On October 06 2008 06:43 mahnini wrote: Look at interest as a static profit and see how little sense this makes.
Lets say it is the bank's profit. Interest can be used for operating costs/profit/making more loans.
However, the same problem still exists. The banks collect interest on the money supply, and to pay it even more money must be borrowed. Thats how the M1/M2/M3 can be so insanely high.
What happens in a system like this is that eventually everyone is in debt to the banks. Sure, its used as their "static" (ever increasing) profit, but what that means is that eventually, in this closed system, banks will eventually end up owning everything. Its not that they're greedy (which they are), its simply the end result.
This is why Thomas Jefferson said this: "I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."
The founding fathers understood this simple concept. The rebellion against Britain was in large part about gaining freedom from their banks. That is why Andrew Jackson fought so hard against the Central Bank, and destroyed it.
Its this simple process of collecting interest on the money supply, which creates debt that can never be paid off (that causes the cycle which is inflation). The banks gain ever more collateral for that debt, until people can't repay (thats the deflation).
The current economic crisis is largely about people not being able to absorb new debt. When people can't absorb new debt, money creation stops, the interest cannot be repaid, and thats how it happens. Americans are maxed out on their credit cards, loans, mortgages, etc. No one can take anymore...we are reaching our maximum borrowing potential.
edit: another way to see why banks will end up owning everything is that when you take out a loan, you must put up collateral. The bank doesn't have to put up anything, only give you money which is actually based on someone else's deposits. So this is a disequilibrium, you give the bank real value, and they write something on their balance sheets.
While they may only be collecting interest as you say (which always increases in the overall system), when you default (inevitable deflation happens), the bank takes ownership of your property. Thats when they really own everything, the interest profit isn't the main focus.
This is simply untrue. We do not need to borrow more money to pay off interest. We can generate value through assets/services and sell them (just like the bank is doing).
But you have to pay off your debt in their money, greenbacks. They hold the monopoly on greenbacks.
I understand that you pay off debt with money, I don't understand your point.
You have to pay loans off in greenbacks. The only way greenbacks come about is when someone puts up collateral, and takes out a loan. So for the loans to be payed off, the banks require a constant source of real value, the assets you are talking about, to be put up as collateral.
Individually, its very easy for you, mahnini, to pay off your loan. However, when you do that (see the wiki article), that money you've repaid goes out of existence, and the money supply shrinks. This makes it more difficult for someone else who has a loan to pay it back. They simply can't use their valuable assets and give them to the bank, their assets must be given a dollar value.
Incorrect, the money you've repaid is still in the system but the value of the security that was generated when you took out the loan has disappeared.
But if there isn't any money in the economy, all of a sudden people aren't willing to pay for your service. It is "worth" less. The bank will only give you a small amount for it.
A good example is mortgages. They are "stinky" and "bad". Nevermind the fact that they are american homes, real, american property. There isn't any money out there, and the banks will only use your valuable assets for a few cents on the dollar. Thats deflation...
I'm talking about the economy as a whole, so long as people are generating desirable goods and services the money will always circulate as value is created and purchased, and the profits that the bank make are probably themselves put into an account which can be loaned.
On October 06 2008 07:45 babypo0 wrote: great chart, mahnini. once you understand the tools and tricks, it's not hard to figure out how it works. i don't know what stops people from putting 2 and 2 together. they're more apt to believe things if the mainstream media resounds it with barely any substantiating facts, than being shows a plethora of history, facts, mechanisms, and charts.
one comment about interest rates controlling the money supply. while that is true, it would be a grave mistake to only point to interest rates. the real culprit is fractional reserve banking. if you hold 100, you can loan out 900 out of thin air, created. if there was no fractional reserve banking and 100 meant you can loan out 100, then no money would be created other than printing, counterfeiting, or if more stuff to back the dollar was found. thus with fractional reserve banking, interest rates control the rate of money supply expansion by simply affecting the amount of loans - meaning the amount that is created. it's not super complicated. you don't need to be a financial guru to understand the basics.
This is untrue and was exactly what the video wanted to implicate.
Well not in a single transaction, but the banking system as a whole.
That is still untrue.
Thats the money multiplier concept. Banks multiply the money by 1/reserve ratio. If the reserve ratio is 10%, they multiply the money by 10, hence the "thin air".
It is not out of thin air. The money is simply circulated through the system and as loans and deposits are made, the banks continually keeps 10% for each loan and subsequent deposit and are free to loan the rest out. Value is still held in the banks as a form of a liability to accounts.
On October 06 2008 06:43 mahnini wrote: Look at interest as a static profit and see how little sense this makes.
Lets say it is the bank's profit. Interest can be used for operating costs/profit/making more loans.
However, the same problem still exists. The banks collect interest on the money supply, and to pay it even more money must be borrowed. Thats how the M1/M2/M3 can be so insanely high.
What happens in a system like this is that eventually everyone is in debt to the banks. Sure, its used as their "static" (ever increasing) profit, but what that means is that eventually, in this closed system, banks will eventually end up owning everything. Its not that they're greedy (which they are), its simply the end result.
