Unemployed need not apply

[Toddsterpatriot]

Correct, so what happens when the depositor comes looking for his $1 million?

the bank says, Edward borrowed the $1 million to make widgets that nobody wanted to buy, Edward cant repay the loan, Edward's suppliers have your money, you are shit out of luck, but don't expect deflation because money supply did not shrink it's just in different pockets now..

Edward's suppliers have your money, you are shit out of luck

Yes, and that caused the money supply to shrink by $1 million.

but don't expect deflation because money supply did not shrink

It did shrink.

 

[Toddsterpatriot]

New loans increase the money supply, defaults decrease the money supply.

that would be true if the Fed didn't intervene to insure that money supply stayed the same; so you would say the Fed and the Fed alone determines how large or small the money supply is

that would be true if the Fed didn't intervene to insure that money supply stayed the same;

The Fed doesn't ensure the money supply stayed the same.

the Fed and the Fed alone determines how large or small the money supply is

You're wrong.

How does a bank increase the money supply?
Walk thru the steps and I will attempt to correct your errors.

 

[EdwardBaiamonte]

Yes, and that caused the money supply to shrink by $1 million.

if I put my money in your pocket it does cause the money supply to shrink.

 

[EdwardBaiamonte]

The Fed doesn't ensure the money supply stayed the same.
.

their mandate is to keep it the same at least to the point where no inflation or deflation results

 

[EdwardBaiamonte]

How does a bank increase the money supply?
.

by loaning out only enough money to prevent deflation and inflation as determined by the Central Bank.

 

[Toddsterpatriot]

The Fed doesn't ensure the money supply stayed the same.
.

their mandate is to keep it the same at least to the point where no inflation or deflation results

their mandate is to keep it the same

No it isn't.
And even if it were, creating a mandate doesn't mean they could accomplish it.

 

[Toddsterpatriot]

How does a bank increase the money supply?
.

by loaning out only enough money to prevent deflation and inflation as determined by the Central Bank.

How does a bank increase the money supply?

by loaning out only enough money

How does loaning out money increase the money supply?

 

[EdwardBaiamonte]

The Fed doesn't ensure the money supply stayed the same.
.

their mandate is to keep it the same at least to the point where no inflation or deflation results

their mandate is to keep it the same

No it isn't.
And even if it were, creating a mandate doesn't mean they could accomplish it.

they have largely accomplished it since inflation has been very low and yet deflation has been an equal worry too.

 

[EdwardBaiamonte]

How does loaning out money increase the money supply?

loaning increases money supply only if Fed allows enough loaning to increase money aggregates.

 

[Toddsterpatriot]

How does loaning out money increase the money supply?

loaning increases money supply only if Fed allows enough loaning to increase money aggregates.

loaning increases money supply

How?

only if Fed allows enough loaning to increase money aggregates

When does a loan not "increase money aggregates"?

 

[EdwardBaiamonte]

When does a loan not "increase money aggregates"?

when there is not sufficient loaning to do so. A bank can make no loans or make loans equal to or less than its reserves. It is happening now for example with $4.3 trillion in bank reserves held by the Fed because banks don't want to make loans.

 

[Toddsterpatriot]

When does a loan not "increase money aggregates"?

when there is not sufficient loaning to do so. A bank can make no loans or make loans equal to or less than its reserves. It is happening now for example with $4.3 trillion in bank reserves held by the Fed because banks don't want to make loans.

when there is not sufficient loaning to do so.

You're not making sense.

A bank can make no loans or make loans equal to or less than its reserves.

Why aren't you answering my question?
If you don't know how loans increase the money supply, just say so.

 

[danielpalos]

Correct, so what happens when the depositor comes looking for his $1 million?

the bank says, Edward borrowed the $1 million to make widgets that nobody wanted to buy, Edward cant repay the loan, Edward's suppliers have your money, you are shit out of luck, but don't expect deflation because money supply did not shrink it's just in different pockets now..

thank goodness for socialism bailing out capitalism with deposit insurance.

 

[danielpalos]

When banks fail, the money supply shrinks.
.

no it doesn't. a bank does not burn its money when it fails

with a bank; insolvency means withdrawals exceeding deposits.

100% stupid and liberal of course since our subject is not what insolvency means but whether money supply shrinks when a bank fails. If you lack the IQ to know what the subject is you lack the IQ to participate meaningfully.
Does the liberal understand?

isn't a shrinking money supply implied when a bank runs out of money?

no, a bank does not burn the money supply it merely loans it out to those who don't repay it, That does not change the money supply it just puts it in different pockets

the inability of a bank to have enough cash on hand to pay depositors is an indication unto itself of tight money (policies).

 

[danielpalos]

New loans increase the money supply, defaults decrease the money supply.

that would be true if the Fed didn't intervene to insure that money supply stayed the same; so you would say the Fed and the Fed alone determines how large or small the money supply is

sure; it is what open market operations are all about.

 

[OnePercenter]

The government collects taxes and puts the monies back to be spent which stimulates the economy.

Yes, the government destimulates the economy and then stimulates the economy.
With the usual government losses due to overhead and inefficiency.

If you can make an argument that taxes destimulate an economy.

 

[Toddsterpatriot]

The government collects taxes and puts the monies back to be spent which stimulates the economy.

Yes, the government destimulates the economy and then stimulates the economy.
With the usual government losses due to overhead and inefficiency.

If you can make an argument that taxes destimulate an economy.

If you tax my activity at a high enough rate, I'll reduce that activity.
Liberals do that all the time when they want to reduce smoking by taxing it.

 

[OnePercenter]

When banks fail, the money supply shrinks.
.

no it doesn't. a bank does not burn its money when it fails

Yes it does.

how??? If a bank loans me $one million for a business venture, the business fails, I don't pay back the money, the bank fails, but money supply stays the same and prices to not fall 34%.

If a bank loans me $one million for a business venture, the business fails, I don't pay back the money,

Correct, so what happens when the depositor comes looking for his $1 million?

What if the original bank sells the note?

 

[Toddsterpatriot]

When banks fail, the money supply shrinks.
.

no it doesn't. a bank does not burn its money when it fails

Yes it does.

how??? If a bank loans me $one million for a business venture, the business fails, I don't pay back the money, the bank fails, but money supply stays the same and prices to not fall 34%.

If a bank loans me $one million for a business venture, the business fails, I don't pay back the money,

Correct, so what happens when the depositor comes looking for his $1 million?

What if the original bank sells the note?

What if the original bank sells the defaulted note?
Why don't you explain what happens?

 

[OnePercenter]

The government collects taxes and puts the monies back to be spent which stimulates the economy.

Yes, the government destimulates the economy and then stimulates the economy.
With the usual government losses due to overhead and inefficiency.

If you can make an argument that taxes destimulate an economy.

If you tax my activity at a high enough rate, I'll reduce that activity.
Liberals do that all the time when they want to reduce smoking by taxing it.

If you tax my activity at a high enough rate, I'll reduce that activity.

Wouldn't that depend if the activity was already on-going? Any smart business person that increases or starts an activity (financial) already has tax savings or reduction in place.

Liberals do that all the time when they want to reduce smoking by taxing it

Originally it was liberals, today it's bi-partisan.