How is money created?

[Toddsterpatriot]

Actually a federal reserve not isn't an IOU. A FRN is the end of the line. It is analogous to a gold coin. It's simply a thing that people place value on. If you own a $20 FRN, nobody owes you anything.

That's a funny video. Thanks for posting it.

What's funny is our financial system in this country, a fucking joke. That's what happens when you're in debt more than you can ever pay.

Why can't we ever pay?

Far too large to be ever be paid back... Lol

Why do you feel that?

 

[Dovahkiin]

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?

Yes, they did indeed create a deposit account for $10000.
In your scenario, when the check doesn't clear, their obviously isn't enough in his deposit. Notice how we're not even arguing that LOANS CREATE THE DEPOSITS.

In your scenario, when the check doesn't clear, their obviously isn't enough in his deposit.

You're contradicting your previous claims.
Billy took out a loan of $10,000. The bank creates a deposit account for Billy of $10,000.
Billy writes a check for $10,000. The check recipient deposits it in another bank. The check bounces.
Why?

Notice how we're not even arguing that LOANS CREATE THE DEPOSITS.

Notice you aren't explaining why Billy's loan requires additional deposits to clear.

The only thing the bank needs to clear the check is $10,000 in reserves, which the Fed will transfer to the depositing bank's reserve account. Attracting other deposits is the easiest way to get those reserves, but not the only way.

The only thing the bank needs to clear the check is $10,000 in reserves,

Yes, that's what Dovahkiin is missing.

What makes you think I'm missing that?

 

[Toddsterpatriot]

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?

Yes, they did indeed create a deposit account for $10000.
In your scenario, when the check doesn't clear, their obviously isn't enough in his deposit. Notice how we're not even arguing that LOANS CREATE THE DEPOSITS.

In your scenario, when the check doesn't clear, their obviously isn't enough in his deposit.

You're contradicting your previous claims.
Billy took out a loan of $10,000. The bank creates a deposit account for Billy of $10,000.
Billy writes a check for $10,000. The check recipient deposits it in another bank. The check bounces.
Why?

Notice how we're not even arguing that LOANS CREATE THE DEPOSITS.

Notice you aren't explaining why Billy's loan requires additional deposits to clear.

The only thing the bank needs to clear the check is $10,000 in reserves, which the Fed will transfer to the depositing bank's reserve account. Attracting other deposits is the easiest way to get those reserves, but not the only way.

The only thing the bank needs to clear the check is $10,000 in reserves,

Yes, that's what Dovahkiin is missing.

What makes you think I'm missing that?

Billy took out a loan of $10,000. The bank creates a deposit account for Billy of $10,000.
Billy writes a check for $10,000. The check recipient deposits it in another bank. The check bounces.
Why?

 

[Dovahkiin]

Yes, they did indeed create a deposit account for $10000.
In your scenario, when the check doesn't clear, their obviously isn't enough in his deposit. Notice how we're not even arguing that LOANS CREATE THE DEPOSITS.

In your scenario, when the check doesn't clear, their obviously isn't enough in his deposit.

You're contradicting your previous claims.
Billy took out a loan of $10,000. The bank creates a deposit account for Billy of $10,000.
Billy writes a check for $10,000. The check recipient deposits it in another bank. The check bounces.
Why?

Notice how we're not even arguing that LOANS CREATE THE DEPOSITS.

Notice you aren't explaining why Billy's loan requires additional deposits to clear.

The only thing the bank needs to clear the check is $10,000 in reserves, which the Fed will transfer to the depositing bank's reserve account. Attracting other deposits is the easiest way to get those reserves, but not the only way.

The only thing the bank needs to clear the check is $10,000 in reserves,

Yes, that's what Dovahkiin is missing.

What makes you think I'm missing that?

Billy took out a loan of $10,000. The bank creates a deposit account for Billy of $10,000.
Billy writes a check for $10,000. The check recipient deposits it in another bank. The check bounces.
Why?

Banks tend to never have an issue getting reserves. I was under the assumption that we were talking about users deposits at banks being drawn from to loan. We seem to be in agreement.

 

[Toddsterpatriot]

In your scenario, when the check doesn't clear, their obviously isn't enough in his deposit.

