Isn’t it Time to Stop Calling it “The National Debt”?

[Andylusion]

Different words to make the same idiotic claims...That government is the distributor of all wealth.
Government creates nothing. Government consumes. Government consumes less than it expends, making government a parasite.
Here's a lesson in supply and demand. Under which, all commodities including currency are subject to market forces.
When the federal reserve has top print more currency to pay for deficit spending, that simply increases the amount of dollars in circulation. This causes the supply to increase while doing the opposite to demand. Thus, the value of the USD falls. as currency traders sell USD in favor of stronger currencies. Business increases prices to make up for the loss in currency value.
The more the federal government has to borrow to cover for deficit spending, the lower the value of the US Dollar.
Ya got that?

The value of the US dollar is lower compared to what, assets, or other currencies? Since the BOJ and Europe are pursuing the same monetary expansion policies, and the dollar is the reserve currency, shouldn't we eventually get inflation?

Money expansion policies? Please explain.
Look at an inflation calculator. Inflation is inevitable.
As the cost of labor, goods, services, technology, etc increases, the requisite price for each and every, increases.
What difference does it make? None at all.
BTW, the above passage is just one anti capitalist person's opinion. Done

Many economist/investors use the term "money expansion policy" to describe events like quantitative easing or other similar stimulus which occurs when central banks increase money supply to stimulate growth. Yes, it is inflationary, but it is intended to create growth, not in response to growth.

Yeah, I know why they claim to do it. I don't see that it ever works. Japan tried this for a decade, and it didn't do jack.

The Keynesian call it a Liquidity Trap. But I call it bad economics. The problem is, injecting money into the banking system, doesn't magically make investors willing to invest, or borrowers worthy of borrowing.

If the economy sucks, and there are no investors willing to invest in your economy, it doesn't matter how much money the banks have laying around to invest with. If the economy sucks, and borrowers are too risky to lend money to, it doesn't matter how much money you have to lend with.

This idea that we should be printing off cash, and expanding the money supply, when there is nothing for people to buy, sell, build, or produce..... is stupid.

Change the taxes, and the regulation, so that people can engage in capitalism, and the free market, and then the economy will take off. Ironically if the economy takes off, you don't need Quantitative easing anymore.

So I can't think of a single situation where QE is of any value.... other than to devalue the money, so government can borrow more money.

Japan tried this for a decade, and it didn't do jack.

Which is why they need to lower taxes and focus on boosting aggregate demand for the people who don't save as much.

The Keynesian call it a Liquidity Trap.

That's what it is.

The problem is, injecting money into the banking system, doesn't magically make investors willing to invest, or borrowers worthy of borrowing.

I agree, since banks loan when people are worthy and demand credit, they don't loan out deposits.

If the economy sucks, and there are no investors willing to invest in your economy, it doesn't matter how much money the banks have laying around to invest with.

Banks don't even need money laying around, only to meet requirements set by the government. Bank loans create money.

This idea that we should be printing off cash, and expanding the money supply, when there is nothing for people to buy, sell, build, or produce..... is stupid.

It's a great idea, if it's aimed at putting dollars directly into the poor/middle classes hands with jobs/assistance programs.

Change the taxes, and the regulation, so that people can engage in capitalism, and the free market, and then the economy will take off.

Yeah, that has never happened. Not without a massive build up in private sector debt.

So I can't think of a single situation where QE is of any value.... other than to devalue the money, so government can borrow more money.

QE makes sure banks have excess reserves and helps control the rates when banks lend reserves to each other overnight. It's useful, and QE money doesn't get into our hands anyways. The government doesn't really "borrow" since it has to spend the dollars before it can convert them to bonds.

Of course banks loan out deposits. All banks do.

Banks still need money. No bank creates money. They loan money they have. From the deposits.

You still don't get it. Even Obama came to your specific home, and handed you a million dollars.... if there is no store with products for you to buy.... what use is the million dollars? It's not a great idea. It's stupidity.

I can think of dozens of examples where that has happened. China. Vietnam. India. Chile. Hong Kong. Taiwan. Capitalism has worked every where it's tried. Debt is a function of culture shift, and government policy. Not deregulation and lowering taxes.

 

[Dovahkiin]

The value of the US dollar is lower compared to what, assets, or other currencies? Since the BOJ and Europe are pursuing the same monetary expansion policies, and the dollar is the reserve currency, shouldn't we eventually get inflation?

Money expansion policies? Please explain.
Look at an inflation calculator. Inflation is inevitable.
As the cost of labor, goods, services, technology, etc increases, the requisite price for each and every, increases.
What difference does it make? None at all.
BTW, the above passage is just one anti capitalist person's opinion. Done

Many economist/investors use the term "money expansion policy" to describe events like quantitative easing or other similar stimulus which occurs when central banks increase money supply to stimulate growth. Yes, it is inflationary, but it is intended to create growth, not in response to growth.

Yeah, I know why they claim to do it. I don't see that it ever works. Japan tried this for a decade, and it didn't do jack.

The Keynesian call it a Liquidity Trap. But I call it bad economics. The problem is, injecting money into the banking system, doesn't magically make investors willing to invest, or borrowers worthy of borrowing.

If the economy sucks, and there are no investors willing to invest in your economy, it doesn't matter how much money the banks have laying around to invest with. If the economy sucks, and borrowers are too risky to lend money to, it doesn't matter how much money you have to lend with.

This idea that we should be printing off cash, and expanding the money supply, when there is nothing for people to buy, sell, build, or produce..... is stupid.

Change the taxes, and the regulation, so that people can engage in capitalism, and the free market, and then the economy will take off. Ironically if the economy takes off, you don't need Quantitative easing anymore.

So I can't think of a single situation where QE is of any value.... other than to devalue the money, so government can borrow more money.

Japan tried this for a decade, and it didn't do jack.

Which is why they need to lower taxes and focus on boosting aggregate demand for the people who don't save as much.

The Keynesian call it a Liquidity Trap.

That's what it is.

The problem is, injecting money into the banking system, doesn't magically make investors willing to invest, or borrowers worthy of borrowing.

I agree, since banks loan when people are worthy and demand credit, they don't loan out deposits.

If the economy sucks, and there are no investors willing to invest in your economy, it doesn't matter how much money the banks have laying around to invest with.

Banks don't even need money laying around, only to meet requirements set by the government. Bank loans create money.

This idea that we should be printing off cash, and expanding the money supply, when there is nothing for people to buy, sell, build, or produce..... is stupid.

It's a great idea, if it's aimed at putting dollars directly into the poor/middle classes hands with jobs/assistance programs.

Change the taxes, and the regulation, so that people can engage in capitalism, and the free market, and then the economy will take off.

Yeah, that has never happened. Not without a massive build up in private sector debt.

So I can't think of a single situation where QE is of any value.... other than to devalue the money, so government can borrow more money.

QE makes sure banks have excess reserves and helps control the rates when banks lend reserves to each other overnight. It's useful, and QE money doesn't get into our hands anyways. The government doesn't really "borrow" since it has to spend the dollars before it can convert them to bonds.

Of course banks loan out deposits. All banks do.

Banks still need money. No bank creates money. They loan money they have. From the deposits.

You still don't get it. Even Obama came to your specific home, and handed you a million dollars.... if there is no store with products for you to buy.... what use is the million dollars? It's not a great idea. It's stupidity.

I can think of dozens of examples where that has happened. China. Vietnam. India. Chile. Hong Kong. Taiwan. Capitalism has worked every where it's tried. Debt is a function of culture shift, and government policy. Not deregulation and lowering taxes.

Of course banks loan out deposits. All banks do.

What makes you believe this?
https://www.kreditopferhilfe.net/docs/S_and_P__Repeat_After_Me_8_14_13.pdf
http://www.bankofengland.co.uk/publ...lletin/2014/qb14q1prereleasemoneycreation.pdf
Loans create deposits.
Money multiplier and other myths

Banks still need money. No bank creates money.

Banks need to meet requirements and have some financial/real assets, but they never have close to the amount of liabilities they carry. Ever heard of a bank run? The majority of money originates from banks, loans creating deposits. This is endogenous money, and it comes with a matching liability. The fed, the BOE, and many others agree with me. If you have evidence that banks do something otherwise, I'd love to see it.

They loan money they have. From the deposits.

Nonsense. Deposits are liabilities on the banks balance sheet, and there's nothing in a deposit to lend out. If someone deposits physical cash, the cash goes into the vault (reserves) and the bank simply marks up their account. The bank doesn't worry about loaning out reserves when it originates, it simply creates the deposit and gets the reserves overnight to meet the requirement. Other countries don't even have a reserve requirement.

You still don't get it. Even Obama came to your specific home, and handed you a million dollars.... if there is no store with products for you to buy.... what use is the million dollars? It's not a great idea. It's stupidity.

I never argued otherwise. In fact, the only real issue when it comes to spending is a shortage of supply. In venezuela, they have the potential to boost supply and get citizens their basic needs.

Capitalism has worked every where it's tried. Debt is a function of culture shift, and government policy. Not deregulation and lowering taxes.

Define capitalism. I agree if we're thinking of the same thing.
Debt is the engine of prosperity. Deregulation is stupid in regards to the financial sector. Ever heard of Minsky?
Lowering taxes is a good thing. Across the board.

 

[Dovahkiin]

Sadly, what you think you know about how this corporate "gubermint" works (which is owned by international bankers which is a fucking fact) and what the reality is are two very different things and so far detatched from reality that if you could comprehend it? You would want to lead a charge of people armed with pitchforks and torches on D.C....it's just that fucking bad. We have been raped, pillaged and plundered. You say that the gold in Ft Knox was not the country's treasure? Look up the gold confiscation that took place in 1933....knowledge is power. Look up some of my old posts. I have spent 12 to 14 hours a day every day for the last 4 years trying to figure out how things got so fucked up and I have a pretty good grasp on it....kudos to those that went before me that did the heavy lifting.

The gold confiscation is null and void. Old hat. Next.

Really? So where is the gold???????

I have some..And no, you cannot see it.
Why are you so hung up on this stupid shit?
Why don't you just go buy some for yourself?
Or would you rather just have something to bitch about?
What's next? A conspiracy thread about earthquakes?
The funniest part of your everything is a conspiracy obsession is that you think you have a pretty good grasp on "it"....That's funny.
The best thing I can say about you conspiracy wackos is that it's free entertainment

The gold in Ft Knox........where is it and why has there never been a full audit of it? Things that make you go "hmmmmmm?:"

Genius.....There is roughly 177 million ounces of gold bullion in the Kentucky facility.
Or do you have a reading comprehension problem?

Gold that means nothing when compared to the amount of dollars in the world. Thank god.

 

[Dovahkiin]

The debt is owed by USA.INC and it's subsidiaries. USA.INC was taken into recievership by the IMF in 1950 to provide the 19 essential "gubermint" services and it is a for profit venture....unfortunately, they hide the profits and give us the bill on the corporate credit card to us to pay off.....great business model when you have a country full of dullards.

Yes, the 1% know how to siphon the Treasury and leave us with the debt. Ask Dick Cheney about that. And BTW, where's all the gold that used to be in Fort Knox? Maybe we should ask Cheney about that too...? Why are Congressional committees who ask for access to audit Fort Knox being denied access by ??? persons...?

That was OUR gold and OUR representatives must be allowed access to audit it.

What are you smoking? 37% of taxes are paid by the top 1%. The top 25% pay 85% of all taxes. If it wasn't for them, we wouldn't have a government at all.

It's not OUR gold, it's their gold you stole from them. Our representatives are doing exactly what we tell them to.

If it wasn't for the top 25% the other 75% would be fighting in the streets over food scraps.

Yeah, that's what I've been saying. It's amazing to me how counter intuitive the left-wing is. Everything we have.... literally everything.... is due almost exclusively to the top 20% of the country.

Even services the government provides, only exist because of a rich guy somewhere. Some top 1%er made the concrete, the road paving equipment... everything.

Without them... there would be... nothing. Dirt paths. You certainly wouldn't need more than that, because there would be no cars are gas. We'd all be getting up before dawn, working 14 hours shifts on farms 6 days a week or more, living poor, and going to bed long after the sun went down exhausted.

That's what life was like without the evil rich. There was no 'sick days'. No 'vacation time'. No 'holiday pay'. No 'time and a half'.

The left-wingers are all complete and total idiots. They have no idea how good they have it.... all due to the rich.

Yeah, that's what I've been saying. It's amazing to me how counter intuitive the left-wing is. Everything we have.... literally everything.... is due almost exclusively to the top 20% of the country.

Uninformed dogma. Demand drives the mass production of new goods/services.
And many inventions were only possible thanks to the government.

Even services the government provides, only exist because of a rich guy somewhere. Some top 1%er made the concrete, the road paving equipment... everything.

The government paid an individual who used the dollars to employ others to build infrastructure. The currency issuer caused this to happen.

Without them... there would be... nothing. Dirt paths. You certainly wouldn't need more than that, because there would be no cars are gas. We'd all be getting up before dawn, working 14 hours shifts on farms 6 days a week or more, living poor, and going to bed long after the sun went down exhausted.

Sounds like the world before government regulations.

That's what life was like without the evil rich. There was no 'sick days'. No 'vacation time'. No 'holiday pay'. No 'time and a half'.

What the f***? You seem to forget the rampant inequality of the late 1800's/early 1900's.

The left-wingers are all complete and total idiots. They have no idea how good they have it.... all due to the rich.

Demand is the engine. Demand comes from the poor/middle class. The rich only have dollars thanks to government spending more then it taxes. Money creation is what really matters here.

 

[Andylusion]

Money expansion policies? Please explain.
Look at an inflation calculator. Inflation is inevitable.
As the cost of labor, goods, services, technology, etc increases, the requisite price for each and every, increases.
What difference does it make? None at all.
BTW, the above passage is just one anti capitalist person's opinion. Done

Many economist/investors use the term "money expansion policy" to describe events like quantitative easing or other similar stimulus which occurs when central banks increase money supply to stimulate growth. Yes, it is inflationary, but it is intended to create growth, not in response to growth.

Yeah, I know why they claim to do it. I don't see that it ever works. Japan tried this for a decade, and it didn't do jack.

The Keynesian call it a Liquidity Trap. But I call it bad economics. The problem is, injecting money into the banking system, doesn't magically make investors willing to invest, or borrowers worthy of borrowing.

If the economy sucks, and there are no investors willing to invest in your economy, it doesn't matter how much money the banks have laying around to invest with. If the economy sucks, and borrowers are too risky to lend money to, it doesn't matter how much money you have to lend with.

