How is money created?

[Toddsterpatriot]

Banks do not lend out deposits

How long does the lending bank remain in business with $0 deposits?

Todd, does a bank take from its deposits to loan?

Todd, does a bank take from its deposits to loan?

Where else would the money come from to clear the check?

Jesus. Loans create deposits. Your entire argument isn't even attacking that.

Honestly, I have an okay (not great, but I'm not totally ignorant either) understanding of money creation and I'm having a hard time following you two.

My understanding is that a bank receives a deposit from a client. The bank then generally keeps a certain % of that deposit stored (based off of laws or the bank's policies) and then seeks to loan out or invest the rest. As an example, let's say Todd deposits $100 in Bank [US]. Bank [US] has a policy of keeping 20% of deposits and looking to loan the rest. Kiin goes to Bank [US] wanting a loan. Bank [US] loans Kiin $80. In this scenario Bank [US] has just created $80 for the economy.

Banks create 100% of the loan, not 90%. For a $1000 loan, the bank creates a $1000 deposit (their liability) and a $1000+ promissory note (their asset). The 10% that you think is set aside is actually just their reserve requirement increasing by $100. And reserve transactions happen within the walls of the Fed - banks never touch those reserves.

Here's where deposits come in: to your bank, they are a cheap source of reserves, nothing more. When you deposit a check (drawn on a different bank) for $150, your bank marks up your account by $150 (a liability to your bank), and the Fed transfers $150 from the other bank's reserve account to your bank's reserve account. Assets = liabilities, and the bank's position doesn't change. But now, because of the deposit, your bank has $135 in excess reserves, and they probably aren't paying you any interest, either.

Without your deposit, the bank could still make the loan; their reserve account doesn't have to be brought up until days later.

And reserve transactions happen within the walls of the Fed - banks never touch those reserves.

Banks touch reserves all the time.

 

[Toddsterpatriot]

Most americans have absolutely no idea.
I wonder what you guys know?
Here's the truth:
- Loans create new money, this shows up in the form of deposits.
- The federal government creates new money through deficit spending. The central bank also plays an important role.

I expect many posters to take an issue with my assertion that Loans create deposits.
Banks do not lend out deposits or multiply up central bank money.

http://www.bankofengland.co.uk/publ...lletin/2014/qb14q1prereleasemoneycreation.pdf

This article explains how the majority of money in the modern economy is created by commercial banks making loans. • Money creation in practice differs from some popular misconceptions — banks do not act simply as intermediaries, lending out deposits that savers place with them, and nor do they ‘multiply up’ central bank money to create new loans and deposits. • The amount of money created in the economy ultimately depends on the monetary policy of the central bank. In normal times, this is carried out by setting interest rates. The central bank can also affect the amount of money directly through purchasing assets or ‘quantitative easing’.

That's how things work now, but that doesn't mean that's how they have to work. Before the Federal Reserve was created gold was money. The quantity of money remained fixed except for when new gold deposits were discovered. Under the gold standard the value of the dollar in 1914 was greater than when the Constitution was ratified in 1789. Since that time the value of the dollar has decreased by a factor of 20. A modern dollar is worth only 5% of what an 1914 dollar was worth.

You can be the judge of which system is better.

The quantity of money remained fixed except for when new gold deposits were discovered.

Bank loans under the gold standard also increased the money supply.

No, they merely created more claims to money. They created no more gold.

No, they merely created more claims to money. They created no more gold.

Bank loans increased the money supply, they did not increase the gold supply.

 

[Rustic]

Money is just an IOU… That simple. The US treasury, the federal reserve and US government have no money. The federal debt is far too large for the federal government to have any assets.

Money is just an IOU… That simple.

I saw that claim the first time you posted it. So who owes me for this $20 FRN I'm holding?

The federal government robs Peter to pay Paul = our currency... It's just an exchange of IOUs

Yeah, the government sucks.
You still haven't answered my question.

