I really don't want a world were people can't buy a house because there is no FRB system to let the previous generation lend to the next generation at a profit.
I just bought a house precisely because the previous generation lent to me and my fiance at a profit.... but there were no banks involved. There is no need for FRB when you have a community. Instead, many people choose to live in a cutthroat world without neighbors and friends. No thanks. I'm glad for you. You are very lucky to have access to a previous generation to do so. I also would like the world you describe where we borrow directly from people we know; bitcoin will help us get there. Until then... FRB and banking is filling that gap. Unless you seriously think that every current FTB has parents/neighbours with enough saved cash to purchase a house? I suppose it's possible. As if there is no way to crowd loan .. |
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Ahhh who cares if savers got the shaft in the process right?
Indeed. The opposite is far worse; if just the simple fact of having money results in you getting richer and richer by sitting on your money because other people grow the economy and therefore grow the demand for money, what kind of idiotic system is that? Having inflation means that you will have an incentive to invest your money, spend your money or otherwise participate in the economy, I have no problem with that. :shaking my head: what utter ignorance of history you display......  You're completely oblivious to the 2nd industrial revolution right? Robbing people is not a path to sustainable wealth, it's a path to tyranny with a few and a life on a treadmill barely getting by paying all your bills. Calling it robbing doesnt make it so. Do you feel robbed because bitcoins (or for that matter, gold) is constantly being mined? Of course not, it takes work to mine gold. It takes no work to convince people they have access to their money that they don't really. |
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HAhahahaha you stupid troll... hahaha  |
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You can't create more out of nothing. If I own a rock of gold and own it for the purpose of saving value I KNOW you can't own the same rock of gold. You can't either own a similar rock of gold if you haven't put in a huge amount of work to dig it up or produce something other of equal value in order to trade for it.
Correct. But I can own another good, S, which economically acts as a substitute of the rock of gold. If the production costs of S are below those of the rock of gold, the supply in that market will increase and the price will decrease. Again, this is not particular to money. This rock of gold is a store of claims on goods and services in the economy and you creating a rock of gold out of thin air is stealing these claims on goods and services from me.
In order for a rock of gold to be some sort of claim, there needs to be a counterparty to that claim, with which you have a contract. People other than this counterparty cannot be held accountable if this claim is reneged upon. Who is this counterparty and when did they agree to a contract? Every market participant willing to accept a particular good as payment which makes a good money in the first place. Money wouldn't be money if it weren't a claim on good and services it would just be a good. That's why counterfeiting is wrong in the first place.
Non-sequitur. Ad hominem. Absofkinglutely, otherwise what's the point of money?
There is no "point of money". Furthermore, it's a non-sequitur. You did not address why particular economic differences result in legal differences. It's like saying that it's ok to steal from the rich because rich are richer than the poor. Ad hominem. Money wouldn't be money if it didn't fulfill the roll of money. Money without the roll of money would just be a good like anything else. |
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Ahhh who cares if savers got the shaft in the process right?
Indeed. The opposite is far worse; if just the simple fact of having money results in you getting richer and richer by sitting on your money because other people grow the economy and therefore grow the demand for money, what kind of idiotic system is that? Having inflation means that you will have an incentive to invest your money, spend your money or otherwise participate in the economy, I have no problem with that. :shaking my head: what utter ignorance of history you display...... You're completely oblivious to the 2nd industrial revolution right? Robbing people is not a path to sustainable wealth, it's a path to tyranny with a few and a life on a treadmill barely getting by paying all your bills. |
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Actually you are right. But you are wrong asking the question "This is good in what way?"