This is why Thomas Jefferson said this: "I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."
The founding fathers understood this simple concept. The rebellion against Britain was in large part about gaining freedom from their banks. That is why Andrew Jackson fought so hard against the Central Bank, and destroyed it.
Its this simple process of collecting interest on the money supply, which creates debt that can never be paid off (that causes the cycle which is inflation). The banks gain ever more collateral for that debt, until people can't repay (thats the deflation).
The current economic crisis is largely about people not being able to absorb new debt. When people can't absorb new debt, money creation stops, the interest cannot be repaid, and thats how it happens. Americans are maxed out on their credit cards, loans, mortgages, etc. No one can take anymore...we are reaching our maximum borrowing potential.
edit: another way to see why banks will end up owning everything is that when you take out a loan, you must put up collateral. The bank doesn't have to put up anything, only give you money which is actually based on someone else's deposits. So this is a disequilibrium, you give the bank real value, and they write something on their balance sheets.
While they may only be collecting interest as you say (which always increases in the overall system), when you default (inevitable deflation happens), the bank takes ownership of your property. Thats when they really own everything, the interest profit isn't the main focus.
This is simply untrue. We do not need to borrow more money to pay off interest. We can generate value through assets/services and sell them (just like the bank is doing).
But you have to pay off your debt in their money, greenbacks. They hold the monopoly on greenbacks.
I understand that you pay off debt with money, I don't understand your point.
You have to pay loans off in greenbacks. The only way greenbacks come about is when someone puts up collateral, and takes out a loan. So for the loans to be payed off, the banks require a constant source of real value, the assets you are talking about, to be put up as collateral.
Individually, its very easy for you, mahnini, to pay off your loan. However, when you do that (see the wiki article), that money you've repaid goes out of existence, and the money supply shrinks. This makes it more difficult for someone else who has a loan to pay it back. They simply can't use their valuable assets and give them to the bank, their assets must be given a dollar value.
Incorrect, the money you've repaid is still in the system but the value of the security that was generated when you took out the loan has disappeared.
This comes back to the whole money = debt idea. If there is no debt, there is no money. You have a positive adding to a negative to give zero. From the wikipedia article: http://en.wikipedia.org/wiki/Money_creation "Similarly, money destruction, i.e., the reverse of money creation, can occur in two different ways, depending on how the money was created. The destruction of physically created money occurs when coins are scrapped to recover their precious metal content, or when the issuer redeems the securities. The destruction of money created through loans occurs as the loans are paid back."
But if there isn't any money in the economy, all of a sudden people aren't willing to pay for your service. It is "worth" less. The bank will only give you a small amount for it.
A good example is mortgages. They are "stinky" and "bad". Nevermind the fact that they are american homes, real, american property. There isn't any money out there, and the banks will only use your valuable assets for a few cents on the dollar. Thats deflation...
I'm talking about the economy as a whole, so long as people are generating desirable goods and services the money will always circulate as value is created and purchased, and the profits that the bank make are probably themselves put into an account which can be loaned.
No, unless people continually take out loans and acquire debt, there can be no money. When the loans are paid back, through repayment or default, the money "vanishes into thin air". In the great depression, no one had any money. All the money disappeared. Do you think there wasn't plenty of value around? The roaring 20's meant there was plenty businesses, factories, cars, all kinds of stuff. How did everything disappear? http://en.wikipedia.org/wiki/Great_Depression#Debt
On October 06 2008 06:43 mahnini wrote: Look at interest as a static profit and see how little sense this makes.
Lets say it is the bank's profit. Interest can be used for operating costs/profit/making more loans.
However, the same problem still exists. The banks collect interest on the money supply, and to pay it even more money must be borrowed. Thats how the M1/M2/M3 can be so insanely high.
What happens in a system like this is that eventually everyone is in debt to the banks. Sure, its used as their "static" (ever increasing) profit, but what that means is that eventually, in this closed system, banks will eventually end up owning everything. Its not that they're greedy (which they are), its simply the end result.
This is why Thomas Jefferson said this: "I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."
The founding fathers understood this simple concept. The rebellion against Britain was in large part about gaining freedom from their banks. That is why Andrew Jackson fought so hard against the Central Bank, and destroyed it.
Its this simple process of collecting interest on the money supply, which creates debt that can never be paid off (that causes the cycle which is inflation). The banks gain ever more collateral for that debt, until people can't repay (thats the deflation).
The current economic crisis is largely about people not being able to absorb new debt. When people can't absorb new debt, money creation stops, the interest cannot be repaid, and thats how it happens. Americans are maxed out on their credit cards, loans, mortgages, etc. No one can take anymore...we are reaching our maximum borrowing potential.
edit: another way to see why banks will end up owning everything is that when you take out a loan, you must put up collateral. The bank doesn't have to put up anything, only give you money which is actually based on someone else's deposits. So this is a disequilibrium, you give the bank real value, and they write something on their balance sheets.
