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Thread: In America: The Final Assault In The War On Cash

  1. #1

    In America: The Final Assault In The War On Cash

    https://www.technocracy.news/in-amer...e-war-on-cash/

    Before I show you what I’ve learned about a plan to seize control of America’s money, let me make one point clear…

    If you value sound money and political freedom… if you value limited government and taxation with representation… and if you value enterprise and privacy… then you’re going to hate the future I’m about to describe.

    There is no philosophical or monetary middle ground on the issue.

    You’re either with it or against it.

    The Chicago Plan

    In March 1933, Henry Morgenthau Jr., chairman of the Federal Farm Board, was sent a short memo titled, “Memorandum on Banking Reform.”

    It was signed by Frank Knight (the acknowledged author of the memo), Garfield Cox, Aaron Director, Paul Douglas, Lloyd Mints, Henry Schultz, and Henry Simons. All of them were professors at the University of Chicago.

    The memorandum advocated for full-reserve banking (FRB) in the U.S. monetary system. U.S. currency would be backed only by government debt, not bank debt (loans issued by commercial banks to private citizens and companies).

    It wouldn’t nationalize the U.S. banking system. But it would nationalize the nation’s money supply.

    Under this kind of system, banks could no longer “create” money by lending it into existence. Money creation would be the exclusive territory of the government of the United States.

    In this system, the key government agencies could not create money through new lending. They would do so through new spending (on priorities determined by elected politicians).

    They called it “The Chicago Plan.”

    The most radical elements of the plan – which we’ll discuss shortly – were left on the shelf nearly a century ago.

    But I believe it’s about to find a resurgence in modern America…

    The End of Fractional Reserve

    Before I show you what the implications of a modern Chicago Plan would be, it’s important you understand how money creation works today.

    Despite what you may think, the central bank (the Federal Reserve) doesn’t print that much money. The vast majority of the money supply in the U.S. economy is grown by banks lending money into existence.

    Commercial banks issue a loan, it appears in your account, and just like that… it’s money. From nothing, something! And then there was cash!

    But here’s the other part of that process that most people don’t realize. When the banks issue a loan, they don’t have to have a dollar in cash in their vaults for every dollar in cash they lend. If they DID, then every loan to a new customer would be matched with an equal amount of savings already in the bank from another customer. That’s “full reserve” banking.

    What we have today is called “fractional-reserve” banking. Why? The amount of cash savings actually held by the bank is only a fraction of the money lent by the bank. And for each dollar in saving deposits held by the bank (your money), the bank can lend up to $10 in new money (this is the secret magic of money creation).

    It’s also what some people call “debt-based” money, because money is created when a new debt is born (in the form of a bank loan).

    Proponents of the Chicago Plan contend that allowing banks to create credit in a fractional reserve system leads to credit cycles. And the credit cycle has booms and busts. The busts damage everyone, not just those who have borrowed and spent too much.

    That’s a problem, they say. To circumvent it, there are those in power actively trying to end the banking system as we know it. They want to go back to the original idea of the Chicago Plan. And then they want to go one step further and replace America’s money with something else entirely.

    America’s New Money

    The main feature of the Chicago Plan is that it moves credit creation from private hands to public (government) hands, with the average American unaware of who is really moving the government hands. Money isn’t lent into existence. It’s spent into existence.

    You can imagine that he who does the spending in this system has great power. That’s exactly the idea!

    Under the plan, instead of stimulating growth by changing the price of money for commercial banks (which is how monetary policy currently works with the Federal Reserve and interest rates), the government would “spend” money into circulation – on public works and infrastructure projects, for example.

    The quantity of money in the economy would be determined by the government, not the commercial banks. And, at least in theory, the government would enjoy vastly lower levels of debt (both absolutely, and relative to GDP) in this kind of money system. Why?

    In the current system, the US Treasury raises money by selling bonds to commercial banks or the Fed, paying interest to both. Money is created by borrowing. But again, it’s debt-based money. That wouldn’t happen in the new system. But what would the new money be backed by?

    Er… government debt!

    The term “full-reserve banking” implies every unit of currency is backed by an actual reserve. Some advocates of full-reserve banking (including a handful of Austrian economists) believe you could back the money with gold. Thus gold would be restored as the most important reserve asset in the world.

    But if your agenda is to spend money into existence in unlimited quantities, you can also use government debt as a reserve asset. There’s a lot of it already. And you can always make more!

    In fact, this is a key feature of the Chicago Plan. It’s full-reserve banking where the government does all the money creation, “backed” by government debt. The commercial banks merely provide payment services or pay interest on deposits. They are forced out of the debt-based money creation business (where all the profit is, of course).

    According to the theory, this new American money system would accomplish three things…

    1. End the booms and busts of the credit cycle.
    2. Do away with bank runs (no need to get your money out of the bank if it’s fully backed).
    3. Eliminate the government’s debt problem. If money can be spent into existence, government borrowing and government debts are a thing of the past. If it needs more money, the government just spends it and “backs” it by issuing new bonds held by the central bank. The government could never be insolvent.


    Does that sound like an improvement on the current system to you? To some people, it all sounds somewhat appealing, until you look closer…

    Monetary Sovereignty

    Under the Chicago Plan, the government has “monetary sovereignty.” What is monetary sovereignty? It is the complete decoupling of money from anything real.

    Let me explain what I mean and why that’s so important for the value of your savings and investments today.

    Under the Chicago Plan, money doesn’t have to have its roots in real value-added labor. Money doesn’t come into existence because a tradesman has created something useful and sold it to someone else, requiring money to make the transaction.

    And under the new system, money certainly doesn’t have to be anything physical and scarce, like gold.

    Under the new system, money can be whatever the government wants it to be.

    With a monetarily sovereign government calling the shots, money is literally no object. A monetarily sovereign government wouldn’t have to borrow anymore, or pay interest. To create money, it would simply spend it into existence. Voilà!

    Think of all the jobs and incomes created when a monetarily sovereign government decides to spend trillions on new infrastructure and “nation building” projects.

    This is Richard Duncan’s “creditism” without the need to borrow. It is economic growth without effort, wealth without labor, riches without risk.

    If you think it sounds absurd, you’re not alone. But remember what’s at stake here: total control of American money, and through it, of the economy, and of you. And it’ll be accomplished by controlling the quantity of money through a central authority.

    For an idea of what that might look like – and why it’s so dangerous to your cash and savings today – consider this quote from the innocuously titled “The Case for Unencumbering Interest Rate Policy at the Zero Bound.”

    It was delivered by Marvin Goodfriend of Carnegie Mellon University at the Fed’s annual retreat in Jackson Hole, Wyoming in 2016 (emphasis added is mine):

    The most straightforward way to unencumber interest rate policy completely at the zero bound is to abolish paper currency. In principle, abolishing paper currency would be effective, would not need new technology, and would not need institutional modifications. However, the public would be deprived of the widely used bundle of services that paper currency uniquely provides.

    […] Hence, the public is likely to resist the abolition of paper currency at least until mobile access to bank deposits becomes cheaper and more easily available.

    First, we have a proposal for a new system in which only the government can create money. Next, the “experts” think the most logical way to “unencumber” ineffective monetary policy is to abolish cash.

    Goodfriend, by the way, was nominated by President Trump to serve on the Federal Reserve’s seven-member Board of Governors. His nomination is currently awaiting action by the U.S. Senate.

    Taken together, there is a real effort underway to do away with your individual economic liberty and your preference to hold cash in the face of interest rate uncertainty. “If that could be overcome,” Goodfriend seems to be saying, “then we could make you act the way we want you to.”

    Am I exaggerating? Would Wall Street allow such a fundamental change to America’s banking system? Would the Fed really abolish cash? Is there a possibility of all of this becoming a reality?

