Mrs Magpie
On a bit of break...
I don't think Jazzz is a Nazi. I think he's deluded and only sees what fits in with his skewed view.Hitler loved his mum
I don't think Jazzz is a Nazi. I think he's deluded and only sees what fits in with his skewed view.Hitler loved his mum
I don't think Jazzz is a Nazi. I think he's deluded and only sees what fits in with his skewed view.
Which is why I think Blagsta, training as an MH nurse, looks like a bully (although he does wade in on anyone who doesn't agree with him) which could also be regarded as inexcusable.I don't either.
I do think he's mad and that his madness leads him to be soft on anti-semites, which is inexcusable.
So let's clarify further - is jazzz correct or is he wrong to say that non-central banks create money out of nothing?
Hitler loved his mum
Why have you quoted that to me?I am pretty much blue in the face now, so perhaps can just help by quoting others:
Professor Richard Werner at the Just Banking Conference April 2012
In comparison with the mainstream story... here we have a new deposit of a hundred pounds with the bank... and we're told it gives them £1 to the central bank as reserve, and then it lends ninety-nine pounds... it's just not true. You see the methodology used in the mainstream [economics] is the deductive methodology, it doesn't start out looking with reality and facts, it says, "oh, we have axioms, axioms are things that we know to be true. And they're so true, we know them so much to be true, that we never have to check whether they are actually true". And by the way, they're not true. And then we add assumptions to this, and assumptions are things that we know from the outset are things that we know are not true, but what the heck let's just build a model based on them. This construct would not come up the with idea of how reality works, because reality is just so quirky. A logical deduction from first principles wouldn't deliver the banking system that we have. So it wouldn't occur to economists.
What actually happens when you have a new deposit of one hundred pounds with the bank is that, and we have a reserve requirement of one percent, for sake of argument, not one pound is given to the central bank, but the entire one hundred deposit. And the bank then says, well that's my one percent reserve. Alright, and so we've got the new deposit, one hundred pounds, and immediately the deposit with the central bank, double-entry bookkeeping as Josh pointed out, so how much can the bank now lend? If the one hundred is the one percent, of ten thousand, minus the one hundred given to the central bank, means nine thousand nine hundred. And how's this done? The moment you get your loan contract signed, the bank can put this one the asset side as an asset, and then it has to invent the liability for the balance sheet to balance. Well, you'll ask, can I please have the money, I don't care about the accounting. And the bank will say, we've just put it into your account. They may even say, erroneously, we've transferred it into your account. There's no transfer. They just write the figure. Somebody types it in. And so this is how it actually works, and the reason this is not recognised is the fundamental flaw in the methodology of economics. There is no such thing as a bank 'loan', there is only bank credit creation.
[starts 8:40 or so]
He loved her so much he had the village he was born in erased and all history of it removed. There's also rumour that his grandma was four by two which if ever proven would be one to make Jehovah himself facepalm. If the kremlin archives would yeild up the suspected remains we might get some DNA clue but either way. He only had one ball.
I mean the stuff about the destruction of his birth village.Next you'll be telling me goerrings was not rather small
I mean the stuff about the destruction of his birth village.
Just using your question as the serve.Why have you quoted that to me?
Which is why I think Blagsta, training as an MH nurse, looks like a bully (although he does wade in on anyone who doesn't agree with him) which could also be regarded as inexcusable.
Goering had no balls at all
No, I was saying that a board persona can give an entirely false impression.....and grumpy fucker is a bit of a twee term for something that really could be construed as bullying.Are you implying that being a grumpy fucker on a message board is somehow akin to anti-semitism?
I don't know ayatollahWhy are so many posters having such a problem with the simple "o" level Commerce fact that each and every bank, within constraints set by the central bank, do "create money", all the time ?
You may well be right, although he had many children. This is the version my Granny sang while driving her ambulance in the Blitz, or so she told me.always thought it was Goebbels who had no balls? scans better...
quiet womanJazzz, please would you cut to the chase and let us know what you're proposing instead of the banking system, please?
I think it was sub-prime/credit crunch when 75% of their funding model relied on that, that caused what happened - rather than any short term funding being demanded back.
put even more simply, it's their debtIt was actually more a simple case of the later - they funded their long term lending via short term funding which they had expected to be able to roll over continuously each time it came due for repayment - when things froze up they weren't able to roll over that funding and were forced to go to the state for emergency funding (this is what i meant when i mentioned to IWNW about what a bank's obligations are, i.e. they're not what the bank has lent, but what they have borrowed to fund that lending)
quiet woman
it's only been seventeen pages
the thread's hardly got going.
the world is full of things that jazzz can't grasp.Sorry I guess I'm getting a bit bored with Jazzz getting het up about banks creating money without grasping that they can't do it in a vacuum.
It was actually more a simple case of the later - they funded their long term lending via short term funding which they had expected to be able to roll over continuously each time it came due for repayment - when things froze up they weren't able to roll over that funding and were forced to go to the state for emergency funding (this is what i meant when i mentioned to IWNW about what a bank's obligations are, i.e. they're not what the bank has lent, but what they have borrowed to fund that lending)
Why are so many posters having such a problem with the simple "o" level Commerce fact that each and every bank, within constraints set by the central bank, do "create money", all the time ?
From Wikipedia:
Fractional-reserve banking is a form of banking where banks maintain reserves (of cash and coin or deposits at the central bank) that are equal to only a fraction of the amounts of customers' deposits. Funds deposited at a bank are mostly lent out; the bank keeps only a fraction (called the reserve ratio) of those funds as assets or "reserves". Some of the funds lent out are subsequently deposited with another bank, increasing the fund assets and deposit liabilities at that second bank, and allowing further lending. As most bank deposits are treated as money in their own right, fractional reserve banking increases the money supply, and banks are said to create money. Due to the prevalence of fractional reserve banking, the broad money supply of most countries is a multiple larger than the amount of base money created by the country's central bank. That multiple (called the money multiplier) is determined by the reserve requirement or other financial ratio requirements imposed by financial regulators, by the excess reserves kept by commercial banks, and by the publicly held currency not deposited in banks.[1][2]
Example
As a simple example of how the fractional reserve system works, consider a scenario of only one bank, a reserve fraction of 10%, and an initial money supply of $1000 cash that is initially deposited at our bank. This can effectively be turned into $9954 through 50 successive loans and redeposits. This is achieved as follows. Only 10% of the original $1000 is required to be held as reserve for the deposit, and so the remaining $900 can be loaned out to a customer who will most likely exchange it with another person for some goods or services. That person will most likely in turn redeposit it in another account within our bank. As only 10% of this new deposit must be held in reserve, the remaining $810 may then be loaned out again and subsequently redeposited, and so on and so forth. If we end the series after 50 iterations, we find that we have $9954 now in existence within the money supply.
put even more simply, it's their debt
Ah, I probably didn't phrase it well. I meant that their funding model based on 75% wholesale funding fell apart when they couldn't get the short term funding necessary to fund that when the sub-prime/credit crunch hit - rather than their liquidity crisis being a result of short term funding loans being demanded *back* which is what camouflage was asking.
yeah but the former is pretty much just the same as the later
because their reliance on wholesale funding to fund the bulk of their lending was also the reliance on short term funding in the wholesale market
so this funding was in a sense 'demanded back' because it had only been extended to NR for a period of 3 months (and previously always rolled over when the 3 month's were up) but when the music stopped, and the latest three month batch came to an end they market wasn't willing or able to roll it over again, hence the need for 30bn of emergency funding form the state to plug the gap