Printed paper has no value... It's an IOU. LOL

Printed paper has no value...

So you say.

It's an IOU.

Cool. Who owes me?

So-called money is just a number in the computer, in other words an IOU... Lol

 

[Contumacious]

Todd, does a bank take from its deposits to loan?

Todd, does a bank take from its deposits to loan?

Where else would the money come from to clear the check?

Jesus. Loans create deposits. Your entire argument isn't even attacking that.

Honestly, I have an okay (not great, but I'm not totally ignorant either) understanding of money creation and I'm having a hard time following you two.

My understanding is that a bank receives a deposit from a client. The bank then generally keeps a certain % of that deposit stored (based off of laws or the bank's policies) and then seeks to loan out or invest the rest. As an example, let's say Todd deposits $100 in Bank [US]. Bank [US] has a policy of keeping 20% of deposits and looking to loan the rest. Kiin goes to Bank [US] wanting a loan. Bank [US] loans Kiin $80. In this scenario Bank [US] has just created $80 for the economy.

Banks create deposits when they loan.
A good read:
The truth is out: money is just an IOU, and the banks are rolling in it | David Graeber
Why Do Banks Want Our Deposits? Hint: It’s Not to Make Loans.

Many authorities have said it: banks do not lend their deposits. They create the money they lend on their books.

Robert B. Anderson, Treasury Secretary under Eisenhower, said it in 1959:

When a bank makes a loan, it simply adds to the borrower’s deposit account in the bank by the amount of the loan. The money is not taken from anyone else’s deposits; it was not previously paid in to the bank by anyone. It’s new money, created by the bank for the use of the borrower.

The Bank of England said it in the spring of 2014, writing in its quarterly bulletin:

The reality of how money is created today differs from the description found in some economics textbooks: Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits.

. . . Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.

All of which leaves us to wonder: If banks do not lend their depositors’ money, why are they always scrambling to get it? Banks advertise to attract depositors, and they pay interest on the funds. What good are our deposits to the bank?

The answer is that while banks do not need the deposits to create loans, they do need to balance their books; and attracting customer deposits is usually the cheapest way to do it.

Why Do Banks Want Our Deposits? Hint: It’s Not to Make Loans.

Ellen Brown is a moron. Your use of her as a source is perfect.

When a bank makes a loan, it simply adds to the borrower’s deposit account in the bank by the amount of the loan. The money is not taken from anyone else’s deposits; it was not previously paid in to the bank by anyone. It’s new money, created by the bank for the use of the borrower.


Yes. And when the borrower tries to use that money, whether by withdrawing currency at the lending bank or writing a check against their new deposit account, the bank better have access to deposits, if it doesn't want the check to bounce.

A simple, hypothetical example will illustrate the principal of insanity that is the basis of our current monetary system.

Suppose JPMorgan holds $1 billion in total deposits. In the original form of our fractional-reserve fraud, the fraud ratio was set at 10:1. This meant that for every dollar that a bank actually held, it was allowed to “lend” $10. Now for the simple arithmetic.

JPMorgan is holding $1 billion of other peoples’ property, but it is allowed to “lend” a total of $10 billion. Where does the other $9 billion come from? It is conjured out of thin air via fractional-reserve fraud. Thus, for many readers, this represents their first actual glimpse of the full scope of fraudulence of our current monetary system.

 

[Rustic]

Federal reserve, U.S. Treasury and the federal government have just a stack of electronic IOUs they exchanged back-and-forth… Some people collect it money. Lol

 

[Toddsterpatriot]

Banks do not lend out deposits

How long does the lending bank remain in business with $0 deposits?

Todd, does a bank take from its deposits to loan?

Todd, does a bank take from its deposits to loan?

Where else would the money come from to clear the check?

Jesus. Loans create deposits. Your entire argument isn't even attacking that.

You didn't explain how the check clears.

