Stupid World

[Akzle]

Which, given your repetitive bleating about shit makes me relatively a fucking sight better off than you.

Akzel needs to work, (harder)

1) say what? have you somehow mistaken anything i've done for "bleating about shit"?
rarking up old white cunts is one of my hobbies.
also, since i don't actually recall bleating for some time, what would be the "shit" that you're on about?

2)

[mashman]

The original 100 goes in, then 80 is lent out, providing 80 that can come back in, etc etc, nothing is plucked from thin air. All the sums add up. Just like balancing a bank statement, you take both the income (deposits) and expenses (withdrawals) to find out how much money you actually have.

Or another example, me and 4 mates pass a 20 dollar note from wallet to wallet (0% fractional reserve), how has $80 been created and where is it?

Of course there's money plucked out of thin air... that first 100 to start with.

Total Deposits: 457.05
Total Amount Lent: 357.05
Reserve: 100

That's the summary. Total lent is done and dusted and according to you those numbers look all happy lovely as they add together to balance the transactions, except when the dust has settled the bank has 457.05 and 100 giving a grand total of 557.05 (I took the 100 away earlier instead of adding it). That means that the bank has made 200 on all of the transactions because they have the returned total deposits as well as the reserve.

All of it is pulled out of thin air, however the 457.05 is backed by the 100, not by 457.05. Now that those total deposits exist, you can lend that 457.05 and after that round you'll end up with 2285.10, rinse and repeat and you've created (printed) 2285.10 that has only ever been backed by 100.

[bogan]

Of course there's money plucked out of thin air... that first 100 to start with.

Total Deposits: 457.05
Total Amount Lent: 357.05
Reserve: 100

That's the summary. Total lent is done and dusted and according to you those numbers look all happy lovely as they add together to balance the transactions, except when the dust has settled the bank has 457.05 and 100 giving a grand total of 557.05 (I took the 100 away earlier instead of adding it). That means that the bank has made 200 on all of the transactions because they have the returned total deposits as well as the reserve.

All of it is pulled out of thin air, however the 457.05 is backed by the 100, not by 457.05. Now that those total deposits exist, you can lend that 457.05 and after that round you'll end up with 2285.10, rinse and repeat and you've created (printed) 2285.10 that has only ever been backed by 100.

The first 100 is deposited into the bank by a person, one assumes the person has obtained it not by way of magery, but in either case, it is not the bank that plucks that 100 out of thin air.

When the dust has settled the bank has 100 in reserve, 457 in money it owes people, and 357 in money people owe it; this completely balances out, and none has been created. You cannot lend that 457 out because the bank does not have 457 to lend as 347 of that has already been lent out. That is like just adding the income on your bank statement while ignoring the expenses and then going an spending that income again, simple maths just doesn't work that way, you can't minus things twice. ie 457-357 != 457

[bogan]

The NZ banks as I understand them

First off NZ has no fractional reserve rate , As far AS I know . this mean it can lend out that dollar as much as they want ...

However they are constrained by capital requirement ratios. or capital adequacy ratio of around 76 % ( asb)

The governments or RBNZ prints around 2% in hard currency M1 cash ( off top of head )

New money enters the system by the RBNZ either by direct printing , ( yes hitting a few keys on a keyboard ) or selling of assets such as bonds , gold silver etc .... and they are constrained to hold the inflation rate between 2 AND 3% SO THEY CAN JUST INCREASE THE MONEY SUPPLY , so they go in the back door by allowing the reserve currency to accumulate interest.( cant find info on this about nz ) ...this is what QE actually is ......moving money so that it can be used .....

The banks now have capital to lend against, so

when you come in for a dollar ....they hit a few keys and produce out of thin air ...one dollar


at 5.75 %

So as there is no reserve to be kept , but are constrained by capital adequacy , 7.6% we get

Future value = $ 1 principle sum x 7.6 times they can lend it out x ( 1+ interest rate 5.75 ) ^no of years

Fv = 7.6 x ( 1+5.75 ) ^1

Fv= $9.50
now after the 1 year they have $8.37 to lend out .......NOT 7.6 compounding ,,,

therefore

FV= 8.37 x7.6 x (1+5.75)^1
=67.26
and so on .............540 ...$ 4339.98 .......$34 880........ $280 333.7.................


