Hidden Secrets of Money

[Erdogan]

Most of the video (except the FRB part) is correct
...

What is wrong about the FRB part?

FRB does not create money, it just created larger amount of checkbook numbers in bank's account, prove that money has been stored there, but those numbers can not be spent, if there is a bank run, those numbers will vanish quickly. The base money will never increase by means of FRB

A larger amount of checkbook numbers is money.

It is an illusion of money, like after you deposite your money at MTGOX, the web interface shows you a number on your account, and you think that money is real  

When the Federal Reserve buys a U.S. Treasury bond, it credits the U.S. Treasury with new money, created out of thin air. The only collateral is "the good faith and credit of the U.S. Government." The Treasury can spend that money, illusory or not, for real goods and services. It does this over and over again, thus causing inflation, a hidden tax on everyone who holds dollars.

Even with so called tapering, or totally removing QE, the govenment could continue money productions in the semi private bond market. For instance, the USPS could issue a bond with implicit government insurance, or through a newly created empty company. This is what happened to the Reichsmark.

Edit: http://en.wikipedia.org/wiki/Reichsmark
"Dummy Company Currency Expansion"

[bobdutica]

Most of the video (except the FRB part) is correct
...

What is wrong about the FRB part?

FRB does not create money, it just created larger amount of checkbook numbers in bank's account, prove that money has been stored there, but those numbers can not be spent, if there is a bank run, those numbers will vanish quickly. The base money will never increase by means of FRB

A larger amount of checkbook numbers is money.

It is an illusion of money, like after you deposite your money at MTGOX, the web interface shows you a number on your account, and you think that money is real  

When the Federal Reserve buys a U.S. Treasury bond, it credits the U.S. Treasury with new money, created out of thin air. The only collateral is "the good faith and credit of the U.S. Government." The Treasury can spend that money, illusory or not, for real goods and services. It does this over and over again, thus causing inflation, a hidden tax on everyone who holds dollars.

Even with so called tapering, or totally removing QE, the govenment could continue money productions in the semi private bond market. For instance, the USPS could issue a bond with implicit government insurance, or through a newly created empty company. This is what happened to the Reichsmark.

Edit: http://en.wikipedia.org/wiki/Reichsmark
"Dummy Company Currency Expansion"

Absolutely right! If you don't own a wheelbarrow, better get one right away. You'll need one to carry enough fiat currency to buy a loaf of bread.

[Adrian-x]

Mike Maloney's "Hidden Secrets of money" ep6 will be about Bitcoin.

https://www.youtube.com/watch?v=iFDe5kUUyT0&feature=youtu.be (see comments)

[johnyj]

It is an illusion of money, like after you deposit your money at MTGOX, the web interface shows you a number on your account, and you think that money is real  

When the Federal Reserve buys a U.S. Treasury bond, it credits the U.S. Treasury with new money, created out of thin air. The only collateral is "the good faith and credit of the U.S. Government." The Treasury can spend that money, illusory or not, for real goods and services. It does this over and over again, thus causing inflation, a hidden tax on everyone who holds dollars.

What you are talking about is base money, it is real money and spendable. Do not mix it up with checkbook money, which is just a number on your account.

You deposit 100 dollars into a bank, then bank loaned out 90 dollars to other people and keep 10 dollars. Your account statement still shows that you have 100 dollars in your bank account, but 90% of those dollars are illusion and can not be spent by you (Double spend is not possible). When you withdraw those 100 dollars, banks will have to find another 90 dollars to give you

In reality there are many different type of accounts, money in most liquid accounts might not get loaned out by banks, but money in those long term saving accounts definitely get loaned out

[Adrian-x]

is a Ponzi scheme... simple as that... whats tha matter? just like gov have the monopoly of the force (violence), it has the monopoly of economics (Ponzi)

The ponzi will last as long as exponential growth is possible with finite resources and the allotted environmental space allows.
Just hope it's natural disaster that triggers reform not ego, and war.

[roslinpl]

is a Ponzi scheme... simple as that... whats tha matter? just like gov have the monopoly of the force (violence), it has the monopoly of economics (Ponzi)

What is a ponzi? all economics? money?

[bobdutica]

is a Ponzi scheme... simple as that... whats tha matter? just like gov have the monopoly of the force (violence), it has the monopoly of economics (Ponzi)

What is a ponzi? all economics? money?

Read the definition of a Ponzi scheme here.