    It’s happening faster than you think.

    For example, the Swiss recently voted on implementing a version of the Chicago Plan earlier this month. They ultimately voted it down, but the fact that such a plan was considered in the first place shows that this idea is coming back into the mainstream.

    Also, keep in mind that the Swiss, due to their constitution, get to vote on these kinds of things. It’s a direct democracy, controlled at the local level. Top-down change – the kind of change which tends to benefit the elites and those in the shadows of power – is very hard to achieve in Switzerland. But in the United States…?

    What would it take for elected officials, and the American voters, to decide that the banks can no longer be trusted? What would it take for politicians and voters to agree that it’s time to end “too big to fail” banks and change the financial system so “the people” (through their elected officials, of course) can be in charge of the money system?

    A stock market crash?

    Another “systemically important bank” collapse?

    A sovereign debt crisis?

    The catalyst could come from anywhere, or nowhere. And if you think it’s out of the realm of possibility, then you lack imagination, or an understanding of history.

    In Defense of Economic Liberty

    In a world where government has unrestricted control of the money, and hiding in physical cash is no longer an option (because cash has been abolished), there’s no end to what a monetary sovereign could force you to do.

    Control of money is a massive political power. What would happen next?

    Outlawing cryptos?

    Forcing negative interest rates (effectively a tax on your savings)?

    Banning the purchase of items that the government deems undesirable, like weapons, alcohol, or cigarettes?

    These may seem far-fetched scenarios. But they are well within the realm of possibility for a government in complete control of the money in your account.

    This was the plan in 1933. It almost happened. I believe it is the plan today. And I believe it WILL happen. Much sooner than you think. Which is why you must plan for it NOW.

    This is not a theoretical debate. What, exactly, is at stake for you right now?

    This idea of sovereign money appeals to central planners because with it, they have absolute authority and permission to try and solve any “problem” they deem a threat.

    You are that threat, because you won’t do what you’re told. You won’t spend when you’re supposed to spend, borrow when you’re supposed to borrow. And you’re likely to hoard cash and real money (precious metals) in the face of low (or negative) interest rates. That makes you an uncompliant problem for the State to solve.

    When you pair it with banning cash and going all-digital, you have nothing less than the complete loss of economic liberty and freedom of action in America. THAT’s what’s at stake here. Right now.

    If you’re in a situation where you can only spend money when you’re allowed to spend money, or you can only spend money that they say is money, and you can only spend money when they think it’s okay, then you’re not free.

    And to some people, freedom still matters in America.

    ...
    Full article at link.

    In a world with zero cash and zero financial privacy, there is NO LIMIT to what they can make you do.
    1776 > 1984

    The FAILURE of the United States Government to operate and maintain an
    Honest Money System , which frees the ordinary man from the clutches of the money manipulators, is the single largest contributing factor to the World's current Economic Crisis.

    The Elimination of Privacy is the Architecture of Genocide

    Belief, Money, and Violence are the three ways all people are controlled

    Quote Originally Posted by Zippyjuan View Post
    Our central bank is not privately owned.



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  3. #2
    Ending fractional reserve lending is good but letting government create unlimited amounts of money is bad and killing cash is worse, gold or silver should be money and nothing else. (for governmental purposes, people should be able to trade in anything they want.)
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankind…it’s people I can’t stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  4. #3
    I haven't used cash in like... two decades. I only ever need it when visiting the States.

    I experience a hell of a lot more freedom in cashless societies than in the cash ones, so that'd be a negative correlation.