If their isn't enough money in Billy's deposit, which Billy does indeed draw from, of course the check isn't going to clear. Now, how did billy's deposit get their in the first place?

If their isn't enough money in Billy's deposit, which Billy does indeed draw from, of course the check isn't going to clear.

You said Billy borrowed $10,000. So they created a deposit account for Billy of $10,000.
How can there not be enough money in Billy's deposit for him to withdraw $10,000?

 

[Toddsterpatriot]

Banks do not lend out deposits

How long does the lending bank remain in business with $0 deposits?

It doesn't, because a bank that isn't lending doesn't have anyone going to it for loans.
This should be common sense.

It doesn't

I agree, it doesn't remain in business.

a bank that isn't lending doesn't have anyone going to it for loans.

Your bank did lend to you. $10,000 for your car purchase. Did you forget already?

You're all over the place. Notice how you fail to provide evidence that deposits create loans.

Notice how you fail to provide evidence that deposits create loans.

Deposits don't create loans, deposits give banks the money they need to clear loan checks.

Deposits are used to balance the books and attract customers. Banks don't want to hold deposits in large amounts, it's a liability.

Deposits are used to balance the books and attract customers.

A loan creates a deposit. Sounds like the books already balance.
Why would they need a second deposit?

 

[Rustic]

Todd, does a bank take from its deposits to loan?

Todd, does a bank take from its deposits to loan?

Where else would the money come from to clear the check?

Jesus. Loans create deposits. Your entire argument isn't even attacking that.

You didn't explain how the check clears.

If their isn't enough money in Billy's deposit, which Billy does indeed draw from, of course the check isn't going to clear. Now, how did billy's deposit get their in the first place?

If their isn't enough money in Billy's deposit, which Billy does indeed draw from, of course the check isn't going to clear.

You said Billy borrowed $10,000. So they created a deposit account for Billy of $10,000.
How can there not be enough money in Billy's deposit for him to withdraw $10,000?

IOUs

 

[Toddsterpatriot]

Money is just an IOU… That simple.

I saw that claim the first time you posted it. So who owes me for this $20 FRN I'm holding?

The federal government robs Peter to pay Paul = our currency... It's just an exchange of IOUs

Yeah, the government sucks.
You still haven't answered my question.

Printed paper has no value... It's an IOU. LOL

Printed paper has no value...

So you say.

It's an IOU.

Cool. Who owes me?

So-called money is just a number in the computer, in other words an IOU... Lol

So-called money is just a number in the computer, in other words an IOU.

Before we get to deposit accounts, I want to clear up your claim about FRNs.

 

[Norman]

Todd, does a bank take from its deposits to loan?

Where else would the money come from to clear the check?

Jesus. Loans create deposits. Your entire argument isn't even attacking that.

Honestly, I have an okay (not great, but I'm not totally ignorant either) understanding of money creation and I'm having a hard time following you two.

My understanding is that a bank receives a deposit from a client. The bank then generally keeps a certain % of that deposit stored (based off of laws or the bank's policies) and then seeks to loan out or invest the rest. As an example, let's say Todd deposits $100 in Bank [US]. Bank [US] has a policy of keeping 20% of deposits and looking to loan the rest. Kiin goes to Bank [US] wanting a loan. Bank [US] loans Kiin $80. In this scenario Bank [US] has just created $80 for the economy.

Banks create deposits when they loan.
A good read:
The truth is out: money is just an IOU, and the banks are rolling in it | David Graeber
Why Do Banks Want Our Deposits? Hint: It’s Not to Make Loans.

Many authorities have said it: banks do not lend their deposits. They create the money they lend on their books.

Robert B. Anderson, Treasury Secretary under Eisenhower, said it in 1959:

When a bank makes a loan, it simply adds to the borrower’s deposit account in the bank by the amount of the loan. The money is not taken from anyone else’s deposits; it was not previously paid in to the bank by anyone. It’s new money, created by the bank for the use of the borrower.