While they may only be collecting interest as you say (which always increases in the overall system), when you default (inevitable deflation happens), the bank takes ownership of your property. Thats when they really own everything, the interest profit isn't the main focus.
This is simply untrue. We do not need to borrow more money to pay off interest. We can generate value through assets/services and sell them (just like the bank is doing).
But you have to pay off your debt in their money, greenbacks. They hold the monopoly on greenbacks.
I understand that you pay off debt with money, I don't understand your point.
You have to pay loans off in greenbacks. The only way greenbacks come about is when someone puts up collateral, and takes out a loan. So for the loans to be payed off, the banks require a constant source of real value, the assets you are talking about, to be put up as collateral.
Individually, its very easy for you, mahnini, to pay off your loan. However, when you do that (see the wiki article), that money you've repaid goes out of existence, and the money supply shrinks. This makes it more difficult for someone else who has a loan to pay it back. They simply can't use their valuable assets and give them to the bank, their assets must be given a dollar value.
Incorrect, the money you've repaid is still in the system but the value of the security that was generated when you took out the loan has disappeared.
This comes back to the whole money = debt idea. If there is no debt, there is no money. You have a positive adding to a negative to give zero. From the wikipedia article: http://en.wikipedia.org/wiki/Money_creation "Similarly, money destruction, i.e., the reverse of money creation, can occur in two different ways, depending on how the money was created. The destruction of physically created money occurs when coins are scrapped to recover their precious metal content, or when the issuer redeems the securities. The destruction of money created through loans occurs as the loans are paid back."
But if there isn't any money in the economy, all of a sudden people aren't willing to pay for your service. It is "worth" less. The bank will only give you a small amount for it.
A good example is mortgages. They are "stinky" and "bad". Nevermind the fact that they are american homes, real, american property. There isn't any money out there, and the banks will only use your valuable assets for a few cents on the dollar. Thats deflation...
I'm talking about the economy as a whole, so long as people are generating desirable goods and services the money will always circulate as value is created and purchased, and the profits that the bank make are probably themselves put into an account which can be loaned.
No, unless people continually take out loans and acquire debt, there can be no money. When the loans are paid back, through repayment of default, the money "vanishes into thin air". In the great depression, no one had any money. All the money disappeared. Do you think there wasn't plenty of value around? The roaring 20's meant there was plenty businesses, factories, cars, all kinds of stuff. How did everything disappear? http://en.wikipedia.org/wiki/Great_Depression#Debt
This is incorrect, you seem to think money in and of itself holds value. While the amount of money in the system affects the perceived value of it, in the end money is just a medium of exchange. So when banks default on assets money does not disappear, banks take value for value and ends up eliminating the security. The money is still there, the person still spent the money and it is still in the system. This is what I meant by generating value through assets, the person is now presumably debt free and there is money in the system that is not based on debt. Money can always be put into circulation as assets or services are bought.
On October 06 2008 06:43 mahnini wrote: Look at interest as a static profit and see how little sense this makes.
Lets say it is the bank's profit. Interest can be used for operating costs/profit/making more loans.
However, the same problem still exists. The banks collect interest on the money supply, and to pay it even more money must be borrowed. Thats how the M1/M2/M3 can be so insanely high.
What happens in a system like this is that eventually everyone is in debt to the banks. Sure, its used as their "static" (ever increasing) profit, but what that means is that eventually, in this closed system, banks will eventually end up owning everything. Its not that they're greedy (which they are), its simply the end result.
This is why Thomas Jefferson said this: "I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."
The founding fathers understood this simple concept. The rebellion against Britain was in large part about gaining freedom from their banks. That is why Andrew Jackson fought so hard against the Central Bank, and destroyed it.
Its this simple process of collecting interest on the money supply, which creates debt that can never be paid off (that causes the cycle which is inflation). The banks gain ever more collateral for that debt, until people can't repay (thats the deflation).
The current economic crisis is largely about people not being able to absorb new debt. When people can't absorb new debt, money creation stops, the interest cannot be repaid, and thats how it happens. Americans are maxed out on their credit cards, loans, mortgages, etc. No one can take anymore...we are reaching our maximum borrowing potential.
edit: another way to see why banks will end up owning everything is that when you take out a loan, you must put up collateral. The bank doesn't have to put up anything, only give you money which is actually based on someone else's deposits. So this is a disequilibrium, you give the bank real value, and they write something on their balance sheets.
While they may only be collecting interest as you say (which always increases in the overall system), when you default (inevitable deflation happens), the bank takes ownership of your property. Thats when they really own everything, the interest profit isn't the main focus.
This is simply untrue. We do not need to borrow more money to pay off interest. We can generate value through assets/services and sell them (just like the bank is doing).
But you have to pay off your debt in their money, greenbacks. They hold the monopoly on greenbacks.
I understand that you pay off debt with money, I don't understand your point.
You have to pay loans off in greenbacks. The only way greenbacks come about is when someone puts up collateral, and takes out a loan. So for the loans to be payed off, the banks require a constant source of real value, the assets you are talking about, to be put up as collateral.