    Maybe invest in a passport?
    In New Zealand:
    The Coastguard is a Charity
    Air Traffic Control is a private company run on user fees
    The DMV is a private non-profit
    Rescue helicopters and ambulances are operated by charities and are plastered with corporate logos
    The agriculture industry has zero subsidies
    5% of the national vote, gets you 5 seats in Parliament
    A tax return has 4 fields
    Business licenses aren't even a thing nor are capital gains taxes
    Constitutional right to refuse any type of medical care

  5. #4
    Quote Originally Posted by Swordsmyth View Post
    Ending fractional reserve lending is good but letting government create unlimited amounts of money is bad and killing cash is worse, gold or silver should be money and nothing else. (for governmental purposes, people should be able to trade in anything they want.)
    Yep. The article even pointed that out. Its the fiction that draws in most people so they think "sure that sounds like a great idea", and fail to see the consequences of what they want.

    When the Federal Reserve was proposed, it was promoted under the guise of being intended to "reign in the evil banks" despite having been written by the Bankers, who then usurped the entire US economy.
    1776 > 1984

    The FAILURE of the United States Government to operate and maintain an
    Honest Money System , which frees the ordinary man from the clutches of the money manipulators, is the single largest contributing factor to the World's current Economic Crisis.

    The Elimination of Privacy is the Architecture of Genocide

    Belief, Money, and Violence are the three ways all people are controlled

    Quote Originally Posted by Zippyjuan View Post
    Our central bank is not privately owned.

  6. #5
    Well poop. I'm not sure how I missed the news that Goodfriend was nominated for the Fed Reserve Board back in November 2017, but I did. His ideas in the The Case for Unencumbering Interest Rate Policy at the Zero Bound are odious. What a punch to the gut to hear that he is on tap to have actual voting power to effect that bull$#@!.

    Article referenced in the OP didn't even mention Goodfriend's solution to the public's resistance to the ultimate goal of abolishing cash. Goodfriend acknowledged that that wasn't practical, so he came up with another idea:
    ...
    So Goodfriend comes up with a new concept called the “flexible market-determined deposit price of paper currency.” (Seriously, I’m not making this up; you can find it in Section 5B of his paper.)

    In plain English, this means the “money” in your bank account and the “money” in your purse or wallet would be like two different kinds of currency. There would be an exchange rate between the two, just as there is an exchange rate between dollars and euros. The Fed could set this exchange rate at whatever level it wanted and would not be obligated to “defend” that rate at any particular level.

    What this means is if you go to the bank and withdraw $1,000, the bank might only give you $980 in cash because of the “exchange rate” between your bank account and cash. Or if you deposit $1,000 in cash, the bank might only credit your bank account $980 because of the same “exchange rate” between your cash and the bank account balance. In short, it’s a way to impose negative interest rates on physical cash.
    ...
    http://dailyreckoning.com/get-ready-...rate-policy-2/
    I compiled a "brief" history of events since October 2008 that are defining the global currency war and the role that gold is playing:

    Tin Foil Hats, Economic Reality and the Total Perspective Vortex

    Also, have you contacted your Congressional Rep and asked them co-sponsor Ron Paul's Rep. Paul Broun Jr.'s HR 1098 77: Free Competition in Currencies Act?

  7. #6
    Quote Originally Posted by idiom View Post
    I haven't used cash in like... two decades. I only ever need it when visiting the States.

    I experience a hell of a lot more freedom in cashless societies than in the cash ones, so that'd be a negative correlation.

    Maybe invest in a passport?
    That's because you are a good citizen and taxpayer. I'd imagine your Social Credits are high.
    Quote Originally Posted by Zippyjuan View Post
    Ron Paul know some weird people...



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    The Federalist Papers, No. 15:

    Except as to the rule of appointment, the United States have an indefinite discretion to make requisitions for men and money; but they have no authority to raise either by regulations extending to the individual citizens of America.

  8. #7
    Quote Originally Posted by Bern View Post
    Well poop. I'm not sure how I missed the news that Goodfriend was nominated for the Fed Reserve Board back in November 2017, but I did. His ideas in the The Case for Unencumbering Interest Rate Policy at the Zero Bound are odious. What a punch to the gut to hear that he is on tap to have actual voting power to effect that bull$#@!.