It's irrelevant whether or not it's good, the original question was whether or not Bitcoin is or has a government and the ability to fork it, what ever this would actually mean for the value of the system, proves it does not. If I want to use Bitcoin, I can, however I cannot force others to use my version of Bitcoin even if I modify the original Bitcoin and have enough rule enforcement power which is something a government could do.
why are u getting so "hung up" on the definitions of what ppl are trying to say? such as "democracy" or "government"? such as, i know exactly what rjk is trying to say when he says the governing rules of Bitcoin are the source code and algorithm which govern the Bitcoin community and network. i also am convinced that democratic principles apply to Bitcoin. miners can try to subvert the system to their benefit if they want but if it violates the wants or desires of the majority of users, they will simply leave. no users, no network, no miners. period. users are not "forced" to use Bitcoin. they have a choice unlike USD's here in the US which have to be used for a variety of purposes, taxes being one. Because people and their delusions are responsible for most of bad outcomes in the world and I'm doing my damn best to avoid delusions being perpetuated in Bitcoin. What bitcoin is: Honest, strict, free of coercion, voluntary, regulated by market consumers (a free market), sovereign, without entitlement of equality between users ect. What bitcoin isn't: democratic, a government, being governed by people, promoting equality of any kind |
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That still doesn't make sense. The amount doesn't multiply.
If Joe Bob loans $100m to Bank A, then Bank A deposits in Bank B, then Bank B deposits in Bank C....
Bank A is only allowed to loan $91m to Bank B and must keep $9m on-hand to pay all of their depositors. Bank A now has $9m in cash, $91m as an asset in the form of a deposit, but they still have a $100m liability to Joe Bob, so they're done -- Bank A can't loan out any more of the $100m. They have $100m assets, $100m liabilities from the transaction. Yes but Joe Bob still has access to his $100m through demand deposits while the bank lent $91m to someone else which is where the money creation happens. Bank A's reserves are made up of waaaay more cash than what they need to keep on-hand for Joe Bob. They're not just loaning to Joe Bob, but likely tens of thousands of other people who also make up Bank A's cash reserves. Let's say Bank A has $5b total of deposits. Bank A thus needs $450m in reserves, so they'll have no problem paying Joe Bob if he needs money right away, and if four other people withdrew $100m on the same day, Bank A would simply request an intra-bank loan (often called "overnight loans"). These short-term loans by banks to other banks ensure they're able to meet the reserve ratio for cash-on-hand enforced by government regulators. In this case, Bank A has -$50m and needs a ~$525m loan from another bank. These loans usually happen within a few hours because banks have established reputations with each other. We do something similar with Bitcoins. If I need to pay a depositor but don't have enough on-hand, I ask Patrick or someone along those lines for a short-term loan I pay a minimal % on. When I'm able to liquidate my investments, or loan repayments are made to me, I pay Pat. And that is the fraud that FRB enables. Joe Bob and all the other depositors believe they have access to more money than they actually do and this belief reflects in prices robbing savers. If Joe Bob didn't believe he could have immediate access to his deposits he wouldn't be out there competing for goods or services and savers wouldn't get robbed. I don't care whether savers get robbed because of money actually being created out of thin air or just imagined it was created. Joe Bob thinks he has his deposits available to spend immediately and so all the other depositors meanwhile the bank lent a fraction to someone else who again probably deposited their borrowed money with a bank and again believe they have immediate access to it while the bank loaned a fraction of it. Even if the actual money supply hasn't increased it has increased in the minds of all the depositors which is what ultimately really matters when good and services are being competed for and how the savers get the shaft. It's an unseen fraud hence why I'm not getting anywhere in this thread. |
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Maybe FRB isn't as much fraud as are demand deposits?
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That still doesn't make sense. The amount doesn't multiply.
If Joe Bob loans $100m to Bank A, then Bank A deposits in Bank B, then Bank B deposits in Bank C....
Bank A is only allowed to loan $91m to Bank B and must keep $9m on-hand to pay all of their depositors. Bank A now has $9m in cash, $91m as an asset in the form of a deposit, but they still have a $100m liability to Joe Bob, so they're done -- Bank A can't loan out any more of the $100m. They have $100m assets, $100m liabilities from the transaction. Yes but Joe Bob still has access to his $100m through demand deposits while the bank lent $91m to someone else which is where the money creation happens. |
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But I defined FRB different and how it actually happens in the real world today. Where deposits are immediately used as reserves for loaning money that does not exist.
