Fractional Reserve Lending IS NOT bad - its unavoidable

[Ron~Popeil]

The real issue is not that we "allow" fractional reserve lending. The government should not be involved in banking at all.

Banks would not take such stupid risks if they were not back by the federal reserve's ability to print money. If you make stupid decisions you fail. The government bailout addiction makes it easy for banks to make stupid decisions and the hyper regulation after such a bailout leads to the demise of small banks which compounds the original issue by further centralizing the banking system and increasing the risk of systemic shocks. These newly merged frankenbanks are then even more likely to be bailed out for bad decision making. The bailouts come from you and me in the form of tax dollars and devalued currency. Rinse and repeat ad nauseam.

You are wrong.  Bailout was an emergency loan that's already paid off w interest

In the case of AIG the Treasury took equity in terms of AIG stock and made a handsome profit selling in 2012.

I don't know about you but I didnt pay any more taxes because of bailouts.  I got suckered into an ARM mortgage by Countrywide and when my interest ballooned no bank allowed me refinance because my mortgage was underwater.  But I could roll it into an FHA jumbo.  So the govt helped me out a lot

And do you know how they paid off those debts with interest? They took the money that was supposed to be for making loans and getting the economy moving and create jobs and they used it to speculate on food commodities. That's right. They used that money to drive the price of food up so they could make a profit. People were hungry in this country and they made it worse so they could make a buck off of it.

Yes you are taxed on all of that. Have you taken the time to look at the value of the money in your pocket? Have you noticed that it doesn't go as far as it used to? Do you know why? In order to support this house of debt we have been living in the fed has been printing money at record rates in order to lower the value of the dollar to reduce the size of the debt. That is also a tax.

[twiifm]

@ozziecoin

Again you know not of what you speak.  

Keynesians are not neoclassicists.  Keynes wasn't a monetarist either although a monetarist like Bernanke could also be Keynesian.  However, Friedman, the father of monetarism, was definitely not Keynesian

LOL. I don't have solutions to the worlds economics problems and never claimed to have. However, at the least I understand economics so I don't go around talking about "evils of FRB".  That would be plain ignorant.  The only thing I try to post on these boards are factual knowledge and I debate those who post misinformation.

Wait so now you are quoting Soros and Shiller?  LOL cause I happen to follow Soros Institute for New Economic Thinking and I'm taking Shillers Coursera class.  How can you follow these people and be so misguided?  You do realize that Soros is part of the 1% that you seem to hold so much contempt for.

Weren't you the guy who told me to follow Taleb cause you think options trading is for schmucks not realizing Taleb got famous as a renegade options trader?

Are you just pulling these names put of your ass to sound intelligent or do you actually read what they write?  

I don't subscribe to EMH.  But the GFC had nothing to do w FRB and something like BTC won't prevent bubbles and crashes either.  If youre so keen on Shiller you would already understand that bubbles are the result of psychology and behavioral economics not monetary policies.  The QE came after as a response to bubble crash

Also you keep interchanging private debt and govt debt.  They are not the same thing

[Ozziecoin]

@ozziecoin

Again you know not of what you speak.  

Keynesians are not neoclassicists.  Keynes wasn't a monetarist either although a monetarist like Bernanke could also be Keynesian.  However, Friedman, the father of monetarism, was definitely not Keynesian

LOL. I don't have solutions to the worlds economics problems and never claimed to have. However, at the least I understand economics so I don't go around talking about "evils of FRB".  That would be plain ignorant.  The only thing I try to post on these boards are factual knowledge and I debate those who post misinformation.

Wait so now you are quoting Soros and Shiller?  LOL cause I happen to follow Soros Institute for New Economic Thinking and I'm taking Shillers Coursera class.  How can you follow these people and be so misguided?  You do realize that Soros is part of the 1% that you seem to hold so much contempt for.

Weren't you the guy who told me to follow Taleb cause you think options trading is for schmucks not realizing Taleb got famous as a renegade options trader?

Are you just pulling these names put of your ass to sound intelligent or do you actually read what they write?  

