John Kenneth Galbraith, mariner Eccles and john stamp all admit money is invented out of thin air to name just three off the top of my head. To say fractional reserve banking doesn't invent money out of nothing is simply incorrect. Where do you think the trillions of dollars if debt come from?
@hypernation2007 Money _is_created out of thin air, but not in the way the speaker describes. Read the wikipedia entry on fractional reserve banking and then listen to the speaker. They don't say the same thing. Also, debt is exactly _not_ creating money out of thin air: the borrow gets the money, the debtor loses the money. Simple as that.
@sachamm Even Wikipedia gets it right. "By its nature, the practice of fractional reserve banking expands the money supply" - Money is generated from nothing and is created as it is loaned. This is particularly interesting to note when borrowing money for a mortgage. The money was created from nothing so either the bank gets an astonishing amount of new money (mostly more than double the value of the house" and if you default, they get the house. Remarkable.
@hypernation2007 Lets say you give me $100 for safe keeping, with the proviso that you can access the money at any time. I then turn around and lend $75 to Joe Bloggs, because I know you won't likely need the money any time soon. That is fractional reserve banking, and you'll note that no new money was created. It expands the money supply because you still "have" your $100 on account, but Joe has $75 of it, just as debt.
@sachamm - Here's another banker who disagrees with you:
Banks create money. That is what they are for. . . . The manufacturing process to make money consists of making an entry in a book. That is all. . . . Each and every time a Bank makes a loan . . . new Bank credit is created -- brand new money.
- Graham Towers, Governor of the Bank of Canada from 1935 to 1955
@hypernation2007 The phrase "creating money from thin air" describes the process by which the federal bank creates new money and lends it to banks. The process of a (non-federal) bank lending money does not do the same thing. You can use the metaphor of "creating new money" to describe lending, but it is not quite correct. It is more accurate to say that existing money is multiplied or made more powerful.
@sachamm You seem to be getting stuck in semantics. Multiplication is the same as creating it out of thin air. Indeed, multiplication is the term used by Modern Money Mechanics. Specifically "commercial banks" are listed over and over as the creators of new money. What sources are you drawing on?
@hypernation2007 Presumably when you say I'm stuck in semantics you mean that I am splitting hairs, but I don't think so. When someone says "creating money from nothing" I assume that there is actual new money. Show me the money. The talk's explanation of how lending works is just plain wrong.
@sachamm No, I'm suggesting that you see a difference between multiplication and increase. They are the same. Your arithmetic is sound, it simply doesn't reflect how banking actually works. The sources given in the lecture (including the Fed's own documents) all support this. Arithmetic is not a source.
@hypernation2007 Hehe, I'll admit that math is not a source, but I'm afraid you have misapprehended the Fed's documents. Lending by banks is done exactly how I've described, with the additional complication of charging interest. Lending _by_the_Fed_ is a different matter, and this is why I said you have conflated the Fed with the regular banks.
@sachamm Ok what did I misunderstand about this: "Reserves are unchanged by the loan transactions. But the deposit credits constitute new additions to the total deposits of the banking system." - Modern Money Mechanics. It's freely available online. It also systematically shows the creation of 100 grand from 10 grand. Not the Fed, commercial banks.
"Loans (assets) and deposits (liabilities) both rise by $9,000. Reserves are unchanged by the loan transactions. But the deposit credits constitute new additions to the total deposits of the banking system."
In my example, below, the "new additions" referred to in the last sentence corresponds to the $75 that Joe Bloggs has, since he could turn around and give the $75 to me (the banker), making my deposits $175. Still no new money created...
@hypernation2007 _Reserves_ stay the same, and note that it doesn't say new money is created. It says the total deposits increase. You can see how deposits increase but total money stays the same by looking at my $100 example below and considering what would happen if Joe deposited his borrowed $75 into my bank. There is still only $100 total money floating around, and yet I have $175 of deposits. _That_ is the magic that everyone is talking about.
@sachamm The problem with all your replies Mr. Sachamm is this. You are either 1)wilfully ignorant or 2) Just thick or 3) Dellusional. If you really don`t understand that Fractional reserve banking is nothing more than a scam & that it really does create money "Out of nothing" then I suggest you try eating money or putting it into your car or conecting your electricity supply to a big bag of money to see how far it gets you. Wake up mate & stop behaving like a dog that`s been shown a card trick.
@midnightoil22 The problem with your reply, Mr Beds Are Burning, is that you attack me personally and provide no evidence or even an argument to back up your claims. I suggest you try reading someone that has a clue of what they are talking about before spouting off in a public forum. Then, re-read my posts and please tell me what I've said that is wrong. Be specific, or... be gone, troll.
@sachamm "Be GoneTroll?" Are you fucking serious? How old are you mate? Does your mother know you`re using the internet?
I`ve read your posts "attack me personally". Pull your ego association out of your ass & face up to the fact that you live in a world that is not as it actually appears to be, you have been conned, you`re a sucker, we`ve all had to just face up to it. It can be painful but it`s a FACT. I don`t need to quote sources as Mr. Mcleish is accurate & totally verifiable.
@hypernation2007 You are wrong new money is not created, only new deposit created not money. Inflation looks big because of that, but look during 21 century inflation in USA was 1 percent per year and despite dollar lost value workers earn not few hundred dolars per mount. Wages changed accordingly do not forget. By the way inflation (low as few percent) makes really good work in easing money distribution.
@Karmathejedi1701 Actually, interest is not creation of wealth out of nothing. Lets say, in my example, the $100 you give me for safe keeping (i.e. deposited) earned 10% interest, so now you have $110 on deposit. Lets run the numbers:
1) Joe Bloggs has $75 but owes $75, net $0
2) me, the banker, has $25 and is owed $75, but in turn owes $110 to you, net $-10
3) you, have $0 but is owed $110, net $110
Add $0 + $-10 + $110, you get... the original $100. No wealth creation, just redistribution.
@mbass77 The biggest and most obvious one that I saw is the speaker's misunderstanding of fractional-reserve banking. The speaker says that banks create money out of thin air and proceed to lend the fictional money to the populace. This is simply false, since banks can only lend money they actually have.
Then he talks about Apple employing "planned obsolescence" in order to force consumers to purchase new iPhones. This, of course, is tripe. Absolute rubbish.
@mbass77 There were many other points that sounded fishy, but I don't have the time or inclination to chase them down, and, as I said, I stopped listening about 1/2 way through, since I saw no end in sight for this kind of baseless anti-establishmentarianism.
I'm sure Ben would like to know about any factual errors in his talk - especially anything major - and anywhere he was imprecise or could be clearer.
colinnewman1962 1 year ago
John Kenneth Galbraith, mariner Eccles and john stamp all admit money is invented out of thin air to name just three off the top of my head. To say fractional reserve banking doesn't invent money out of nothing is simply incorrect. Where do you think the trillions of dollars if debt come from?
hypernation2007 1 year ago
@hypernation2007 Money _is_created out of thin air, but not in the way the speaker describes. Read the wikipedia entry on fractional reserve banking and then listen to the speaker. They don't say the same thing. Also, debt is exactly _not_ creating money out of thin air: the borrow gets the money, the debtor loses the money. Simple as that.
sachamm 1 year ago
@sachamm Even Wikipedia gets it right. "By its nature, the practice of fractional reserve banking expands the money supply" - Money is generated from nothing and is created as it is loaned. This is particularly interesting to note when borrowing money for a mortgage. The money was created from nothing so either the bank gets an astonishing amount of new money (mostly more than double the value of the house" and if you default, they get the house. Remarkable.
hypernation2007 1 year ago
@hypernation2007 Lets say you give me $100 for safe keeping, with the proviso that you can access the money at any time. I then turn around and lend $75 to Joe Bloggs, because I know you won't likely need the money any time soon. That is fractional reserve banking, and you'll note that no new money was created. It expands the money supply because you still "have" your $100 on account, but Joe has $75 of it, just as debt.
sachamm 1 year ago
@sachamm - Here's another banker who disagrees with you:
Banks create money. That is what they are for. . . . The manufacturing process to make money consists of making an entry in a book. That is all. . . . Each and every time a Bank makes a loan . . . new Bank credit is created -- brand new money.
