abolish the Federal Reserve?

[BJL]

what kind of question is that?

obviously it does, but that doesn't mean banks create money out of thin air.

fractional reserves only relates to equity, not to money.

once again... look at a bank balance sheet and see what happens when they increase lending.

 

[nevadan]

When a consumer gets a loan from a bank for a new dwelling and the loan is based on the banks ability to issue credit as a function of some multiple of actual cash on hand, all the players involved in the development to the new property (carpenters, plumbers, lumber yards, etc.) get paid in real dollars credited to their own bank accounts. These dollars do not come from the savings of depositors that will eventually be repaid with interest, they are dollars that come from the creation of new debt. In other words they did not exist before the creation of the new loan. Sure, the bank has a tidy balance sheet showing assets and liabilities that all fit together neatly but as the originator of the new loan money they are in a position to generate profits from interest payments on money that they created...out of thin air. Meanwhile all the dollars paid out for the construction of the house inflate the money supply pushing prices higher.

Just as an aside, with all the billions out there that suddenly find their way onto bank balance sheets as losses these days I'd say the balance sheet is a little suspect as a good indicator.

 

[daddyeaux]

go here and move the slide bar to 1:11:00 elapsed time

http://zeitgeistmovie.com/

I haven't seen the first 2 parts of this..religion and 911 I believe... conspiracy theorist's red meat

depending on your views, right or left, Part III of the movie is fairly well done..

 

[Retired]

Someone should launch a Congressional investigation into Greenspan's loose monetary policy at the Fed.

He bears much responsibility for screwing up this country big time.

 

[BJL]

Quote from nevadan:

These dollars do not come from the savings of depositors that will eventually be repaid with interest, they are dollars that come from the creation of new debt.

That's only because bank liabilities are counted as money. All loans must be funded, so although they do create money (same as a carpenter can create new chairs) they can't create them out of thin air (just as the carpenter needs woods and nails).

As an aside, why do you think european banks drew $500bln from the ECB if they can create money out of thin air?

 

[nevadan]

So where do the funds come from? Money trees growing next to the trees the carpenter uses?

 

[BJL]

you and me (and some other ).

just like the carpenters buys wood, make a chair and sells that a profit.

a bank buys money (or rather borrows it), makes a loan and sells money (lending) at a profit.

 

[eusdaiki]

Quote from jerry11901:

http://www.youtube.com/watch?v=_dmPchuXIXQ

It's astonishing how the objectives described in this movie and the steps toward getting to those objectives have congruence with prophecies written over 2000 years ago.

Only Christ can provide freedom from the world.

 

[Avid_Consumer]

Quote from BJL:

same as a carpenter can create new chairs) they can't create them out of thin air (just as the carpenter needs woods and nails).

carpenters don't have the luxury of creating and selling 10 chairs from one chair's worth of wood

 

[BJL]

Quote from Avid_Consumer:

carpenters don't have the luxury of creating and selling 10 chairs from one chair's worth of wood

nor do banks. same as a carpenter can create 10 chairs with one hammer (and probably more), a bank can support a number of dollar of loans with one dollar of equity. they still need outside funds though to fund the loans (and have to pay for those funds).