I don't subscribe to EMH.  But the GFC had nothing to do w FRB and something like BTC won't prevent bubbles and crashes either.  If youre so keen on Shiller you would already understand that bubbles are the result of psychology and behavioral economics not monetary policies.  The QE came after as a response to bubble crash

Also you keep interchanging private debt and govt debt.  They are not the same thing

Hah! An economics student.  I should've known.  I rest my case - you are a complete dumbass.  Enjoy school fees buddy.

FYI: keynesians, monetarists and neo-classical economics all prescribe to the same belief of efficient markets, supply and demand and FRB.

Hyman Minsky on the other hand told them they're all idiots.  The GFC taught us that Minsky was right.  So were the Austrians.

Taleb bets against idiots like you and Soros is the 1% because he used leverage to prove that the system is not efficient.  I don't support him but he exploited the system. And you have to respect that.

Shiller knows it's behavioural but Soros understood you need leverage to create a bubble. (Please read his theory of reflexivity. It is similar to Minsky's disequilibrium theory but much easier to read.)

Private debt and gov't debt are not the same thing but who cares about the price of rice in China.

The problem is FRB.  Take your head out of your ass.  

[Ozziecoin]

http://www.businessspectator.com.au/article/2013/12/16/economy/oh-my-paul-krugman-edition

And as Krugman himself put it just a year ago, “the overall level of debt makes no difference to aggregate net worth – one person’s liability is another person’s asset. It follows that the level of debt matters only if the distribution of net worth matters.” (End This Depression Now!, 2012)

Yet here we have Krugman suggesting that change in the aggregate level of debt matters in its own right, and proposing a one-for-one correspondence between the change in aggregate private debt and aggregate demand: “Debt was rising by around 2 per cent of GDP annually; that’s not going to happen in future, which a naïve calculation suggests means a reduction in demand, other things equal, of around 2 per cent of GDP.”

But if he does abandon Loanable Funds, then 'all is forgiven', because I’m convinced that the Neoclassical belief in Loanable Funds is the biggest barrier there is to the development of a realistic, monetary macroeconomics. If Krugman gives way on this belief, then maybe there’s hope that central banks and treasuries around the world will eventually do so too. They might finally start to develop economic policies that reduce the problems caused by the crisis, rather than making them worse.

It would appear the ignorant people are the ones talking about the Loanable Funds model.  It's a myth!!!  

Krugman is WRONG.  One person's liability is NOT another person's asset.  Due to FRB.  Minsky was RIGHT.

Lord Adair Turner, formally the UK's chief financial regulator, said "Banks do not, as too many textbooks still suggest, take deposits of existing money from savers and lend it out to borrowers: they create credit and money ex nihilo – extending a loan to the borrower and simultaneously crediting the borrower’s money account".

[Ozziecoin]

@ twiifm

I don't know what you're following.  But you understand nothing of what you are following.  I'm sorry but it's a fact.

[gts476]

Outstanding trolling, well played

[NotLambchop]

...In large part because intimate knowledge of the modern(scammy) banking system is not a mandatory part of the curriculum in public brainwashing institutions schools.
...

...
Hah! An economics student.  I should've known.  I rest my case - you are a complete dumbass.  Enjoy school fees buddy.
...

I take it the two of you have successfully avoided brainwashing?  While other children were being corrupted by teh banksters, you finance revolutionaries were busy huffing household solvents?

[r34tr783tr78]

I'm also critic of the FR, but from a formal point of view it doesn't destroy the link between credit and debit. One man debit is another man/entity credit.

The bank lends the money someone deposited to another person by crediting the account of this second person, that might use the money to pay a debt to a third person that decides to keep the money on the bank, allowing it to lend again a big part of it. But the link between debit and credit isn't affected.

The problem is on their guaranty, the "real" money. If one of the debtors of the bank defaults that is going to have a bigger impact because of the FR.

[solarion]

...In large part because intimate knowledge of the modern(scammy) banking system is not a mandatory part of the curriculum in public brainwashing institutions schools.
...

...
Hah! An economics student.  I should've known.  I rest my case - you are a complete dumbass.  Enjoy school fees buddy.
...