Individually, its very easy for you, mahnini, to pay off your loan. However, when you do that (see the wiki article), that money you've repaid goes out of existence, and the money supply shrinks. This makes it more difficult for someone else who has a loan to pay it back. They simply can't use their valuable assets and give them to the bank, their assets must be given a dollar value.
Incorrect, the money you've repaid is still in the system but the value of the security that was generated when you took out the loan has disappeared.
This comes back to the whole money = debt idea. If there is no debt, there is no money. You have a positive adding to a negative to give zero. From the wikipedia article: http://en.wikipedia.org/wiki/Money_creation "Similarly, money destruction, i.e., the reverse of money creation, can occur in two different ways, depending on how the money was created. The destruction of physically created money occurs when coins are scrapped to recover their precious metal content, or when the issuer redeems the securities. The destruction of money created through loans occurs as the loans are paid back."
But if there isn't any money in the economy, all of a sudden people aren't willing to pay for your service. It is "worth" less. The bank will only give you a small amount for it.
A good example is mortgages. They are "stinky" and "bad". Nevermind the fact that they are american homes, real, american property. There isn't any money out there, and the banks will only use your valuable assets for a few cents on the dollar. Thats deflation...
I'm talking about the economy as a whole, so long as people are generating desirable goods and services the money will always circulate as value is created and purchased, and the profits that the bank make are probably themselves put into an account which can be loaned.
No, unless people continually take out loans and acquire debt, there can be no money. When the loans are paid back, through repayment of default, the money "vanishes into thin air". In the great depression, no one had any money. All the money disappeared. Do you think there wasn't plenty of value around? The roaring 20's meant there was plenty businesses, factories, cars, all kinds of stuff. How did everything disappear? http://en.wikipedia.org/wiki/Great_Depression#Debt
This is incorrect, you seem to think money in and of itself holds value. While the amount of money in the system affects the perceived value of it, in the end money is just a medium of exchange. So when banks default on assets money does not disappear, banks take value for value and ends up eliminating the security. The money is still there, the person still spent the money and it is still in the system. This is what I meant by generating value through assets, the person is now presumably debt free and there is money in the system that is not based on debt. Money can always be put into circulation as assets or services are bought.
Yes, the bank holds the value. Then they liquidate it, extracting their money from the system. Once that money is extracted, they add it to their balance sheet to cover the debt, and it disappears.
On October 06 2008 06:43 mahnini wrote: Look at interest as a static profit and see how little sense this makes.
Lets say it is the bank's profit. Interest can be used for operating costs/profit/making more loans.
However, the same problem still exists. The banks collect interest on the money supply, and to pay it even more money must be borrowed. Thats how the M1/M2/M3 can be so insanely high.
What happens in a system like this is that eventually everyone is in debt to the banks. Sure, its used as their "static" (ever increasing) profit, but what that means is that eventually, in this closed system, banks will eventually end up owning everything. Its not that they're greedy (which they are), its simply the end result.
This is why Thomas Jefferson said this: "I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."
The founding fathers understood this simple concept. The rebellion against Britain was in large part about gaining freedom from their banks. That is why Andrew Jackson fought so hard against the Central Bank, and destroyed it.
Its this simple process of collecting interest on the money supply, which creates debt that can never be paid off (that causes the cycle which is inflation). The banks gain ever more collateral for that debt, until people can't repay (thats the deflation).
The current economic crisis is largely about people not being able to absorb new debt. When people can't absorb new debt, money creation stops, the interest cannot be repaid, and thats how it happens. Americans are maxed out on their credit cards, loans, mortgages, etc. No one can take anymore...we are reaching our maximum borrowing potential.
edit: another way to see why banks will end up owning everything is that when you take out a loan, you must put up collateral. The bank doesn't have to put up anything, only give you money which is actually based on someone else's deposits. So this is a disequilibrium, you give the bank real value, and they write something on their balance sheets.
While they may only be collecting interest as you say (which always increases in the overall system), when you default (inevitable deflation happens), the bank takes ownership of your property. Thats when they really own everything, the interest profit isn't the main focus.
This is simply untrue. We do not need to borrow more money to pay off interest. We can generate value through assets/services and sell them (just like the bank is doing).
But you have to pay off your debt in their money, greenbacks. They hold the monopoly on greenbacks.
I understand that you pay off debt with money, I don't understand your point.
You have to pay loans off in greenbacks. The only way greenbacks come about is when someone puts up collateral, and takes out a loan. So for the loans to be payed off, the banks require a constant source of real value, the assets you are talking about, to be put up as collateral.
Individually, its very easy for you, mahnini, to pay off your loan. However, when you do that (see the wiki article), that money you've repaid goes out of existence, and the money supply shrinks. This makes it more difficult for someone else who has a loan to pay it back. They simply can't use their valuable assets and give them to the bank, their assets must be given a dollar value.
Incorrect, the money you've repaid is still in the system but the value of the security that was generated when you took out the loan has disappeared.
This comes back to the whole money = debt idea. If there is no debt, there is no money. You have a positive adding to a negative to give zero. From the wikipedia article: http://en.wikipedia.org/wiki/Money_creation "Similarly, money destruction, i.e., the reverse of money creation, can occur in two different ways, depending on how the money was created. The destruction of physically created money occurs when coins are scrapped to recover their precious metal content, or when the issuer redeems the securities. The destruction of money created through loans occurs as the loans are paid back."
But if there isn't any money in the economy, all of a sudden people aren't willing to pay for your service. It is "worth" less. The bank will only give you a small amount for it.
A good example is mortgages. They are "stinky" and "bad". Nevermind the fact that they are american homes, real, american property. There isn't any money out there, and the banks will only use your valuable assets for a few cents on the dollar. Thats deflation...
I'm talking about the economy as a whole, so long as people are generating desirable goods and services the money will always circulate as value is created and purchased, and the profits that the bank make are probably themselves put into an account which can be loaned.
No, unless people continually take out loans and acquire debt, there can be no money. When the loans are paid back, through repayment of default, the money "vanishes into thin air". In the great depression, no one had any money. All the money disappeared. Do you think there wasn't plenty of value around? The roaring 20's meant there was plenty businesses, factories, cars, all kinds of stuff. How did everything disappear? http://en.wikipedia.org/wiki/Great_Depression#Debt
This is incorrect, you seem to think money in and of itself holds value. While the amount of money in the system affects the perceived value of it, in the end money is just a medium of exchange. So when banks default on assets money does not disappear, banks take value for value and ends up eliminating the security. The money is still there, the person still spent the money and it is still in the system. This is what I meant by generating value through assets, the person is now presumably debt free and there is money in the system that is not based on debt. Money can always be put into circulation as assets or services are bought.
Yes, the bank holds the value. Then they liquidate it, extracting their money from the system. Once that money is extracted, they add it to their balance sheet to cover the debt, and it disappears.
The money does not disappear. If the money from liquidation covers the loan the bank may net $0 but the money is still there sitting in someone's account debt free.
On October 06 2008 07:09 fight_or_flight wrote: [quote] Lets say it is the bank's profit. Interest can be used for operating costs/profit/making more loans.
However, the same problem still exists. The banks collect interest on the money supply, and to pay it even more money must be borrowed. Thats how the M1/M2/M3 can be so insanely high.
What happens in a system like this is that eventually everyone is in debt to the banks. Sure, its used as their "static" (ever increasing) profit, but what that means is that eventually, in this closed system, banks will eventually end up owning everything. Its not that they're greedy (which they are), its simply the end result.
This is why Thomas Jefferson said this: "I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."
The founding fathers understood this simple concept. The rebellion against Britain was in large part about gaining freedom from their banks. That is why Andrew Jackson fought so hard against the Central Bank, and destroyed it.
Its this simple process of collecting interest on the money supply, which creates debt that can never be paid off (that causes the cycle which is inflation). The banks gain ever more collateral for that debt, until people can't repay (thats the deflation).
The current economic crisis is largely about people not being able to absorb new debt. When people can't absorb new debt, money creation stops, the interest cannot be repaid, and thats how it happens. Americans are maxed out on their credit cards, loans, mortgages, etc. No one can take anymore...we are reaching our maximum borrowing potential.
edit: another way to see why banks will end up owning everything is that when you take out a loan, you must put up collateral. The bank doesn't have to put up anything, only give you money which is actually based on someone else's deposits. So this is a disequilibrium, you give the bank real value, and they write something on their balance sheets.
While they may only be collecting interest as you say (which always increases in the overall system), when you default (inevitable deflation happens), the bank takes ownership of your property. Thats when they really own everything, the interest profit isn't the main focus.
This is simply untrue. We do not need to borrow more money to pay off interest. We can generate value through assets/services and sell them (just like the bank is doing).
But you have to pay off your debt in their money, greenbacks. They hold the monopoly on greenbacks.
I understand that you pay off debt with money, I don't understand your point.
You have to pay loans off in greenbacks. The only way greenbacks come about is when someone puts up collateral, and takes out a loan. So for the loans to be payed off, the banks require a constant source of real value, the assets you are talking about, to be put up as collateral.
Individually, its very easy for you, mahnini, to pay off your loan. However, when you do that (see the wiki article), that money you've repaid goes out of existence, and the money supply shrinks. This makes it more difficult for someone else who has a loan to pay it back. They simply can't use their valuable assets and give them to the bank, their assets must be given a dollar value.
Incorrect, the money you've repaid is still in the system but the value of the security that was generated when you took out the loan has disappeared.
This comes back to the whole money = debt idea. If there is no debt, there is no money. You have a positive adding to a negative to give zero. From the wikipedia article: http://en.wikipedia.org/wiki/Money_creation "Similarly, money destruction, i.e., the reverse of money creation, can occur in two different ways, depending on how the money was created. The destruction of physically created money occurs when coins are scrapped to recover their precious metal content, or when the issuer redeems the securities. The destruction of money created through loans occurs as the loans are paid back."