- Graham Towers, Governor of the Bank of Canada from 1935 to 1955
hypernation2007 1 year ago
@hypernation2007 The phrase "creating money from thin air" describes the process by which the federal bank creates new money and lends it to banks. The process of a (non-federal) bank lending money does not do the same thing. You can use the metaphor of "creating new money" to describe lending, but it is not quite correct. It is more accurate to say that existing money is multiplied or made more powerful.
sachamm 1 year ago
@sachamm You seem to be getting stuck in semantics. Multiplication is the same as creating it out of thin air. Indeed, multiplication is the term used by Modern Money Mechanics. Specifically "commercial banks" are listed over and over as the creators of new money. What sources are you drawing on?
hypernation2007 1 year ago
@hypernation2007 Presumably when you say I'm stuck in semantics you mean that I am splitting hairs, but I don't think so. When someone says "creating money from nothing" I assume that there is actual new money. Show me the money. The talk's explanation of how lending works is just plain wrong.
My sources are accounting arithmetic. See below.
sachamm 1 year ago
@sachamm No, I'm suggesting that you see a difference between multiplication and increase. They are the same. Your arithmetic is sound, it simply doesn't reflect how banking actually works. The sources given in the lecture (including the Fed's own documents) all support this. Arithmetic is not a source.
hypernation2007 1 year ago
@hypernation2007 Hehe, I'll admit that math is not a source, but I'm afraid you have misapprehended the Fed's documents. Lending by banks is done exactly how I've described, with the additional complication of charging interest. Lending _by_the_Fed_ is a different matter, and this is why I said you have conflated the Fed with the regular banks.
sachamm 1 year ago
@sachamm Ok what did I misunderstand about this: "Reserves are unchanged by the loan transactions. But the deposit credits constitute new additions to the total deposits of the banking system." - Modern Money Mechanics. It's freely available online. It also systematically shows the creation of 100 grand from 10 grand. Not the Fed, commercial banks.
hypernation2007 1 year ago
@hypernation2007 You missed the preceding sentence:
"Loans (assets) and deposits (liabilities) both rise by $9,000. Reserves are unchanged by the loan transactions. But the deposit credits constitute new additions to the total deposits of the banking system."
In my example, below, the "new additions" referred to in the last sentence corresponds to the $75 that Joe Bloggs has, since he could turn around and give the $75 to me (the banker), making my deposits $175. Still no new money created...
sachamm 1 year ago
@sachamm The precending sentence is vital - deposits stay the same, yet new money is created.
hypernation2007 1 year ago
@hypernation2007 _Reserves_ stay the same, and note that it doesn't say new money is created. It says the total deposits increase. You can see how deposits increase but total money stays the same by looking at my $100 example below and considering what would happen if Joe deposited his borrowed $75 into my bank. There is still only $100 total money floating around, and yet I have $175 of deposits. _That_ is the magic that everyone is talking about.
sachamm 1 year ago
@sachamm The problem with all your replies Mr. Sachamm is this. You are either 1)wilfully ignorant or 2) Just thick or 3) Dellusional. If you really don`t understand that Fractional reserve banking is nothing more than a scam & that it really does create money "Out of nothing" then I suggest you try eating money or putting it into your car or conecting your electricity supply to a big bag of money to see how far it gets you. Wake up mate & stop behaving like a dog that`s been shown a card trick.
midnightoil22 1 year ago
@midnightoil22 The problem with your reply, Mr Beds Are Burning, is that you attack me personally and provide no evidence or even an argument to back up your claims. I suggest you try reading someone that has a clue of what they are talking about before spouting off in a public forum. Then, re-read my posts and please tell me what I've said that is wrong. Be specific, or... be gone, troll.
sachamm 1 year ago
@sachamm Great musical reference.
