FORUMS > The Sin Bin > Money For Nothing |
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973_1515165968.gif Last edited by Ferocious Aardvark on stardate Jun 26, 3013 11:27 am, edited 48,562,867,458,300,023 times in total:d7dc4b20b2c2dd7b76ac6eac29d5604e_973.gif |
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| I thought I'd already explained in very basic terms that the talk of banks "creating money out of nothing" is just not true.
I'll have another go.
I have just set up Bank of FA (quite a fitting moniker, I thought)
You are my first customer
You want to borrow £10K from my bank, so I lend you it. All this means is your loan account is credited with 10K. BUT, and this is the point that most people miss, no money has been "created" - because whereas previously you had no money, now you have got MINUS 10K. You owe it to my bank! the two cancel out. No money has been created.
In due course you repay your loan. You, your bank, and the total sum of money are now squits, nothing created, nothing lost, except that the bank has made you pay a fee (interest and bank charges) for the privilege, so to that extent, they are in front, but that is money for services rendered, paid out of your income, again it is not money that has been "created".
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995.gif "If the American people knew tonight, exactly how the monetary and banking system worked, there would be a revolution before tomorrow morning."
-Abraham Lincoln:995.gif |
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| Quote: Charlie Sheen "Do the bank get chicks for free though?'"
Yes.
They get to buy their services with their big, tax payer funded, bonus payouts. So they do indeed get the chicks for free because you are paying for them instead.
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995.gif "If the American people knew tonight, exactly how the monetary and banking system worked, there would be a revolution before tomorrow morning."
-Abraham Lincoln:995.gif |
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| Quote: Cookridge_Rhino "I agree with your explanation of fractional reserve banking but the OP doesnt, he (because he has misunderstood things he has read and heard) thinks that they need no money at all in their reserves in order to lend money, he thinks they literally lend as much money as they want because it all compeletely comes from nowhere.'"
Forget the fractional reserve system, thats from yesteryear.
Banks now just create money from nothing, then go into the interbank lending markets and loan the money needed to cover their reserve ratios. That's how Northern Rock was sunk, nobody would lend them the money.
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143_1357419061.jpg :d7dc4b20b2c2dd7b76ac6eac29d5604e_143.jpg |
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| Quote: LeighGionaire "Forget the fractional reserve system, thats from yesteryear.
Banks now just create money from nothing, then go into the interbank lending markets and loan the money needed to cover their reserve ratios. That's how Northern Rock was sunk, nobody would lend them the money.'"
They were borrowing money on the markets. That's just the same as me borrowing a fiver from you.
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Rank | Posts | Team |
International Board Member | 1437 | No Team Selected |
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Feb 2002 | 22 years | |
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Apr 2017 | Mar 2017 | LINK |
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995.gif "If the American people knew tonight, exactly how the monetary and banking system worked, there would be a revolution before tomorrow morning."
-Abraham Lincoln:995.gif |
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| Quote: tb "Haven't we done the 'let's return to the 14th Century and pretend the Lombards never existed" to death now? Can we move on from "money for nothing" and discuss the more intriguing topic of chicks for free?'"
In my opinion understanding how money is created and destroyed is the number one political question.
Why do we let private banks control the money supply? Why do governments continue to borrow debt based money from private banks when they could create the money themselves?
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Rank | Posts | Team |
International Board Member | 1437 | No Team Selected |
Joined | Service | Reputation |
Feb 2002 | 22 years | |
Online | Last Post | Last Page |
Apr 2017 | Mar 2017 | LINK |
Milestone Posts |
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Milestone Years |
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Location |
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Signature |
995.gif "If the American people knew tonight, exactly how the monetary and banking system worked, there would be a revolution before tomorrow morning."
-Abraham Lincoln:995.gif |
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