Now Im not sure how to apply the capital adequacy ratio I THINK it acts in the same way was the fractional reserve rate , which I think is 9 in America

So , if some one more knowledgeable could add , Im all ears , but them the facts as I understand them

Stephen

at the end of the day shonkey shylock was an apt description


at the current rate of 5.7 % per anumn

That's the key part, how the CAR is applied and that is what limits how far that dollar can be stretched. Interest is another issue entirely as it is money generated via a service, the service may be simple as, but it is one people choose to pay for, thus it is not money created from nothing.

[Brian d marge]

That's the key part, how the CAR is applied and that is what limits how far that dollar can be stretched. Interest is another issue entirely as it is money generated via a service, the service may be simple as, but it is one people choose to pay for, thus it is not money created from nothing.

Car
Is the ratio odassetss to lending
That dollar can be lent out as many times as they want
Held in check by the value of the assets
The original dollar came into the system either . . . .yes from thin air the purchase of government debt or by other asset transfers . . Gold and silver
Think how did asb? Give a billion dollars to christchurch
It was computer generated money

Now i agree on the interest charged for a service

Butthe simple answer do banks print money out of thin air

Yes

[yokel]

[QUOTE=Brian d marge;1130782900
Butthe simple answer do banks print money out of thin air

Yes[/QUOTE]

And no,
If you have an idea for say an invention and you draw a plan did that invention come out of thin air?

[Scuba_Steve]

if everyone went down to the banks tomorrow & asked to withdraw all their money they [the banks] would not be able to fulfil the order, why? Because the money doesn't exist, most of it never has; it's just a lot of IOU's

[Brian d marge]

if everyone went down to the banks tomorrow & asked to withdraw all their money they [the banks] would not be able to fulfil the order, why? Because the money doesn't exist, most of it never has; it's just a lot of IOU's

Royal bank of scotland

[Akzle]

if everyone went down to the banks tomorrow & asked to withdraw all their money they [the banks] would not be able to fulfil the order, why? Because the money doesn't exist, most of it never has; it's just a lot of IOU's

thank fuck for OBR, where the banks aren't actually obliged to give you any cashcash, in such a case, or, if they otherwise feel like it.
becasue it would be such a fucking tragedy if the banks couldn't operate...

[bogan]

if everyone went down to the banks tomorrow & asked to withdraw all their money they [the banks] would not be able to fulfil the order, why? Because the money doesn't exist, most of it never has; it's just a lot of IOU's

They could if they called in all the money they had loaned out (under FRB). The maths and explanation are simple, and correct as I explained them. The problem with it that we both share with the system is the crash you outlined, however it is not caused by bank printing money or otherwise creating it out of thin air, it is caused by banks loaning so much of the money they get, out again to people that cannot repay it at the drop of a hat. The crash and complication in the system come when those markers are called in, yet they cannot be paid back due to reasons like insolvency/bankruptcy bad investments, assets devaluation etc etc.

[bogan]

Car
Is the ratio odassetss to lending
That dollar can be lent out as many times as they want
Held in check by the value of the assets
The original dollar came into the system either . . . .yes from thin air the purchase of government debt or by other asset transfers . . Gold and silver
Think how did asb? Give a billion dollars to christchurch
It was computer generated money

Now i agree on the interest charged for a service

Butthe simple answer do banks print money out of thin air

Yes

Indeed, asset wealth to lending. If CAR is set at 10%, $1 worth of assets (deposited coin) can only be lent 10 times, thus the limit is real. I'm not sure how this works in practice though, FRB is easy cos at any transaction stage the total that can be lent out is always less than the money the bank has. But in this case, do they just manage lending to ensure they don't go below the CAR? ie, get $1 capital in, lend out 10? (and no that 10 can't be used as more capital for more loans) or is it similar to FRB in that money owed to bank is not include when calculating money multiplier? EDIT: actually nm, it still adds to the original value when subtracting loans/deposits so I'm not sure whay you are on about when you say that dollar can be lent out as many times as they want? Similarly to FRB, that dollar can be lent out as many times as it is deposited.