    Article referenced in the OP didn't even mention Goodfriend's solution to the public's resistance to the ultimate goal of abolishing cash. Goodfriend acknowledged that that wasn't practical, so he came up with another idea:

    http://dailyreckoning.com/get-ready-...rate-policy-2/
    Just one more example of Trump draining the swamp.
    "The Patriarch"

    Quote Originally Posted by Swordsmyth View Post

    Not going to happen.
    Quote Originally Posted by Schifference View Post
    The man did not think clearly. It was almost as if he had brain cancer of something.
    Quote Originally Posted by oyarde View Post
    I missed out on the dick pills , they any good ?

  9. #8
    Quote Originally Posted by idiom View Post
    I haven't used cash in like... two decades. I only ever need it when visiting the States
    I experience a hell of a lot more freedom in cashless societies than in the cash ones, so that'd be a negative correlation.
    Maybe invest in a passport?
    You haven't needed to use cash in the US in quite a long time. But some of us choose to do so for a variety of reasons. eg:I prefer to pay with cash when I'm at the strip club or with a hooker afterwards. I always buy my drugs with cash, because my dealer gives me a discount. I always tip in cash, because I want the staff to cheat on their taxes. When I drive to the pine barrens to bury a body, I always use cash on the tollway so that I'm not tracked. just a couple of common every day examples.



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  11. #9
    Quote Originally Posted by Origanalist View Post
    Just one more example of Trump draining the swamp.

    Right into high positions within his administration. Who could possibly have predicted such things? Who?
    Chris

    "Government ... does not exist of necessity, but rather by virtue of a tragic, almost comical combination of klutzy, opportunistic terrorism against sitting ducks whom it pretends to shelter, plus our childish phobia of responsibility, praying to be exempted from the hard reality of life on life's terms." Wolf DeVoon

    "...Make America Great Again. I'm interested in making American FREE again. Then the greatness will come automatically."Ron Paul

  12. #10
    Quote Originally Posted by CCTelander View Post
    Right into high positions within his administration. Who could possibly have predicted such things? Who?
    dannno?
    "The Patriarch"

    Quote Originally Posted by Swordsmyth View Post

    Not going to happen.
    Quote Originally Posted by Schifference View Post
    The man did not think clearly. It was almost as if he had brain cancer of something.
    Quote Originally Posted by oyarde View Post
    I missed out on the dick pills , they any good ?

  13. #11
    Quote Originally Posted by Origanalist View Post
    dannno?

    well, he does seem to have a direct line to Trump's brain (or something) so...
    Chris

    "Government ... does not exist of necessity, but rather by virtue of a tragic, almost comical combination of klutzy, opportunistic terrorism against sitting ducks whom it pretends to shelter, plus our childish phobia of responsibility, praying to be exempted from the hard reality of life on life's terms." Wolf DeVoon

    "...Make America Great Again. I'm interested in making American FREE again. Then the greatness will come automatically."Ron Paul

  14. #12
    Quote Originally Posted by specsaregood View Post
    You haven't needed to use cash in the US in quite a long time. But some of us choose to do so for a variety of reasons. eg:I prefer to pay with cash when I'm at the strip club or with a hooker afterwards. I always buy my drugs with cash, because my dealer gives me a discount. I always tip in cash, because I want the staff to cheat on their taxes. When I drive to the pine barrens to bury a body, I always use cash on the tollway so that I'm not tracked. just a couple of common every day examples.
    Just said to me the other day about government tracking of everything: “Who cares? If you aren’t doing anything wrong, then you have nothing to worry about”.
    Twitter: B4Liberty@USAB4L
    "Foreign aid is taking money from the poor people of a rich country, and giving it to the rich people of a poor country." - Ron Paul
    "Beware the Military-Industrial-Financial-Corporate-Internet-Media-Government Complex." - B4L update of General Dwight D. Eisenhower
    "Debt is the drug, Wall St. Banksters are the dealers, and politicians are the addicts." - B4L
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    The views and opinions expressed here are solely my own, and do not represent this forum or any other entities or persons.

  15. #13
    Quote Originally Posted by DamianTV View Post
    https://www.technocracy.news/in-amer...e-war-on-cash/



    Full article at link.

    In a world with zero cash and zero financial privacy, there is NO LIMIT to what they can make you do.

    Seems to me that would be a fast track to hyper-inflation. Zimbabwe with modern electronic exchange systems.
    Twitter: B4Liberty@USAB4L
    "Foreign aid is taking money from the poor people of a rich country, and giving it to the rich people of a poor country." - Ron Paul
    "Beware the Military-Industrial-Financial-Corporate-Internet-Media-Government Complex." - B4L update of General Dwight D. Eisenhower
    "Debt is the drug, Wall St. Banksters are the dealers, and politicians are the addicts." - B4L
    "Totally free immigration? I've never taken that position. I believe in national sovereignty." - Ron Paul
    They are what they hate.” - B4L


    The views and opinions expressed here are solely my own, and do not represent this forum or any other entities or persons.

  16. #14
    Quote Originally Posted by Swordsmyth View Post
    Ending fractional reserve lending is good but letting government create unlimited amounts of money is bad and killing cash is worse, gold or silver should be money and nothing else. (for governmental purposes, people should be able to trade in anything they want.)
    Which way would you end fractional reserve banking- get rid of the reserve requirement and allow banks to loan out up to 100% of deposits or go to a 100% reserve system where they are not allowed to loan out any money and keep all deposits "in reserve"? (Fractional reserve banking means they are required to keep a fraction of deposits in reserves and not loan out that portion of money). Anything between no reserve and 100% reserves would be a fractional reserve banking system.

    (I agree you don't want to put the government- President or Congress- in control of the money supply.)
    Last edited by Zippyjuan; 11-28-2018 at 02:06 PM.
    Donald Trump: 'What you're seeing and what you're reading is not what's happening'

    "Truth isn't truth"- Rudy Giuliani

    "China has total respect for Donald Trump and for Donald Trump's very, very large brain," - Donald Trump.

    I am Zippy and I approve of this post. But you don't have to.

  17. #15
    In North Korea only the extremely privileged can make electronic transactions.

    In New Zealand pretty much everything is electronic.

    I fail to see how New Zealand is more despotic than North Korea.

    Obsession with the currency as a form of control is Marxist thinking. It doesn't actually work. God isn't inevitably pushing the world into communism.
    In New Zealand:
    The Coastguard is a Charity
    Air Traffic Control is a private company run on user fees
    The DMV is a private non-profit
    Rescue helicopters and ambulances are operated by charities and are plastered with corporate logos
    The agriculture industry has zero subsidies
    5% of the national vote, gets you 5 seats in Parliament
    A tax return has 4 fields
    Business licenses aren't even a thing nor are capital gains taxes
    Constitutional right to refuse any type of medical care

  18. #16
    Quote Originally Posted by idiom View Post
    In North Korea only the extremely privileged can make electronic transactions.

    In New Zealand pretty much everything is electronic.

    I fail to see how New Zealand is more despotic than North Korea.

    Obsession with the currency as a form of control is Marxist thinking. It doesn't actually work. God isn't inevitably pushing the world into communism.
    The problems aren't what we use for money- but how we use that money.
    Donald Trump: 'What you're seeing and what you're reading is not what's happening'

    "Truth isn't truth"- Rudy Giuliani

    "China has total respect for Donald Trump and for Donald Trump's very, very large brain," - Donald Trump.

    I am Zippy and I approve of this post. But you don't have to.



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  20. #17
    Quote Originally Posted by idiom View Post
    I haven't used cash in like... two decades. I only ever need it when visiting the States.

    I experience a hell of a lot more freedom in cashless societies than in the cash ones, so that'd be a negative correlation.

    Maybe invest in a passport?
    You begin to sound more and more like an enemy troll.