This idea that we should be printing off cash, and expanding the money supply, when there is nothing for people to buy, sell, build, or produce..... is stupid.

Change the taxes, and the regulation, so that people can engage in capitalism, and the free market, and then the economy will take off. Ironically if the economy takes off, you don't need Quantitative easing anymore.

So I can't think of a single situation where QE is of any value.... other than to devalue the money, so government can borrow more money.

Japan tried this for a decade, and it didn't do jack.

Which is why they need to lower taxes and focus on boosting aggregate demand for the people who don't save as much.

The Keynesian call it a Liquidity Trap.

That's what it is.

The problem is, injecting money into the banking system, doesn't magically make investors willing to invest, or borrowers worthy of borrowing.

I agree, since banks loan when people are worthy and demand credit, they don't loan out deposits.

If the economy sucks, and there are no investors willing to invest in your economy, it doesn't matter how much money the banks have laying around to invest with.

Banks don't even need money laying around, only to meet requirements set by the government. Bank loans create money.

This idea that we should be printing off cash, and expanding the money supply, when there is nothing for people to buy, sell, build, or produce..... is stupid.

It's a great idea, if it's aimed at putting dollars directly into the poor/middle classes hands with jobs/assistance programs.

Change the taxes, and the regulation, so that people can engage in capitalism, and the free market, and then the economy will take off.

Yeah, that has never happened. Not without a massive build up in private sector debt.

So I can't think of a single situation where QE is of any value.... other than to devalue the money, so government can borrow more money.

QE makes sure banks have excess reserves and helps control the rates when banks lend reserves to each other overnight. It's useful, and QE money doesn't get into our hands anyways. The government doesn't really "borrow" since it has to spend the dollars before it can convert them to bonds.

Of course banks loan out deposits. All banks do.

Banks still need money. No bank creates money. They loan money they have. From the deposits.

You still don't get it. Even Obama came to your specific home, and handed you a million dollars.... if there is no store with products for you to buy.... what use is the million dollars? It's not a great idea. It's stupidity.

I can think of dozens of examples where that has happened. China. Vietnam. India. Chile. Hong Kong. Taiwan. Capitalism has worked every where it's tried. Debt is a function of culture shift, and government policy. Not deregulation and lowering taxes.

Of course banks loan out deposits. All banks do.

What makes you believe this?
https://www.kreditopferhilfe.net/docs/S_and_P__Repeat_After_Me_8_14_13.pdf
http://www.bankofengland.co.uk/publ...lletin/2014/qb14q1prereleasemoneycreation.pdf
Loans create deposits.
Money multiplier and other myths

Banks still need money. No bank creates money.

Banks need to meet requirements and have some financial/real assets, but they never have close to the amount of liabilities they carry. Ever heard of a bank run? The majority of money originates from banks, loans creating deposits. This is endogenous money, and it comes with a matching liability. The fed, the BOE, and many others agree with me. If you have evidence that banks do something otherwise, I'd love to see it.

They loan money they have. From the deposits.

Nonsense. Deposits are liabilities on the banks balance sheet, and there's nothing in a deposit to lend out. If someone deposits physical cash, the cash goes into the vault (reserves) and the bank simply marks up their account. The bank doesn't worry about loaning out reserves when it originates, it simply creates the deposit and gets the reserves overnight to meet the requirement. Other countries don't even have a reserve requirement.

You still don't get it. Even Obama came to your specific home, and handed you a million dollars.... if there is no store with products for you to buy.... what use is the million dollars? It's not a great idea. It's stupidity.

I never argued otherwise. In fact, the only real issue when it comes to spending is a shortage of supply. In venezuela, they have the potential to boost supply and get citizens their basic needs.

Capitalism has worked every where it's tried. Debt is a function of culture shift, and government policy. Not deregulation and lowering taxes.

Define capitalism. I agree if we're thinking of the same thing.
Debt is the engine of prosperity. Deregulation is stupid in regards to the financial sector. Ever heard of Minsky?
Lowering taxes is a good thing. Across the board.

Alright. If what you say is true, then two things would also be true.

You are telling me, that if I borrow $5,000 to buy a car, at my local bank, that they do not lend me that money, from the deposits they have. That they are literally, just creating cash. Right?

Then if that was true, two things would also be true.

One... no bank would ever bother to try and get deposits. Why would you get someone's deposits, that you don't need, and you have to pay interest on? Deposits would be a money losing venture. The whole reason for deposits, is that the amount of interest you pay to the account holder, is a fraction of the interest charged on the loans made from the deposit.

Right? You deposit $100,000. I pay you 2% interest on your deposit, and loan out $90,000 at 5% interest. I pay you $2,000 in interest, but collect $4,500 in interest on the loan.

You are saying none of that happens. I just pay you $2,000 in interest, for money that has no value to me. It doesn't earn me or anyone, any money. And I don't need it, to loan out the $90,000. So why not simply not take deposits, and have $4,500 profit, instead of $2,500 profit?

Two... If banks could simply create money to lend cash... how would any bank ever have a run? Wasn't the entire reason for bailing out the banks in 2008, to supposedly prevent a fiscal contagion of domino bank runs and failures?

If the bank can simply create money, how could they possibly fail? If the loans I gave you, I created out of thin air... then it would be impossible for your defaulting on that loan, to bankrupt my bank. I made the money to begin with. I can just keep making money, to stay afloat. I don't owe anyone money, because I created the money I loaned..... right?

The whole entire concept of a bank run... is that the bank has deposits, and makes loans with those deposits. Then if the person defaults, and people want their deposits back, the bank is trapped. They owe people their deposits, but they loaned that money out and the person didn't pay back.

If you are telling me, deposits are not loaned out, and money is magically created.... then what you are saying is all these regulations and controls we have to prevent bank runs are completely useless. Utterly irrelevant, because it's not possible to have a bank run.

And if it is not possible to have systemic failure.... WHY THE HECK DID WE BAIL OUT ANYTHING?!?!

It doesn't make sense. What you are saying is mind boggling.

 

[Andylusion]

The debt is owed by USA.INC and it's subsidiaries. USA.INC was taken into recievership by the IMF in 1950 to provide the 19 essential "gubermint" services and it is a for profit venture....unfortunately, they hide the profits and give us the bill on the corporate credit card to us to pay off.....great business model when you have a country full of dullards.

Yes, the 1% know how to siphon the Treasury and leave us with the debt. Ask Dick Cheney about that. And BTW, where's all the gold that used to be in Fort Knox? Maybe we should ask Cheney about that too...? Why are Congressional committees who ask for access to audit Fort Knox being denied access by ??? persons...?

That was OUR gold and OUR representatives must be allowed access to audit it.

What are you smoking? 37% of taxes are paid by the top 1%. The top 25% pay 85% of all taxes. If it wasn't for them, we wouldn't have a government at all.

It's not OUR gold, it's their gold you stole from them. Our representatives are doing exactly what we tell them to.

If it wasn't for the top 25% the other 75% would be fighting in the streets over food scraps.

Yeah, that's what I've been saying. It's amazing to me how counter intuitive the left-wing is. Everything we have.... literally everything.... is due almost exclusively to the top 20% of the country.

Even services the government provides, only exist because of a rich guy somewhere. Some top 1%er made the concrete, the road paving equipment... everything.

Without them... there would be... nothing. Dirt paths. You certainly wouldn't need more than that, because there would be no cars are gas. We'd all be getting up before dawn, working 14 hours shifts on farms 6 days a week or more, living poor, and going to bed long after the sun went down exhausted.

That's what life was like without the evil rich. There was no 'sick days'. No 'vacation time'. No 'holiday pay'. No 'time and a half'.

The left-wingers are all complete and total idiots. They have no idea how good they have it.... all due to the rich.

Yeah, that's what I've been saying. It's amazing to me how counter intuitive the left-wing is. Everything we have.... literally everything.... is due almost exclusively to the top 20% of the country.

Uninformed dogma. Demand drives the mass production of new goods/services.
And many inventions were only possible thanks to the government.

Even services the government provides, only exist because of a rich guy somewhere. Some top 1%er made the concrete, the road paving equipment... everything.

The government paid an individual who used the dollars to employ others to build infrastructure. The currency issuer caused this to happen.

Without them... there would be... nothing. Dirt paths. You certainly wouldn't need more than that, because there would be no cars are gas. We'd all be getting up before dawn, working 14 hours shifts on farms 6 days a week or more, living poor, and going to bed long after the sun went down exhausted.

Sounds like the world before government regulations.

That's what life was like without the evil rich. There was no 'sick days'. No 'vacation time'. No 'holiday pay'. No 'time and a half'.

What the f***? You seem to forget the rampant inequality of the late 1800's/early 1900's.

The left-wingers are all complete and total idiots. They have no idea how good they have it.... all due to the rich.

Demand is the engine. Demand comes from the poor/middle class. The rich only have dollars thanks to government spending more then it taxes. Money creation is what really matters here.

Alrighty..... Let's say all the rich leave. You want an automobile. Who is going to buy the property, build the buildings, design the cars, create the tools, hire the contractors to make the parts? Heck, who is going to pay the power bill, to turn on the lights, before you start producing your first car?

If all you need is "Demand to drive mass production" show me how it would work? No rich people remember? No capital to build anything. How's that going to work for you, 'uninformed dogma'?

You doubt that? Look at the countries where all the rich left, and show me all the mass production going on. Venezuela, Cuba, Greece. Yeah, we see how will that "demand" created all the mass production. Did all those people magically stop demanding?

Yeah, of course there was rampant inequality. Try the 1700s, and early 1800s. Most worked on a farm. A ton better off, than working for the rich man. Right? Poverty, 24/7 work, day starts before the suns up, and ends long after it's down. Never worked on a farm huh? When your sick, you still milk the cows... or you don't have milk anymore. Things were not better back then.

We live in a freakin wonderland, compared to the people who built this country. The worker at McDonald's lives in a wonderland compared to the people who built this country.

 

[Dovahkiin]

Yes, the 1% know how to siphon the Treasury and leave us with the debt. Ask Dick Cheney about that. And BTW, where's all the gold that used to be in Fort Knox? Maybe we should ask Cheney about that too...? Why are Congressional committees who ask for access to audit Fort Knox being denied access by ??? persons...?

That was OUR gold and OUR representatives must be allowed access to audit it.

What are you smoking? 37% of taxes are paid by the top 1%. The top 25% pay 85% of all taxes. If it wasn't for them, we wouldn't have a government at all.

It's not OUR gold, it's their gold you stole from them. Our representatives are doing exactly what we tell them to.

If it wasn't for the top 25% the other 75% would be fighting in the streets over food scraps.

Yeah, that's what I've been saying. It's amazing to me how counter intuitive the left-wing is. Everything we have.... literally everything.... is due almost exclusively to the top 20% of the country.

Even services the government provides, only exist because of a rich guy somewhere. Some top 1%er made the concrete, the road paving equipment... everything.

Without them... there would be... nothing. Dirt paths. You certainly wouldn't need more than that, because there would be no cars are gas. We'd all be getting up before dawn, working 14 hours shifts on farms 6 days a week or more, living poor, and going to bed long after the sun went down exhausted.

That's what life was like without the evil rich. There was no 'sick days'. No 'vacation time'. No 'holiday pay'. No 'time and a half'.

The left-wingers are all complete and total idiots. They have no idea how good they have it.... all due to the rich.

Yeah, that's what I've been saying. It's amazing to me how counter intuitive the left-wing is. Everything we have.... literally everything.... is due almost exclusively to the top 20% of the country.

Uninformed dogma. Demand drives the mass production of new goods/services.
And many inventions were only possible thanks to the government.

Even services the government provides, only exist because of a rich guy somewhere. Some top 1%er made the concrete, the road paving equipment... everything.

The government paid an individual who used the dollars to employ others to build infrastructure. The currency issuer caused this to happen.

Without them... there would be... nothing. Dirt paths. You certainly wouldn't need more than that, because there would be no cars are gas. We'd all be getting up before dawn, working 14 hours shifts on farms 6 days a week or more, living poor, and going to bed long after the sun went down exhausted.

Sounds like the world before government regulations.

That's what life was like without the evil rich. There was no 'sick days'. No 'vacation time'. No 'holiday pay'. No 'time and a half'.

What the f***? You seem to forget the rampant inequality of the late 1800's/early 1900's.

The left-wingers are all complete and total idiots. They have no idea how good they have it.... all due to the rich.

Demand is the engine. Demand comes from the poor/middle class. The rich only have dollars thanks to government spending more then it taxes. Money creation is what really matters here.

Alrighty..... Let's say all the rich leave. You want an automobile. Who is going to buy the property, build the buildings, design the cars, create the tools, hire the contractors to make the parts? Heck, who is going to pay the power bill, to turn on the lights, before you start producing your first car?

If all you need is "Demand to drive mass production" show me how it would work? No rich people remember? No capital to build anything. How's that going to work for you, 'uninformed dogma'?

You doubt that? Look at the countries where all the rich left, and show me all the mass production going on. Venezuela, Cuba, Greece. Yeah, we see how will that "demand" created all the mass production. Did all those people magically stop demanding?

Yeah, of course there was rampant inequality. Try the 1700s, and early 1800s. Most worked on a farm. A ton better off, than working for the rich man. Right? Poverty, 24/7 work, day starts before the suns up, and ends long after it's down. Never worked on a farm huh? When your sick, you still milk the cows... or you don't have milk anymore. Things were not better back then.

We live in a freakin wonderland, compared to the people who built this country. The worker at McDonald's lives in a wonderland compared to the people who built this country.

You are telling me, that if I borrow $5,000 to buy a car, at my local bank, that they do not lend me that money, from the deposits they have. That they are literally, just creating cash. Right?

A commercial bank, when it loans, simply creates a deposit. Reserves include vault cash, which is used when an individual with the bank wants to withdraw paper. But there really isn't a difference between money and credit these days. Paper dollars are government IOU'S.

One... no bank would ever bother to try and get deposits.

Stop right there. Every asset has a liability that comes along with it. Banks, for the most part, need deposits because they need to balance their books and attract customers.
They also have to fulfill requirements.
Loans create the deposits. Now, to expand on this, I say some things to make a point. If you want to get technical, banks need to manage their balance sheets and do in fact need deposits to do this, but can you show me a bank that has enough dollars to match its liabilities at any given time? (I'm not talking about PROM. notes.)

Why would you get someone's deposits, that you don't need, and you have to pay interest on?

Banks do need them. The statement 'Loans create deposits' doesn't mean banks don't need deposits.
‘Loans Create Deposits’ – in Context – Monetary Realism

The whole reason for deposits, is that the amount of interest you pay to the account holder, is a fraction of the interest charged on the loans made from the deposit.