I take it the two of you have successfully avoided brainwashing?<ignorant crap snipped>

I cannot speak for Ozziecoin, but I was indoctrinated at a .gov DOE facility. I was taught all about the three equal and opposing pillars that allegedly maintain balance in US government, which was then still billed as a Republic(I'm old). Interestingly the FRBNY and the fourth branch of government were not discussed.

[solarion]

I'm also critic of the FR, but from a formal point of view it doesn't destroy the link between credit and debit. One man debit is another man/entity credit.

So at which point is the "money" to repay the interest on a debt created?

[NotLambchop]

...In large part because intimate knowledge of the modern(scammy) banking system is not a mandatory part of the curriculum in public brainwashing institutions schools.
...

...
Hah! An economics student.  I should've known.  I rest my case - you are a complete dumbass.  Enjoy school fees buddy.
...

I take it the two of you have successfully avoided brainwashing?<ignorant crap snipped>

I cannot speak for Ozziecoin, but I was indoctrinated at a .gov DOE facility. I was taught all about the three equal and opposing pillars that allegedly maintain balance in US government, which was then still billed as a Republic(I'm old). Interestingly the FRBNY and the fourth branch of government were not discussed.

lolwut?  Are you still saving monyz on recreational chemistry by stealing stuff from under my sink?  Come on, bro, put down teh bag

[r34tr783tr78]

I'm also critic of the FR, but from a formal point of view it doesn't destroy the link between credit and debit. One man debit is another man/entity credit.

So at which point is the "money" to repay the interest on a debt created?

Since all fiat money is created out of debt (the central bank creates money by lending to banks or, in certain countries, directly to the State), interest creates new debt that can only be paid by borrowing more, supposedly supported in future income grow (think about corporations).

It's because of this that no modern economy is prepared for a long economic stagnation. Interest debt can only be paid by someone getting more loans and that can only be supported by economic grow or inflation (nominal grow). Any long stagnation creates a financial crisis, solved by inflation or defaults.

[spazzdla]

It is Fraud, plain and simple.

[solarion]

I'm also critic of the FR, but from a formal point of view it doesn't destroy the link between credit and debit. One man debit is another man/entity credit.

So at which point is the "money" to repay the interest on a debt created?

Since all fiat money is created out of debt (the central bank creates money by lending to banks or, in certain countries, directly to the State), interest creates new debt that can only be paid by borrowing more, supposedly supported in future income grow (think about corporations).

It's because of this that no modern economy is prepared for a long economic stagnation. Interest debt can only be paid by someone getting more loans and that can only be supported by economic grow or inflation (nominal grow). Any long stagnation creates a financial crisis, solved by inflation or defaults.

So long story short...it's not.

Sounds remarkably like a pyramid scheme. There's never enough "money" available to extinguish all debt(principle + interest) as the interest on that debt hasn't been created. This results in perpetual debt slavery as well as major deflationary events if/when the masses lose faith in their currency or there's a sustained economic slowdown and large numbers of peasants stop living beyond their means. If people stop borrowing(or ironically use only physical cotton dollars) the entire system collapses in a deflationary spiral as debt(currency) is extinguished faster than new debt(currency) is created. This is why government policy encourages debt greater than previous debt...IT MUST. HUD, Fannie mae, freddie mac, cash for clunkers, tax credits, zero(and near zero) % interest rates, .gov student loan takeovers, fed mbs purchases(liquidity injections), operation twist(again), etc.

Fiat debt based currencies are designed to fail, and they always do as they're inherently flawed. The USD is no exception and it too will fail(again), but not until those that do not understand the scam are milked dry. At the appropriate time a new scam currency(SDR, Amero, etc) will be wheeled out on cue to replace the failing USD and continue the complicated theft...perhaps this time on a global scale under a single scam currency(SDR). Perhaps like the Euro has unified much of the Euro zone under a scam currency the Amero will unify the Americas under a single scam currency.

[Miz4r]

I'm also critic of the FR, but from a formal point of view it doesn't destroy the link between credit and debit. One man debit is another man/entity credit.

So at which point is the "money" to repay the interest on a debt created?

