Money as Debt - Fractional Reserve Banking - How "Money" is Created (2/5)

[jemslayer3]

2-3 minutes. i dont understand.

how can a bank lend 10 grand when they only have 1 grand in reserves?

i understand fractional reserve banking. lets say a bank has 100 dollars in deposits, they can have a reserve of only 20 dollars.

but how can they lend out 60 dollars when they only have 20 in reserves?

banks cant print money only the fed.

plz help i didnt get that 2-3 minute part..

[tangium]

@jemslayer3 If I'm not mistaken, they misinterpreted the fractional reserve system.

They're somewhat correct, in that it will create money, but the method is mistaken.

Take a deposit of 1,000 USD. Assuming the minimum required reserve is 10%, this means they can lend out 900 USD. These are then deposited into other banks, which can lend out another 90% of it, putting $810 into the hands of more people, who then repeat the process until there's nothing left. In this way, money is created.

[jemslayer3]

@tangium Yea how you described it, is how i understood it. There was 100 initial dollars in the Fed. the bank lent out the 100 dollars and so on. now there is 400 dollars with only 100 initial dollars.

pretty sure we're on the same page?

[tangium]

@jemslayer3

Yes. The part where the video trips up is in saying that the first bank can lend out more than the total amount (minus reserve requirement) of money deposited.

[iansummerell]

This is all very interesting but the banks have used the money to bet on the hedge fund market. Lost it! Then the government are loaning them the money out of my taxes. Is that right?

[EagleTalonZ]

Don't forget! Today is Ron Paul's money 'bomb'!!! Go to w w w(dot)ronpaul2012(dot)com and donate! Also, if you purchase campaign items in the store it does go towards the donation amount. Join the r3VOLution and let's save this nation!! END THE FED!!!

[MrDucqui]

thank

[SilentNoMorePubs]

Another good video is titled WHY WE ARE IN SO MUCH DEBT. It provides one of the simplest, clearest explanations yet. Highly recommended.

[Aresftfun]

That is messed up.

[magiclard]

I am watxhing this carefully and if anyone has any other sensible pointers on this type of thing let me know thanks.

[BraveLittIeToaster]

@magiclard

search youtube for "Banking 1" From "khanacademy"

the "money as debt" series is wildly misleading, and wrought with inaccuracies and half truths...

[magiclard]

@BraveLittIeToaster thank you brave little toaster....this type of thing is very important-I havent replied for months because of ''not being too bothered about it'' and I guess thats how the world bankers/leaders like us to be. Going off to look at it now :)

[RoySC1]

The primary source of debt money is Congress's constitutional authority "to borrow money on the credit of the United States". If the people were to demand that this power be abolished by amending our Constitution, their lives and future generations lives, would be free of financial enslavement. Such authority is the old fashion "protection rackets" on a grand scale..

[brianmenendez]

there is no debt! don't worry about it

[Patriot4Liberty1776]

Correct our "debt" becomes our currency. Without debt we cannot create more currency.

Do your part to help share this out and advocate for ending the Federal Reserve which is not Federal and has not tangible reserves.

[psxwarrior]

Just watched it. Everyone needs to watch this video series.

[quuaa1]

I was wondering how Fannie May and Freddie Mac can lend out $5 Trillion dollars, regardless of the fact that I doubt they're worth +$5 Trillion. That explains it.

[gearzone2611]

What about paychecks? I think the bankers are keeping paychecks too ya? Do you have any videos about it. Tnx!

[czarben87]

@Patriot4Liberty1776 You peopele do not understand how the economy works. Without the fractional reserve system we would have a fraction of the wealth and GDP that we currently do. This process is how people can buy cars and houses and how kids to go to college without having to pay cash up front. This is also the reason why we have investments. Small businesses cannot start without some financial help.

[Lingerfoot]

@Patriot4Liberty1776 - I don't understand what you mean when you say that without "debt" we can't create more currency? What do you mean by that statement, I still don't understand. Why is fiat currency bad? Peace.

