Bitcoin Forum

Why Do We Tolerate The Banks Printing Money ? 

Another vid I made.

http://www.youtube.com/watch?v=TzcxCw6BovE

I didn't watch the video, but the answer is clear:

because they give some of it to us. 

We don't have a choice but to tolerate it. Except move on to something else, maybe some kind of crytographically driven digital system, with instant payments and free to use for everyone on Earth. Oh well, we can keep dreaming  ;)

Because we're born with money, and never question its existence as valid.  Nobody accepts the dollar because they agree that it is the best currency, they accept it because they know no other alternative, and nobody else around them accepts anything else.  We don't realize there is a monopoly on money, and acknowledge the negative effects a monopoly will put on anything; we never come to the conclusion that competing currencies would improve our overall standard of what to accept as tender and who to trust.  You cannot force trust, as governments attempt to do.

So we tolerate banks printing money because we tolerate fiat at all.  We tolerate one governance.  Some of us even tolerate one god.  It's funny what a capitalistic society will do, one who advocates competition, but never will when it threatens specific existences.

Same reason we tolerate publishers printing books.  Its their purpose - take that away and you may as well return to using gold as a currency.

OK. If you can think of another way - go ahead and do it.
Banks are printing legal tender money for so long that people simply cannot throw it all away.
They're addicted to those money.

Because some inflation is good for growth because it encourages the rich to invest their money in businesses- which create jobs. And how else would a national currency be managed?

I agree. Although you have to admit that they're overdoing it and inflation is really high.

The whole fractional system is really risky.

On the other hand the world wouldn't be the same without it. So thats the way it goes.

Fact of the matter is that the older the currency - the more reliable it is - gold and silver were first, then paper, then ni/cu, then bank cards, then online payment methods, and now - cryptocurrency.

"Some inflation" =/= printing millions upon millions daily.  You could first manage it by allowing competition.  Otherwise you're not managing it, you're simply shoving it down everyone's throats.

Correction: They LEND it to us through a scammy process

As far as I know I do not tolerate this

Not a bad idea. And then we could have institutions that hold our gold for us, and keep it safe, in return for a small percentage or the ability to loan some of it out to others, and we could call them Banks.

Before money is partly backed by gold, and gold is a product of scarcity and labour. But from 1971 fiat money is backed by debt, and this debt has grown into a huge bubble by now

It is amazing how such a scheme has been played for more than 40 years without majority of people notice it. I could only say that banks are very good at manipulate people's trust, and most of the people are just ignorant

Banks are backed up by insurance companies. Most of them are a product of people's fear. Which proves to be a better motivator than money.

it's tolerated because everyone who opposes it is assassinated.

Banks do not print money, central banks do. A central bank is not a bank but a money printer.

A bank offers valuable lending and borrowing services. They lend out 90% of what they borrow and keep 10% in reserve. No money (euro/dollars) is created out of thin air. But a lot of credit can be created, not out of thin air, but based on how much deposits they get. This credit is then also used to make payments (using bank accounts, you don't pay with money, you pay with credit that you have at the bank). So credit is used as currency in our society. But currency is not money.

If you understand this you also understand how it is possible that a lot of currency dissapears today, but at the same time the costs of living expenses goes up. This is because indeed a lot of currency is dissapearing, ie: credit, as banks see their balances shrink. But there is no money dissapearing at all (USD/EUR..). So people have less credit, less currency, but there is more money in circulation in society.

you're quoting what they are legally allowed to lend out but it was found that banks have been lending way more for eg. Goldman Sachs lent over 300 times their deposits.  oh and it is created out of thin air - there are no funds 'moved' into a borrowers account.

OK. We all watched Zeitgeist, alright? Stop quoting the same shit over and over again. I'm sick of it.

Hath there been any other way, people would have invented it. Plus - it's proven to be working for 100 years now.

And it is not all fake.

A lie is only a lie until the moment it starts providing results. When you buy a porsch and a house and a wife with a money you made on forex, not moving a finger, is it really a lie?

When a businessman develops a factory, buys equipment, hires personnel and produces a product is it a lie?

NO! Why? Because you can see it's physical dimensions. "Lie" is a fictional term.

This is a misunderstanding of how banking works. When people say a bank lends out 300 times their deposits, what they mean to say is that the leverage of that bank is 300. This means that the own capital the bank has, is 300 times less than the amount of depositis and loans it has outstanding. And indeed, this is extremely thin, means their own capital is only 0.3% of their loans outstanding. Regulations dictate that they should have a lot more own capital but indeed, regulations are just that, rules that can be avoided. And even the regulations, like basel norms, dictate they should only have somewhere around 5 to 10% own capital. That is still a levarage of 10 to 20 on their own capital.

A commercial bank cannot lend out what it does not have. Everything you borrow from a bank is real. You get indeed real fiat and the proof of that is that you can convert the loan into real fiat. This real fiat the bank has to give you and the bank is incapable of printing fiat out of thin air. So they must have gotten that fiat from someone else, ie: a depositor.

Fractional reserve banking is widely misunderstood I believe. And in doing so commercial banks are blamed for the crimes politicians and their central printers are doing: printing money out of thin air and stealing from everybody that holds fiat.