But if there isn't any money in the economy, all of a sudden people aren't willing to pay for your service. It is "worth" less. The bank will only give you a small amount for it.
A good example is mortgages. They are "stinky" and "bad". Nevermind the fact that they are american homes, real, american property. There isn't any money out there, and the banks will only use your valuable assets for a few cents on the dollar. Thats deflation...
I'm talking about the economy as a whole, so long as people are generating desirable goods and services the money will always circulate as value is created and purchased, and the profits that the bank make are probably themselves put into an account which can be loaned.
No, unless people continually take out loans and acquire debt, there can be no money. When the loans are paid back, through repayment of default, the money "vanishes into thin air". In the great depression, no one had any money. All the money disappeared. Do you think there wasn't plenty of value around? The roaring 20's meant there was plenty businesses, factories, cars, all kinds of stuff. How did everything disappear? http://en.wikipedia.org/wiki/Great_Depression#Debt
This is incorrect, you seem to think money in and of itself holds value. While the amount of money in the system affects the perceived value of it, in the end money is just a medium of exchange. So when banks default on assets money does not disappear, banks take value for value and ends up eliminating the security. The money is still there, the person still spent the money and it is still in the system. This is what I meant by generating value through assets, the person is now presumably debt free and there is money in the system that is not based on debt. Money can always be put into circulation as assets or services are bought.
Yes, the bank holds the value. Then they liquidate it, extracting their money from the system. Once that money is extracted, they add it to their balance sheet to cover the debt, and it disappears.
The money does not disappear. If the money from liquidation covers the loan the bank may net $0 but the money is still there sitting in someone's account debt free.
dude....I gave a quote from wikipedia that says money is destroyed when loans are repaid....I don't know what else I can say.
The money appeared from a bank's double-accounting trick, and when that money is repaid, it disappears in the same way.
On October 06 2008 07:47 mahnini wrote: [quote] This is simply untrue. We do not need to borrow more money to pay off interest. We can generate value through assets/services and sell them (just like the bank is doing).
But you have to pay off your debt in their money, greenbacks. They hold the monopoly on greenbacks.
I understand that you pay off debt with money, I don't understand your point.
You have to pay loans off in greenbacks. The only way greenbacks come about is when someone puts up collateral, and takes out a loan. So for the loans to be payed off, the banks require a constant source of real value, the assets you are talking about, to be put up as collateral.
Individually, its very easy for you, mahnini, to pay off your loan. However, when you do that (see the wiki article), that money you've repaid goes out of existence, and the money supply shrinks. This makes it more difficult for someone else who has a loan to pay it back. They simply can't use their valuable assets and give them to the bank, their assets must be given a dollar value.
Incorrect, the money you've repaid is still in the system but the value of the security that was generated when you took out the loan has disappeared.
This comes back to the whole money = debt idea. If there is no debt, there is no money. You have a positive adding to a negative to give zero. From the wikipedia article: http://en.wikipedia.org/wiki/Money_creation "Similarly, money destruction, i.e., the reverse of money creation, can occur in two different ways, depending on how the money was created. The destruction of physically created money occurs when coins are scrapped to recover their precious metal content, or when the issuer redeems the securities. The destruction of money created through loans occurs as the loans are paid back."
But if there isn't any money in the economy, all of a sudden people aren't willing to pay for your service. It is "worth" less. The bank will only give you a small amount for it.
A good example is mortgages. They are "stinky" and "bad". Nevermind the fact that they are american homes, real, american property. There isn't any money out there, and the banks will only use your valuable assets for a few cents on the dollar. Thats deflation...
I'm talking about the economy as a whole, so long as people are generating desirable goods and services the money will always circulate as value is created and purchased, and the profits that the bank make are probably themselves put into an account which can be loaned.
No, unless people continually take out loans and acquire debt, there can be no money. When the loans are paid back, through repayment of default, the money "vanishes into thin air". In the great depression, no one had any money. All the money disappeared. Do you think there wasn't plenty of value around? The roaring 20's meant there was plenty businesses, factories, cars, all kinds of stuff. How did everything disappear? http://en.wikipedia.org/wiki/Great_Depression#Debt
This is incorrect, you seem to think money in and of itself holds value. While the amount of money in the system affects the perceived value of it, in the end money is just a medium of exchange. So when banks default on assets money does not disappear, banks take value for value and ends up eliminating the security. The money is still there, the person still spent the money and it is still in the system. This is what I meant by generating value through assets, the person is now presumably debt free and there is money in the system that is not based on debt. Money can always be put into circulation as assets or services are bought.
Yes, the bank holds the value. Then they liquidate it, extracting their money from the system. Once that money is extracted, they add it to their balance sheet to cover the debt, and it disappears.
The money does not disappear. If the money from liquidation covers the loan the bank may net $0 but the money is still there sitting in someone's account debt free.
dude....I gave a quote from wikipedia that says money is destroyed when loans are repaid....I don't know what else I can say.
The money appeared from a bank's double-accounting trick, and when that money is repaid, it disappears in the same way.
The money generated from the security as a result of the loan disappears. The principle money used for the loan still exists.
On October 06 2008 07:36 babypo0 wrote: the latter part of this is accurate. the beginning part about religion is poorly researched.
but it's funny how anything christian is banned and closed and flamed while anything anti christian gets revived from the dead.
it can be anything religious, so long as it's not christian. that's how to get threads survived on TL. you'd think that a protestant nation would be more inclined to at least letting the basics get word out. for being the largest protestant nation in the world, it's funny how this bias resonates in the nation, even outside of TL.
On October 06 2008 07:51 fight_or_flight wrote: [quote] But you have to pay off your debt in their money, greenbacks. They hold the monopoly on greenbacks.
I understand that you pay off debt with money, I don't understand your point.
You have to pay loans off in greenbacks. The only way greenbacks come about is when someone puts up collateral, and takes out a loan. So for the loans to be payed off, the banks require a constant source of real value, the assets you are talking about, to be put up as collateral.
Individually, its very easy for you, mahnini, to pay off your loan. However, when you do that (see the wiki article), that money you've repaid goes out of existence, and the money supply shrinks. This makes it more difficult for someone else who has a loan to pay it back. They simply can't use their valuable assets and give them to the bank, their assets must be given a dollar value.
Incorrect, the money you've repaid is still in the system but the value of the security that was generated when you took out the loan has disappeared.
This comes back to the whole money = debt idea. If there is no debt, there is no money. You have a positive adding to a negative to give zero. From the wikipedia article: http://en.wikipedia.org/wiki/Money_creation "Similarly, money destruction, i.e., the reverse of money creation, can occur in two different ways, depending on how the money was created. The destruction of physically created money occurs when coins are scrapped to recover their precious metal content, or when the issuer redeems the securities. The destruction of money created through loans occurs as the loans are paid back."
But if there isn't any money in the economy, all of a sudden people aren't willing to pay for your service. It is "worth" less. The bank will only give you a small amount for it.
A good example is mortgages. They are "stinky" and "bad". Nevermind the fact that they are american homes, real, american property. There isn't any money out there, and the banks will only use your valuable assets for a few cents on the dollar. Thats deflation...
I'm talking about the economy as a whole, so long as people are generating desirable goods and services the money will always circulate as value is created and purchased, and the profits that the bank make are probably themselves put into an account which can be loaned.
No, unless people continually take out loans and acquire debt, there can be no money. When the loans are paid back, through repayment of default, the money "vanishes into thin air". In the great depression, no one had any money. All the money disappeared. Do you think there wasn't plenty of value around? The roaring 20's meant there was plenty businesses, factories, cars, all kinds of stuff. How did everything disappear? http://en.wikipedia.org/wiki/Great_Depression#Debt
This is incorrect, you seem to think money in and of itself holds value. While the amount of money in the system affects the perceived value of it, in the end money is just a medium of exchange. So when banks default on assets money does not disappear, banks take value for value and ends up eliminating the security. The money is still there, the person still spent the money and it is still in the system. This is what I meant by generating value through assets, the person is now presumably debt free and there is money in the system that is not based on debt. Money can always be put into circulation as assets or services are bought.
Yes, the bank holds the value. Then they liquidate it, extracting their money from the system. Once that money is extracted, they add it to their balance sheet to cover the debt, and it disappears.
The money does not disappear. If the money from liquidation covers the loan the bank may net $0 but the money is still there sitting in someone's account debt free.
dude....I gave a quote from wikipedia that says money is destroyed when loans are repaid....I don't know what else I can say.
The money appeared from a bank's double-accounting trick, and when that money is repaid, it disappears in the same way.
The money generated from the security as a result of the loan disappears. The principle money used for the loan still exists.
There are two cases a loan is repaid: 1) someone pays it off 2) they default assets are liquidated
In case (1) the person may have thrown a whole ton of money out there into the system. But, to pay it off, they've retrieved every single dime that the put out there plus more. So there is no net money in the system, in fact there is a little less than if it never happened due to the interest.
In case (2), the bank sells the collateral, and every single dime that the guy spent out there in the system with his loan has presumably been retrieved from the system.
There is no net money into the system when a loan is made.
Where is the principle? Its not in the system. The bank doesn't have it, they simply have a zero balance again. It doesn't exist.
mahnini are you a econ major? even if you are an undergrad econ major this topic is quite confusing/controversial for you to act like such a smartass dickhead. you have the most idiotic examples. eating food and bugs?
On October 06 2008 09:49 yoinkity wrote: mahnini are you a econ major? even if you are an undergrad econ major this topic is quite confusing/controversial for you to act like such a smartass dickhead. you have the most idiotic examples. eating food and bugs?
Most educated people don't understand this, not even most people that work in banks....so I can't hold it against him too much.
Here is one of the parts of that Money as Debt video from the OP that helps explain this.
I really think it's dumb to seriously question economic systems in place without actually studying economics sufficiently. I think more often than not it's actually Not as simple as that high budget youtube video tells you it is, that when you come up with a problem, a question of "how can our economic system function this way?" the answer isn't necessarily "that's just the thing, it can't!"