In the modern banking system, deposits are a liability for a commercial bank. Banks hold them for balance sheet management/to meet requirements and vault cash/reserve transfers. If banks could only loan out money they had, well, you'll have to explain this:
FRB: Z.1 Release--L.1--Credit Market Debt Outstanding--June 11, 2015

Right? You deposit $100,000. I pay you 2% interest on your deposit, and loan out $90,000 at 5% interest. I pay you $2,000 in interest, but collect $4,500 in interest on the loan.

Deposits are always a liability for a bank. I've already mentioned why commercial banks seek deposits, but when a bank decides to make a loan, they simply mark up an account. This is how banks 'create money.' They worry about reserves later.

You are saying none of that happens.

I'm saying that banks originate.

I just pay you $2,000 in interest, for money that has no value to me.

Deposits have value, for balance sheet management and attracting customers.

It doesn't earn me or anyone, any money.

The individual who has the deposit earns money.

And I don't need it, to loan out the $90,000. So why not simply not take deposits, and have $4,500 profit, instead of $2,500 profit?

Banks need to properly manage their balance sheets, attract customers, and they need reserves.

Two... If banks could simply create money to lend cash... how would any bank ever have a run?

I want you to look at this:
FRB: Z.1 Release--L.1--Credit Market Debt Outstanding--June 11, 2015
I also want you to look at this:
http://www.bankofengland.co.uk/publ...lletin/2014/qb14q1prereleasemoneycreation.pdf
Now, when talking about a bank run, you're referring to customers in large numbers attempting to withdraw government IOU'S, where a bank only keeps a small portion of its assets in cash. This does nothing to go against my point. The majority of money is electronic and originated from banks.

Wasn't the entire reason for bailing out the banks in 2008, to supposedly prevent a fiscal contagion of domino bank runs and failures?

Pretty much.

If the bank can simply create money, how could they possibly fail?

Because deposits are still a liability for a bank, and banks never have enough cash if a majority of customers decide to withdraw at the same time. Cash is only a small part of their assets. Banks can't simply give out promissory notes to customers during a bank run.

I made the money to begin with. I can just keep making money, to stay afloat. I don't owe anyone money, because I created the money I loaned..... right?

No, because when a bank originates, it's bank credit for a customer.

If you are telling me, deposits are not loaned out, and money is magically created.... then what you are saying is all these regulations and controls we have to prevent bank runs are completely useless. Utterly irrelevant, because it's not possible to have a bank run.

Never said this.

Alrighty..... Let's say all the rich leave. You want an automobile. Who is going to buy the property, build the buildings, design the cars, create the tools, hire the contractors to make the parts? Heck, who is going to pay the power bill, to turn on the lights, before you start producing your first car?

Why would the rich leave? I suppose the real question is, why would the capitalist ever decide to build 10,000 new cars if there isn't any demand?

If all you need is "Demand to drive mass production" show me how it would work? No rich people remember? No capital to build anything. How's that going to work for you, 'uninformed dogma'?

When has mass production ever occurred in a capitalist economy without demand for the product being produced?
What makes you think capitalists are going to flee? We're specifically talking about capitalist economies. If we were facing a supply side problem, you'd have a point, but historically, downturns are due to a drop in aggregate demand.

You doubt that? Look at the countries where all the rich left, and show me all the mass production going on. Venezuela, Cuba, Greece. Yeah, we see how will that "demand" created all the mass production. Did all those people magically stop demanding?

Venezuela is a socialist hell hole with an energy crisis, a horrible currency exchange system, import problems, dealing with low oil prices..
Cuba is a literal dictatorship where the government doesn't allow businesses to meet demand for products, which is clearly there.
Greece? Their problems stem from them abandoning their own currency and dealing with a trade deficit that originated from their growth before the crisis. I don't really see where Greece ran off capitalists.

Did all those people magically stop demanding?

No, I've never once claimed demand can function without supply.

Yeah, of course there was rampant inequality. Try the 1700s, and early 1800s. Most worked on a farm. A ton better off, than working for the rich man. Right? Poverty, 24/7 work, day starts before the suns up, and ends long after it's down. Never worked on a farm huh? When your sick, you still milk the cows... or you don't have milk anymore. Things were not better back then.

It wasn't better. But you're arguing against an invisible strawman that has never once claimed that the rich are evil.

We live in a freakin wonderland, compared to the people who built this country. The worker at McDonald's lives in a wonderland compared to the people who built this country.

I agree, let's make things even better.

 

[Andylusion]

What are you smoking? 37% of taxes are paid by the top 1%. The top 25% pay 85% of all taxes. If it wasn't for them, we wouldn't have a government at all.

It's not OUR gold, it's their gold you stole from them. Our representatives are doing exactly what we tell them to.

If it wasn't for the top 25% the other 75% would be fighting in the streets over food scraps.

Yeah, that's what I've been saying. It's amazing to me how counter intuitive the left-wing is. Everything we have.... literally everything.... is due almost exclusively to the top 20% of the country.

Even services the government provides, only exist because of a rich guy somewhere. Some top 1%er made the concrete, the road paving equipment... everything.

Without them... there would be... nothing. Dirt paths. You certainly wouldn't need more than that, because there would be no cars are gas. We'd all be getting up before dawn, working 14 hours shifts on farms 6 days a week or more, living poor, and going to bed long after the sun went down exhausted.

That's what life was like without the evil rich. There was no 'sick days'. No 'vacation time'. No 'holiday pay'. No 'time and a half'.

The left-wingers are all complete and total idiots. They have no idea how good they have it.... all due to the rich.

Yeah, that's what I've been saying. It's amazing to me how counter intuitive the left-wing is. Everything we have.... literally everything.... is due almost exclusively to the top 20% of the country.

Uninformed dogma. Demand drives the mass production of new goods/services.
And many inventions were only possible thanks to the government.

Even services the government provides, only exist because of a rich guy somewhere. Some top 1%er made the concrete, the road paving equipment... everything.

The government paid an individual who used the dollars to employ others to build infrastructure. The currency issuer caused this to happen.

Without them... there would be... nothing. Dirt paths. You certainly wouldn't need more than that, because there would be no cars are gas. We'd all be getting up before dawn, working 14 hours shifts on farms 6 days a week or more, living poor, and going to bed long after the sun went down exhausted.

Sounds like the world before government regulations.

That's what life was like without the evil rich. There was no 'sick days'. No 'vacation time'. No 'holiday pay'. No 'time and a half'.

What the f***? You seem to forget the rampant inequality of the late 1800's/early 1900's.

The left-wingers are all complete and total idiots. They have no idea how good they have it.... all due to the rich.

Demand is the engine. Demand comes from the poor/middle class. The rich only have dollars thanks to government spending more then it taxes. Money creation is what really matters here.

Alrighty..... Let's say all the rich leave. You want an automobile. Who is going to buy the property, build the buildings, design the cars, create the tools, hire the contractors to make the parts? Heck, who is going to pay the power bill, to turn on the lights, before you start producing your first car?

If all you need is "Demand to drive mass production" show me how it would work? No rich people remember? No capital to build anything. How's that going to work for you, 'uninformed dogma'?

You doubt that? Look at the countries where all the rich left, and show me all the mass production going on. Venezuela, Cuba, Greece. Yeah, we see how will that "demand" created all the mass production. Did all those people magically stop demanding?

Yeah, of course there was rampant inequality. Try the 1700s, and early 1800s. Most worked on a farm. A ton better off, than working for the rich man. Right? Poverty, 24/7 work, day starts before the suns up, and ends long after it's down. Never worked on a farm huh? When your sick, you still milk the cows... or you don't have milk anymore. Things were not better back then.

We live in a freakin wonderland, compared to the people who built this country. The worker at McDonald's lives in a wonderland compared to the people who built this country.

You are telling me, that if I borrow $5,000 to buy a car, at my local bank, that they do not lend me that money, from the deposits they have. That they are literally, just creating cash. Right?

A commercial bank, when it loans, simply creates a deposit. Reserves include vault cash, which is used when an individual with the bank wants to withdraw paper. But there really isn't a difference between money and credit these days. Paper dollars are government IOU'S.

One... no bank would ever bother to try and get deposits.

Stop right there. Every asset has a liability that comes along with it. Banks, for the most part, need deposits because they need to balance their books and attract customers.
They also have to fulfill requirements.
Loans create the deposits. Now, to expand on this, I say some things to make a point. If you want to get technical, banks need to manage their balance sheets and do in fact need deposits to do this, but can you show me a bank that has enough dollars to match its liabilities at any given time? (I'm not talking about PROM. notes.)

Why would you get someone's deposits, that you don't need, and you have to pay interest on?

Banks do need them. The statement 'Loans create deposits' doesn't mean banks don't need deposits.
‘Loans Create Deposits’ – in Context – Monetary Realism

The whole reason for deposits, is that the amount of interest you pay to the account holder, is a fraction of the interest charged on the loans made from the deposit.

In the modern banking system, deposits are a liability for a commercial bank. Banks hold them for balance sheet management/to meet requirements and vault cash/reserve transfers. If banks could only loan out money they had, well, you'll have to explain this:
FRB: Z.1 Release--L.1--Credit Market Debt Outstanding--June 11, 2015

Right? You deposit $100,000. I pay you 2% interest on your deposit, and loan out $90,000 at 5% interest. I pay you $2,000 in interest, but collect $4,500 in interest on the loan.

Deposits are always a liability for a bank. I've already mentioned why commercial banks seek deposits, but when a bank decides to make a loan, they simply mark up an account. This is how banks 'create money.' They worry about reserves later.

You are saying none of that happens.

I'm saying that banks originate.

I just pay you $2,000 in interest, for money that has no value to me.

Deposits have value, for balance sheet management and attracting customers.

It doesn't earn me or anyone, any money.

The individual who has the deposit earns money.

And I don't need it, to loan out the $90,000. So why not simply not take deposits, and have $4,500 profit, instead of $2,500 profit?

Banks need to properly manage their balance sheets, attract customers, and they need reserves.

Two... If banks could simply create money to lend cash... how would any bank ever have a run?

I want you to look at this:
FRB: Z.1 Release--L.1--Credit Market Debt Outstanding--June 11, 2015
I also want you to look at this:
http://www.bankofengland.co.uk/publ...lletin/2014/qb14q1prereleasemoneycreation.pdf
Now, when talking about a bank run, you're referring to customers in large numbers attempting to withdraw government IOU'S, where a bank only keeps a small portion of its assets in cash. This does nothing to go against my point. The majority of money is electronic and originated from banks.

Wasn't the entire reason for bailing out the banks in 2008, to supposedly prevent a fiscal contagion of domino bank runs and failures?

Pretty much.

If the bank can simply create money, how could they possibly fail?

Because deposits are still a liability for a bank, and banks never have enough cash if a majority of customers decide to withdraw at the same time. Cash is only a small part of their assets. Banks can't simply give out promissory notes to customers during a bank run.

I made the money to begin with. I can just keep making money, to stay afloat. I don't owe anyone money, because I created the money I loaned..... right?

No, because when a bank originates, it's bank credit for a customer.

If you are telling me, deposits are not loaned out, and money is magically created.... then what you are saying is all these regulations and controls we have to prevent bank runs are completely useless. Utterly irrelevant, because it's not possible to have a bank run.

Never said this.

Alrighty..... Let's say all the rich leave. You want an automobile. Who is going to buy the property, build the buildings, design the cars, create the tools, hire the contractors to make the parts? Heck, who is going to pay the power bill, to turn on the lights, before you start producing your first car?

Why would the rich leave? I suppose the real question is, why would the capitalist ever decide to build 10,000 new cars if there isn't any demand?

If all you need is "Demand to drive mass production" show me how it would work? No rich people remember? No capital to build anything. How's that going to work for you, 'uninformed dogma'?

When has mass production ever occurred in a capitalist economy without demand for the product being produced?
What makes you think capitalists are going to flee? We're specifically talking about capitalist economies. If we were facing a supply side problem, you'd have a point, but historically, downturns are due to a drop in aggregate demand.

You doubt that? Look at the countries where all the rich left, and show me all the mass production going on. Venezuela, Cuba, Greece. Yeah, we see how will that "demand" created all the mass production. Did all those people magically stop demanding?

Venezuela is a socialist hell hole with an energy crisis, a horrible currency exchange system, import problems, dealing with low oil prices..
Cuba is a literal dictatorship where the government doesn't allow businesses to meet demand for products, which is clearly there.
Greece? Their problems stem from them abandoning their own currency and dealing with a trade deficit that originated from their growth before the crisis. I don't really see where Greece ran off capitalists.

Did all those people magically stop demanding?

No, I've never once claimed demand can function without supply.

Yeah, of course there was rampant inequality. Try the 1700s, and early 1800s. Most worked on a farm. A ton better off, than working for the rich man. Right? Poverty, 24/7 work, day starts before the suns up, and ends long after it's down. Never worked on a farm huh? When your sick, you still milk the cows... or you don't have milk anymore. Things were not better back then.

It wasn't better. But you're arguing against an invisible strawman that has never once claimed that the rich are evil.

We live in a freakin wonderland, compared to the people who built this country. The worker at McDonald's lives in a wonderland compared to the people who built this country.

I agree, let's make things even better.

Without getting into the nitty gritty, clearly the way in which you, and your sources, explain banking, is way beyond me.

The very first example "loans create deposits" doesn't make any sense to me at all. Yeah if you loan me $5,000, and I deposit $5,000. Right. But I wouldn't do that. I might buy an old car. That person might buy a couch. That person might by a dinner for his family.

It may never be deposit. The car dealership might pay it's workers. The fast food place might open a new store.

But I don't see an automatic assumption, that one banks loan, automatically creates a deposit.

Not saying you are wrong... but this is clearly way over my head. You got me dude. I'm ignorant. Cookie for you I guess.

 

[Dovahkiin]

If it wasn't for the top 25% the other 75% would be fighting in the streets over food scraps.

Yeah, that's what I've been saying. It's amazing to me how counter intuitive the left-wing is. Everything we have.... literally everything.... is due almost exclusively to the top 20% of the country.

Even services the government provides, only exist because of a rich guy somewhere. Some top 1%er made the concrete, the road paving equipment... everything.

Without them... there would be... nothing. Dirt paths. You certainly wouldn't need more than that, because there would be no cars are gas. We'd all be getting up before dawn, working 14 hours shifts on farms 6 days a week or more, living poor, and going to bed long after the sun went down exhausted.

That's what life was like without the evil rich. There was no 'sick days'. No 'vacation time'. No 'holiday pay'. No 'time and a half'.