[roslinpl]

is a Ponzi scheme... simple as that... whats tha matter? just like gov have the monopoly of the force (violence), it has the monopoly of economics (Ponzi)

What is a ponzi? all economics? money?

Read the definition of a Ponzi scheme here.

Well I understand a definition of Ponzi - this is why I asked this question.
If someone tells me that money, economy, bitcoin and perhaps a bank account are ponzi
Maybe I did misunderstood a meaning of main topic?
But I think there is nothing from Ponzi scheme here. in this what was called a ponzi above.

[bobdutica]

is a Ponzi scheme... simple as that... whats tha matter? just like gov have the monopoly of the force (violence), it has the monopoly of economics (Ponzi)

What is a ponzi? all economics? money?

Read the definition of a Ponzi scheme here.

Well I understand a definition of Ponzi - this is why I asked this question.
If someone tells me that money, economy, bitcoin and perhaps a bank account are ponzi
Maybe I did misunderstood a meaning of main topic?
But I think there is nothing from Ponzi scheme here. in this what was called a ponzi above.

Oh, I misunderstood your question. Actually, I don't think any of those things are Ponzi schemes. I think that all fiat money systems run by central banks are simply stealing the people's money.

[johnyj]

In principle all those scams depend on people's belief: They believe that the government will guarantee fiat money's value, then fiat money will keep their value. They believe that banks will protect their money, then they hand over money to banks. In fact the government can not guarantee anything in return for fiat money, except accept it as a tax payment, and banks just loaned out those money to someone else

[twiifm]

In principle all those scams depend on people's belief: They believe that the government will guarantee fiat money's value, then fiat money will keep their value. They believe that banks will protect their money, then they hand over money to banks. In fact the government can not guarantee anything in return for fiat money, except accept it as a tax payment, and banks just loaned out those money to someone else

Government is also part of society.   Government plays an important role to keep society stable.   Anarchists down play government but when shit hits the fan they all go running to government

[bl4kjaguar]

and banks just loaned out those money to someone else

Actually, banks are prohibited from using consumer deposits to make loans.

[twiifm]

and banks just loaned out those money to someone else

Actually, banks are prohibited from using consumer deposits to make loans.

When banks create loan the deposit is created simultaneuously as a balance sheet entry.   Asset & liability

[twiifm]

They believe that the government will guarantee fiat money's value, then fiat money will keep their value. They believe that banks will protect their money, then they hand over money to banks. In fact the government can not guarantee anything in return for fiat money, except accept it as a tax payment,

Govt doesn't guarantee value.   They back the money as the issuer.   They accept it as legal tender.  Its the only accepted tender for taxes.   Which is legal obligation.   The taxes guarantees demand.   

[odolvlobo]

Actually, banks are prohibited from using consumer deposits to make loans.

That can't be true. How would a savings bank make money? Why would there be FDIC insurance? Do you have a source to back up that statement?

[bl4kjaguar]

Actually, banks are prohibited from using consumer deposits to make loans.

That can't be true. Why would there be FDIC insurance?

FDIC insurance is only for bank failures.

If the bank wants to loan out your money, they need your permission because a deposit is not property; it is a debt owed to the depositor.

In order to understand past and present Law, you must first understand the British and American definitions of words used and based in common law prior to 1900.

One of the most accurate sources is the Dictionary of Law consisting of Judicial Definitions and Explanations of Words, Phrases and Maxims.

https://archive.org/details/cu31924022836534

Therein you will find defined the word "deposit" just as I have described.

[odolvlobo]

Actually, banks are prohibited from using consumer deposits to make loans.

That can't be true. Why would there be FDIC insurance?

FDIC insurance is only for bank failures.
If the bank wants to loan out your money, they need your permission because a deposit is not property; it is a debt owed to the depositor.
In order to understand past and present Law, you must first understand the British and American definitions of words used and based in common law prior to 1900.

If I am interpreting you correctly, you are saying that banks are illegally loaning consumer deposits, right?

[twiifm]

I don't know about the legal issue.  But this is how it works as an operational issue

At the individual bank level: banks make loans.  They then either borrow the reserves they need at the discount window or overnight market, OR the grow their deposit base to meet their reserve requirements. But the banks make the loans first, and then do whatever to hit their reserve target at the end of the day in order to balance their books.

At a macro level: the banking system makes loans, which in turn create deposits.

You have to look at banking as a balance sheet operation to understand it.

Technically speaking when a bank takes your deposit and pay you interest i.e interest savings or CDs.  You are lending them the money.  That money becomes part of their reserves that they lend from.

For checking account I'm not sure.