This is well known already.   But there's nothing parastic or deceptive about this.  Its required for liquidity. 

Isn't the liabilty in bonds?   Govt debt is liability,  no?

About fractional reserve.   Banks do overnight loans to each other to balance their books.   If one one bank is runned they have to borrow from another bank.  If they become insolvent they get bought out.

If all banks get runned they turn to the Fed as lender of last resort. Theres nothing wrong with fractional reserve.  

The crisis we face now has more to do with how banking and finance became too advanced for current regulations.   2008 crisis has more to do w derivatives and shadow banking.

Bitcoins don't address any of this only regulations will. Its not about honest bankers.   Its about how bankers and regulators play cat and mouse

I think the only interesting thing about bitcoin is the tech minus the amateur economics and libertarian/ anarchist politics.   If anything the banks and govt will develop a crypto for transfering money / making payments digitally.  Thats what consumers care about, not politics or speculating.   Im not a tech so I don't know if its feasible or not

Technical analysis is always trumped by fundamentals over the long run.

You are making a huge speculative assumption that bitcoin will achieve mass adoption.   The question is what makes it superior to fiat that institutions and govt will support it?   

Whats stopping govt from outlawing it as legal tender?   At some point govt has to take a stance like China.   Whats stopping a better crypto from replacing it?  Did anyone think Facebook would kill Myspace

You don't even know if bitcoin will exist in the future.   

If someone owns enough bitcoins theycan lend them.   But then the the loans would be regulated under existing laws.  For example,  mortgages,  line of credit,  other loans.    But question is why would you need to borrow bitcoins?  Unecessary unless seller refuse to accept any currency other than bitcoins.

Credit card companies have a fraud investigator who then forward investigations to law enforcement.  If LE recovers stolen goods then its returned.  CC don't steal money from the merchant. The crooks do

Maybe its not fair but thats how it is.  

Dude learn the facts before you speak.   Bloomberg article was wrong.   Grayson got his info from Bloomberg and not research.  Coleman couldn't answer his question cause she wasn't prepared.   Money was not missing it was overnight loans that were paid back

http://econbrowser.com/archives/2011/12/more_on_those_s

This is written by L Randall Wray on Levi Institute blog.   Wray is a respected economist and not politico

I agree with odolvlobo explanation.

I think many people confuse private debt and govt debt.   They are not the same thing.

Private sector needs debt to engage in business in order to profit.  Govts don't need to profit.   Heck they have power to print money.   Govt role is to keep the economy going.   

Whether deficits matter or not in the long run is debatable.   Japan runs a deficit 300% of GDP and it hasn't collapsed yet.

 

Bitcoin is not useful as money.   Neither is gold or silver

Money needs to be elastic in order to be useful in modern economies.   As economic activity expands,  the money supply needs to expand to meet demand.   Liquidity is one important aspect of money.

Read about Modern Money Theory L. Randall Wray if you want to know more.   Money should be approached as stock and flow rather than commodity

I think that was an overnight loan so these banks could clear their books.   It was paid back

Different than Mt Gox

FDIC only insures 250K on deposits.   Has nothing to do with 2008 crisis. Bear Stearns and Lehman collapse because they were overleveraged on MBS.   They couldn't unwind fast enough when investors pulled out because the securities were derived from toxic assets.   Reason being they were mortgage derivatives tied to subprime lending.

The function of banking is to provide liquidity so the economy continues to function.   The banks make money as liquidity dealers.   They borrow at a lower interest and lend at a higher interest.

Central banks exist because a central authority is preferable to maintain liquidity.   They are granted the power to lower or raise Fed Fund rates.   This is supposed to encourage or discourage lending.

Economies always swing from boom to bust.   When it swings too far Central Banks are needed to counteract.   The Fed can create or destroy money.   They do this bc economies always need liquidity.   If credit freeze up,  the economy will grind too halt.

Most bitbugs never studied economics or banking so they dont understand the role of banks.  

Bitcoin was designed to be decentralized, deflationary and disciplined.   Because of this it cannot serve the needs of modern economies.   Money needs to be elastic sometimes and disciplined other times