The left-wingers are all complete and total idiots. They have no idea how good they have it.... all due to the rich.

Yeah, that's what I've been saying. It's amazing to me how counter intuitive the left-wing is. Everything we have.... literally everything.... is due almost exclusively to the top 20% of the country.

Uninformed dogma. Demand drives the mass production of new goods/services.
And many inventions were only possible thanks to the government.

Even services the government provides, only exist because of a rich guy somewhere. Some top 1%er made the concrete, the road paving equipment... everything.

The government paid an individual who used the dollars to employ others to build infrastructure. The currency issuer caused this to happen.

Without them... there would be... nothing. Dirt paths. You certainly wouldn't need more than that, because there would be no cars are gas. We'd all be getting up before dawn, working 14 hours shifts on farms 6 days a week or more, living poor, and going to bed long after the sun went down exhausted.

Sounds like the world before government regulations.

That's what life was like without the evil rich. There was no 'sick days'. No 'vacation time'. No 'holiday pay'. No 'time and a half'.

What the f***? You seem to forget the rampant inequality of the late 1800's/early 1900's.

The left-wingers are all complete and total idiots. They have no idea how good they have it.... all due to the rich.

Demand is the engine. Demand comes from the poor/middle class. The rich only have dollars thanks to government spending more then it taxes. Money creation is what really matters here.

Alrighty..... Let's say all the rich leave. You want an automobile. Who is going to buy the property, build the buildings, design the cars, create the tools, hire the contractors to make the parts? Heck, who is going to pay the power bill, to turn on the lights, before you start producing your first car?

If all you need is "Demand to drive mass production" show me how it would work? No rich people remember? No capital to build anything. How's that going to work for you, 'uninformed dogma'?

You doubt that? Look at the countries where all the rich left, and show me all the mass production going on. Venezuela, Cuba, Greece. Yeah, we see how will that "demand" created all the mass production. Did all those people magically stop demanding?

Yeah, of course there was rampant inequality. Try the 1700s, and early 1800s. Most worked on a farm. A ton better off, than working for the rich man. Right? Poverty, 24/7 work, day starts before the suns up, and ends long after it's down. Never worked on a farm huh? When your sick, you still milk the cows... or you don't have milk anymore. Things were not better back then.

We live in a freakin wonderland, compared to the people who built this country. The worker at McDonald's lives in a wonderland compared to the people who built this country.

You are telling me, that if I borrow $5,000 to buy a car, at my local bank, that they do not lend me that money, from the deposits they have. That they are literally, just creating cash. Right?

A commercial bank, when it loans, simply creates a deposit. Reserves include vault cash, which is used when an individual with the bank wants to withdraw paper. But there really isn't a difference between money and credit these days. Paper dollars are government IOU'S.

One... no bank would ever bother to try and get deposits.

Stop right there. Every asset has a liability that comes along with it. Banks, for the most part, need deposits because they need to balance their books and attract customers.
They also have to fulfill requirements.
Loans create the deposits. Now, to expand on this, I say some things to make a point. If you want to get technical, banks need to manage their balance sheets and do in fact need deposits to do this, but can you show me a bank that has enough dollars to match its liabilities at any given time? (I'm not talking about PROM. notes.)

Why would you get someone's deposits, that you don't need, and you have to pay interest on?

Banks do need them. The statement 'Loans create deposits' doesn't mean banks don't need deposits.
‘Loans Create Deposits’ – in Context – Monetary Realism

The whole reason for deposits, is that the amount of interest you pay to the account holder, is a fraction of the interest charged on the loans made from the deposit.

In the modern banking system, deposits are a liability for a commercial bank. Banks hold them for balance sheet management/to meet requirements and vault cash/reserve transfers. If banks could only loan out money they had, well, you'll have to explain this:
FRB: Z.1 Release--L.1--Credit Market Debt Outstanding--June 11, 2015

Right? You deposit $100,000. I pay you 2% interest on your deposit, and loan out $90,000 at 5% interest. I pay you $2,000 in interest, but collect $4,500 in interest on the loan.

Deposits are always a liability for a bank. I've already mentioned why commercial banks seek deposits, but when a bank decides to make a loan, they simply mark up an account. This is how banks 'create money.' They worry about reserves later.

You are saying none of that happens.

I'm saying that banks originate.

I just pay you $2,000 in interest, for money that has no value to me.

Deposits have value, for balance sheet management and attracting customers.

It doesn't earn me or anyone, any money.

The individual who has the deposit earns money.

And I don't need it, to loan out the $90,000. So why not simply not take deposits, and have $4,500 profit, instead of $2,500 profit?

Banks need to properly manage their balance sheets, attract customers, and they need reserves.

Two... If banks could simply create money to lend cash... how would any bank ever have a run?

I want you to look at this:
FRB: Z.1 Release--L.1--Credit Market Debt Outstanding--June 11, 2015
I also want you to look at this:
http://www.bankofengland.co.uk/publ...lletin/2014/qb14q1prereleasemoneycreation.pdf
Now, when talking about a bank run, you're referring to customers in large numbers attempting to withdraw government IOU'S, where a bank only keeps a small portion of its assets in cash. This does nothing to go against my point. The majority of money is electronic and originated from banks.

Wasn't the entire reason for bailing out the banks in 2008, to supposedly prevent a fiscal contagion of domino bank runs and failures?

Pretty much.

If the bank can simply create money, how could they possibly fail?

Because deposits are still a liability for a bank, and banks never have enough cash if a majority of customers decide to withdraw at the same time. Cash is only a small part of their assets. Banks can't simply give out promissory notes to customers during a bank run.

I made the money to begin with. I can just keep making money, to stay afloat. I don't owe anyone money, because I created the money I loaned..... right?

No, because when a bank originates, it's bank credit for a customer.

If you are telling me, deposits are not loaned out, and money is magically created.... then what you are saying is all these regulations and controls we have to prevent bank runs are completely useless. Utterly irrelevant, because it's not possible to have a bank run.

Never said this.

Alrighty..... Let's say all the rich leave. You want an automobile. Who is going to buy the property, build the buildings, design the cars, create the tools, hire the contractors to make the parts? Heck, who is going to pay the power bill, to turn on the lights, before you start producing your first car?

Why would the rich leave? I suppose the real question is, why would the capitalist ever decide to build 10,000 new cars if there isn't any demand?

If all you need is "Demand to drive mass production" show me how it would work? No rich people remember? No capital to build anything. How's that going to work for you, 'uninformed dogma'?

When has mass production ever occurred in a capitalist economy without demand for the product being produced?
What makes you think capitalists are going to flee? We're specifically talking about capitalist economies. If we were facing a supply side problem, you'd have a point, but historically, downturns are due to a drop in aggregate demand.

You doubt that? Look at the countries where all the rich left, and show me all the mass production going on. Venezuela, Cuba, Greece. Yeah, we see how will that "demand" created all the mass production. Did all those people magically stop demanding?

Venezuela is a socialist hell hole with an energy crisis, a horrible currency exchange system, import problems, dealing with low oil prices..
Cuba is a literal dictatorship where the government doesn't allow businesses to meet demand for products, which is clearly there.
Greece? Their problems stem from them abandoning their own currency and dealing with a trade deficit that originated from their growth before the crisis. I don't really see where Greece ran off capitalists.

Did all those people magically stop demanding?

No, I've never once claimed demand can function without supply.

Yeah, of course there was rampant inequality. Try the 1700s, and early 1800s. Most worked on a farm. A ton better off, than working for the rich man. Right? Poverty, 24/7 work, day starts before the suns up, and ends long after it's down. Never worked on a farm huh? When your sick, you still milk the cows... or you don't have milk anymore. Things were not better back then.

It wasn't better. But you're arguing against an invisible strawman that has never once claimed that the rich are evil.

We live in a freakin wonderland, compared to the people who built this country. The worker at McDonald's lives in a wonderland compared to the people who built this country.

I agree, let's make things even better.

Without getting into the nitty gritty, clearly the way in which you, and your sources, explain banking, is way beyond me.

The very first example "loans create deposits" doesn't make any sense to me at all. Yeah if you loan me $5,000, and I deposit $5,000. Right. But I wouldn't do that. I might buy an old car. That person might buy a couch. That person might by a dinner for his family.

It may never be deposit. The car dealership might pay it's workers. The fast food place might open a new store.

But I don't see an automatic assumption, that one banks loan, automatically creates a deposit.

Not saying you are wrong... but this is clearly way over my head. You got me dude. I'm ignorant. Cookie for you I guess.

Why doesn't it make sense?
Bank loans create deposits. I've done my best to explain it.

 

[Toddsterpatriot]

Many economist/investors use the term "money expansion policy" to describe events like quantitative easing or other similar stimulus which occurs when central banks increase money supply to stimulate growth. Yes, it is inflationary, but it is intended to create growth, not in response to growth.

Yeah, I know why they claim to do it. I don't see that it ever works. Japan tried this for a decade, and it didn't do jack.

The Keynesian call it a Liquidity Trap. But I call it bad economics. The problem is, injecting money into the banking system, doesn't magically make investors willing to invest, or borrowers worthy of borrowing.

If the economy sucks, and there are no investors willing to invest in your economy, it doesn't matter how much money the banks have laying around to invest with. If the economy sucks, and borrowers are too risky to lend money to, it doesn't matter how much money you have to lend with.

This idea that we should be printing off cash, and expanding the money supply, when there is nothing for people to buy, sell, build, or produce..... is stupid.

Change the taxes, and the regulation, so that people can engage in capitalism, and the free market, and then the economy will take off. Ironically if the economy takes off, you don't need Quantitative easing anymore.

So I can't think of a single situation where QE is of any value.... other than to devalue the money, so government can borrow more money.

Japan tried this for a decade, and it didn't do jack.

Which is why they need to lower taxes and focus on boosting aggregate demand for the people who don't save as much.

The Keynesian call it a Liquidity Trap.

That's what it is.

The problem is, injecting money into the banking system, doesn't magically make investors willing to invest, or borrowers worthy of borrowing.

I agree, since banks loan when people are worthy and demand credit, they don't loan out deposits.

If the economy sucks, and there are no investors willing to invest in your economy, it doesn't matter how much money the banks have laying around to invest with.

Banks don't even need money laying around, only to meet requirements set by the government. Bank loans create money.

This idea that we should be printing off cash, and expanding the money supply, when there is nothing for people to buy, sell, build, or produce..... is stupid.

It's a great idea, if it's aimed at putting dollars directly into the poor/middle classes hands with jobs/assistance programs.

Change the taxes, and the regulation, so that people can engage in capitalism, and the free market, and then the economy will take off.

Yeah, that has never happened. Not without a massive build up in private sector debt.

So I can't think of a single situation where QE is of any value.... other than to devalue the money, so government can borrow more money.

QE makes sure banks have excess reserves and helps control the rates when banks lend reserves to each other overnight. It's useful, and QE money doesn't get into our hands anyways. The government doesn't really "borrow" since it has to spend the dollars before it can convert them to bonds.

Of course banks loan out deposits. All banks do.

Banks still need money. No bank creates money. They loan money they have. From the deposits.

You still don't get it. Even Obama came to your specific home, and handed you a million dollars.... if there is no store with products for you to buy.... what use is the million dollars? It's not a great idea. It's stupidity.

I can think of dozens of examples where that has happened. China. Vietnam. India. Chile. Hong Kong. Taiwan. Capitalism has worked every where it's tried. Debt is a function of culture shift, and government policy. Not deregulation and lowering taxes.

Of course banks loan out deposits. All banks do.

What makes you believe this?
https://www.kreditopferhilfe.net/docs/S_and_P__Repeat_After_Me_8_14_13.pdf
http://www.bankofengland.co.uk/publ...lletin/2014/qb14q1prereleasemoneycreation.pdf
Loans create deposits.
Money multiplier and other myths

Banks still need money. No bank creates money.

Banks need to meet requirements and have some financial/real assets, but they never have close to the amount of liabilities they carry. Ever heard of a bank run? The majority of money originates from banks, loans creating deposits. This is endogenous money, and it comes with a matching liability. The fed, the BOE, and many others agree with me. If you have evidence that banks do something otherwise, I'd love to see it.

They loan money they have. From the deposits.

Nonsense. Deposits are liabilities on the banks balance sheet, and there's nothing in a deposit to lend out. If someone deposits physical cash, the cash goes into the vault (reserves) and the bank simply marks up their account. The bank doesn't worry about loaning out reserves when it originates, it simply creates the deposit and gets the reserves overnight to meet the requirement. Other countries don't even have a reserve requirement.

You still don't get it. Even Obama came to your specific home, and handed you a million dollars.... if there is no store with products for you to buy.... what use is the million dollars? It's not a great idea. It's stupidity.

I never argued otherwise. In fact, the only real issue when it comes to spending is a shortage of supply. In venezuela, they have the potential to boost supply and get citizens their basic needs.

Capitalism has worked every where it's tried. Debt is a function of culture shift, and government policy. Not deregulation and lowering taxes.

Define capitalism. I agree if we're thinking of the same thing.
Debt is the engine of prosperity. Deregulation is stupid in regards to the financial sector. Ever heard of Minsky?
Lowering taxes is a good thing. Across the board.

Alright. If what you say is true, then two things would also be true.

You are telling me, that if I borrow $5,000 to buy a car, at my local bank, that they do not lend me that money, from the deposits they have. That they are literally, just creating cash. Right?

Then if that was true, two things would also be true.

One... no bank would ever bother to try and get deposits. Why would you get someone's deposits, that you don't need, and you have to pay interest on? Deposits would be a money losing venture. The whole reason for deposits, is that the amount of interest you pay to the account holder, is a fraction of the interest charged on the loans made from the deposit.

Right? You deposit $100,000. I pay you 2% interest on your deposit, and loan out $90,000 at 5% interest. I pay you $2,000 in interest, but collect $4,500 in interest on the loan.

You are saying none of that happens. I just pay you $2,000 in interest, for money that has no value to me. It doesn't earn me or anyone, any money. And I don't need it, to loan out the $90,000. So why not simply not take deposits, and have $4,500 profit, instead of $2,500 profit?

Two... If banks could simply create money to lend cash... how would any bank ever have a run? Wasn't the entire reason for bailing out the banks in 2008, to supposedly prevent a fiscal contagion of domino bank runs and failures?

If the bank can simply create money, how could they possibly fail? If the loans I gave you, I created out of thin air... then it would be impossible for your defaulting on that loan, to bankrupt my bank. I made the money to begin with. I can just keep making money, to stay afloat. I don't owe anyone money, because I created the money I loaned..... right?