You're contradicting your previous claims.
Billy took out a loan of $10,000. The bank creates a deposit account for Billy of $10,000.
Billy writes a check for $10,000. The check recipient deposits it in another bank. The check bounces.
Why?

Notice how we're not even arguing that LOANS CREATE THE DEPOSITS.

Notice you aren't explaining why Billy's loan requires additional deposits to clear.

The only thing the bank needs to clear the check is $10,000 in reserves, which the Fed will transfer to the depositing bank's reserve account. Attracting other deposits is the easiest way to get those reserves, but not the only way.

The only thing the bank needs to clear the check is $10,000 in reserves,

Yes, that's what Dovahkiin is missing.

What makes you think I'm missing that?

Billy took out a loan of $10,000. The bank creates a deposit account for Billy of $10,000.
Billy writes a check for $10,000. The check recipient deposits it in another bank. The check bounces.
Why?

Banks tend to never have an issue getting reserves. I was under the assumption that we were talking about users deposits at banks being drawn from to loan. We seem to be in agreement.

So Billy's check won't bounce because his lender gets reserves from someone else?

 

[Dovahkiin]

The only thing the bank needs to clear the check is $10,000 in reserves, which the Fed will transfer to the depositing bank's reserve account. Attracting other deposits is the easiest way to get those reserves, but not the only way.

The only thing the bank needs to clear the check is $10,000 in reserves,

Yes, that's what Dovahkiin is missing.

What makes you think I'm missing that?

Billy took out a loan of $10,000. The bank creates a deposit account for Billy of $10,000.
Billy writes a check for $10,000. The check recipient deposits it in another bank. The check bounces.
Why?

Banks tend to never have an issue getting reserves. I was under the assumption that we were talking about users deposits at banks being drawn from to loan. We seem to be in agreement.

So Billy's check won't bounce because his lender gets reserves from someone else?

Banks tend to never have an issue getting reserves.
You do know why checks bounce, right?

 

[Toddsterpatriot]

The only thing the bank needs to clear the check is $10,000 in reserves,

Yes, that's what Dovahkiin is missing.

What makes you think I'm missing that?

Billy took out a loan of $10,000. The bank creates a deposit account for Billy of $10,000.
Billy writes a check for $10,000. The check recipient deposits it in another bank. The check bounces.
Why?

Banks tend to never have an issue getting reserves. I was under the assumption that we were talking about users deposits at banks being drawn from to loan. We seem to be in agreement.

So Billy's check won't bounce because his lender gets reserves from someone else?

Banks tend to never have an issue getting reserves.
You do know why checks bounce, right?

Banks tend to never have an issue getting reserves.

And?

You do know why checks bounce, right?

One reason would be making loans with no deposits to fund them.

 

[Centinel]

There is a difference between money and a claim to money. M1 and up are claims to money.

There is a difference between an ounce of gold and a claim to an ounce of gold. You obviously are well versed in the concept of fractional reserve banking, so you know that it creates multiple claims to the same gold coin.

M1 and up are claims to money.

Is it considered money? Is it counted in the money supply?

There is a difference between an ounce of gold and a claim to an ounce of gold.

Yes, a bank account is different than a gold coin.

Is it considered money? Is it counted in the money supply?

Yes, many people consider a bank account to actually be money, instead of recognizing that it is merely a claim on money.

Yes, a bank account is different than a gold coin.

Precisely. The gold coin is money, and a bank account is something different.

Printed Paper is an IOU... A bank is a storage for IOUs...

Actually a federal reserve not isn't an IOU. A FRN is the end of the line. It is analogous to a gold coin. It's simply a thing that people place value on. If you own a $20 FRN, nobody owes you anything.

Analogous to a gold coin?

HUH?

Another victim of the US "education"system !!!!!!!!!!!!!


Un-fucking-believable.


.

Yes, analogous. In a gold-standard monetary system, gold is MB (the monetary base). In our fiat currency system, FRNs are the monetary base.

 

[Centinel]

You mean like it was more the total amount of gold when gold was money?

Of course the money supply was more than just the gold supply.
What are the parts of money supply? Do you know?

There is a difference between money and a claim to money. M1 and up are claims to money.

There is a difference between an ounce of gold and a claim to an ounce of gold. You obviously are well versed in the concept of fractional reserve banking, so you know that it creates multiple claims to the same gold coin.

M1 and up are claims to money.

Is it considered money? Is it counted in the money supply?