But i'm just gonna say for sake of pondering, that what seems to me to be a problem is that all the loans being given out would temporarilly increase the amount of money in circulation before they can be payed back and made to disappear again, and during that time there would be inflation. But it wouldn't really be temporary because more loans are probably taken out before other ones can be payed back, so the extra money added to circulation is basically sustained. The perhaps incrimentally increased money supply would cause inflation, which would cause people to have to take out greater loans for the same value, and then there would be more money added to circulation.
But i can't seem to figure out why inflation is a bad thing, since each dollar is worth less but there are more dollars to counterbalance this. I haven't really thought this through but i've been theorycrafting economics for a while already and i think i'm gonna stop now.
On October 06 2008 09:49 yoinkity wrote: mahnini are you a econ major? even if you are an undergrad econ major this topic is quite confusing/controversial for you to act like such a smartass dickhead. you have the most idiotic examples. eating food and bugs?
nope, not an economics major, but go ahead and argue my points, i'll be glad to debate with you or concede the point if i feel i'm wrong.
I cannot watch the movie now, but I wonder how does manhini address the problem of inflation.
Banks/FED create inflation by creating more and more money. I wonder if FED (as other central banks) sets an inflation target - while at the same time, is the source creating inflation.
I actually have no idea what is the level of inflation in the US at the moment - I've read that somewhere (unfortunately I dont remember the source : /) that if the inflation in the US now was counted using the method used in the 1980's, it would be around 14%, not 4%.
On October 06 2008 09:49 yoinkity wrote: mahnini are you a econ major? even if you are an undergrad econ major this topic is quite confusing/controversial for you to act like such a smartass dickhead. you have the most idiotic examples. eating food and bugs?
nope, not an economics major, but go ahead and argue my points, i'll be glad to debate with you or concede the point if i feel i'm wrong.
i rest my case. lol please don't say your a high school student. arguing with you will take an enormous amount of technical economic terms. there would be no point unless you are atleast an undergrad that have a good foundation in economics. this video was for the layman, but the core of the problem is of course much more complicated. it is beyond the realm of even many graduate students. this is an interesting video for anybody, regardless of age or level of education. but the degree to which you act like a smartass and bash everyone is quite repulsive.
On October 06 2008 09:49 yoinkity wrote: mahnini are you a econ major? even if you are an undergrad econ major this topic is quite confusing/controversial for you to act like such a smartass dickhead. you have the most idiotic examples. eating food and bugs?
nope, not an economics major, but go ahead and argue my points, i'll be glad to debate with you or concede the point if i feel i'm wrong.
i rest my case. lol please don't say your a high school student. arguing with you will take an enormous amount of technical economic terms. there would be no point unless you are atleast an undergrad that have a good foundation in economics. this video was for the layman, but the core of the problem is of course much more complicated. it is beyond the realm of even many graduate students. this is an interesting video for anybody, regardless of age or level of education. but the degree to which you act like a smartass and bash everyone is quite repulsive.
What the fuck.
What makes your baby-brand-new 38 post ass REMOTELY qualified to make a post like this when you haven't made a SINGLE substantial post in this entire thread? On what grounds do you claim that it is beyond the realm of graduate students, unless by graduate students you mean your utter lack of comprehension of anything that has been posted in this thread. Cease posting like a juvenile i-know-more-than-everybody-so-i'm-not-even-gonna-post-psuedo-intellectual or your scrotum will be forcibly peeled off of your testicles.
p.s. i like mahnini's style. he makes liberal anger fashionable. mahnini FIGHTING
On October 06 2008 10:17 closed wrote: I cannot watch the movie now, but I wonder how does manhini address the problem of inflation.
Banks/FED create inflation by creating more and more money. I wonder if FED (as other central banks) sets an inflation target - while at the same time, is the source creating inflation.
I actually have no idea what is the level of inflation in the US at the moment - I've read that somewhere (unfortunately I dont remember the source : /) that if the inflation in the US now was counted using the method used in the 1980's, it would be around 14%, not 4%.
inflation is typically handled by raising interest rates of money so less money is loaned out. the fed can also contract the money supply by selling us bonds effectively taking money out of circulation.
On October 06 2008 09:49 yoinkity wrote: mahnini are you a econ major? even if you are an undergrad econ major this topic is quite confusing/controversial for you to act like such a smartass dickhead. you have the most idiotic examples. eating food and bugs?
nope, not an economics major, but go ahead and argue my points, i'll be glad to debate with you or concede the point if i feel i'm wrong.
i rest my case. lol please don't say your a high school student. arguing with you will take an enormous amount of technical economic terms. there would be no point unless you are atleast an undergrad that have a good foundation in economics. this video was for the layman, but the core of the problem is of course much more complicated. it is beyond the realm of even many graduate students. this is an interesting video for anybody, regardless of age or level of education. but the degree to which you act like a smartass and bash everyone is quite repulsive.
i've made some pretty decent points that hold more than enough merit, take for example my first post. i think it's the best i've made in this thread.
EPT