The whole entire concept of a bank run... is that the bank has deposits, and makes loans with those deposits. Then if the person defaults, and people want their deposits back, the bank is trapped. They owe people their deposits, but they loaned that money out and the person didn't pay back.

If you are telling me, deposits are not loaned out, and money is magically created.... then what you are saying is all these regulations and controls we have to prevent bank runs are completely useless. Utterly irrelevant, because it's not possible to have a bank run.

And if it is not possible to have systemic failure.... WHY THE HECK DID WE BAIL OUT ANYTHING?!?!

It doesn't make sense. What you are saying is mind boggling.

You are telling me, that if I borrow $5,000 to buy a car, at my local bank, that they do not lend me that money, from the deposits they have.

That's incorrect. They absolutely do lend you the money they received from deposits.

If banks could simply create money to lend cash... how would any bank ever have a run?

Bingo!

If the bank can simply create money, how could they possibly fail? If the loans I gave you, I created out of thin air... then it would be impossible for your defaulting on that loan, to bankrupt my bank.

Absolutely.

It doesn't make sense. What you are saying is mind boggling.

It's technically true, but pointless. If a bank lent with no deposits, the loan check you hand to your car dealer would bounce.
So, yes, they create a deposit account when you borrow, but that "deposit" is immediately withdrawn when the car dealer cashes the check. And without the other customer deposits, the bouncing checks would put the bank out of business.

 

[Toddsterpatriot]

What are you smoking? 37% of taxes are paid by the top 1%. The top 25% pay 85% of all taxes. If it wasn't for them, we wouldn't have a government at all.

It's not OUR gold, it's their gold you stole from them. Our representatives are doing exactly what we tell them to.

If it wasn't for the top 25% the other 75% would be fighting in the streets over food scraps.

Yeah, that's what I've been saying. It's amazing to me how counter intuitive the left-wing is. Everything we have.... literally everything.... is due almost exclusively to the top 20% of the country.

Even services the government provides, only exist because of a rich guy somewhere. Some top 1%er made the concrete, the road paving equipment... everything.

Without them... there would be... nothing. Dirt paths. You certainly wouldn't need more than that, because there would be no cars are gas. We'd all be getting up before dawn, working 14 hours shifts on farms 6 days a week or more, living poor, and going to bed long after the sun went down exhausted.

That's what life was like without the evil rich. There was no 'sick days'. No 'vacation time'. No 'holiday pay'. No 'time and a half'.

The left-wingers are all complete and total idiots. They have no idea how good they have it.... all due to the rich.

Yeah, that's what I've been saying. It's amazing to me how counter intuitive the left-wing is. Everything we have.... literally everything.... is due almost exclusively to the top 20% of the country.

Uninformed dogma. Demand drives the mass production of new goods/services.
And many inventions were only possible thanks to the government.

Even services the government provides, only exist because of a rich guy somewhere. Some top 1%er made the concrete, the road paving equipment... everything.

The government paid an individual who used the dollars to employ others to build infrastructure. The currency issuer caused this to happen.

Without them... there would be... nothing. Dirt paths. You certainly wouldn't need more than that, because there would be no cars are gas. We'd all be getting up before dawn, working 14 hours shifts on farms 6 days a week or more, living poor, and going to bed long after the sun went down exhausted.

Sounds like the world before government regulations.

That's what life was like without the evil rich. There was no 'sick days'. No 'vacation time'. No 'holiday pay'. No 'time and a half'.

What the f***? You seem to forget the rampant inequality of the late 1800's/early 1900's.

The left-wingers are all complete and total idiots. They have no idea how good they have it.... all due to the rich.

Demand is the engine. Demand comes from the poor/middle class. The rich only have dollars thanks to government spending more then it taxes. Money creation is what really matters here.

Alrighty..... Let's say all the rich leave. You want an automobile. Who is going to buy the property, build the buildings, design the cars, create the tools, hire the contractors to make the parts? Heck, who is going to pay the power bill, to turn on the lights, before you start producing your first car?

If all you need is "Demand to drive mass production" show me how it would work? No rich people remember? No capital to build anything. How's that going to work for you, 'uninformed dogma'?

You doubt that? Look at the countries where all the rich left, and show me all the mass production going on. Venezuela, Cuba, Greece. Yeah, we see how will that "demand" created all the mass production. Did all those people magically stop demanding?

Yeah, of course there was rampant inequality. Try the 1700s, and early 1800s. Most worked on a farm. A ton better off, than working for the rich man. Right? Poverty, 24/7 work, day starts before the suns up, and ends long after it's down. Never worked on a farm huh? When your sick, you still milk the cows... or you don't have milk anymore. Things were not better back then.

We live in a freakin wonderland, compared to the people who built this country. The worker at McDonald's lives in a wonderland compared to the people who built this country.

You are telling me, that if I borrow $5,000 to buy a car, at my local bank, that they do not lend me that money, from the deposits they have. That they are literally, just creating cash. Right?

A commercial bank, when it loans, simply creates a deposit. Reserves include vault cash, which is used when an individual with the bank wants to withdraw paper. But there really isn't a difference between money and credit these days. Paper dollars are government IOU'S.

One... no bank would ever bother to try and get deposits.

Stop right there. Every asset has a liability that comes along with it. Banks, for the most part, need deposits because they need to balance their books and attract customers.
They also have to fulfill requirements.
Loans create the deposits. Now, to expand on this, I say some things to make a point. If you want to get technical, banks need to manage their balance sheets and do in fact need deposits to do this, but can you show me a bank that has enough dollars to match its liabilities at any given time? (I'm not talking about PROM. notes.)

Why would you get someone's deposits, that you don't need, and you have to pay interest on?

Banks do need them. The statement 'Loans create deposits' doesn't mean banks don't need deposits.
‘Loans Create Deposits’ – in Context – Monetary Realism

The whole reason for deposits, is that the amount of interest you pay to the account holder, is a fraction of the interest charged on the loans made from the deposit.

In the modern banking system, deposits are a liability for a commercial bank. Banks hold them for balance sheet management/to meet requirements and vault cash/reserve transfers. If banks could only loan out money they had, well, you'll have to explain this:
FRB: Z.1 Release--L.1--Credit Market Debt Outstanding--June 11, 2015

Right? You deposit $100,000. I pay you 2% interest on your deposit, and loan out $90,000 at 5% interest. I pay you $2,000 in interest, but collect $4,500 in interest on the loan.

Deposits are always a liability for a bank. I've already mentioned why commercial banks seek deposits, but when a bank decides to make a loan, they simply mark up an account. This is how banks 'create money.' They worry about reserves later.

You are saying none of that happens.

I'm saying that banks originate.

I just pay you $2,000 in interest, for money that has no value to me.

Deposits have value, for balance sheet management and attracting customers.

It doesn't earn me or anyone, any money.

The individual who has the deposit earns money.

And I don't need it, to loan out the $90,000. So why not simply not take deposits, and have $4,500 profit, instead of $2,500 profit?

Banks need to properly manage their balance sheets, attract customers, and they need reserves.

Two... If banks could simply create money to lend cash... how would any bank ever have a run?

I want you to look at this:
FRB: Z.1 Release--L.1--Credit Market Debt Outstanding--June 11, 2015
I also want you to look at this:
http://www.bankofengland.co.uk/publ...lletin/2014/qb14q1prereleasemoneycreation.pdf
Now, when talking about a bank run, you're referring to customers in large numbers attempting to withdraw government IOU'S, where a bank only keeps a small portion of its assets in cash. This does nothing to go against my point. The majority of money is electronic and originated from banks.

Wasn't the entire reason for bailing out the banks in 2008, to supposedly prevent a fiscal contagion of domino bank runs and failures?

Pretty much.

If the bank can simply create money, how could they possibly fail?

Because deposits are still a liability for a bank, and banks never have enough cash if a majority of customers decide to withdraw at the same time. Cash is only a small part of their assets. Banks can't simply give out promissory notes to customers during a bank run.

I made the money to begin with. I can just keep making money, to stay afloat. I don't owe anyone money, because I created the money I loaned..... right?

No, because when a bank originates, it's bank credit for a customer.

If you are telling me, deposits are not loaned out, and money is magically created.... then what you are saying is all these regulations and controls we have to prevent bank runs are completely useless. Utterly irrelevant, because it's not possible to have a bank run.

Never said this.

Alrighty..... Let's say all the rich leave. You want an automobile. Who is going to buy the property, build the buildings, design the cars, create the tools, hire the contractors to make the parts? Heck, who is going to pay the power bill, to turn on the lights, before you start producing your first car?

Why would the rich leave? I suppose the real question is, why would the capitalist ever decide to build 10,000 new cars if there isn't any demand?

If all you need is "Demand to drive mass production" show me how it would work? No rich people remember? No capital to build anything. How's that going to work for you, 'uninformed dogma'?

When has mass production ever occurred in a capitalist economy without demand for the product being produced?
What makes you think capitalists are going to flee? We're specifically talking about capitalist economies. If we were facing a supply side problem, you'd have a point, but historically, downturns are due to a drop in aggregate demand.

You doubt that? Look at the countries where all the rich left, and show me all the mass production going on. Venezuela, Cuba, Greece. Yeah, we see how will that "demand" created all the mass production. Did all those people magically stop demanding?

Venezuela is a socialist hell hole with an energy crisis, a horrible currency exchange system, import problems, dealing with low oil prices..
Cuba is a literal dictatorship where the government doesn't allow businesses to meet demand for products, which is clearly there.
Greece? Their problems stem from them abandoning their own currency and dealing with a trade deficit that originated from their growth before the crisis. I don't really see where Greece ran off capitalists.

Did all those people magically stop demanding?

No, I've never once claimed demand can function without supply.

Yeah, of course there was rampant inequality. Try the 1700s, and early 1800s. Most worked on a farm. A ton better off, than working for the rich man. Right? Poverty, 24/7 work, day starts before the suns up, and ends long after it's down. Never worked on a farm huh? When your sick, you still milk the cows... or you don't have milk anymore. Things were not better back then.

It wasn't better. But you're arguing against an invisible strawman that has never once claimed that the rich are evil.

We live in a freakin wonderland, compared to the people who built this country. The worker at McDonald's lives in a wonderland compared to the people who built this country.

I agree, let's make things even better.

Banks, for the most part, need deposits because they need to balance their books

Yes, they need to balance the books by having deposits to lend.
No deposit, no cleared check.

and attract customers.

If they didn't need deposits, they would only need to attract borrowers, not depositors.

Because deposits are still a liability for a bank, and banks never have enough cash if a majority of customers decide to withdraw at the same time.

And if they never lent deposits, they'd still be there to satisfy the run.

 

[Toddsterpatriot]

If it wasn't for the top 25% the other 75% would be fighting in the streets over food scraps.

Yeah, that's what I've been saying. It's amazing to me how counter intuitive the left-wing is. Everything we have.... literally everything.... is due almost exclusively to the top 20% of the country.

Even services the government provides, only exist because of a rich guy somewhere. Some top 1%er made the concrete, the road paving equipment... everything.

Without them... there would be... nothing. Dirt paths. You certainly wouldn't need more than that, because there would be no cars are gas. We'd all be getting up before dawn, working 14 hours shifts on farms 6 days a week or more, living poor, and going to bed long after the sun went down exhausted.

That's what life was like without the evil rich. There was no 'sick days'. No 'vacation time'. No 'holiday pay'. No 'time and a half'.

The left-wingers are all complete and total idiots. They have no idea how good they have it.... all due to the rich.

Yeah, that's what I've been saying. It's amazing to me how counter intuitive the left-wing is. Everything we have.... literally everything.... is due almost exclusively to the top 20% of the country.

Uninformed dogma. Demand drives the mass production of new goods/services.
And many inventions were only possible thanks to the government.

Even services the government provides, only exist because of a rich guy somewhere. Some top 1%er made the concrete, the road paving equipment... everything.

The government paid an individual who used the dollars to employ others to build infrastructure. The currency issuer caused this to happen.

Without them... there would be... nothing. Dirt paths. You certainly wouldn't need more than that, because there would be no cars are gas. We'd all be getting up before dawn, working 14 hours shifts on farms 6 days a week or more, living poor, and going to bed long after the sun went down exhausted.

Sounds like the world before government regulations.

That's what life was like without the evil rich. There was no 'sick days'. No 'vacation time'. No 'holiday pay'. No 'time and a half'.

What the f***? You seem to forget the rampant inequality of the late 1800's/early 1900's.

The left-wingers are all complete and total idiots. They have no idea how good they have it.... all due to the rich.

Demand is the engine. Demand comes from the poor/middle class. The rich only have dollars thanks to government spending more then it taxes. Money creation is what really matters here.

Alrighty..... Let's say all the rich leave. You want an automobile. Who is going to buy the property, build the buildings, design the cars, create the tools, hire the contractors to make the parts? Heck, who is going to pay the power bill, to turn on the lights, before you start producing your first car?

If all you need is "Demand to drive mass production" show me how it would work? No rich people remember? No capital to build anything. How's that going to work for you, 'uninformed dogma'?

You doubt that? Look at the countries where all the rich left, and show me all the mass production going on. Venezuela, Cuba, Greece. Yeah, we see how will that "demand" created all the mass production. Did all those people magically stop demanding?

Yeah, of course there was rampant inequality. Try the 1700s, and early 1800s. Most worked on a farm. A ton better off, than working for the rich man. Right? Poverty, 24/7 work, day starts before the suns up, and ends long after it's down. Never worked on a farm huh? When your sick, you still milk the cows... or you don't have milk anymore. Things were not better back then.

We live in a freakin wonderland, compared to the people who built this country. The worker at McDonald's lives in a wonderland compared to the people who built this country.

You are telling me, that if I borrow $5,000 to buy a car, at my local bank, that they do not lend me that money, from the deposits they have. That they are literally, just creating cash. Right?

A commercial bank, when it loans, simply creates a deposit. Reserves include vault cash, which is used when an individual with the bank wants to withdraw paper. But there really isn't a difference between money and credit these days. Paper dollars are government IOU'S.

One... no bank would ever bother to try and get deposits.

Stop right there. Every asset has a liability that comes along with it. Banks, for the most part, need deposits because they need to balance their books and attract customers.
They also have to fulfill requirements.
Loans create the deposits. Now, to expand on this, I say some things to make a point. If you want to get technical, banks need to manage their balance sheets and do in fact need deposits to do this, but can you show me a bank that has enough dollars to match its liabilities at any given time? (I'm not talking about PROM. notes.)

Why would you get someone's deposits, that you don't need, and you have to pay interest on?