You cannot attack others for not providing sources when you have yet to list one ;-)
hypernation2007 1 year ago
@hypernation2007 I think the wikipedia articles on banking are good, and I didn't see anything wrong with Modern Money Mechanics either.
sachamm 1 year ago
@sachamm "Be GoneTroll?" Are you fucking serious? How old are you mate? Does your mother know you`re using the internet?
I`ve read your posts "attack me personally". Pull your ego association out of your ass & face up to the fact that you live in a world that is not as it actually appears to be, you have been conned, you`re a sucker, we`ve all had to just face up to it. It can be painful but it`s a FACT. I don`t need to quote sources as Mr. Mcleish is accurate & totally verifiable.
midnightoil22 1 year ago
@midnightoil22 /ignore
sachamm 1 year ago
@sachamm/ Ignore?
I see you`ve still got your head stuck up your ass.
Wilfull ignorance is not healthy in a world that is constantly changing.
midnightoil22 1 year ago
@hypernation2007 You are wrong new money is not created, only new deposit created not money. Inflation looks big because of that, but look during 21 century inflation in USA was 1 percent per year and despite dollar lost value workers earn not few hundred dolars per mount. Wages changed accordingly do not forget. By the way inflation (low as few percent) makes really good work in easing money distribution.
chronius9 1 year ago
@hypernation2007 Running some accounting on the $100 example below:
1) Joe Bloggs has $75 but owes $75, net $0
2) me, the banker, has $25 and is owed $75, but in turn owes $100 to you, net $0
3) you, have $0 but is owed $100, net $100
Where is the new money you are talking about?
sachamm 1 year ago
@sachamm It would be great if this was how modern banking oeprated. Yet it does not.
hypernation2007 1 year ago
@sachamm you forgot the interest charged (the creation of wealth out of nothing)
Karmathejedi1701 2 months ago
This has been flagged as spam show
@Karmathejedi1701 Actually, interest is not creation of wealth out of nothing. Lets say, in my example, the $100 you give me for safe keeping (i.e. deposited) earned 10% interest, so now you have $110 on deposit. Lets run the numbers:
1) Joe Bloggs has $75 but owes $75, net $0
2) me, the banker, has $25 and is owed $75, but in turn owes $110 to you, net $-10
3) you, have $0 but is owed $110, net $110
Add $0 + $-10 + $110, you get... the original $100. No wealth creation, just redistribution.
sachamm 2 months ago
I did enjoy the presenter's style, but I couldn't get through the whole series. Just too many factual errors and conspiratorial verbiage.
sachamm 1 year ago
@sachamm could you be more specific about the errors? Thanks
mbass77 1 year ago
@mbass77 The biggest and most obvious one that I saw is the speaker's misunderstanding of fractional-reserve banking. The speaker says that banks create money out of thin air and proceed to lend the fictional money to the populace. This is simply false, since banks can only lend money they actually have.
Then he talks about Apple employing "planned obsolescence" in order to force consumers to purchase new iPhones. This, of course, is tripe. Absolute rubbish.
sachamm 1 year ago
@mbass77 There were many other points that sounded fishy, but I don't have the time or inclination to chase them down, and, as I said, I stopped listening about 1/2 way through, since I saw no end in sight for this kind of baseless anti-establishmentarianism.
sachamm 1 year ago
Hi! Would you mind to point out the factual errors you found out on the presentation? Thanks
londonkall 1 year ago
@londonkall Seem my other comments below and on the 2/8 and 3/8 videos.
sachamm 1 year ago
Great lecture =)
tunnis7us 1 year ago
great lecture. well presented. :)
stux1979 1 year ago