[patbarkley]

@Patriot4Liberty1776

"Do your part to help share this out and advocate for ending the Federal Reserve which is not Federal and has not tangible reserves"

It is Federal. It was created by Congress.

It has reserves. Gold and bonds.

[MrDzver]

@Patriot4Liberty1776 i notice the documentary mentions 'the mint' creating money and is a federal agency, which is untrue because the federal reserve creates money and as you stated, it is definitely not a government agency

[psxwarrior]

In other words, our country has no real wealth.

[derekhess47]

There are plenty of tangible and non-tangible assets that can be considered wealth, such as buildings, cars, knowledge, people, skills, productivity etc, the money is just a paper representation of this. When you take a loan from the bank you are agreeing to put xxxx amount of productivity into the economy in exchange for the fruits of that productivity in advance, do you follow?

[psxwarrior]

That's true. I've always felt that if the paper money was printed based on the productivity of goods and services in the country, we would be the richest, debt free nation on earth. When you think about it, the fed doesn't really need to collect taxes from us, because the government uses that money they get from the fed to do all their unconstitutional stuff. Why should we give our money back to them? That represents our wealth as a nation...

[psxwarrior]

I just think it's more about control than anything else. If the fed and banks issued money based on productivity, and not require us to pay it back, we would be a nation of rich people everywhere. No one wouild have lack, because we all have what we need. It's just about control. Pay this money back to me or else we're gonna repo your car or your house. The fact is, the whole system is run wrong, and it's all screwed up.

[mlh8723]

A countrys assets is basically the wealth of that country, for example anything valuable such as oil, water, food and labour is an asset. The more of these assets a country has the wealthier it is.

[Lingerfoot]

@psxwarrior - Why do you mean that our country has no real wealth? I don't have a clue what you mean by that statement, I am still not sure that I understand this video. Please explain....Thanks.

[psxwarrior]

@Lingerfoot I mean that we don't produce goods like we used to. We don't have the factories and the farms that we did. The money that we both have now is backed by oil. Most of that oil comes from over seas. Our dollar is backed by a product from another country!!! That is awful. Because of that, the only real jobs in this country are jobs like walmart, best buy, and your local grocery store, where they sell stuff. We don't produce as a country. We consume.

[psxwarrior]

@psxwarrior As a result, since our currency is backed by a foreign product, it's important that that product is sold in gobs. That is why you put a lot of gas in your gas tank, and not have some other energy source like water to power your car. Every time somebody goes to promote an alternative energy source for the auto, they are driven out of business, because it would mean that what is backing the dollar is made useless. This is why that even with a collapsing economy...

[psxwarrior]

@psxwarrior as long as demand for oil is high, it doesn't matter if all jobs are gone. Also, in order to keep the dollar strong, the powers that be will strong arm other countries into having to accept that dollar as currency. This helps keep demand high for the dollar, and inflation from running out of control in the United States. The banks have all the power, because they can lend out 90% of their worth and get it back with interest. I'm trying to say that...

[psxwarrior]

@psxwarrior it doesn't matter whether or not any of us loose our jobs, or if there really is any production in this country at all. The power bankers in the world have tied the world together using the dollar in most countries in the world. We consume, the rest of the world produces, and the power bankers of the world reap the rewards. I know it's a lot to take in, but this is how our world works. These bankers are the same people Jesus threw out of the temple 2000 years ago.

[PeaceThroughDeceit]

@psxwarrior The wealth exists in the material aspect. The problem is that the cost of these materials take more Dollars to purchase them when this new money is created. One way or another the Market has to clear itself.

[psxwarrior]

@PeaceThroughDeceit But the reason I say that is because we don't manufacture our own iPods or TVs and such. Lost jobs, plus more "money" in the economy, equals even more inflation, but as I said in my comments below, inflation is being kept down by the dollar being the world reserve currency. Other central banks are getting that money. Not just other financial institutions in the US.