I'm still getting the simple answer that they can stretch money already in existence, but only so far.

[yokel]

if everyone went down to the banks tomorrow & asked to withdraw all their money they [the banks] would not be able to fulfil the order, why? Because the money doesn't exist, most of it never has; it's just a lot of IOU's

That's right unless everyone today repaid all their loans,
I don't think that would be a lot people that would actually have any money to withdraw anyway haha

[Brian d marge]

Indeed, asset wealth to lending. If CAR is set at 10%, $1 worth of assets (deposited coin) can only be lent 10 times, thus the limit is real. I'm not sure how this works in practice though, FRB is easy cos at any transaction stage the total that can be lent out is always less than the money the bank has. But in this case, do they just manage lending to ensure they don't go below the CAR? ie, get $1 capital in, lend out 10? (and no that 10 can't be used as more capital for more loans) or is it similar to FRB in that money owed to bank is not include when calculating money multiplier? EDIT: actually nm, it still adds to the original value when subtracting loans/deposits so I'm not sure whay you are on about when you say that dollar can be lent out as many times as they want? Similarly to FRB, that dollar can be lent out as many times as it is deposited.

I'm still getting the simple answer that they can stretch money already in existence, but only so far.

If u use the british model same as the american frb
3 percent is kept as a reserve so 93 pence can be lent out 9 times
The 9 times is a law in place to reduce the damage in case of a bank run . . Im not sure of the exact figire of top of head 9 or whatever

9 x 97p is 8 pound odd

So 7 pound is imaginary money

It doesnt exits never has done

And there are of course check and balances to minimise the damage

For example asset ratios and min reserves

But the only thing really that backs the loan . . .is the credibility of the institution

It sux but there it is

[mashman]

The first 100 is deposited into the bank by a person, one assumes the person has obtained it not by way of magery, but in either case, it is not the bank that plucks that 100 out of thin air.

When the dust has settled the bank has 100 in reserve, 457 in money it owes people, and 357 in money people owe it; this completely balances out, and none has been created. You cannot lend that 457 out because the bank does not have 457 to lend as 347 of that has already been lent out. That is like just adding the income on your bank statement while ignoring the expenses and then going an spending that income again, simple maths just doesn't work that way, you can't minus things twice. ie 457-357 != 457

Where did the person get the 100 from in the first place? Most probable answer is that the money was plucked out of thin air by the bank because the person turned up with a lump of gold or a cow or a shiny dog turd or sommink else that has some form of perceived value. Either way, the money is plucked out of thin air.

Transaction 1: the bank still has 100. 20 in reserve and a 80 asset.
Transaction 2: the bank still has 80. 16 in reserve and a 64 asset.
etc...

Banks have lent out, but are still owed. By the end of round 1 the banks have 457.05 of deposits. That those deposits belong to someone else is irrelevant, because if it were relevant, then how can you lend the initial 100 deposit which you say wasn't the banks to begin with? At that very same point in time they also hold the 100 reserve. All money created is plucked out of thin air.

[bogan]

If u use the british model same as the american frb
3 percent is kept as a reserve so 93 pence can be lent out 9 times
The 9 times is a law in place to reduce the damage in case of a bank run . . Im not sure of the exact figire of top of head 9 or whatever

9 x 97p is 8 pound odd

So 7 pound is imaginary money

It doesnt exits never has done

And there are of course check and balances to minimise the damage

For example asset ratios and min reserves

But the only thing really that backs the loan . . .is the credibility of the institution

It sux but there it is

That 8 odd pound is only lent out if others owe the bank 7 pound. I'm sure those who owe the bank would rather it be imaginary, but it certainly isn't. The money multiplier thing is actually inhibiting the banks from lending even more, were there no FRB or equivalent the money could be lent out an infinite amount of times as long as it was also deposited an infinite amount of times. In FRB banks cannot lend out money they do not have, they cannot lend the same money out twice unless it is redeposited.

A bank run won't break the banks because the money doesn't exist, a bank run will break the banks because that money is unavailable, it will break the economy by adjusting the value of goods and the dollar due to that unavailability.