Banks do need them. The statement 'Loans create deposits' doesn't mean banks don't need deposits.
‘Loans Create Deposits’ – in Context – Monetary Realism

The whole reason for deposits, is that the amount of interest you pay to the account holder, is a fraction of the interest charged on the loans made from the deposit.

In the modern banking system, deposits are a liability for a commercial bank. Banks hold them for balance sheet management/to meet requirements and vault cash/reserve transfers. If banks could only loan out money they had, well, you'll have to explain this:
FRB: Z.1 Release--L.1--Credit Market Debt Outstanding--June 11, 2015

Right? You deposit $100,000. I pay you 2% interest on your deposit, and loan out $90,000 at 5% interest. I pay you $2,000 in interest, but collect $4,500 in interest on the loan.

Deposits are always a liability for a bank. I've already mentioned why commercial banks seek deposits, but when a bank decides to make a loan, they simply mark up an account. This is how banks 'create money.' They worry about reserves later.

You are saying none of that happens.

I'm saying that banks originate.

I just pay you $2,000 in interest, for money that has no value to me.

Deposits have value, for balance sheet management and attracting customers.

It doesn't earn me or anyone, any money.

The individual who has the deposit earns money.

And I don't need it, to loan out the $90,000. So why not simply not take deposits, and have $4,500 profit, instead of $2,500 profit?

Banks need to properly manage their balance sheets, attract customers, and they need reserves.

Two... If banks could simply create money to lend cash... how would any bank ever have a run?

I want you to look at this:
FRB: Z.1 Release--L.1--Credit Market Debt Outstanding--June 11, 2015
I also want you to look at this:
http://www.bankofengland.co.uk/publ...lletin/2014/qb14q1prereleasemoneycreation.pdf
Now, when talking about a bank run, you're referring to customers in large numbers attempting to withdraw government IOU'S, where a bank only keeps a small portion of its assets in cash. This does nothing to go against my point. The majority of money is electronic and originated from banks.

Wasn't the entire reason for bailing out the banks in 2008, to supposedly prevent a fiscal contagion of domino bank runs and failures?

Pretty much.

If the bank can simply create money, how could they possibly fail?

Because deposits are still a liability for a bank, and banks never have enough cash if a majority of customers decide to withdraw at the same time. Cash is only a small part of their assets. Banks can't simply give out promissory notes to customers during a bank run.

I made the money to begin with. I can just keep making money, to stay afloat. I don't owe anyone money, because I created the money I loaned..... right?

No, because when a bank originates, it's bank credit for a customer.

If you are telling me, deposits are not loaned out, and money is magically created.... then what you are saying is all these regulations and controls we have to prevent bank runs are completely useless. Utterly irrelevant, because it's not possible to have a bank run.

Never said this.

Alrighty..... Let's say all the rich leave. You want an automobile. Who is going to buy the property, build the buildings, design the cars, create the tools, hire the contractors to make the parts? Heck, who is going to pay the power bill, to turn on the lights, before you start producing your first car?

Why would the rich leave? I suppose the real question is, why would the capitalist ever decide to build 10,000 new cars if there isn't any demand?

If all you need is "Demand to drive mass production" show me how it would work? No rich people remember? No capital to build anything. How's that going to work for you, 'uninformed dogma'?

When has mass production ever occurred in a capitalist economy without demand for the product being produced?
What makes you think capitalists are going to flee? We're specifically talking about capitalist economies. If we were facing a supply side problem, you'd have a point, but historically, downturns are due to a drop in aggregate demand.

You doubt that? Look at the countries where all the rich left, and show me all the mass production going on. Venezuela, Cuba, Greece. Yeah, we see how will that "demand" created all the mass production. Did all those people magically stop demanding?

Venezuela is a socialist hell hole with an energy crisis, a horrible currency exchange system, import problems, dealing with low oil prices..
Cuba is a literal dictatorship where the government doesn't allow businesses to meet demand for products, which is clearly there.
Greece? Their problems stem from them abandoning their own currency and dealing with a trade deficit that originated from their growth before the crisis. I don't really see where Greece ran off capitalists.

Did all those people magically stop demanding?

No, I've never once claimed demand can function without supply.

Yeah, of course there was rampant inequality. Try the 1700s, and early 1800s. Most worked on a farm. A ton better off, than working for the rich man. Right? Poverty, 24/7 work, day starts before the suns up, and ends long after it's down. Never worked on a farm huh? When your sick, you still milk the cows... or you don't have milk anymore. Things were not better back then.

It wasn't better. But you're arguing against an invisible strawman that has never once claimed that the rich are evil.

We live in a freakin wonderland, compared to the people who built this country. The worker at McDonald's lives in a wonderland compared to the people who built this country.

I agree, let's make things even better.

Without getting into the nitty gritty, clearly the way in which you, and your sources, explain banking, is way beyond me.

The very first example "loans create deposits" doesn't make any sense to me at all. Yeah if you loan me $5,000, and I deposit $5,000. Right. But I wouldn't do that. I might buy an old car. That person might buy a couch. That person might by a dinner for his family.

It may never be deposit. The car dealership might pay it's workers. The fast food place might open a new store.

But I don't see an automatic assumption, that one banks loan, automatically creates a deposit.

Not saying you are wrong... but this is clearly way over my head. You got me dude. I'm ignorant. Cookie for you I guess.

The very first example "loans create deposits" doesn't make any sense to me at all. Yeah if you loan me $5,000, and I deposit $5,000.

Maybe this will help. Customer A deposits $5000 in a new bank.

The bank now has assets of $5,000 (Customer A's $20s)
The bank has a $5,000 liability (Customer A's savings acct)
The books balance.

You come in to borrow $4000 to buy a car.
The bank has a new $4000 asset (your IOU)
They have to balance that with a liability (your $4000 "newly created deposit" that Dovahkiin mentioned)

You write a $4000 check to buy a car.
The dealer cashes the check and the bank gives him $4000 cash (from Customer A's deposit)

Now the bank has $1000 in cash (asset)
$4000 IOU from you (asset)
And a $5000 savings account for Customer A (liability)
The books balance.

Your "newly created deposit" is gone, cleared out by handing the car dealer cash originally from
the deposit of Customer A. Without that, or another deposit, your "newly created deposit" would not
be really helpful for the bank to clear your check.

Hope this helps.

 

[BuckToothMoron]

Different words to make the same idiotic claims...That government is the distributor of all wealth.
Government creates nothing. Government consumes. Government consumes less than it expends, making government a parasite.
Here's a lesson in supply and demand. Under which, all commodities including currency are subject to market forces.
When the federal reserve has top print more currency to pay for deficit spending, that simply increases the amount of dollars in circulation. This causes the supply to increase while doing the opposite to demand. Thus, the value of the USD falls. as currency traders sell USD in favor of stronger currencies. Business increases prices to make up for the loss in currency value.
The more the federal government has to borrow to cover for deficit spending, the lower the value of the US Dollar.
Ya got that?

The value of the US dollar is lower compared to what, assets, or other currencies? Since the BOJ and Europe are pursuing the same monetary expansion policies, and the dollar is the reserve currency, shouldn't we eventually get inflation?

Money expansion policies? Please explain.
Look at an inflation calculator. Inflation is inevitable.
As the cost of labor, goods, services, technology, etc increases, the requisite price for each and every, increases.
What difference does it make? None at all.
BTW, the above passage is just one anti capitalist person's opinion. Done

Many economist/investors use the term "money expansion policy" to describe events like quantitative easing or other similar stimulus which occurs when central banks increase money supply to stimulate growth. Yes, it is inflationary, but it is intended to create growth, not in response to growth.

Yeah, I know why they claim to do it. I don't see that it ever works. Japan tried this for a decade, and it didn't do jack.

The Keynesian call it a Liquidity Trap. But I call it bad economics. The problem is, injecting money into the banking system, doesn't magically make investors willing to invest, or borrowers worthy of borrowing.

If the economy sucks, and there are no investors willing to invest in your economy, it doesn't matter how much money the banks have laying around to invest with. If the economy sucks, and borrowers are too risky to lend money to, it doesn't matter how much money you have to lend with.

This idea that we should be printing off cash, and expanding the money supply, when there is nothing for people to buy, sell, build, or produce..... is stupid.

Change the taxes, and the regulation, so that people can engage in capitalism, and the free market, and then the economy will take off. Ironically if the economy takes off, you don't need Quantitative easing anymore.

So I can't think of a single situation where QE is of any value.... other than to devalue the money, so government can borrow more money.

Japan tried this for a decade, and it didn't do jack.

Which is why they need to lower taxes and focus on boosting aggregate demand for the people who don't save as much.

The Keynesian call it a Liquidity Trap.

That's what it is.

The problem is, injecting money into the banking system, doesn't magically make investors willing to invest, or borrowers worthy of borrowing.

I agree, since banks loan when people are worthy and demand credit, they don't loan out deposits.

If the economy sucks, and there are no investors willing to invest in your economy, it doesn't matter how much money the banks have laying around to invest with.

Banks don't even need money laying around, only to meet requirements set by the government. Bank loans create money.

This idea that we should be printing off cash, and expanding the money supply, when there is nothing for people to buy, sell, build, or produce..... is stupid.

It's a great idea, if it's aimed at putting dollars directly into the poor/middle classes hands with jobs/assistance programs.

Change the taxes, and the regulation, so that people can engage in capitalism, and the free market, and then the economy will take off.

Yeah, that has never happened. Not without a massive build up in private sector debt.

So I can't think of a single situation where QE is of any value.... other than to devalue the money, so government can borrow more money.

QE makes sure banks have excess reserves and helps control the rates when banks lend reserves to each other overnight. It's useful, and QE money doesn't get into our hands anyways. The government doesn't really "borrow" since it has to spend the dollars before it can convert them to bonds.

QE can be compared to an addictive prescription drug; it can be very effective when used in particular situations, but only for a limited time. However most of the central banks around the world have become hopelessly addicted. Rather than use it in a liquidity crisis like in 2008, they have continued to refill the prescription in an effort to treat an unwilling economy. This pumps money into an economy which is not growing. Worthy investors, those in a strong position have incredible access to capital, so they borrow and invest it.

But without a growing economy the choices are limited. Observe how many publicly traded companies have turned to buying back their own stock. They can't justify hiring more employees, or building a plant, not any type of expansion. Why would they, when the economy doesn't justify it? Other investors may make more reckless decisions which puts the money at greater risk. There is a point where too much QE creates malinvestment, bubbles, and as we have observed, an expanding wealth gap.

Time will only tell if the Federal Reserve got off the drug soon enough. I wouldn't bet on big interest rate hikes myself.

 

[Dovahkiin]

If it wasn't for the top 25% the other 75% would be fighting in the streets over food scraps.

Yeah, that's what I've been saying. It's amazing to me how counter intuitive the left-wing is. Everything we have.... literally everything.... is due almost exclusively to the top 20% of the country.

Even services the government provides, only exist because of a rich guy somewhere. Some top 1%er made the concrete, the road paving equipment... everything.

Without them... there would be... nothing. Dirt paths. You certainly wouldn't need more than that, because there would be no cars are gas. We'd all be getting up before dawn, working 14 hours shifts on farms 6 days a week or more, living poor, and going to bed long after the sun went down exhausted.

That's what life was like without the evil rich. There was no 'sick days'. No 'vacation time'. No 'holiday pay'. No 'time and a half'.

The left-wingers are all complete and total idiots. They have no idea how good they have it.... all due to the rich.

Yeah, that's what I've been saying. It's amazing to me how counter intuitive the left-wing is. Everything we have.... literally everything.... is due almost exclusively to the top 20% of the country.

Uninformed dogma. Demand drives the mass production of new goods/services.
And many inventions were only possible thanks to the government.

Even services the government provides, only exist because of a rich guy somewhere. Some top 1%er made the concrete, the road paving equipment... everything.

The government paid an individual who used the dollars to employ others to build infrastructure. The currency issuer caused this to happen.

Without them... there would be... nothing. Dirt paths. You certainly wouldn't need more than that, because there would be no cars are gas. We'd all be getting up before dawn, working 14 hours shifts on farms 6 days a week or more, living poor, and going to bed long after the sun went down exhausted.

Sounds like the world before government regulations.

That's what life was like without the evil rich. There was no 'sick days'. No 'vacation time'. No 'holiday pay'. No 'time and a half'.

What the f***? You seem to forget the rampant inequality of the late 1800's/early 1900's.

The left-wingers are all complete and total idiots. They have no idea how good they have it.... all due to the rich.

Demand is the engine. Demand comes from the poor/middle class. The rich only have dollars thanks to government spending more then it taxes. Money creation is what really matters here.

Alrighty..... Let's say all the rich leave. You want an automobile. Who is going to buy the property, build the buildings, design the cars, create the tools, hire the contractors to make the parts? Heck, who is going to pay the power bill, to turn on the lights, before you start producing your first car?

If all you need is "Demand to drive mass production" show me how it would work? No rich people remember? No capital to build anything. How's that going to work for you, 'uninformed dogma'?

You doubt that? Look at the countries where all the rich left, and show me all the mass production going on. Venezuela, Cuba, Greece. Yeah, we see how will that "demand" created all the mass production. Did all those people magically stop demanding?

Yeah, of course there was rampant inequality. Try the 1700s, and early 1800s. Most worked on a farm. A ton better off, than working for the rich man. Right? Poverty, 24/7 work, day starts before the suns up, and ends long after it's down. Never worked on a farm huh? When your sick, you still milk the cows... or you don't have milk anymore. Things were not better back then.

We live in a freakin wonderland, compared to the people who built this country. The worker at McDonald's lives in a wonderland compared to the people who built this country.

You are telling me, that if I borrow $5,000 to buy a car, at my local bank, that they do not lend me that money, from the deposits they have. That they are literally, just creating cash. Right?

A commercial bank, when it loans, simply creates a deposit. Reserves include vault cash, which is used when an individual with the bank wants to withdraw paper. But there really isn't a difference between money and credit these days. Paper dollars are government IOU'S.

One... no bank would ever bother to try and get deposits.

Stop right there. Every asset has a liability that comes along with it. Banks, for the most part, need deposits because they need to balance their books and attract customers.
They also have to fulfill requirements.
Loans create the deposits. Now, to expand on this, I say some things to make a point. If you want to get technical, banks need to manage their balance sheets and do in fact need deposits to do this, but can you show me a bank that has enough dollars to match its liabilities at any given time? (I'm not talking about PROM. notes.)

Why would you get someone's deposits, that you don't need, and you have to pay interest on?

Banks do need them. The statement 'Loans create deposits' doesn't mean banks don't need deposits.
‘Loans Create Deposits’ – in Context – Monetary Realism

The whole reason for deposits, is that the amount of interest you pay to the account holder, is a fraction of the interest charged on the loans made from the deposit.