There is a difference between an ounce of gold and a claim to an ounce of gold.

Yes, a bank account is different than a gold coin.

Is it considered money? Is it counted in the money supply?

Yes, many people consider a bank account to actually be money, instead of recognizing that it is merely a claim on money.

Yes, a bank account is different than a gold coin.

Precisely. The gold coin is money, and a bank account is something different.

Yes, many people consider a bank account to actually be money,

Not just people. The Fed also considers it money.

Precisely. The gold coin is money, and a bank account is something different.

And they are both part of the money supply.

And they are both part of the money supply.

Yes, many people confuse claims to money with money itself.

 

[Dovahkiin]

What makes you think I'm missing that?

Billy took out a loan of $10,000. The bank creates a deposit account for Billy of $10,000.
Billy writes a check for $10,000. The check recipient deposits it in another bank. The check bounces.
Why?

Banks tend to never have an issue getting reserves. I was under the assumption that we were talking about users deposits at banks being drawn from to loan. We seem to be in agreement.

So Billy's check won't bounce because his lender gets reserves from someone else?

Banks tend to never have an issue getting reserves.
You do know why checks bounce, right?

Banks tend to never have an issue getting reserves.

And?

You do know why checks bounce, right?

One reason would be making loans with no deposits to fund them.

Banks don't fund loans with jen's deposit. We've already established that banks never have an issue getting reserves...

 

[Toddsterpatriot]

Billy took out a loan of $10,000. The bank creates a deposit account for Billy of $10,000.
Billy writes a check for $10,000. The check recipient deposits it in another bank. The check bounces.
Why?

Banks tend to never have an issue getting reserves. I was under the assumption that we were talking about users deposits at banks being drawn from to loan. We seem to be in agreement.

So Billy's check won't bounce because his lender gets reserves from someone else?

Banks tend to never have an issue getting reserves.
You do know why checks bounce, right?

Banks tend to never have an issue getting reserves.

And?

You do know why checks bounce, right?

One reason would be making loans with no deposits to fund them.

Banks don't fund loans with jen's deposit. We've already established that banks never have an issue getting reserves...

Banks don't fund loans with jen's deposit.

Why not?

 

[Dovahkiin]

Banks tend to never have an issue getting reserves. I was under the assumption that we were talking about users deposits at banks being drawn from to loan. We seem to be in agreement.

So Billy's check won't bounce because his lender gets reserves from someone else?

Banks tend to never have an issue getting reserves.
You do know why checks bounce, right?

Banks tend to never have an issue getting reserves.

And?

You do know why checks bounce, right?

One reason would be making loans with no deposits to fund them.

Banks don't fund loans with jen's deposit. We've already established that banks never have an issue getting reserves...

Banks don't fund loans with jen's deposit.

Why not?

Todd, I'm pretty sure we already agree on this point. Loans create deposits. Can you show me evidence of a bank taking from a users deposit to make a loan? I don't see it.

 

[Toddsterpatriot]

So Billy's check won't bounce because his lender gets reserves from someone else?

Banks tend to never have an issue getting reserves.
You do know why checks bounce, right?

Banks tend to never have an issue getting reserves.

And?

You do know why checks bounce, right?

One reason would be making loans with no deposits to fund them.

Banks don't fund loans with jen's deposit. We've already established that banks never have an issue getting reserves...

Banks don't fund loans with jen's deposit.

Why not?

Todd, I'm pretty sure we already agree on this point. Loans create deposits. Can you show me evidence of a bank taking from a users deposit to make a loan? I don't see it.

Can you show me evidence of a bank taking from a users deposit to make a loan? I don't see it.

Why didn't Billy's bank fund his loan with Jen's deposit?
Where did Jen's money go after she made her deposit?

 

[Rustic]

All printed paper is just a number in the computer for its backing...

 

[Dovahkiin]

Banks tend to never have an issue getting reserves.
You do know why checks bounce, right?

Banks tend to never have an issue getting reserves.

And?

You do know why checks bounce, right?

One reason would be making loans with no deposits to fund them.

Banks don't fund loans with jen's deposit. We've already established that banks never have an issue getting reserves...

Banks don't fund loans with jen's deposit.

Why not?

Todd, I'm pretty sure we already agree on this point. Loans create deposits. Can you show me evidence of a bank taking from a users deposit to make a loan? I don't see it.