I'm still not "getting it." Banks don't get to pick a reserve amount and then are able to loan out some multiple of that, they have to keep a % of deposits on-hand as a reserve. The alternative to fractional-reserve and full-reserve is no-reserve, where banks can freely loan out as much cash as they have -- it doesn't mean they get to create an infinite amount of cash to loan out. Let's say the reserve ratio for banks in the US is a flat 9%. That means if a bank has $100b in deposits, they must keep $9b as cash or something which can be near-immediately turned into cash or regulators will shut them down. It doesn't mean that banks can use the $100b from deposits and claim it as a reserve which multiplies their amount to lend to $1.11t. I'm pretty darn sure that doesn't happen anywhere. Of course if they were the only bank doing this. But they are not and when the loans get deposited at some other bank that other bank can again loan out a fraction and again and again and again and the end results is what I said it was. That still doesn't make sense. The amount doesn't multiply. Demand deposits. You would be right if banks didn't allow depositors to have access to their depoists, but they do and that's what creates money out of thin air and is the fraud that robes the savers that I'm desperately trying to point out. |
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I guess that's a problem then, I always thought FRB means a bank lends more than it's deposits, meaning they create money out of thin air, something which we know is damn near impossible with bitcoin. Lending out a % of deposits != FRB to me.
Your understanding is wrong. A bank cannot lend out more than its deposits. In fact, the reserve ratio is what specifies how much they can lend out. They are allowed to lend (in the UK) 97% of deposits. 3 questions: - Do depositors in such a bank have access to their deposits whenever they please? - If no, do the depositors think they have access to their deposits whenever they please? - If yes, how can that be if the bank lent 97% of their deposits to someone else? Irrelevant. Your assertion was that they loan out more than they have deposited. Which is what I showed wasn't true. I also note that you've jumped to a different argument in response to that demonstration rather than admit that your understanding was flawed. Answer 1: yes they do. It's called demand deposit and every current account operates under that principle. Answer 2: n/a Answer 3: Firstly, 97% is less than 100%. To counter your obvious "ho ho ho, what about when they all want their money out at once?"; the answer is that central banks act as the "lender of last resort". Btw I let this slide but I shouldn't have since it's the crucial point of my argument. Sooooo the depositors can spend their money that a loan was made based on and the borrower can naturally spend his borrowed money? How does this happen without creating money out of thin air? |
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Of course if they were the only bank doing this. But they are not and when the loans get deposited at some other bank that other bank can again loan out a fraction and again and again and again and the end results is what I said it was.
Nonsense. It makes no difference whether it is one bank or one "banking system". There are loans and there are deposits. No bank is allowed to lend more than it has had deposited. If anything, the fact that there are multiple banks makes it harder for them to lend right up to the theoretical maximum as determined by the reserve ratio. You are being completely oblivious to the time factor. UGH, maybe this cartoon will explain to you http://www.youtube.com/watch?v=Zx0vrR2BFp8 The explanation starts at 13:30 and is so clear and easy to understand a 5year old will get it. |
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Your assertion was that they loan out more than they have deposited. Which is what I showed wasn't true. + Everyone withdraws their money and nothing happens. = does not compute How is this not creating more money out of thin air which is what I actually said they do when they do FRB. Excellent selective quoting. The rest of my post pointed out that in the event of a bank run it was the central bank that created money not the banks themselves; and that when the run is over, that money is destroyed again. Cash money in people's fists at the end of the run does them no good; they instantly start spending it or depositing it. If they spend it it goes to a merchant who puts it back in the bank, the central bank debt is repaid and the money is destroyed again. The money that is "created" is merely so those panicing people can hold the bits of paper in their hand. There is no more or less money in the economy than there was when the bits of paper were 0s and 1s on the banks computer screen. ORLY?:  |
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I guess that's a problem then, I always thought FRB means a bank lends more than it's deposits, meaning they create money out of thin air, something which we know is damn near impossible with bitcoin. Lending out a % of deposits != FRB to me.