The Bank of England said it in the spring of 2014, writing in its quarterly bulletin:

The reality of how money is created today differs from the description found in some economics textbooks: Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits.

. . . Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.

All of which leaves us to wonder: If banks do not lend their depositors’ money, why are they always scrambling to get it? Banks advertise to attract depositors, and they pay interest on the funds. What good are our deposits to the bank?

The answer is that while banks do not need the deposits to create loans, they do need to balance their books; and attracting customer deposits is usually the cheapest way to do it.

Why Do Banks Want Our Deposits? Hint: It’s Not to Make Loans.

Ellen Brown is a moron. Your use of her as a source is perfect.

When a bank makes a loan, it simply adds to the borrower’s deposit account in the bank by the amount of the loan. The money is not taken from anyone else’s deposits; it was not previously paid in to the bank by anyone. It’s new money, created by the bank for the use of the borrower.


Yes. And when the borrower tries to use that money, whether by withdrawing currency at the lending bank or writing a check against their new deposit account, the bank better have access to deposits, if it doesn't want the check to bounce.

A simple, hypothetical example will illustrate the principal of insanity that is the basis of our current monetary system.

Suppose JPMorgan holds $1 billion in total deposits. In the original form of our fractional-reserve fraud, the fraud ratio was set at 10:1. This meant that for every dollar that a bank actually held, it was allowed to “lend” $10. Now for the simple arithmetic.

JPMorgan is holding $1 billion of other peoples’ property, but it is allowed to “lend” a total of $10 billion. Where does the other $9 billion come from? It is conjured out of thin air via fractional-reserve fraud. Thus, for many readers, this represents their first actual glimpse of the full scope of fraudulence of our current monetary system.

It's not fraud if you have agreed to it. Every guy who puts money into bank has agreed that the bank can lend it, and yet he can take it out.

Problem here is the government that forces this system on you, in an attempt to tax you through money creation. The fraud is the socialism.

 

[Toddsterpatriot]

Todd, does a bank take from its deposits to loan?

Where else would the money come from to clear the check?

Jesus. Loans create deposits. Your entire argument isn't even attacking that.

Honestly, I have an okay (not great, but I'm not totally ignorant either) understanding of money creation and I'm having a hard time following you two.

My understanding is that a bank receives a deposit from a client. The bank then generally keeps a certain % of that deposit stored (based off of laws or the bank's policies) and then seeks to loan out or invest the rest. As an example, let's say Todd deposits $100 in Bank [US]. Bank [US] has a policy of keeping 20% of deposits and looking to loan the rest. Kiin goes to Bank [US] wanting a loan. Bank [US] loans Kiin $80. In this scenario Bank [US] has just created $80 for the economy.

Banks create deposits when they loan.
A good read:
The truth is out: money is just an IOU, and the banks are rolling in it | David Graeber
Why Do Banks Want Our Deposits? Hint: It’s Not to Make Loans.

Many authorities have said it: banks do not lend their deposits. They create the money they lend on their books.

Robert B. Anderson, Treasury Secretary under Eisenhower, said it in 1959:

When a bank makes a loan, it simply adds to the borrower’s deposit account in the bank by the amount of the loan. The money is not taken from anyone else’s deposits; it was not previously paid in to the bank by anyone. It’s new money, created by the bank for the use of the borrower.

The Bank of England said it in the spring of 2014, writing in its quarterly bulletin:

The reality of how money is created today differs from the description found in some economics textbooks: Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits.

. . . Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.

All of which leaves us to wonder: If banks do not lend their depositors’ money, why are they always scrambling to get it? Banks advertise to attract depositors, and they pay interest on the funds. What good are our deposits to the bank?

The answer is that while banks do not need the deposits to create loans, they do need to balance their books; and attracting customer deposits is usually the cheapest way to do it.