In the modern banking system, deposits are a liability for a commercial bank. Banks hold them for balance sheet management/to meet requirements and vault cash/reserve transfers. If banks could only loan out money they had, well, you'll have to explain this:
FRB: Z.1 Release--L.1--Credit Market Debt Outstanding--June 11, 2015

Right? You deposit $100,000. I pay you 2% interest on your deposit, and loan out $90,000 at 5% interest. I pay you $2,000 in interest, but collect $4,500 in interest on the loan.

Deposits are always a liability for a bank. I've already mentioned why commercial banks seek deposits, but when a bank decides to make a loan, they simply mark up an account. This is how banks 'create money.' They worry about reserves later.

You are saying none of that happens.

I'm saying that banks originate.

I just pay you $2,000 in interest, for money that has no value to me.

Deposits have value, for balance sheet management and attracting customers.

It doesn't earn me or anyone, any money.

The individual who has the deposit earns money.

And I don't need it, to loan out the $90,000. So why not simply not take deposits, and have $4,500 profit, instead of $2,500 profit?

Banks need to properly manage their balance sheets, attract customers, and they need reserves.

Two... If banks could simply create money to lend cash... how would any bank ever have a run?

I want you to look at this:
FRB: Z.1 Release--L.1--Credit Market Debt Outstanding--June 11, 2015
I also want you to look at this:
http://www.bankofengland.co.uk/publ...lletin/2014/qb14q1prereleasemoneycreation.pdf
Now, when talking about a bank run, you're referring to customers in large numbers attempting to withdraw government IOU'S, where a bank only keeps a small portion of its assets in cash. This does nothing to go against my point. The majority of money is electronic and originated from banks.

Wasn't the entire reason for bailing out the banks in 2008, to supposedly prevent a fiscal contagion of domino bank runs and failures?

Pretty much.

If the bank can simply create money, how could they possibly fail?

Because deposits are still a liability for a bank, and banks never have enough cash if a majority of customers decide to withdraw at the same time. Cash is only a small part of their assets. Banks can't simply give out promissory notes to customers during a bank run.

I made the money to begin with. I can just keep making money, to stay afloat. I don't owe anyone money, because I created the money I loaned..... right?

No, because when a bank originates, it's bank credit for a customer.

If you are telling me, deposits are not loaned out, and money is magically created.... then what you are saying is all these regulations and controls we have to prevent bank runs are completely useless. Utterly irrelevant, because it's not possible to have a bank run.

Never said this.

Alrighty..... Let's say all the rich leave. You want an automobile. Who is going to buy the property, build the buildings, design the cars, create the tools, hire the contractors to make the parts? Heck, who is going to pay the power bill, to turn on the lights, before you start producing your first car?

Why would the rich leave? I suppose the real question is, why would the capitalist ever decide to build 10,000 new cars if there isn't any demand?

If all you need is "Demand to drive mass production" show me how it would work? No rich people remember? No capital to build anything. How's that going to work for you, 'uninformed dogma'?

When has mass production ever occurred in a capitalist economy without demand for the product being produced?
What makes you think capitalists are going to flee? We're specifically talking about capitalist economies. If we were facing a supply side problem, you'd have a point, but historically, downturns are due to a drop in aggregate demand.

You doubt that? Look at the countries where all the rich left, and show me all the mass production going on. Venezuela, Cuba, Greece. Yeah, we see how will that "demand" created all the mass production. Did all those people magically stop demanding?

Venezuela is a socialist hell hole with an energy crisis, a horrible currency exchange system, import problems, dealing with low oil prices..
Cuba is a literal dictatorship where the government doesn't allow businesses to meet demand for products, which is clearly there.
Greece? Their problems stem from them abandoning their own currency and dealing with a trade deficit that originated from their growth before the crisis. I don't really see where Greece ran off capitalists.

Did all those people magically stop demanding?

No, I've never once claimed demand can function without supply.

Yeah, of course there was rampant inequality. Try the 1700s, and early 1800s. Most worked on a farm. A ton better off, than working for the rich man. Right? Poverty, 24/7 work, day starts before the suns up, and ends long after it's down. Never worked on a farm huh? When your sick, you still milk the cows... or you don't have milk anymore. Things were not better back then.

It wasn't better. But you're arguing against an invisible strawman that has never once claimed that the rich are evil.

We live in a freakin wonderland, compared to the people who built this country. The worker at McDonald's lives in a wonderland compared to the people who built this country.

I agree, let's make things even better.

Banks, for the most part, need deposits because they need to balance their books

Yes, they need to balance the books by having deposits to lend.
No deposit, no cleared check.

and attract customers.

If they didn't need deposits, they would only need to attract borrowers, not depositors.

Because deposits are still a liability for a bank, and banks never have enough cash if a majority of customers decide to withdraw at the same time.

And if they never lent deposits, they'd still be there to satisfy the run.

Who said they didn't need deposits?

 

[easyt65]

Since Obama / Democrats set 'monthly', 'annual', and 'total' deficit spending records, added almost $7 trillion in new debt in only 4 years - more debt than every President from Washington to Clinton COMBINED, and secured the 1st US Credit rating downgrade, I completely agree - it's time to call it the 'Liberal Debt'!

 

[Toddsterpatriot]

Yeah, that's what I've been saying. It's amazing to me how counter intuitive the left-wing is. Everything we have.... literally everything.... is due almost exclusively to the top 20% of the country.

Even services the government provides, only exist because of a rich guy somewhere. Some top 1%er made the concrete, the road paving equipment... everything.

Without them... there would be... nothing. Dirt paths. You certainly wouldn't need more than that, because there would be no cars are gas. We'd all be getting up before dawn, working 14 hours shifts on farms 6 days a week or more, living poor, and going to bed long after the sun went down exhausted.

That's what life was like without the evil rich. There was no 'sick days'. No 'vacation time'. No 'holiday pay'. No 'time and a half'.

The left-wingers are all complete and total idiots. They have no idea how good they have it.... all due to the rich.

Yeah, that's what I've been saying. It's amazing to me how counter intuitive the left-wing is. Everything we have.... literally everything.... is due almost exclusively to the top 20% of the country.

Uninformed dogma. Demand drives the mass production of new goods/services.
And many inventions were only possible thanks to the government.

Even services the government provides, only exist because of a rich guy somewhere. Some top 1%er made the concrete, the road paving equipment... everything.

The government paid an individual who used the dollars to employ others to build infrastructure. The currency issuer caused this to happen.

Without them... there would be... nothing. Dirt paths. You certainly wouldn't need more than that, because there would be no cars are gas. We'd all be getting up before dawn, working 14 hours shifts on farms 6 days a week or more, living poor, and going to bed long after the sun went down exhausted.

Sounds like the world before government regulations.

That's what life was like without the evil rich. There was no 'sick days'. No 'vacation time'. No 'holiday pay'. No 'time and a half'.

What the f***? You seem to forget the rampant inequality of the late 1800's/early 1900's.

The left-wingers are all complete and total idiots. They have no idea how good they have it.... all due to the rich.

Demand is the engine. Demand comes from the poor/middle class. The rich only have dollars thanks to government spending more then it taxes. Money creation is what really matters here.

Alrighty..... Let's say all the rich leave. You want an automobile. Who is going to buy the property, build the buildings, design the cars, create the tools, hire the contractors to make the parts? Heck, who is going to pay the power bill, to turn on the lights, before you start producing your first car?

If all you need is "Demand to drive mass production" show me how it would work? No rich people remember? No capital to build anything. How's that going to work for you, 'uninformed dogma'?

You doubt that? Look at the countries where all the rich left, and show me all the mass production going on. Venezuela, Cuba, Greece. Yeah, we see how will that "demand" created all the mass production. Did all those people magically stop demanding?

Yeah, of course there was rampant inequality. Try the 1700s, and early 1800s. Most worked on a farm. A ton better off, than working for the rich man. Right? Poverty, 24/7 work, day starts before the suns up, and ends long after it's down. Never worked on a farm huh? When your sick, you still milk the cows... or you don't have milk anymore. Things were not better back then.

We live in a freakin wonderland, compared to the people who built this country. The worker at McDonald's lives in a wonderland compared to the people who built this country.

You are telling me, that if I borrow $5,000 to buy a car, at my local bank, that they do not lend me that money, from the deposits they have. That they are literally, just creating cash. Right?

A commercial bank, when it loans, simply creates a deposit. Reserves include vault cash, which is used when an individual with the bank wants to withdraw paper. But there really isn't a difference between money and credit these days. Paper dollars are government IOU'S.

One... no bank would ever bother to try and get deposits.

Stop right there. Every asset has a liability that comes along with it. Banks, for the most part, need deposits because they need to balance their books and attract customers.
They also have to fulfill requirements.
Loans create the deposits. Now, to expand on this, I say some things to make a point. If you want to get technical, banks need to manage their balance sheets and do in fact need deposits to do this, but can you show me a bank that has enough dollars to match its liabilities at any given time? (I'm not talking about PROM. notes.)

Why would you get someone's deposits, that you don't need, and you have to pay interest on?

Banks do need them. The statement 'Loans create deposits' doesn't mean banks don't need deposits.
‘Loans Create Deposits’ – in Context – Monetary Realism

The whole reason for deposits, is that the amount of interest you pay to the account holder, is a fraction of the interest charged on the loans made from the deposit.

In the modern banking system, deposits are a liability for a commercial bank. Banks hold them for balance sheet management/to meet requirements and vault cash/reserve transfers. If banks could only loan out money they had, well, you'll have to explain this:
FRB: Z.1 Release--L.1--Credit Market Debt Outstanding--June 11, 2015

Right? You deposit $100,000. I pay you 2% interest on your deposit, and loan out $90,000 at 5% interest. I pay you $2,000 in interest, but collect $4,500 in interest on the loan.

Deposits are always a liability for a bank. I've already mentioned why commercial banks seek deposits, but when a bank decides to make a loan, they simply mark up an account. This is how banks 'create money.' They worry about reserves later.

You are saying none of that happens.

I'm saying that banks originate.

I just pay you $2,000 in interest, for money that has no value to me.

Deposits have value, for balance sheet management and attracting customers.

It doesn't earn me or anyone, any money.

The individual who has the deposit earns money.

And I don't need it, to loan out the $90,000. So why not simply not take deposits, and have $4,500 profit, instead of $2,500 profit?

Banks need to properly manage their balance sheets, attract customers, and they need reserves.

Two... If banks could simply create money to lend cash... how would any bank ever have a run?

I want you to look at this:
FRB: Z.1 Release--L.1--Credit Market Debt Outstanding--June 11, 2015
I also want you to look at this:
http://www.bankofengland.co.uk/publ...lletin/2014/qb14q1prereleasemoneycreation.pdf
Now, when talking about a bank run, you're referring to customers in large numbers attempting to withdraw government IOU'S, where a bank only keeps a small portion of its assets in cash. This does nothing to go against my point. The majority of money is electronic and originated from banks.

Wasn't the entire reason for bailing out the banks in 2008, to supposedly prevent a fiscal contagion of domino bank runs and failures?

Pretty much.

If the bank can simply create money, how could they possibly fail?

Because deposits are still a liability for a bank, and banks never have enough cash if a majority of customers decide to withdraw at the same time. Cash is only a small part of their assets. Banks can't simply give out promissory notes to customers during a bank run.

I made the money to begin with. I can just keep making money, to stay afloat. I don't owe anyone money, because I created the money I loaned..... right?

No, because when a bank originates, it's bank credit for a customer.

If you are telling me, deposits are not loaned out, and money is magically created.... then what you are saying is all these regulations and controls we have to prevent bank runs are completely useless. Utterly irrelevant, because it's not possible to have a bank run.

Never said this.

Alrighty..... Let's say all the rich leave. You want an automobile. Who is going to buy the property, build the buildings, design the cars, create the tools, hire the contractors to make the parts? Heck, who is going to pay the power bill, to turn on the lights, before you start producing your first car?

Why would the rich leave? I suppose the real question is, why would the capitalist ever decide to build 10,000 new cars if there isn't any demand?

If all you need is "Demand to drive mass production" show me how it would work? No rich people remember? No capital to build anything. How's that going to work for you, 'uninformed dogma'?

When has mass production ever occurred in a capitalist economy without demand for the product being produced?
What makes you think capitalists are going to flee? We're specifically talking about capitalist economies. If we were facing a supply side problem, you'd have a point, but historically, downturns are due to a drop in aggregate demand.

You doubt that? Look at the countries where all the rich left, and show me all the mass production going on. Venezuela, Cuba, Greece. Yeah, we see how will that "demand" created all the mass production. Did all those people magically stop demanding?

Venezuela is a socialist hell hole with an energy crisis, a horrible currency exchange system, import problems, dealing with low oil prices..
Cuba is a literal dictatorship where the government doesn't allow businesses to meet demand for products, which is clearly there.
Greece? Their problems stem from them abandoning their own currency and dealing with a trade deficit that originated from their growth before the crisis. I don't really see where Greece ran off capitalists.

Did all those people magically stop demanding?

No, I've never once claimed demand can function without supply.

Yeah, of course there was rampant inequality. Try the 1700s, and early 1800s. Most worked on a farm. A ton better off, than working for the rich man. Right? Poverty, 24/7 work, day starts before the suns up, and ends long after it's down. Never worked on a farm huh? When your sick, you still milk the cows... or you don't have milk anymore. Things were not better back then.

It wasn't better. But you're arguing against an invisible strawman that has never once claimed that the rich are evil.

We live in a freakin wonderland, compared to the people who built this country. The worker at McDonald's lives in a wonderland compared to the people who built this country.

I agree, let's make things even better.

Banks, for the most part, need deposits because they need to balance their books

Yes, they need to balance the books by having deposits to lend.
No deposit, no cleared check.

and attract customers.

If they didn't need deposits, they would only need to attract borrowers, not depositors.

Because deposits are still a liability for a bank, and banks never have enough cash if a majority of customers decide to withdraw at the same time.

And if they never lent deposits, they'd still be there to satisfy the run.

Who said they didn't need deposits?

Who said the loan created deposits mattered?

 

[Dovahkiin]

Uninformed dogma. Demand drives the mass production of new goods/services.
And many inventions were only possible thanks to the government.
The government paid an individual who used the dollars to employ others to build infrastructure. The currency issuer caused this to happen.
Sounds like the world before government regulations.
What the f***? You seem to forget the rampant inequality of the late 1800's/early 1900's.
Demand is the engine. Demand comes from the poor/middle class. The rich only have dollars thanks to government spending more then it taxes. Money creation is what really matters here.

