"Banks create money out of nothing" - Guardian

[grit]

No, we're meant to absolutely spunk everywhere because somebody half-arsedly mentions stuff in the Guardian which people already knew. Oh fractional reserve banking it's a fucking revelation let me buy a million Zeitgeist DVDs right now.

How fucking dare the guardian not assume that all people share this knowledge!

 

[yield]

critique of loon theories around banking/money creation/the federal reserve

 

[RaverDrew]

How fucking dare the guardian not assume that all people share this knowledge!

Better this kinda thing gets taken as common knowledge imo, but yet some seem to pefer the more controlling version of events to be the norm.

Oi lefties/trots/marxists/anarchists etc. get over yourselves ffs... the more people question the bullshit we're fed, the easier/more achievable your cause becomes. You ain't succeeded AT ALL for all this time because you're too pig ignorant about YOUR way being the right way exclusively !!! FFS let people question what they see and accept, only then will the general consensus move in our general direction away from the current bullshit, negative, and destructive way of being.

Or, just carry on like...

 

[Blagsta]

Fractional reserve banking is real and a problem, so comments like this aren't really helpful and just add fuel to the fire that certain sections are merely trying to shut down debate.

Why is it a problem to any greater degree than any other aspect of capitalism? I see loads of people go "OMG fractional reserve banking creates money from nothing!11!!", people who really should know better. It's not a mystery or any big deal and it doesn't create money from nothing. All it is, is a bank circulating what has been deposited. Does anyone really think that your money just sits in bank vaults? No, banks lend and re-invest on the fairly safe bet that everyone will not want to realise their assets in the form of cash all at once. Once we get over the childish idea that money = cash and we understand that money circulates, the mystery and myths disappear.

 

[Blagsta]

Kind of.

It doesn't have the same mathematical properties as a pyramid scheme. Fractional reserve works ad infinitum whilst there's no bank run. But oh man when there's a run... Catastrophic on an epic scale.

Banks will never keep 100% reserves. They couldn't function. Well, maybe they could but say bye bye to free bank accounts.

 

[Blagsta]

This isn't really it paolo, although you describe a credit expansion it doesn't have to happen that way at all, and it is important to get away from the idea that the banks are just passing things around.

From the book earlier linked to:



http://www.positivemoney.org.uk/where-does-money-come-from-book/



http://www.positivemoney.org.uk/2011/12/common-misconceptions-banking/

This is a load of old rubbish. See love detective's many posts de-bunking this.

 

[grit]

Better this kinda thing gets taken as common knowledge imo, but yet some seem to pefer the more controlling version of events to be the norm.

Oi lefties/trots/marxists/anarchists etc. get over yourselves ffs... the more people question the bullshit we're fed, the easier/more achievable your cause becomes. You ain't succeeded AT ALL for all this time because you're too pig ignorant about YOUR way being the right way exclusively !!! FFS let people question what they see and accept, only then will the general consensus move in our general direction away from the current bullshit, negative, and destructive way of being.

Or, just carry on like...

Excellent post, its a tragic comedy seeing some of the reactions to this information.

 

[ItWillNeverWork]

I think there are three questions that need to be answered in understanding how money is created. Firstly, are banks physically able to create money out of nothing? Are they allowed to do so? And is it sustainable for them to do so?

In a narrow sense it can be said that they are able to create 'money out of nothing' by simply granting credit to a borrower and seeking out the funds to back this loan straight after. As long as the books balance by the time it comes for the bank to report it's finances, then there isn't an issue. The balance sheet must always sum to zero, but this does not necessarily mean that a bank has to have deposits prior to it agreeing to lend; it simply means that the deposits must be found from somewhere before it reports it's numbers. This is of course a legal obligation.

In the event that a bank cannot fund it's obligations or locate sufficient funds to back it's loans up, it will either borrow from other banks, or in the case of a sector-wide crisis, go to the central bank to get bailed out. Either way, banks must always locate it's reserves from somewhere in order to be legit. The belief by some people that banks 'create money out of nothing', I think, comes from the way in which they supposedly grant credit and then find the funds to back that credit after the event.

Also, a bank cannot just print money for it's own use as this is quite simply illegal.