Fractional reserve lending means that they can't lend out all deposits that they get. So they still have 10% deposits available to pay out people that withdraw their deposit. The small fraud is that they say to everyone that they can withdraw their deposits at any time, but in reality they can only pay 10% of deposits at any time. So if a bank run occurs they suddenly have to liquidate long term loans they made at a discount making loses. However, to keep this lie standing, central printers were created and they were called intitially 'lenders of last resort'. This central printer would simply print money and give it to commercial banks if a bank run occurs so that the commercial bank does not need to liquidate long term loans at discount. So commercial banks were happy with the service central printers offered. But ofcourse, this service of central printers is not small fraud but big fraud, it is counterfitting money.

Fractional reserve lending has also nothing to do with the banks own capital and is something very different. Banks promise depositors that they will take the loses of their loans themselves, paying them with their own capital. This is not the 10% of deposits that is kept in reserve from the fractional reserve lending, but the actual own capital of the bank that is initially provided by the ones starting the bank. This indeed is what is refered to as the 'leverage of 300'. Management has emptied almost all own capital, and so if a downturn comes, the bank goes broke immediately and needs to have new capital. This is what all the bailouts are about.  

Nup, hadn't seen Zeitgeist, watching it now - seems to contain a lot of stuff from the Money Makers that came out like 10 years earlier.

You saying you think it's a conspiracy theory?

No. Fractional Banking is a fact, and if not for it we'd be living 100 years back.

You mean when gas was $0.20/gallon?

Still is, if you buy with silver dimes.
http://images.sodahead.com/profiles/0/0/1/9/5/2/0/2/2/Gas-silver-46265369636.jpeg

https://www.youtube.com/watch?v=jaeRZ4S2Orw :D

Fractional banking is a steaming turd that's had tons of air freshener put on it to make everyone think it smells good.

Because who wants a traditional economy?

I'll give you a cow for 2bitcoins.  ;D

Silver dimes do not generate as much growth.

because i don't want to bring 2 goats to walmart whenever i want to pick up some electronics

re: the sign about coins... there's actually pretty good money to be had if you have a teller friend or something at a bank.   get all their rolls of half dollars, you should make around $50 an hour if you know what you're looking for (** and the stuff hasn't already been picked through by someone knowledgeable)

I tried not to have my drink go up my nose too far when I read this - I think you're in the wrong forum. Try neokeynesianbuttsniff.com?

This

Semantics - I guess you're "living a lie"?

When you look at the highest levels of society, it's not about money, it's about CONTROL. First, you have to get everyone dependent on monetary systems via DEBT (half the world still lives via subsistence agriculture), then you can control labor by alternately raising wages and prices.

I watched half of the movie "Money as Debt" that has been mentioned in this forum a few times.
The movie says that money is created when somebody signs a loan.  The banks create the money for the loan out of thin air.
This seems perfectly reasonable to me.  First of all, a house is not exactly "thin air".  The bankers create money out of houses.  The money supply matches the value of tangible goods that are in the money market.  I admit that I didn't follow all the details, especially the ones that indicate that the interbank loans multiply the money supply many times, but I'm just commenting on this one idea of creating money in exchange for tangible goods.

If I put my house on mortgage for $100k, there is $100k of money created to represent the value of the house that I just put in the money market.  I put goods in the market => there is corresponding amount of money created to represent these goods.  If another person mortgages an identical house, they will get the same amount of $ for it (which will also be created).  If the value of goods that are in the money market doubles, the money supply will also double so that prices will remain constant (excluding a small amount of inflation).

Contrast this with the fixed-money supply of bitcoin:  If I put my house in the market for 1000 bitcoins, I'm reducing the bitcoin supply by 1000 bitcoins.  Bitcoins get scarcer and their value relative to goods (my house) increases.  The next person who mortgages an identical house for bitcoins will receive fewer bitcoins than I did.  We both put in the same amount of goods but we get different amounts of bitcoin, depending on who made the transaction first.  Does this seem a fair exchange system?

The value of 1 bitcoin increases as people use bitcoins more.  The people who hold bitcoins get richer (on paper at least) by holding on to their bitcoins and doing nothing at all.

Which of the two systems seems like a bigger scam?

how does putting your house on the market reduce the bitcoin supply? they don't disappear, they just change hands.

It reduces the bitcoin supply for everyone else.

Conventional money is not meant to be a precious commodity whose value changes according to supply and demand.   It has a supply that grows with demand and matches the overall economy.  Creating money to match the demand of the economy is a good thing because it maintains the buying power of money relatively constant (slowly diminishing, on purpose).

https://dl.dropboxusercontent.com/u/146411/ohpo9t.jpg

No, but seriously, the coins are still there, and they're going to get spent elsewhere. The supply has not been reduced. Just moved around.

Problem is that at some point you can't grow anymore, and then it all collapses because we need more growth, more spending, more consuming (doesn't this make you sick?), more everything to be able to pay our debts plus interest. Yes, it has brought the world a lot of good stuff I guess, but I think we have reached the point now where it is just too much and we need to shift to a new paradigm that doesn't depend on growth. Maybe bitcoin with its finite supply could be a small first step towards such a shift...