Alrighty..... Let's say all the rich leave. You want an automobile. Who is going to buy the property, build the buildings, design the cars, create the tools, hire the contractors to make the parts? Heck, who is going to pay the power bill, to turn on the lights, before you start producing your first car?

If all you need is "Demand to drive mass production" show me how it would work? No rich people remember? No capital to build anything. How's that going to work for you, 'uninformed dogma'?

You doubt that? Look at the countries where all the rich left, and show me all the mass production going on. Venezuela, Cuba, Greece. Yeah, we see how will that "demand" created all the mass production. Did all those people magically stop demanding?

Yeah, of course there was rampant inequality. Try the 1700s, and early 1800s. Most worked on a farm. A ton better off, than working for the rich man. Right? Poverty, 24/7 work, day starts before the suns up, and ends long after it's down. Never worked on a farm huh? When your sick, you still milk the cows... or you don't have milk anymore. Things were not better back then.

We live in a freakin wonderland, compared to the people who built this country. The worker at McDonald's lives in a wonderland compared to the people who built this country.

You are telling me, that if I borrow $5,000 to buy a car, at my local bank, that they do not lend me that money, from the deposits they have. That they are literally, just creating cash. Right?

A commercial bank, when it loans, simply creates a deposit. Reserves include vault cash, which is used when an individual with the bank wants to withdraw paper. But there really isn't a difference between money and credit these days. Paper dollars are government IOU'S.

One... no bank would ever bother to try and get deposits.

Stop right there. Every asset has a liability that comes along with it. Banks, for the most part, need deposits because they need to balance their books and attract customers.
They also have to fulfill requirements.
Loans create the deposits. Now, to expand on this, I say some things to make a point. If you want to get technical, banks need to manage their balance sheets and do in fact need deposits to do this, but can you show me a bank that has enough dollars to match its liabilities at any given time? (I'm not talking about PROM. notes.)

Why would you get someone's deposits, that you don't need, and you have to pay interest on?

Banks do need them. The statement 'Loans create deposits' doesn't mean banks don't need deposits.
‘Loans Create Deposits’ – in Context – Monetary Realism

The whole reason for deposits, is that the amount of interest you pay to the account holder, is a fraction of the interest charged on the loans made from the deposit.

In the modern banking system, deposits are a liability for a commercial bank. Banks hold them for balance sheet management/to meet requirements and vault cash/reserve transfers. If banks could only loan out money they had, well, you'll have to explain this:
FRB: Z.1 Release--L.1--Credit Market Debt Outstanding--June 11, 2015

Right? You deposit $100,000. I pay you 2% interest on your deposit, and loan out $90,000 at 5% interest. I pay you $2,000 in interest, but collect $4,500 in interest on the loan.

Deposits are always a liability for a bank. I've already mentioned why commercial banks seek deposits, but when a bank decides to make a loan, they simply mark up an account. This is how banks 'create money.' They worry about reserves later.

You are saying none of that happens.

I'm saying that banks originate.

I just pay you $2,000 in interest, for money that has no value to me.

Deposits have value, for balance sheet management and attracting customers.

It doesn't earn me or anyone, any money.

The individual who has the deposit earns money.

And I don't need it, to loan out the $90,000. So why not simply not take deposits, and have $4,500 profit, instead of $2,500 profit?

Banks need to properly manage their balance sheets, attract customers, and they need reserves.

Two... If banks could simply create money to lend cash... how would any bank ever have a run?

I want you to look at this:
FRB: Z.1 Release--L.1--Credit Market Debt Outstanding--June 11, 2015
I also want you to look at this:
http://www.bankofengland.co.uk/publ...lletin/2014/qb14q1prereleasemoneycreation.pdf
Now, when talking about a bank run, you're referring to customers in large numbers attempting to withdraw government IOU'S, where a bank only keeps a small portion of its assets in cash. This does nothing to go against my point. The majority of money is electronic and originated from banks.

Wasn't the entire reason for bailing out the banks in 2008, to supposedly prevent a fiscal contagion of domino bank runs and failures?

Pretty much.

If the bank can simply create money, how could they possibly fail?

Because deposits are still a liability for a bank, and banks never have enough cash if a majority of customers decide to withdraw at the same time. Cash is only a small part of their assets. Banks can't simply give out promissory notes to customers during a bank run.

I made the money to begin with. I can just keep making money, to stay afloat. I don't owe anyone money, because I created the money I loaned..... right?

No, because when a bank originates, it's bank credit for a customer.

If you are telling me, deposits are not loaned out, and money is magically created.... then what you are saying is all these regulations and controls we have to prevent bank runs are completely useless. Utterly irrelevant, because it's not possible to have a bank run.

Never said this.

Alrighty..... Let's say all the rich leave. You want an automobile. Who is going to buy the property, build the buildings, design the cars, create the tools, hire the contractors to make the parts? Heck, who is going to pay the power bill, to turn on the lights, before you start producing your first car?

Why would the rich leave? I suppose the real question is, why would the capitalist ever decide to build 10,000 new cars if there isn't any demand?

If all you need is "Demand to drive mass production" show me how it would work? No rich people remember? No capital to build anything. How's that going to work for you, 'uninformed dogma'?

When has mass production ever occurred in a capitalist economy without demand for the product being produced?
What makes you think capitalists are going to flee? We're specifically talking about capitalist economies. If we were facing a supply side problem, you'd have a point, but historically, downturns are due to a drop in aggregate demand.

You doubt that? Look at the countries where all the rich left, and show me all the mass production going on. Venezuela, Cuba, Greece. Yeah, we see how will that "demand" created all the mass production. Did all those people magically stop demanding?

Venezuela is a socialist hell hole with an energy crisis, a horrible currency exchange system, import problems, dealing with low oil prices..
Cuba is a literal dictatorship where the government doesn't allow businesses to meet demand for products, which is clearly there.
Greece? Their problems stem from them abandoning their own currency and dealing with a trade deficit that originated from their growth before the crisis. I don't really see where Greece ran off capitalists.

Did all those people magically stop demanding?

No, I've never once claimed demand can function without supply.

Yeah, of course there was rampant inequality. Try the 1700s, and early 1800s. Most worked on a farm. A ton better off, than working for the rich man. Right? Poverty, 24/7 work, day starts before the suns up, and ends long after it's down. Never worked on a farm huh? When your sick, you still milk the cows... or you don't have milk anymore. Things were not better back then.

It wasn't better. But you're arguing against an invisible strawman that has never once claimed that the rich are evil.

We live in a freakin wonderland, compared to the people who built this country. The worker at McDonald's lives in a wonderland compared to the people who built this country.

I agree, let's make things even better.

Banks, for the most part, need deposits because they need to balance their books

Yes, they need to balance the books by having deposits to lend.
No deposit, no cleared check.

and attract customers.

If they didn't need deposits, they would only need to attract borrowers, not depositors.

Because deposits are still a liability for a bank, and banks never have enough cash if a majority of customers decide to withdraw at the same time.

And if they never lent deposits, they'd still be there to satisfy the run.

Who said they didn't need deposits?

Who said the loan created deposits mattered?

It does matter. Because banks originate.
‘Loans Create Deposits’ – in Context – Monetary Realism

 

[Toddsterpatriot]

Alrighty..... Let's say all the rich leave. You want an automobile. Who is going to buy the property, build the buildings, design the cars, create the tools, hire the contractors to make the parts? Heck, who is going to pay the power bill, to turn on the lights, before you start producing your first car?

If all you need is "Demand to drive mass production" show me how it would work? No rich people remember? No capital to build anything. How's that going to work for you, 'uninformed dogma'?

You doubt that? Look at the countries where all the rich left, and show me all the mass production going on. Venezuela, Cuba, Greece. Yeah, we see how will that "demand" created all the mass production. Did all those people magically stop demanding?

Yeah, of course there was rampant inequality. Try the 1700s, and early 1800s. Most worked on a farm. A ton better off, than working for the rich man. Right? Poverty, 24/7 work, day starts before the suns up, and ends long after it's down. Never worked on a farm huh? When your sick, you still milk the cows... or you don't have milk anymore. Things were not better back then.

We live in a freakin wonderland, compared to the people who built this country. The worker at McDonald's lives in a wonderland compared to the people who built this country.

You are telling me, that if I borrow $5,000 to buy a car, at my local bank, that they do not lend me that money, from the deposits they have. That they are literally, just creating cash. Right?

A commercial bank, when it loans, simply creates a deposit. Reserves include vault cash, which is used when an individual with the bank wants to withdraw paper. But there really isn't a difference between money and credit these days. Paper dollars are government IOU'S.

One... no bank would ever bother to try and get deposits.

Stop right there. Every asset has a liability that comes along with it. Banks, for the most part, need deposits because they need to balance their books and attract customers.
They also have to fulfill requirements.
Loans create the deposits. Now, to expand on this, I say some things to make a point. If you want to get technical, banks need to manage their balance sheets and do in fact need deposits to do this, but can you show me a bank that has enough dollars to match its liabilities at any given time? (I'm not talking about PROM. notes.)

Why would you get someone's deposits, that you don't need, and you have to pay interest on?

Banks do need them. The statement 'Loans create deposits' doesn't mean banks don't need deposits.
‘Loans Create Deposits’ – in Context – Monetary Realism

The whole reason for deposits, is that the amount of interest you pay to the account holder, is a fraction of the interest charged on the loans made from the deposit.

In the modern banking system, deposits are a liability for a commercial bank. Banks hold them for balance sheet management/to meet requirements and vault cash/reserve transfers. If banks could only loan out money they had, well, you'll have to explain this:
FRB: Z.1 Release--L.1--Credit Market Debt Outstanding--June 11, 2015

Right? You deposit $100,000. I pay you 2% interest on your deposit, and loan out $90,000 at 5% interest. I pay you $2,000 in interest, but collect $4,500 in interest on the loan.

Deposits are always a liability for a bank. I've already mentioned why commercial banks seek deposits, but when a bank decides to make a loan, they simply mark up an account. This is how banks 'create money.' They worry about reserves later.

You are saying none of that happens.

I'm saying that banks originate.

I just pay you $2,000 in interest, for money that has no value to me.

Deposits have value, for balance sheet management and attracting customers.

It doesn't earn me or anyone, any money.

The individual who has the deposit earns money.

And I don't need it, to loan out the $90,000. So why not simply not take deposits, and have $4,500 profit, instead of $2,500 profit?

Banks need to properly manage their balance sheets, attract customers, and they need reserves.

Two... If banks could simply create money to lend cash... how would any bank ever have a run?

I want you to look at this:
FRB: Z.1 Release--L.1--Credit Market Debt Outstanding--June 11, 2015
I also want you to look at this:
http://www.bankofengland.co.uk/publ...lletin/2014/qb14q1prereleasemoneycreation.pdf
Now, when talking about a bank run, you're referring to customers in large numbers attempting to withdraw government IOU'S, where a bank only keeps a small portion of its assets in cash. This does nothing to go against my point. The majority of money is electronic and originated from banks.

Wasn't the entire reason for bailing out the banks in 2008, to supposedly prevent a fiscal contagion of domino bank runs and failures?

Pretty much.

If the bank can simply create money, how could they possibly fail?

Because deposits are still a liability for a bank, and banks never have enough cash if a majority of customers decide to withdraw at the same time. Cash is only a small part of their assets. Banks can't simply give out promissory notes to customers during a bank run.

I made the money to begin with. I can just keep making money, to stay afloat. I don't owe anyone money, because I created the money I loaned..... right?

No, because when a bank originates, it's bank credit for a customer.

If you are telling me, deposits are not loaned out, and money is magically created.... then what you are saying is all these regulations and controls we have to prevent bank runs are completely useless. Utterly irrelevant, because it's not possible to have a bank run.

Never said this.

Alrighty..... Let's say all the rich leave. You want an automobile. Who is going to buy the property, build the buildings, design the cars, create the tools, hire the contractors to make the parts? Heck, who is going to pay the power bill, to turn on the lights, before you start producing your first car?

Why would the rich leave? I suppose the real question is, why would the capitalist ever decide to build 10,000 new cars if there isn't any demand?

If all you need is "Demand to drive mass production" show me how it would work? No rich people remember? No capital to build anything. How's that going to work for you, 'uninformed dogma'?

When has mass production ever occurred in a capitalist economy without demand for the product being produced?
What makes you think capitalists are going to flee? We're specifically talking about capitalist economies. If we were facing a supply side problem, you'd have a point, but historically, downturns are due to a drop in aggregate demand.

You doubt that? Look at the countries where all the rich left, and show me all the mass production going on. Venezuela, Cuba, Greece. Yeah, we see how will that "demand" created all the mass production. Did all those people magically stop demanding?

Venezuela is a socialist hell hole with an energy crisis, a horrible currency exchange system, import problems, dealing with low oil prices..
Cuba is a literal dictatorship where the government doesn't allow businesses to meet demand for products, which is clearly there.
Greece? Their problems stem from them abandoning their own currency and dealing with a trade deficit that originated from their growth before the crisis. I don't really see where Greece ran off capitalists.

Did all those people magically stop demanding?

No, I've never once claimed demand can function without supply.

Yeah, of course there was rampant inequality. Try the 1700s, and early 1800s. Most worked on a farm. A ton better off, than working for the rich man. Right? Poverty, 24/7 work, day starts before the suns up, and ends long after it's down. Never worked on a farm huh? When your sick, you still milk the cows... or you don't have milk anymore. Things were not better back then.

It wasn't better. But you're arguing against an invisible strawman that has never once claimed that the rich are evil.

We live in a freakin wonderland, compared to the people who built this country. The worker at McDonald's lives in a wonderland compared to the people who built this country.

I agree, let's make things even better.

Banks, for the most part, need deposits because they need to balance their books

Yes, they need to balance the books by having deposits to lend.
No deposit, no cleared check.

and attract customers.

If they didn't need deposits, they would only need to attract borrowers, not depositors.

Because deposits are still a liability for a bank, and banks never have enough cash if a majority of customers decide to withdraw at the same time.

And if they never lent deposits, they'd still be there to satisfy the run.

Who said they didn't need deposits?

Who said the loan created deposits mattered?

It does matter. Because banks originate.
‘Loans Create Deposits’ – in Context – Monetary Realism

It does matter

Why?

 

[Staidhup]

Liberals don't understand debt, but they do understand declining purchase power of the dollar when they have to spend their own hard earned dollars.

 

[Staidhup]

On second thought its not "the national debt" it's only applicable to those that actually pay taxes. No wonder liberals love debt, others flip the bill.