Stupid World

[mashman]

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).

A little debt is a good thing eh.

That initial $100 comes from the central bank, it is base money, and yes it has been printed from thin air

So we still come back to the conclusion that banks cannot create money from nothing.

Does not compute.

Found in an IMF working paper: "Bank reserves held at the central bank have also generally been negligible in size, except of course after the onset of the 2008 financial crisis. But this quantitative point is far less important than the recognition that they do not play any meaningful role in the determination of wider monetary aggregates. The reason is that the �deposit multiplier� of the undergraduate economics textbook, where monetary aggregates are created at the initiative of the central bank, through an initial injection of high-powered money into the banking system that gets multiplied through bank lending, turns the actual operation of the monetary transmission mechanism on its head. This should be absolutely clear under the current inflation targeting regime, where the central bank controls an interest rate and must be willing to supply as many reserves as banks demand at that rate. But as shown by Kydland and Prescott (1990), the availability of central bank reserves did not even constrain banks during the period, in the 1970s and 1980s, when the central bank did in fact officially target monetary aggregates.9 These authors show that broad monetary aggregates, which are driven by banks� lending decisions, led the economic cycle, while narrow monetary aggregates, most importantly reserves, lagged the cycle. In other words, at all times, when banks ask for reserves, the central bank obliges. Reserves therefore impose no constraint. The deposit multiplier is simply, in the words of Kydland and Prescott (1990), a myth.10 And because of this, private banks are almost fully in control of the money creation process."

[bogan]

A little debt is a good thing eh.





Does not compute.

Found in an IMF working paper: "Bank reserves held at the central bank have also generally been negligible in size, except of course after the onset of the 2008 financial crisis. But this quantitative point is far less important than the recognition that they do not play any meaningful role in the determination of wider monetary aggregates. The reason is that the �deposit multiplier� of the undergraduate economics textbook, where monetary aggregates are created at the initiative of the central bank, through an initial injection of high-powered money into the banking system that gets multiplied through bank lending, turns the actual operation of the monetary transmission mechanism on its head. This should be absolutely clear under the current inflation targeting regime, where the central bank controls an interest rate and must be willing to supply as many reserves as banks demand at that rate. But as shown by Kydland and Prescott (1990), the availability of central bank reserves did not even constrain banks during the period, in the 1970s and 1980s, when the central bank did in fact officially target monetary aggregates.9 These authors show that broad monetary aggregates, which are driven by banks� lending decisions, led the economic cycle, while narrow monetary aggregates, most importantly reserves, lagged the cycle. In other words, at all times, when banks ask for reserves, the central bank obliges. Reserves therefore impose no constraint. The deposit multiplier is simply, in the words of Kydland and Prescott (1990), a myth.10 And because of this, private banks are almost fully in control of the money creation process."

Yup. The 10k debt I owe on engineering gear has allowed me to produce vastly more production that I have to pay in servicing that debt. If debt was restricted to 0, so would my production be.

Perhaps it doesn't compute because you cut out the part where I pointed out it was the govt that allowed the printing of money, please be truthful in your quotes.

Note the almost part in your other quote, that is pointing out they are still required to get the govt to create money; the opinion of the writers is likely just that either that approval will be given, or that the banks operate far enough away from the limit is does not apply. Like I said before, opinions are many, varied, and open to interpretation; the numbers simply show us how something works. And all of the numbers I've put up show how banks cannot print money under FRB, and no numbers have been put up showing otherwise.

[mashman]

Yup. The 10k debt I owe on engineering gear has allowed me to produce vastly more production that I have to pay in servicing that debt. If debt was restricted to 0, so would my production be.

Perhaps it doesn't compute because you cut out the part where I pointed out it was the govt that allowed the printing of money, please be truthful in your quotes.

Note the almost part in your other quote, that is pointing out they are still required to get the govt to create money; the opinion of the writers is likely just that either that approval will be given, or that the banks operate far enough away from the limit is does not apply. Like I said before, opinions are many, varied, and open to interpretation; the numbers simply show us how something works. And all of the numbers I've put up show how banks cannot print money under FRB, and no numbers have been put up showing otherwise.

There will always be debt where there is a financial system.

It has nothing to do with the govt as banks can print what they like when they like irrespective of who asks for it. Doing so in accordance within "acceptable" guidelines is a courtesy, not a requirement.

I did note the almost and as I said above that almost is because of courtesy. No money, no FRB.

[bogan]

It has nothing to do with the govt as banks can print what they like when they like irrespective of who asks for it.

Please show with a numerical example how this is the case, I have clearly shown how it is not so I would like to correct your choice of that conclusion. Perhaps you would like to examine increases in M1, M2 etc (deposits/loans etc) with those in M0/MB (actual money, printed by the govt).

[mashman]

Please show with a numerical example how this is the case, I have clearly shown how it is not so I would like to correct your choice of that conclusion. Perhaps you would like to examine increases in M1, M2 etc (deposits/loans etc) with those in M0/MB (actual money, printed by the govt).

If you insist.

[bogan]

If you insist.

That is national debt, and it does not support the idea of banks being able to print money.

[MisterD]

It has everything to do with the govt as central banks can print what they like when they like irrespective of who asks for it.