Why Do Banks Want Our Deposits? Hint: It’s Not to Make Loans.

Ellen Brown is a moron. Your use of her as a source is perfect.

When a bank makes a loan, it simply adds to the borrower’s deposit account in the bank by the amount of the loan. The money is not taken from anyone else’s deposits; it was not previously paid in to the bank by anyone. It’s new money, created by the bank for the use of the borrower.


Yes. And when the borrower tries to use that money, whether by withdrawing currency at the lending bank or writing a check against their new deposit account, the bank better have access to deposits, if it doesn't want the check to bounce.

A simple, hypothetical example will illustrate the principal of insanity that is the basis of our current monetary system.

Suppose JPMorgan holds $1 billion in total deposits. In the original form of our fractional-reserve fraud, the fraud ratio was set at 10:1. This meant that for every dollar that a bank actually held, it was allowed to “lend” $10. Now for the simple arithmetic.

JPMorgan is holding $1 billion of other peoples’ property, but it is allowed to “lend” a total of $10 billion. Where does the other $9 billion come from? It is conjured out of thin air via fractional-reserve fraud. Thus, for many readers, this represents their first actual glimpse of the full scope of fraudulence of our current monetary system.

JPMorgan is holding $1 billion of other peoples’ property, but it is allowed to “lend” a total of $10 billion. Where does the other $9 billion come from?

You are mistaken. With only $1 billion in deposits, JPMorgan can loan out a maximum of $1 billion.
Every loan is fully funded. With a 10% reserve requirement, $10 billion in total deposits (or deposits plus other borrowings) could support $9 billion in loans.

 

[Rustic]

The federal government robs Peter to pay Paul = our currency... It's just an exchange of IOUs

Yeah, the government sucks.
You still haven't answered my question.

Printed paper has no value... It's an IOU. LOL

Printed paper has no value...

So you say.

It's an IOU.

Cool. Who owes me?

So-called money is just a number in the computer, in other words an IOU... Lol

So-called money is just a number in the computer, in other words an IOU.

Before we get to deposit accounts, I want to clear up your claim about FRNs.

You do know there is not enough assets in this country or in the world to even coming close to covering this country's or the worlds debt?? That means there's nothing backing the printed paper. Lol

 

[Norman]

Yeah, the government sucks.
You still haven't answered my question.

Printed paper has no value... It's an IOU. LOL

Printed paper has no value...

So you say.

It's an IOU.

Cool. Who owes me?

So-called money is just a number in the computer, in other words an IOU... Lol

So-called money is just a number in the computer, in other words an IOU.

Before we get to deposit accounts, I want to clear up your claim about FRNs.

You do know there is not enough assets in this country or in the world to cover this country's or the worlds debt?? That means there's nothing backing the printed paper. Lol

So you are saying that there are negative net assets (equity) in the world?

Keep telling yourself that, just don't pretend you own any property while you do.

 

[Rustic]

Printed paper has no value... It's an IOU. LOL

Printed paper has no value...

So you say.

It's an IOU.

Cool. Who owes me?

So-called money is just a number in the computer, in other words an IOU... Lol

So-called money is just a number in the computer, in other words an IOU.

Before we get to deposit accounts, I want to clear up your claim about FRNs.

You do know there is not enough assets in this country or in the world to cover this country's or the worlds debt?? That means there's nothing backing the printed paper. Lol

So you are saying that there are negative net assets (equity) in the world?

Keep telling yourself that, just don't pretend you own any property while you do.

This country and the world has been in the Red for decades... Lol

 

[Toddsterpatriot]

Yeah, the government sucks.
You still haven't answered my question.

Printed paper has no value... It's an IOU. LOL

Printed paper has no value...

So you say.

It's an IOU.

Cool. Who owes me?

So-called money is just a number in the computer, in other words an IOU... Lol

So-called money is just a number in the computer, in other words an IOU.

Before we get to deposit accounts, I want to clear up your claim about FRNs.