Since all fiat money is created out of debt (the central bank creates money by lending to banks or, in certain countries, directly to the State), interest creates new debt that can only be paid by borrowing more, supposedly supported in future income grow (think about corporations).

And where does that 'growth' come from? And doesn't the compounding interest on ever growing debt require exponential growth, instead of just linear growth? Is that even sustainable in a finite world with finite resources? Could it be that all our financial and even climate change problems are related to this? I think the answer is yes, but I'm sure someone here will argue it's not and everything is fine...

[murraypaul]

You want a really long con.  Here you go mate, introducing you to the Federal Reserve:

The history of fiat money, to put it kindly, has been one of failure. In fact, EVERY fiat currency since the Romans first began the practice in the first century has ended in devaluation and eventual collapse, of not only the currency, but of the economy that housed the fiat currency as well.

Stop and think for a second, and that is obviously rubbish, because practically every economy that currently exists uses fiat currency, and hasn't collapsed.
So your argument becomes that every economy that has adopted fiat currency has collapsed ...  except all the ones that haven't.
You can say the same thing about anything.
Every economy that has adopted democracy has collapsed ... except all the ones that haven't.
Every economy where people each vegetables has collapsed ... except all the ones that haven't.
Every economy in a country beginning with R has collapsed ... except all the ones that haven't.
And you think it was fiat currency that caused the collapse of the Roman empire? If not, then what is the connection?
Much more simply: Every economy has collapsed ... except all the ones that haven't.

[NotLambchop]

I'm also critic of the FR, but from a formal point of view it doesn't destroy the link between credit and debit. One man debit is another man/entity credit.

So at which point is the "money" to repay the interest on a debt created?

Since all fiat money is created out of debt (the central bank creates money by lending to banks or, in certain countries, directly to the State), interest creates new debt that can only be paid by borrowing more, supposedly supported in future income grow (think about corporations).

And where does that 'growth' come from? And doesn't the compounding interest on ever growing debt require exponential growth, instead of just linear growth? Is that even sustainable in a finite world with finite resources? Could it be that all our financial and even climate change problems are related to this? I think the answer is yes, but I'm sure someone here will argue it's not and everything is fine...

Human population growth is exponential.  Economic growth needs to be exponential just to keep up

[twiifm]

@ozziecoin

LOL not even close.  Just because I like to learn doesn't mean I'm in school.  Try it sometimes

If you understood options trading you would not make a dumb statement like that about Taleb betting against me. It doesn't even make sense.  You don't even know how I trade or what my positions are.  Furthermore traders sont bet against each other as individuals just the options have 2 sides.  Its not a chess game its a market.  Besides, Taleb retired from trading its impossible for us to ever cross paths

Wait so you respect Soros for gaming the system, but not every other banker for gaming the system?  All Wall Street guys game the system.  Thats how they make money since they don't produce anything

You trying to impress me by name dropping Minsky?  You know he's considered a Post Keynsian right?  

None of these names you dropped says anything about FRB being responsible for economic crashes.  

[solarion]

I'm also critic of the FR, but from a formal point of view it doesn't destroy the link between credit and debit. One man debit is another man/entity credit.

So at which point is the "money" to repay the interest on a debt created?

Since all fiat money is created out of debt (the central bank creates money by lending to banks or, in certain countries, directly to the State), interest creates new debt that can only be paid by borrowing more, supposedly supported in future income grow (think about corporations).

And where does that 'growth' come from? And doesn't the compounding interest on ever growing debt require exponential growth, instead of just linear growth? Is that even sustainable in a finite world with finite resources? Could it be that all our financial and even climate change problems are related to this? I think the answer is yes, but I'm sure someone here will argue it's not and everything is fine...

Human population growth is exponential.  Economic growth needs to be exponential just to keep up

Human population growth is not exponential and currency expansion is not economic growth. The US economy doesn't magically improve simply because helicopter benny conjures up $85b/month and dumps it on his bankster buddies.

[NotLambchop]

^Miz4r suggested that exponential growth is unsustainable.  I replied that human population growth is exponential.
Not everything in this thread is about you.

Consider taking part in the gubmint brainwashing program -- huffing gas may have seemed like a great alternative to education, but look how shit worked out...