Your understanding is wrong. A bank cannot lend out more than its deposits. In fact, the reserve ratio is what specifies how much they can lend out. They are allowed to lend (in the UK) 97% of deposits. 3 questions: - Do depositors in such a bank have access to their deposits whenever they please? - If no, do the depositors think they have access to their deposits whenever they please? - If yes, how can that be if the bank lent 97% of their deposits to someone else? 1) Only if the bank allows demand deposits, and those usually have restrictions stated in contracts, such as with ATM cards' daily & per-transaction limits (though those are also to protect against fraudulent purchases being too out of control -- many banks will change the limits if you ask nicely). 2) I'd imagine most depositors think they do, but if people were stupid enough to believe the banks have full reserves of deposits, there would never be bank runs (except in cases where the bank has extremely negative equity) because depositors would "know" there should be no liquidity problems possible. 3) The problem you imply is why demand deposit schemes aren't implemented in the Bitcoin community. Successfully operating a bank with demand deposits and FRB requires a large volume of money spread across MANY different people. Meanwhile, CD programs are designed to fill the need of large depositors ($100k+). They're granted a higher interest rate but severely penalized if they withdraw early. This allows the bank to plan for when they need to have large reserves of cash on hand to pay those CD-holders. Since BTC lenders don't deal with thousands of accounts, we can really only do CDs or bonds. That's not because of anything inherent with Bitcoin, but because it would lead to disastrous bank runs. The market is what should be finding what the proper reserve ratio is, not the government - meaning banks should not be forced by threat of state violence to hold any % of deposits in reserve, including 100%. If a bank tells a depositor that they have access to their funds via contract, then the bank needs to honor that or the depositor should be able to sue. And I'm perfectly ok with this kind of definition of FRB. But I defined FRB different and how it actually happens in the real world today. Where deposits are immediately used as reserves for loaning money that does not exist. I'm still not "getting it." Banks don't get to pick a reserve amount and then are able to loan out some multiple of that, they have to keep a % of deposits on-hand as a reserve. The alternative to fractional-reserve and full-reserve is no-reserve, where banks can freely loan out as much cash as they have -- it doesn't mean they get to create an infinite amount of cash to loan out. Let's say the reserve ratio for banks in the US is a flat 9%. That means if a bank has $100b in deposits, they must keep $9b as cash or something which can be near-immediately turned into cash or regulators will shut them down. It doesn't mean that banks can use the $100b from deposits and claim it as a reserve which multiplies their amount to lend to $1.11t. I'm pretty darn sure that doesn't happen anywhere. Of course if they were the only bank doing this. But they are not and when the loans get deposited at some other bank that other bank can again loan out a fraction and again and again and again and the end results is what I said it was. |
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With FRB, money is destroyed when debts are paid back. Do you consider that fraud too? This is only possible because of the original fraud. Without it, this second thing cannot happen and therefor is irrelevant. With FRB the money supply expands as the economy grows, and contracts when the economy does. Thats neither fraud nor insane.
Ahhh who cares if savers got the shaft in the process right? |
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Your assertion was that they loan out more than they have deposited. Which is what I showed wasn't true. + Everyone withdraws their money and nothing happens. = does not compute How is this not creating more money out of thin air which is what I actually said they do when they do FRB. |
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I guess that's a problem then, I always thought FRB means a bank lends more than it's deposits, meaning they create money out of thin air, something which we know is damn near impossible with bitcoin. Lending out a % of deposits != FRB to me.