Can you show me evidence of a bank taking from a users deposit to make a loan? I don't see it.

Why didn't Billy's bank fund his loan with Jen's deposit?
Where did Jen's money go after she made her deposit?

The loan created Billy's deposit.

 

[Toddsterpatriot]

Banks tend to never have an issue getting reserves.

And?

You do know why checks bounce, right?

One reason would be making loans with no deposits to fund them.

Banks don't fund loans with jen's deposit. We've already established that banks never have an issue getting reserves...

Banks don't fund loans with jen's deposit.

Why not?

Todd, I'm pretty sure we already agree on this point. Loans create deposits. Can you show me evidence of a bank taking from a users deposit to make a loan? I don't see it.

Can you show me evidence of a bank taking from a users deposit to make a loan? I don't see it.

Why didn't Billy's bank fund his loan with Jen's deposit?
Where did Jen's money go after she made her deposit?

The loan created Billy's deposit.

The loan created Billy's deposit.

Yes, but Billy's deposit won't clear Billy's check.

So where did Jen's deposit go?

 

[Dovahkiin]

Banks don't fund loans with jen's deposit. We've already established that banks never have an issue getting reserves...

Banks don't fund loans with jen's deposit.

Why not?

Todd, I'm pretty sure we already agree on this point. Loans create deposits. Can you show me evidence of a bank taking from a users deposit to make a loan? I don't see it.

Can you show me evidence of a bank taking from a users deposit to make a loan? I don't see it.

Why didn't Billy's bank fund his loan with Jen's deposit?
Where did Jen's money go after she made her deposit?

The loan created Billy's deposit.

The loan created Billy's deposit.

Yes, but Billy's deposit won't clear Billy's check.

So where did Jen's deposit go?

What makes you think his deposit won't clear his check?

 

[Toddsterpatriot]

Banks don't fund loans with jen's deposit.

Why not?

Todd, I'm pretty sure we already agree on this point. Loans create deposits. Can you show me evidence of a bank taking from a users deposit to make a loan? I don't see it.

Can you show me evidence of a bank taking from a users deposit to make a loan? I don't see it.

Why didn't Billy's bank fund his loan with Jen's deposit?
Where did Jen's money go after she made her deposit?

The loan created Billy's deposit.

The loan created Billy's deposit.

Yes, but Billy's deposit won't clear Billy's check.

So where did Jen's deposit go?

What makes you think his deposit won't clear his check?

What makes you think it will?

 

[Dovahkiin]

Todd, I'm pretty sure we already agree on this point. Loans create deposits. Can you show me evidence of a bank taking from a users deposit to make a loan? I don't see it.

Can you show me evidence of a bank taking from a users deposit to make a loan? I don't see it.

Why didn't Billy's bank fund his loan with Jen's deposit?
Where did Jen's money go after she made her deposit?

The loan created Billy's deposit.

The loan created Billy's deposit.

Yes, but Billy's deposit won't clear Billy's check.

So where did Jen's deposit go?

What makes you think his deposit won't clear his check?

What makes you think it will?

This isn't going anywhere. We both know that loans create deposits and banks never need to worry about getting reserves. So, what makes you think a bank will drain money from jen's deposit so billy can take from his? I may be wrong on this, but that doesn't seem right. Please, provide some evidence showing this occurs.

 

[Toddsterpatriot]

Can you show me evidence of a bank taking from a users deposit to make a loan? I don't see it.

Why didn't Billy's bank fund his loan with Jen's deposit?
Where did Jen's money go after she made her deposit?

The loan created Billy's deposit.

The loan created Billy's deposit.

Yes, but Billy's deposit won't clear Billy's check.

So where did Jen's deposit go?

What makes you think his deposit won't clear his check?

What makes you think it will?

This isn't going anywhere. We both know that loans create deposits and banks never need to worry about getting reserves. So, what makes you think a bank will drain money from jen's deposit so billy can take from his? I may be wrong on this, but that doesn't seem right. Please, provide some evidence showing this occurs.

We both know that loans create deposits and banks never need to worry about getting reserves.

The bank needs to get reserves to clear Billy's check?

So, what makes you think a bank will drain money from jen's deposit so billy can take from his?

New bank, $20,000 deposit from Jen. Where does the money go?