Returning to a Gold Standard Is a Bad Idea [View article]
He's a smart and popular "guy". LOL!
On Jan 14 09:04 AM BS Detector wrote:
> Jim Myrtle: > > Isn't it strange that both of us have recent comments in this thread, > which is more than two weeks old and off everybody's radar, with > ratings of +0 -3? And, surprise surprise, bosun.j has comments in > between that are +3 -0. Gee, wonder how that happened.
Returning to a Gold Standard Is a Bad Idea [View article]
No.
On Jan 14 04:02 AM bosun.j wrote:
> If that is true I must ask Jim, has a Bankster ever told you you > couldn't take your money out of savings because it was used or pledged > for your neighbor's mortgage?
Returning to a Gold Standard Is a Bad Idea [View article]
Love your screen name.
Yes, once all deposits and loans are added up, $1000 in new "high powered money" can create $10,000 in deposits and $9000 in loans. For some reason, conspiracy theorists (and poor math students) turn that into "banks can loan multiples of their deposits" when clearly, they cannot.
On Jan 13 04:07 PM Comment Ratings Are Meaningless wrote:
> Jim Myrtle: > > I'm not surprised bosun.j didn't believe it, though it's relatively > straightforward. He can't even provide you with a URL that works. > About all he can do is vote for his own comments to boost his rating, > and vote against others to lower theirs. > > This is analogous to the money multiplier used to determine the impact > of money supply actions by a central bank. Here's how it works. The > reserve requirement (r) is 10%. The 90% the first bank lends goes > to somebody who buys something; a car for example. The seller of > the car then takes the money and deposits it in a bank. That bank > then can then lend 90% of that deposit, which it does to a small > business that buys a computer system. The computer vendor deposits > the money, and the process repeats itself. So from a $1,000 deposit > (seekingalpha.com/symbo...), the money created through lending > is: > > D*(1-r) or $900 from the first loan > D*(1-r)*(1-r) or $810 from the second loan > D*(1-r)*(1-r)*(1-r) or $729 > ... > As the number of iterations reaches infinity, the total money created > through "relending" of a deposit reaches the inverse of the reserve > requirement less the initial deposit: > > D * 1/r - D > > In this case, 1000* 1/0.10 - 1000 = 9000. > > Look up "money multiplier" for more.
Returning to a Gold Standard Is a Bad Idea [View article]
I watched money masters. It's wrong. Banks lend less than deposits, not more. You gave a bad URL. Try again?
On Jan 13 03:31 PM bosun.j wrote:
> Jim, I didn't believe it either. Then I watched Money Masters. I > said in my previous post not to believe me and gave a URL to go to. > Up to you. Chok dee.
Returning to a Gold Standard Is a Bad Idea [View article]
"With your $1000 the Banksters can "loan" $9000!"
Wrong. They lend less than your deposit, not more.
On Jan 13 12:52 PM bosun.j wrote:
> With your $1000 the Banksters can "loan" $9000! Nice part about it > is if you get a lawyer who will sue them for not being able to prove > the lost ANYTHING, and they won't because they CREATED it, no court > in the land will make you pay it back > > Yeah, don't believe me. Go to FDRS.com. I don't like the little effer > that runs the place but his web site will explain it.
Returning to a Gold Standard Is a Bad Idea [View article]
"If the money the bank "loans" is redeposited in the bank, cannot the bank continue to lend until the total loans are a multiple of the original deposit"
If you're talking about "redeposits", you'll see the total loans can't exceed 90% of total deposits. So $10,000 in deposits allows $9,000 in loans.
"We went over this before. If the $900 is redeposited in the bank, the bank can lend $810 more, and so on, until it can lend a total of $9000 with $10,000 on deposit, including the original $1,000. You agreed to that, even corrected my math on the total credit being $9,000 instead of $10,000"
$1000 in deposits allows $900 in loans, $10,000 in deposits allows $9000 in loans.
"What I mean by "turn into" is that a bank can take my signed promise and physically hand me FRNs"
Yes, you can walk into your bank, sign loan documents and walk out with cash. Or buy a car. Or a house.
" We agree on that and probably more if not for the communication gap. I'm curious, are you a banker, a teacher or neither? I'm a math teacher and ex-engineer"
Returning to a Gold Standard Is a Bad Idea [View article]
"A borrower from a goldsmith would have signed something akin to a “loan document” just like a modern borrower. The borrower would have received a gold receipt of some kind and promised to repay it with interest just like a modern borrower"
The most important difference being the goldsmith was printing receipts for multiples of his gold deposits. Modern banks can only loan their deposits less their reserve balance. Because they don't print FRNs.