Anyway, that's my understanding of it at least.

 

[Blagsta]

Better this kinda thing gets taken as common knowledge imo, but yet some seem to pefer the more controlling version of events to be the norm.

Oi lefties/trots/marxists/anarchists etc. get over yourselves ffs... the more people question the bullshit we're fed, the easier/more achievable your cause becomes. You ain't succeeded AT ALL for all this time because you're too pig ignorant about YOUR way being the right way exclusively !!! FFS let people question what they see and accept, only then will the general consensus move in our general direction away from the current bullshit, negative, and destructive way of being.

Or, just carry on like...

Because changing how banks work will have no effect on day to day struggles over wages, working hours, decent schools, decent housing, decent healthcare etc. Because focusing purely on finance capital and ignoring productive capital opens the way for "its the Jews" propaganda. Don't forget that fascist propaganda was anti finance capital, blaming "international banking elites" (read: Jews) for the 1930s depression.

 

[RaverDrew]

Why is it a problem to any greater degree than any other aspect of capitalism? I see loads of people go "OMG fractional reserve banking creates money from nothing!11!!", people who really should know better. It's not a mystery or any big deal and it doesn't create money from nothing. All it is, is a bank circulating what has been deposited. Does anyone really think that your money just sits in bank vaults? No, banks lend and re-invest on the fairly safe bet that everyone will not want to realise their assets in the form of cash all at once. Once we get over the childish idea that money = cash and we understand that money circulates, the mystery and myths disappear.

It's built on bullshit and leaves it open to abuse. You're right in that it's no worse than other aspects of capitalism, but guess what ? I'm anti-capitalist generally, so why shouldn't we be critical of fractional reserve banking, and look for alternatives ?

 

[RaverDrew]

Because changing how banks work will have no effect on day to day struggles over wages, working hours, decent schools, decent housing, decent healthcare etc. Because focusing purely on finance capital and ignoring productive capital opens the way for "its the Jews" propaganda. Don't forget that fascist propaganda was anti finance capital, blaming "international banking elites" (read: Jews) for the 1930s depression.

Blagsta you seem more obsessed with this whole Jew thing than pretty much any other poster I've seen on this site, seriously wtf ?

 

[Blagsta]

It's built on bullshit and leaves it open to abuse. You're right in that it's no worse than other aspects of capitalism, but guess what ? I'm anti-capitalist generally, so why shouldn't we be critical of fractional reserve banking, and look for alternatives ?

(a) how are "we" going to implement these alternatives
And
(b) what difference will it make?



When I put these questions to people on Facebook, I tend to get sworn at.

 

[Blagsta]

Blagsta you seem more obsessed with this whole Jew thing than pretty much any other poster I've seen on this site, seriously wtf ?

I'm not keen on fascism. Jazzz's politics are fascist.

 

[RaverDrew]

(a) how are "we" going to implement these alternatives
And
(b) what difference will it make?



When I put these questions to people on Facebook, I tend to get sworn at.

I'm not keen on fascism. Jazzz's politics are fascist.

Play the ball, not the man, and I'm sure you'd get sworn at a lot less.

Get the people on your side with rational education and debate, rather than mocking and calling them racists every 5 mins. I'm pretty sure the vast majority want a similar end result as yourself.

 

[ItWillNeverWork]

I'm not keen on fascism. Jazzz's politics are fascist.

Really?

 

[ItWillNeverWork]

After doing a search on Jazzz's post history for the word 'jew', it seems that the only results are ones in which he is defending himself against the accusation of anti-semitism. At one point he even resorts to uploading the passport of his jewish grandmother in order to convince people that he is indeed Jewish himself.

Personally I think you should leave Jazzz alone unless you actually have proof he has said anything anti-semitic.

 

[butchersapron]

After doing a search on Jazzz's post history for the word 'jew', it seems that the only results are ones in which he is defending himself against the accusation of anti-semitism. At one point he even resorts to uploading the passport of his jewish grandmother in order to convince people that he is indeed Jewish himself.

Personally I think you should leave Jazzz alone unless you actually have proof he has said anything anti-semitic.

It's the near ten year history of linking to openly anti-semitic sources that provokes it.

 

[ItWillNeverWork]

It's the near ten year history of linking to openly anti-semitic sources that provokes it.

Right, Ok. I didn't know that. That changes things then. Any examples?

 

[Blagsta]

Play the ball, not the man, and I'm sure you'd get sworn at a lot less.

Get the people on your side with rational education and debate, rather than mocking and calling them racists every 5 mins. I'm pretty sure the vast majority want a similar end result as yourself.

Ironic!

 

[Blagsta]

After doing a search on Jazzz's post history for the word 'jew', it seems that the only results are ones in which he is defending himself against the accusation of anti-semitism. At one point he even resorts to uploading the passport of his jewish grandmother in order to convince people that he is indeed Jewish himself.

Personally I think you should leave Jazzz alone unless you actually have proof he has said anything anti-semitic.

His support of anti-semitic websites passed you by then, his pushing of the protocols passed you by, his support of the racist birther movement passed you by, his references to "international financial elites" passed you by?

 

[butchersapron]

I could also mention his 'research associate' being exposed as a pretty famous holocaust denier.

Is this your first time on a jazzz thread or something itwillneverwork? Pick almost any thread he's started and this sort of slack source-checking is very evident.

 

[Blagsta]

Right, Ok. I didn't know that. That changes things then. Any examples?

Pretty much all the sources he uses. Prisonplanet and infowars being two that spring to mind immediately.

 

[Edie]

About a million years ago I used to teach, amongst other things, "o" level Commerce, to secretarial students ..... they always used to think I was simply making it up when I got to that bit of the syllabus covering banking-- particularly the way banks could, and constantly did, lend out much more money than they actually held as deposits - to the extent governed by the Cash Reserve Ratio set by the Bank of England:

It simply IS the case that banks can and do "create money" out of nothing , all the time - a factor which does have to be strictly controlled by the central bank in a state, or it does indeed produce runaway inflation. Making adjustments to the size of the reserves banks have to hold on to , rather than lend out to new borrowers, is a key part of government economic management. Without the ability of banks to increase the money supply via this "lend more than you have in your vaults as deposits" wheeze, capitalism wouldn't be the dynamically expansive system it has been (most of the time).. and bankers wouldn't have got so very rich ! Of course this entire "upside down pyramid of lending" (balanced on a relatively tiny pile of available cash and easy to liquidate into cash investments) by banks comes seriously unstuck when, Like Northern Rock, the customers lose confidence in the bank and all decide to take their money out -- only to discover it aint in the vaults, it was never all in the vaults .. its been lent out to other people. This "run on the bank" bank collapse happened all over the USA in the 1930's.

That's really interesting. I never knew that.

 

[ItWillNeverWork]

His support of anti-semitic websites passed you by then, his pushing of the protocols passed you by, his support of the racist birther movement passed you by, his references to "international financial elites" passed you by?

Actually, yes they all passed me by. I can't say I follow the man around, hanging on to his every word. I don't bother with conspiracy threads much at all, so having these things pass me by is fairly unsurprising.

 

[Blagsta]

Actually, yes they all passed me by. I can't say I follow the man around, hanging on to his every word. I don't bother with conspiracy threads much at all, so having these things pass me by is fairly unsurprising.

Well stop commenting on things of which you're ignorant then!

 

[ItWillNeverWork]

Is this your first time on a jazzz thread or something itwillneverwork? .

I feel like such a 'newb'.

 

[ItWillNeverWork]

Well stop commenting on things of which you're ignorant then!

Oh do fuck off, you self-important tit.

 

[Blagsta]

Oh do fuck off, you self-important tit.

Hang on a minute, you're the one defending a fascist and getting it all wrong, yet I'm self important? Look in the mirror.

 

[cesare]

I feel like such a 'newb'.

It can be quite easy to miss - some of the nasty stuff isn't immediately obvious especially if you only have a quick glance. I remember when it was pointed out to me, then going to have a proper look

 

[ItWillNeverWork]

Hang on a minute, you're the one defending a fascist and getting it all wrong, yet I'm self important? Look in the mirror.

See. Even there you're being self-important.