You do know there is not enough assets in this country or in the world to even coming close to covering this country's or the worlds debt?? That means there's nothing backing the printed paper. Lol

You do know there is not enough assets in this country or in the world to even coming close to covering this country's or the worlds debt??

What a ridiculous misunderstanding of assets and liabilities. You never took an accounting class, obviously.

 

[Contumacious]

Jesus. Loans create deposits. Your entire argument isn't even attacking that.

Honestly, I have an okay (not great, but I'm not totally ignorant either) understanding of money creation and I'm having a hard time following you two.

My understanding is that a bank receives a deposit from a client. The bank then generally keeps a certain % of that deposit stored (based off of laws or the bank's policies) and then seeks to loan out or invest the rest. As an example, let's say Todd deposits $100 in Bank [US]. Bank [US] has a policy of keeping 20% of deposits and looking to loan the rest. Kiin goes to Bank [US] wanting a loan. Bank [US] loans Kiin $80. In this scenario Bank [US] has just created $80 for the economy.

Banks create deposits when they loan.
A good read:
The truth is out: money is just an IOU, and the banks are rolling in it | David Graeber
Why Do Banks Want Our Deposits? Hint: It’s Not to Make Loans.

Many authorities have said it: banks do not lend their deposits. They create the money they lend on their books.

Robert B. Anderson, Treasury Secretary under Eisenhower, said it in 1959:

When a bank makes a loan, it simply adds to the borrower’s deposit account in the bank by the amount of the loan. The money is not taken from anyone else’s deposits; it was not previously paid in to the bank by anyone. It’s new money, created by the bank for the use of the borrower.

The Bank of England said it in the spring of 2014, writing in its quarterly bulletin:

The reality of how money is created today differs from the description found in some economics textbooks: Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits.

. . . Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.

All of which leaves us to wonder: If banks do not lend their depositors’ money, why are they always scrambling to get it? Banks advertise to attract depositors, and they pay interest on the funds. What good are our deposits to the bank?

The answer is that while banks do not need the deposits to create loans, they do need to balance their books; and attracting customer deposits is usually the cheapest way to do it.

Why Do Banks Want Our Deposits? Hint: It’s Not to Make Loans.

Ellen Brown is a moron. Your use of her as a source is perfect.

When a bank makes a loan, it simply adds to the borrower’s deposit account in the bank by the amount of the loan. The money is not taken from anyone else’s deposits; it was not previously paid in to the bank by anyone. It’s new money, created by the bank for the use of the borrower.


Yes. And when the borrower tries to use that money, whether by withdrawing currency at the lending bank or writing a check against their new deposit account, the bank better have access to deposits, if it doesn't want the check to bounce.

A simple, hypothetical example will illustrate the principal of insanity that is the basis of our current monetary system.

Suppose JPMorgan holds $1 billion in total deposits. In the original form of our fractional-reserve fraud, the fraud ratio was set at 10:1. This meant that for every dollar that a bank actually held, it was allowed to “lend” $10. Now for the simple arithmetic.

JPMorgan is holding $1 billion of other peoples’ property, but it is allowed to “lend” a total of $10 billion. Where does the other $9 billion come from? It is conjured out of thin air via fractional-reserve fraud. Thus, for many readers, this represents their first actual glimpse of the full scope of fraudulence of our current monetary system.

It's not fraud if you have agreed to it. Every guy who puts money into bank has agreed that the bank can lend it, and yet he can take it out.

Problem here is the government that forces this system on you, in an attempt to tax you through money creation. The fraud is the socialism.

HUH?

Yo Vern, Federal Reserve Notes are Legal Tender so a merchant has to accept them whether he wants to or not. That's the way it is in socialist countries, ask Comrade Sanders.

"legal tender" signifies no more than a kind of money a creditor cannot refuse in discharge of a debt due to him in the money issued by government

 

[Rustic]

Printed paper has no value... It's an IOU. LOL

Printed paper has no value...