"Correct. One point to you. I didn’t bother doing looking up the formula and doing the math precisely. $900/(1-0.9) = $9,000. Doesn’t change the argument"
Your math is still wrong. A $1000 deposit with a 10% reserve allows the bank to create exactly $900 in loans, not $9000.
"The restaurant, at least in theory functioning as a bank, could obtain FRNs ultimately from the Fed which asks the Treasury to print them"
If the restaurant wanted to wire money to the Fed, they could get FRNs. Not sure what that has to do with your story.
"After which you would continue to owe the restaurant for the meal, because the FRNs were a "loan". Meanwhile the FRNs would begin circulating in the economy, increasing the money supply, until you pay off the loan"
Now you owe the restaurant and the Fed, still not clear where you're going with this.
"The salient point is that securitization of IOUs as legal tender increases the money supply.."
Borrowing increases the money supply. Are you proving what I've said all along?
" If the accounts receivable consist of dollar equivalents such as credit card payments in process or checks, they can certainly sell the"
They wouldn't sell credit card payments, they'd sell IOUs.
"Restaurants cannot sell an IOU because the IOU hasn’t been securitized by a bank"
You can sell an IOU that a bank hasn't touched. Suppliers that need cash can sell an IOU from WalMart (just an example) if they need the money now, instead of in 60 days (just an example).
" Funny, he doesn't dispute that banks create money (FRNs) by lending"
Don't confuse the money supply with FRNs. MZM, which includes FRNs, is narrow money. M1 is broader money. He can lend all day long and increase M1. He can't increase FRNs.
"I’ve been saying that a bank can turn a promise to pay into legal tender"
Legal tender? Like FRNs? A bank can sell your promise to someone else, for legal tender but can't turn on the printer in the vault to turn it into FRNs.
"there is a real difference between $1,000 in FRNs and a signed loan document on which a debtor promises to pay $1,000 FRN’s plus interest? "
Of course there is a difference. One is very liquid, one is less liquid. One pays interest, one doesn't. One has risk of default, one doesn't.
"that a bank is able to turn a promise to pay $1,000 FRNs into the legal equivalent of $1,000 in FRNs?"
I don't know your definition of "legal equivalent".
"that creation of FRNs by the Fed and banks by securitizing promises to repay is the source of inflation that caused the FRN to lose approximately 95% of its value since 1913? "
I don't dispute that the growth of high powered money and subsequent growth of M1, M2, M3 etc over and above the growth of GDP causes inflation.
Returning to a Gold Standard Is a Bad Idea [View article]
"What you fail to see is that the need to borrow is an indication of the creation of money and hence theft by inflation"
Deposits and withdrawals are made on a daily basis. Reserves are needed by some banks, some banks have an excess. That's how the business works. It doesn't mean they loaned out more than their deposits. It doesn't indicate anything about inflation.
" Why should a bank have to borrow money to meet its normal liabilities?"
If a bank tried to finance every day obligations with Fed Funds, that could be a troublesome sign. Most banks that borrow Fed Funds also lend Fed Funds soon after.
Returning to a Gold Standard Is a Bad Idea [View article]
If the bank is collecting interest on $9,000 in loans and holds $1000 in reserves,it must be paying interest on $10,000 on deposits.
"Have you checked that recently? Interest paid on deposits is almost zero and interest collected on bank "loans" probably averages 5% or better"
My point was not to discuss interest rates, but to show, again, that banks cannot lend out multiples of their deposits. Yes, it's terrible that banks can pay you less than 1% while charging 5% and more. The solution is to become a bank or buy their stock. Their debt now yields in the double digits.
A Closer Look at Healthcare and the Economy [View article]
"In the end, we'll have to go to single-payer universal health insurance, from both a corporate standpoint (could save GM's bacon immediately) "
GM employees don't want to lose their gold plated coverage.
"and a human standpoint (in a lot of states, a lot of averagely healthy
people can't buy health insurance because of "preexisting conditions")"
A lot of people die waiting for government healthcare, in those countries that have single-payer.
""Medicare for all" could be that vehicle if the preceding problems are fixed"
What's the long-term shortfall in Medicare funding? You think it might get worse if we cover everybody? Or should we just raise taxes? How high?
On Jan 15 12:21 PM Joyful Alternative wrote:
A Closer Look at Healthcare and the Economy [View article]
Competition with government mandated pricing in Canada?
Doesn't sound like competition to me.