Your understanding is wrong. A bank cannot lend out more than its deposits. In fact, the reserve ratio is what specifies how much they can lend out. They are allowed to lend (in the UK) 97% of deposits. 3 questions: - Do depositors in such a bank have access to their deposits whenever they please? - If no, do the depositors think they have access to their deposits whenever they please? - If yes, how can that be if the bank lent 97% of their deposits to someone else? 1) Only if the bank allows demand deposits, and those usually have restrictions stated in contracts, such as with ATM cards' daily & per-transaction limits (though those are also to protect against fraudulent purchases being too out of control -- many banks will change the limits if you ask nicely). 2) I'd imagine most depositors think they do, but if people were stupid enough to believe the banks have full reserves of deposits, there would never be bank runs (except in cases where the bank has extremely negative equity) because depositors would "know" there should be no liquidity problems possible. 3) The problem you imply is why demand deposit schemes aren't implemented in the Bitcoin community. Successfully operating a bank with demand deposits and FRB requires a large volume of money spread across MANY different people. Meanwhile, CD programs are designed to fill the need of large depositors ($100k+). They're granted a higher interest rate but severely penalized if they withdraw early. This allows the bank to plan for when they need to have large reserves of cash on hand to pay those CD-holders. Since BTC lenders don't deal with thousands of accounts, we can really only do CDs or bonds. That's not because of anything inherent with Bitcoin, but because it would lead to disastrous bank runs. The market is what should be finding what the proper reserve ratio is, not the government - meaning banks should not be forced by threat of state violence to hold any % of deposits in reserve, including 100%. If a bank tells a depositor that they have access to their funds via contract, then the bank needs to honor that or the depositor should be able to sue. And I'm perfectly ok with this kind of definition of FRB. But I defined FRB different and how it actually happens in the real world today. Where deposits are immediately used as reserves for loaning money that does not exist. |
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Of course it does, it's what makes a money a good money. I mean just have to look at the real world example of gold to see you're wrong and I'm right.
Wait, what? You can't be serious. What specific other property rights apply to money that do not apply to other goods? What property rights apply to gold that do not apply to other goods? You can't create more out of nothing. If I own a rock of gold and own it for the purpose of saving value I KNOW you can't own the same rock of gold. You can't either own a similar rock of gold if you haven't put in a huge amount of work to dig it up or produce something other of equal value in order to trade for it. This rock of gold is a store of claims on goods and services in the economy and you creating a rock of gold out of thin air is stealing these claims on goods and services from me. That's why counterfeiting is wrong in the first place. It's easily provable. For any other act that could affect the price of BTC someone needs to create a good or a service of value, they have to apply labor to produce something, something that would affect the goods and service bucket which then gets matched with the money bucket. Merely adding to the money bucket(of course when I say money I mean 1 instances of it, 1 currency if you like, Bitcoin2 would be a separate bucket of money) does not add any value but in fact robs value form those already holding a piece of the money in this bucket.
Ahh, so you're a proponent of the labour theory of value? If some guy X does not "work", and this is somehow causally related to a decrease in the price of Bitcoins, he's violating your rights? Absofkinglutely, otherwise what's the point of money? I think the reason I have such a hard time is people around here have severely distorted beliefs about what money really is, how it originally came about and what was it's purpose in the market and especially what a good money is.
You're having a hard time because you cannot formulate coherent arguments. You randomly jump between all kinds of assumptions. Just because you aren't willing to understand my arguments or can't see the logic in them does not make them incoherent, I might go as far as say your trying a nice sneaky ad hominem there. |
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Is that why we have FRB in Bitcoin? Oh wait we don't have it. We don't? Hmm.. Ok, I missed something. Oh we do? Then I missed something and should sell my BTC asap since apparently someone figured out how to counterfeit bitcoins. When, where and who did it? Fractional-reserve banking is a form of banking where banks maintain reserves (of cash and coin or deposits at the central bank) that are only a fraction of the customer's deposits. This has nothing to do with 'counterfeiting". FRB is when someone lends more than what their deposits are. Where they keep a fraction of their deposits is irrelevant to FRB. Fractional-reserve -- a fraction of reserves are kept as cash-on-hand for deposits. Full-reserve -- a full reserve of deposits is kept as cash-on-hand. Banks can't loan out more than what the have deposited with them unless they have equity (more assets than liabilities). The Fed can create money and loan it to commercial banks for free or near-free, but this isn't related to FRB - that's money creation as it usually happens in the current world. I'm not sure if Austrians are using some obsolete definition or if we're confused. All I see is these facts: A is saving 10BTC B is saving 10BTC ----------------- supply of money competing for the same goods and services is 20BTC C is accepting deposits to loan out through FRB B deposits 1BTC C lends D 9BTC -> this didn't create any more goods or services, it didn't add anymore value A is saving 10BTC B is saving 9BTC and also lent 1BTC but instead of D having 1 BTC to spend D is spending 9BTC ---------------- supply of money competing for the same good and services is 29BTC How is this not defrauding A? |
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