So you say.

It's an IOU.

Cool. Who owes me?

So-called money is just a number in the computer, in other words an IOU... Lol

So-called money is just a number in the computer, in other words an IOU.

Before we get to deposit accounts, I want to clear up your claim about FRNs.

You do know there is not enough assets in this country or in the world to even coming close to covering this country's or the worlds debt?? That means there's nothing backing the printed paper. Lol

You do know there is not enough assets in this country or in the world to even coming close to covering this country's or the worlds debt??

What a ridiculous misunderstanding of assets and liabilities. You never took an accounting class, obviously.

This country alone has most likely 225+ trillion in debt, Assets a fraction of that... Lol

 

[Contumacious]

Printed paper has no value...

So you say.

It's an IOU.

Cool. Who owes me?

So-called money is just a number in the computer, in other words an IOU... Lol

So-called money is just a number in the computer, in other words an IOU.

Before we get to deposit accounts, I want to clear up your claim about FRNs.

You do know there is not enough assets in this country or in the world to cover this country's or the worlds debt?? That means there's nothing backing the printed paper. Lol

So you are saying that there are negative net assets (equity) in the world?

Keep telling yourself that, just don't pretend you own any property while you do.

This country and the world has been in the Red for decades... Lol

The US since it declared bankruptcy in 1935.


.

 

[Toddsterpatriot]

Printed paper has no value...

So you say.

It's an IOU.

Cool. Who owes me?

So-called money is just a number in the computer, in other words an IOU... Lol

So-called money is just a number in the computer, in other words an IOU.

Before we get to deposit accounts, I want to clear up your claim about FRNs.

You do know there is not enough assets in this country or in the world to even coming close to covering this country's or the worlds debt?? That means there's nothing backing the printed paper. Lol

You do know there is not enough assets in this country or in the world to even coming close to covering this country's or the worlds debt??

What a ridiculous misunderstanding of assets and liabilities. You never took an accounting class, obviously.

This country alone has most likely 225+ trillion in debt, Assets a fraction of that... Lol

If I lent you $1000, how would that change our combined assets and liabilities?

 

[Likkmee]

Most americans have absolutely no idea.
I wonder what you guys know?
Here's the truth:
- Loans create new money, this shows up in the form of deposits.
- The federal government creates new money through deficit spending. The central bank also plays an important role.

I expect many posters to take an issue with my assertion that Loans create deposits.
Banks do not lend out deposits or multiply up central bank money.

http://www.bankofengland.co.uk/publ...lletin/2014/qb14q1prereleasemoneycreation.pdf

This article explains how the majority of money in the modern economy is created by commercial banks making loans. • Money creation in practice differs from some popular misconceptions — banks do not act simply as intermediaries, lending out deposits that savers place with them, and nor do they ‘multiply up’ central bank money to create new loans and deposits. • The amount of money created in the economy ultimately depends on the monetary policy of the central bank. In normal times, this is carried out by setting interest rates. The central bank can also affect the amount of money directly through purchasing assets or ‘quantitative easing’.

Since it's obvious you're uh merkkkin, I'll make it simple.
I threaten to jail you for life unless you loan me more money than you could ever hope to earn in 200 years. I give you an IOU. You give the next guy an IOU. He gives you a TV.The TV guy gives a Jew an IOU and gets four more and repeats the process. The guy loses all the TV's to a thief so he goes to the original Jew #1 who owes nobody a nickel. He prints some notes and gives them to you. You write him an IOU which he sells to China.
You're now a capitalist with a pocket full of IOU's allowing you to get 1000 TV's but nobody really has anything to pay for anything.
I need to go to the liquor store now. I have a Gold plastic IOT( I Owe Them).
It's OK tho. That IOT allows them to borrow 10 times it's face value from you and lend it to your son.
Simple aint it /