On Jan 14 03:25 PM iThinkBig wrote:
Returning to a Gold Standard Is a Bad Idea [View article]
On Jan 14 09:04 AM BS Detector wrote:
> Jim Myrtle:
>
> Isn't it strange that both of us have recent comments in this thread,
> which is more than two weeks old and off everybody's radar, with
> ratings of +0 -3? And, surprise surprise, bosun.j has comments in
> between that are +3 -0. Gee, wonder how that happened.
Returning to a Gold Standard Is a Bad Idea [View article]
On Jan 14 04:02 AM bosun.j wrote:
> If that is true I must ask Jim, has a Bankster ever told you you
> couldn't take your money out of savings because it was used or pledged
> for your neighbor's mortgage?
Returning to a Gold Standard Is a Bad Idea [View article]
On Jan 14 01:23 AM bosun.j wrote:
> Here is the correct URL: FDRS.org. Sorry.
>
> Many who kneel before the alter of extremist-capitalism reject the
> findings of Money Masters.
America: A Nation Named Desire [View article]
"There are more middle class Chinese than there are American'ts who work!"
What's a middle class Chinese? Someone who makes $2000 a year?
Lot's of those people all over the world, so what?
On Jan 13 01:24 PM bosun.j wrote:
Returning to a Gold Standard Is a Bad Idea [View article]
Yes, once all deposits and loans are added up,
$1000 in new "high powered money" can create $10,000
in deposits and $9000 in loans. For some reason, conspiracy theorists
(and poor math students) turn that into "banks can loan multiples of their deposits" when clearly, they cannot.
On Jan 13 04:07 PM Comment Ratings Are Meaningless wrote:
> Jim Myrtle:
>
> I'm not surprised bosun.j didn't believe it, though it's relatively
> straightforward. He can't even provide you with a URL that works.
> About all he can do is vote for his own comments to boost his rating,
> and vote against others to lower theirs.
>
> This is analogous to the money multiplier used to determine the impact
> of money supply actions by a central bank. Here's how it works. The
> reserve requirement (r) is 10%. The 90% the first bank lends goes
> to somebody who buys something; a car for example. The seller of
> the car then takes the money and deposits it in a bank. That bank
> then can then lend 90% of that deposit, which it does to a small
> business that buys a computer system. The computer vendor deposits
> the money, and the process repeats itself. So from a $1,000 deposit
> (seekingalpha.com/symbo...), the money created through lending
> is:
>
> D*(1-r) or $900 from the first loan
> D*(1-r)*(1-r) or $810 from the second loan
> D*(1-r)*(1-r)*(1-r) or $729
> ...
> As the number of iterations reaches infinity, the total money created
> through "relending" of a deposit reaches the inverse of the reserve
> requirement less the initial deposit:
>
> D * 1/r - D
>
> In this case, 1000* 1/0.10 - 1000 = 9000.
>
> Look up "money multiplier" for more.
Returning to a Gold Standard Is a Bad Idea [View article]
On Jan 13 03:31 PM bosun.j wrote:
> Jim, I didn't believe it either. Then I watched Money Masters. I
> said in my previous post not to believe me and gave a URL to go to.
> Up to you. Chok dee.
Returning to a Gold Standard Is a Bad Idea [View article]
Wrong. They lend less than your deposit, not more.
On Jan 13 12:52 PM bosun.j wrote:
> With your $1000 the Banksters can "loan" $9000! Nice part about it
> is if you get a lawyer who will sue them for not being able to prove
> the lost ANYTHING, and they won't because they CREATED it, no court
> in the land will make you pay it back
>
> Yeah, don't believe me. Go to FDRS.com. I don't like the little effer
> that runs the place but his web site will explain it.
Put-Writing: Too Often Overlooked [View article]
On Jan 09 04:48 PM Smarty_Pants wrote:
> Wasn't put selling part of the 'portfolio insurance' that helped
> cascade the stock market downward in 1987?
>
Returning to a Gold Standard Is a Bad Idea [View article]
If you're talking about "redeposits", you'll see the total loans can't exceed 90% of total deposits. So $10,000 in deposits allows $9,000 in loans.
"We went over this before. If the $900 is redeposited in the bank, the bank can lend $810 more, and so on, until it can lend a total of $9000 with $10,000 on deposit, including the original $1,000. You agreed to that, even corrected my math on the total credit being $9,000 instead of $10,000"
$1000 in deposits allows $900 in loans, $10,000 in deposits allows $9000 in loans.