Fixxored etc.

[unstuck]

[mashman]

That is national debt, and it does not support the idea of banks being able to print money.

Debt is printed.

[bogan]

Debt is printed.

Seems you've run to the end of your tether, I can hope you'll learn from this as you did from the anti-semitism lecture you got a while ago, but I shall not hold my breath; still, seems like a few others did learn some things so all is not a waste.

Will leave you with this though, despite being able to lend out so much more, banks in US chose to keep the M0-M1 money multiplier below 1 after the GFC. Seems like the actions of those worried about their liquid reserves, doesn't seem like the actions of those who could pull liquid reserves out of thin air any time they chose.

I've shown the mechanism, I've shown its working, I've show the historical data; all you've shown is your bias. Game, set, match; mashy.

[oldrider]

There is a subtle difference between printing money and creating money via book entries the latter is almost limitless!

[Brian d marge]

Please show with a numerical example how this is the case, I have clearly shown how it is not so I would like to correct your choice of that conclusion. Perhaps you would like to examine increases in M1, M2 etc (deposits/loans etc) with those in M0/MB (actual money, printed by the govt).

I dont think you are going to find *printed money* on the balance sheets ....They DO do it as a way of keeping the inflation rate between 2 and 3 %



http://en.wikipedia.org/wiki/Reserve...of_New_Zealand

http://www.tradingeconomics.com/new-...oney-supply-m1

http://www.rbnz.govt.nz/research_and..._1lawrence.pdf

here is a link to fractional reserve , showing the limiting effect of , a money multiplier http://en.wikipedia.org/wiki/Fractional_reserve_banking

on the last link towards the end it explains how the reserve bank pays interest on the overnight deposits , this is how the * printed money * enters the system

Ive given u numbers , and a video And official documentation .

the rest is up to to u

Stephen

[bogan]

There is a subtle difference between printing money and creating money via book entries the latter is almost limitless!

Indeed, the subtlety is the latter is that it is zero sum, and thus not a creation at all, simply a series of I.O.U.s

I dont think you are going to find *printed money* on the balance sheets ....They DO do it as a way of keeping the inflation rate between 2 and 3 %



http://en.wikipedia.org/wiki/Reserve...of_New_Zealand

http://www.tradingeconomics.com/new-...oney-supply-m1

http://www.rbnz.govt.nz/research_and..._1lawrence.pdf

on the last link towards the end it explains how the reserve bank pays interest on the overnight deposits , this is how the * printed money * enters the system

Ive given u numbers , and a video And official documentation .

the rest is up to to u

Stephen

The 'they' is not commercial banks though is it.

And that 'printed money' entering the system comes vis the govt bank, not commercial banks. It is the govt bank, and the economic policy that govern how much money is printed either directly, or 'printed' by adjusting things like the OCR.

I know money is printed, I know the RBNZ controls inflation rates etc, I know banks use base money to create significantly more money in the form of commercial bank money; these things we agree on yes? I also know that commercial banks are limited in how they 'create' money, it does not come from thin air and thus without limit; do you understand that a bank getting interest overnight from the RBNZ is govt controlled, and limited?

[Brian d marge]

Indeed, the subtlety is the latter is that it is zero sum, and thus not a creation at all, simply a series of I.O.U.s



The 'they' is not commercial banks though is it.

And that 'printed money' entering the system comes vis the govt bank, not commercial banks. It is the govt bank, and the economic policy that govern how much money is printed either directly, or 'printed' by adjusting things like the OCR.

I know money is printed, I know the RBNZ controls inflation rates etc, I know banks use base money to create significantly more money in the form of commercial bank money; these things we agree on yes? I also know that commercial banks are limited in how they 'create' money, it does not come from thin air and thus without limit; do you understand that a bank getting interest overnight from the RBNZ is govt controlled, and limited?

Yes to all , if it wasnt limited I would be wallpapering my house with Barundi dinar


but the very nature of fractional reserve creates , up to a limit , due to that required reserve a money multiplier effect is created and that money is NEW money , not backed by anything , but created by the movement or the energy of money . As is the interest charged on the newly created money

now the interest , I know is the cost of money based upon risk

but it introduce interest and the money supply becomes an open system , a system not in equilibrium and I THINK open to the laws of entropy , where as the system expands , internal energy tends towards zero , ie the energy , purchasing power of money declines until it worthless .

Finally MOST people use the shorthand that money is printed , out of thin air . but its created by the use of a service ....( commercial banks )

either way the result is the same and its all just a big wealth transference scheme all the above is IMHO

fkers

Stephen

[Ocean1]

but the very nature of fractional reserve creates , up to a limit , due to that required reserve a money multiplier effect is created and that money is NEW money , not backed by anything

Any new money put into circulation with no connection to a realisable asset is inflation on a stick. In terms of the overall size of the economy it's tiny, and it's sole use is to heat up a sluggish economy, it's the opposite to tightening lending criteria.

This is where mushbrains gets his "money from fresh air" fixation. If there was any unsecured loans available I'm pretty sure I'd be in the queue.

In the real world if there was no fractional reserve system the quantity of existing deposits would be the only money available to lend, just 17% of what's currently available. Almost all of that 83% extra are mortgages.