    "Three cheers for the mark of the beast"
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankind…it’s people I can’t stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  21. #18
    Quote Originally Posted by Zippyjuan View Post
    Which way would you end fractional reserve banking- get rid of the reserve requirement and allow banks to loan out up to 100% of deposits or go to a 100% reserve system where they are not allowed to loan out any money and keep all deposits "in reserve"? (Fractional reserve banking means they are required to keep a fraction of deposits in reserves and not loan out that portion of money). Anything between no reserve and 100% reserves would be a fractional reserve banking system.

    (I agree you don't want to put the government- President or Congress- in control of the money supply.)
    It depends on what the depositors are told and agree to but the banks shouldn't be able to loan out money that doesn't exist.
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankind…it’s people I can’t stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  22. #19
    Quote Originally Posted by Swordsmyth View Post
    It depends on what the depositors are told and agree to but the banks shouldn't be able to loan out money that doesn't exist.
    They don't loan out money which doesn't exist. Blue line is deposits, red line is loans.

    Donald Trump: 'What you're seeing and what you're reading is not what's happening'

    "Truth isn't truth"- Rudy Giuliani

    "China has total respect for Donald Trump and for Donald Trump's very, very large brain," - Donald Trump.

    I am Zippy and I approve of this post. But you don't have to.

  23. #20
    Quote Originally Posted by Zippyjuan View Post
    They don't loan out money which doesn't exist. Blue line is deposits, red line is loans.

    Yes they do, their bank account doesn't drop to zero as they loan out the total value of their deposits.
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankind…it’s people I can’t stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  24. #21
    Quote Originally Posted by Swordsmyth View Post
    Yes they do, their bank account doesn't drop to zero as they loan out the total value of their deposits.
    The bank account balance is an IOU. When you deposit money at the bank, they issue you an IOU for the amount- that is your account balance. They can loan that money to somebody without reducing your IOU. Then that person has an IOU with the bank. Fractional reserve requirements say they cannot loan out all of that money though. They have to keep a portion in reserves in case somebody wants to collect on their IOU (withdraw their money).

    If I have $20 and loan it to Bob, he now has $20 and I have zero. Bob can loan that money to Carl. Now Carl has $20. He owes $20 to Bob and Bob owes $20 to me. Consider me a depositor, Bob the bank, and Carl a borrower.
    Last edited by Zippyjuan; 11-28-2018 at 03:04 PM.
    Donald Trump: 'What you're seeing and what you're reading is not what's happening'

    "Truth isn't truth"- Rudy Giuliani

    "China has total respect for Donald Trump and for Donald Trump's very, very large brain," - Donald Trump.

    I am Zippy and I approve of this post. But you don't have to.

  25. #22
    Quote Originally Posted by Zippyjuan View Post
    The bank account balance is an IOU. When you deposit money at the bank, they issue you an IOU for the amount- that is your account balance. They can loan that money to somebody without reducing your IOU. Then that person has an IOU with the bank. Fractional reserve requirements say they cannot loan out all of that money though. They have to keep a portion in reserves in case somebody wants to collect on their IOU (withdraw their money).

    If I have $20 and loan it to Bob, he now has $20 and I have zero. Bob can loan that money to Carl. Now Carl has $20. He owes $20 to Bob and Bob owes $20 to me. Consider me a depositor, Bob the bank, and Carl a borrower.
    I didn't say MY bank account, I said the bank's account, they aren't running on empty.
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

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  26. #23
    Quote Originally Posted by Swordsmyth View Post
    I didn't say MY bank account, I said the bank's account, they aren't running on empty.
    You mean bank reserves then. That is the difference between what the get in deposits and what they loan out. Because of reserve requirements (and even without reserve requirements most banks would not loan out 100% of deposits because that would make it difficult to meet withdrawls and could lead to a run on the bank).

    Take the chart above and subtract the red line from the blue line. That is their reserves.
    Donald Trump: 'What you're seeing and what you're reading is not what's happening'

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