"What I mean by "turn into" is that a bank can take my signed promise and physically hand me FRNs"
Yes, you can walk into your bank, sign loan documents and walk out with cash. Or buy a car. Or a house.
" We agree on that and probably more if not for the communication gap. I'm curious, are you a banker, a teacher or neither? I'm a math teacher and ex-engineer"
Ex-engineer, ex-finance guy, science teacher.
On Jan 03 07:52 AM asleeper wrote:
Returning to a Gold Standard Is a Bad Idea [View article]
The most important difference being the goldsmith was printing receipts for multiples of his gold deposits. Modern banks can only loan their deposits less their reserve balance. Because they don't print FRNs.
"Correct. One point to you. I didn’t bother doing looking up the formula and doing the math precisely. $900/(1-0.9) = $9,000. Doesn’t change the argument"
Your math is still wrong. A $1000 deposit with a 10% reserve allows the bank to create exactly $900 in loans, not $9000.
"The restaurant, at least in theory functioning as a bank, could obtain FRNs ultimately from the Fed which asks the Treasury to print them"
If the restaurant wanted to wire money to the Fed, they could get FRNs. Not sure what that has to do with your story.
"After which you would continue to owe the restaurant for the meal, because the FRNs were a "loan". Meanwhile the FRNs would begin circulating in the economy, increasing the money supply, until you pay off the loan"
Now you owe the restaurant and the Fed, still not clear where you're going with this.
"The salient point is that securitization of IOUs as legal tender increases the money supply.."
Borrowing increases the money supply. Are you proving what I've said all along?
" If the accounts receivable consist of dollar equivalents such as credit card payments in process or checks, they can certainly sell the"
They wouldn't sell credit card payments, they'd sell IOUs.
"Restaurants cannot sell an IOU because the IOU hasn’t been securitized by a bank"
You can sell an IOU that a bank hasn't touched. Suppliers that need cash can sell an IOU from WalMart (just an example) if they need the money now, instead of in 60 days (just an example).
" Funny, he doesn't dispute that banks create money (FRNs) by lending"
Don't confuse the money supply with FRNs. MZM, which includes FRNs, is narrow money. M1 is broader money. He can lend all day long and increase M1. He can't increase FRNs.
"I’ve been saying that a bank can turn a promise to pay into legal tender"
Legal tender? Like FRNs? A bank can sell your promise to someone else, for legal tender but can't turn on the printer in the vault to turn it into FRNs.
"there is a real difference between $1,000 in FRNs and a signed loan document on which a debtor promises to pay $1,000 FRN’s plus interest? "
Of course there is a difference. One is very liquid, one is less liquid.
One pays interest, one doesn't. One has risk of default, one doesn't.
"that a bank is able to turn a promise to pay $1,000 FRNs into the legal equivalent of $1,000 in FRNs?"
I don't know your definition of "legal equivalent".
"that creation of FRNs by the Fed and banks by securitizing promises to repay is the source of inflation that caused the FRN to lose approximately 95% of its value since 1913? "
I don't dispute that the growth of high powered money and subsequent growth of M1, M2, M3 etc over and above the growth of GDP causes inflation.
On Jan 03 03:29 AM asleeper wrote:
Returning to a Gold Standard Is a Bad Idea [View article]
It gets exhausting repeating the same, basic, facts and have them bounce off their brick wall.
On Jan 03 02:23 AM Ricard wrote:
> BTW, great work Jim. Thanks for the Econ 101 refresher.
Returning to a Gold Standard Is a Bad Idea [View article]
Deposits and withdrawals are made on a daily basis. Reserves are needed by some banks, some banks have an excess. That's how the business works. It doesn't mean they loaned out more than their deposits. It doesn't indicate anything about inflation.
" Why should a bank have to borrow money to meet its normal liabilities?"
If a bank tried to finance every day obligations with Fed Funds, that could be a troublesome sign. Most banks that borrow Fed Funds also lend Fed Funds soon after.
On Jan 02 11:39 PM moonbat1775 wrote:
Returning to a Gold Standard Is a Bad Idea [View article]
in reserves,it must be paying interest on $10,000 on deposits.
"Have you checked that recently? Interest paid on deposits is almost zero and interest collected on bank "loans" probably averages 5% or better"
My point was not to discuss interest rates, but to show, again, that banks cannot lend out multiples of their deposits. Yes, it's terrible that banks can pay you less than 1% while charging 5% and more. The solution is to become a bank or buy their stock. Their debt now yields in the double digits.
On Jan 02 10:07 PM asleeper wrote: