 is a good place to start. Upon loaning money to a customer the loan and deposit seemingly materialise out of thin air, at first glance that appears to contradict the FRB explanations and figures I have been giving. But, let's go back to my figures and say the bank had made that $100 profit through interest or other legit means. Holds 20 and lends 80 to the customer, who then deposits the 80 back to the bank who takes their reserve and lends the 64 back to customer and so on. You end up with the customer being loaned 400 for the bank's original 100, ie, the bank can load out value up to the money multiplier * their cash reserves.
So the simplified model is one day the bank has 100 in cash; the next it has 100 in reserves and 400 in both loans to customers and deposits from customers. On the customer side, one day they have 0, the next they have 400 in both loans from, and deposits to, the bank; as shown in the figure.
What is confusing about the figure is that they show two blocks for both parties; the first part of a loan is bank asset, customer liability; then when it is paid back the bank liability and customer asset are added to cancel out the original figures. Because both are shown there is no net asset exchange, the customer can't deposit to the bank and buy a house; or maybe the model assumes they buy a house of somebody else who uses the money to pay off their loan with a bank deposit.

It's a convoluted way of thinking that does its best to fit the figures and the idea that banks create money together. But, the bank does not create money, it merely uses leveraged lending to the illusion of creating money. It is still zero sum, and that is the telling figure, if something is created out of nothing, there would be more of it in total, and there isn't, so it isn't. I guess when talking about assets it is hard to picture a negative amount, but that is what is happening here, banks lend money they don't have (but they are owed), not money they create.

Fuck, your forehead must be a mess by now.

I'm a fairly patient man, and Brian d marge is making me both learn and better understand some stuff I wouldn't otherwise know.

[Brian d marge]

Go and read the link rather than wasting ur time

[bogan]

Go and read the link rather than wasting ur time

Why do you think I didn't? I even refered to one of the figures within it.

[Brian d marge]

Why do you think I didn't? I even refered to one of the figures within it.

Fooled me
Scurries back to check , .


By the way thank u


Fk ya did to

Stupid phone . . , cheap wine nnot sure whixch

[bogan]

Well I think we all understand the simple example of FRB, and it is perhaps the wider implementation of it that is giving headches. So look at it from another point of view, a hypothetical WRB system (wizard reserve banking) in which banks can get money from thin air. transaction 1: 100 deposited, 80 lent out, 20 put in reserve. transaction 2: 64 lent out, 16 in reserve; see the difference? if banks could get money from thin air there is no need for banks to have the deposit liability. Or in the fig 1 case, bank only gets the loan box, deposit is gone as a liability free wizard can just magic up some dosh. In both those cases the sum is no longer equal to the starting capital; that is the mark of money being introduced from unknown (thin air) sources.

PS: that doc is a bit heavy for a wine night init?

[Brian d marge]

Na i can only get my head around open university after fourteen pints of lager hhhaaaaa and it was my lunch break

[Brian d marge]

Well I think we all understand the simple example of FRB, and it is perhaps the wider implementation of it that is giving headches. So look at it from another point of view, a hypothetical WRB system (wizard reserve banking) in which banks can get money from thin air. transaction 1: 100 deposited, 80 lent out, 20 put in reserve. transaction 2: 64 lent out, 16 in reserve; see the difference? if banks could get money from thin air there is no need for banks to have the deposit liability. Or in the fig 1 case, bank only gets the loan box, deposit is gone as a liability free wizard can just magic up some dosh. In both those cases the sum is no longer equal to the starting capital; that is the mark of money being introduced from unknown (thin air) sources.

PS: that doc is a bit heavy for a wine night init?

If i have understood that correctly

Yes
But all hell is and will breakloose

People would get well pissed off so the powers that be make up some billshyt rules to make it look like some one is looking after them

One thing that i have thought is the whole system seems set up for weatlth asset transfer

[mashman]

Issues/theories etc count for naught when the numbers are so simple.

No, because it doesn't work very well when it is offset by such a liability.

S'ok when it suits your argument though .

Look, I get your example (even though it takes the banking out of FRB), however you're denying that any new money has been created

The expansion of $100 of central bank money through fractional-reserve lending with a 20% reserve rate. $400 of commercial bank money is created virtually through loans.

[bogan]

S'ok when it suits your argument though .

Look, I get your example (even though it takes the banking out of FRB), however you're denying that any new money has been created

Ok, I'll fill in the numbers for that one. Assets of 100 is $100 of leveragable assets. Assets of 100 and liabilities of 100 is $0 of net leverageable assets (yeh I know it isn't that simple in practice but the general rule is followed).

Because it has not, the characteristic of new money being created is that the total increases as per the WRB example. Commercial bank money is total funds the bank is applying interest to etc, it is not the total funds available which is base money. Money printing increases the base money, and thus the total, FRB increases the commercial bank money but not the total. Commercial bank money cannot be used in an endless cycle to create more of itself due to limits imposed by the govt.

[mashman]

Ban on 64,000 Auckland woodburners
bwaaaaaa ha ha ha ha ha ha haaaaaa. To counteract the ever increasing number of cars plobably.


Hong Kong officials, democracy protesters hold first talks... My fave part being: "Chief executive Leung Chun-ying, in an interview late Monday, said open elections for his successor as demanded by demonstrators would result in the largest sector of society -- the city's poor -- dominating the electoral process." and he still says that it's democratic . At least the west has the dignity to price people out of the elections.

[mashman]

Ok, I'll fill in the numbers for that one. Assets of 100 is $100 of leveragable assets. Assets of 100 and liabilities of 100 is $0 of net leverageable assets (yeh I know it isn't that simple in practice but the general rule is followed).

Because it has not, the characteristic of new money being created is that the total increases as per the WRB example. Commercial bank money is total funds the bank is applying interest to etc, it is not the total funds available which is base money. Money printing increases the base money, and thus the total, FRB increases the commercial bank money but not the total. Commercial bank money cannot be used in an endless cycle to create more of itself due to limits imposed by the govt.

All of the loaned assets are still in play. If they are left alone then yes, it is a zero sum game and all money can be repaid as long as everyone repays it and doesn't have 1 under the bed for a rainy day... however we're talking about banks lol.

Maybe you should tell the wiki folks. If an asset can be leveraged, which it can (albeit risky as you point out), then you can pluck as much money from the air as you like... indeed that initial 100 has to have come from a bank.

[bogan]

All of the loaned assets are still in play. If they are left alone then yes, it is a zero sum game and all money can be repaid as long as everyone repays it and doesn't have 1 under the bed for a rainy day... however we're talking about banks lol.

Maybe you should tell the wiki folks. If an asset can be leveraged, which it can (albeit risky as you point out), then you can pluck as much money from the air as you like... indeed that initial 100 has to have come from a bank.

They are, and economically this is deemed a 'good thing'.

That initial $100 comes from the central bank, it is base money, and yes it has been printed from thin air at the govt's behest. The $400 worth of commercial bank money (bank assets) it can be multiplied to with FRB cannot be used to secure a loan proportional to that value of assets because loans are not given that way, the debt is taken into account. It is like getting a second home mortgage; the amount you can get depends not on the value of your assets (house) but on its equity (house value - debt on first mortgage). So no, you cannot leverage an asset which does not have a sum value greater than 0.
So we still come back to the conclusion that banks cannot create money from nothing.

What they do however, is create their money from our money; it is a form of taxation, not money printing. That is why it is in the banks interest to make fullest use of the money multiplier, because this increases the transaction count per dollar, the money velocity. Think of GST as the example, spend a dollar once and the govt gets 15c, increase the money velocity and spend it 10 times and the govt ends up with 80c of that. The sum total has not changed, that is still the key thing to focus on when you talk about money printing; a greater sum total when all debts/assets have been accounted for is money printing, the same sum total but distributed differently is taxation (or normal trade, obviously).

[mashman]

Sikorski U-turn: Polish ex-FM backtracks on scandalous 'divide Ukraine' claim... ooooooo's been a naughty boy then