Bailout

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prairiedog
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Re: Bailout

Post by prairiedog » Sun Mar 01, 2009 6:50 pm

AGENT-784 wrote:
Gerry wrote:
prairiedog wrote:
AGENT-784 wrote:The corporations will never voluntarily surrender the keys which allow them to create DEBT...The corporations will never give back the keys which allow private banks to confiscate value via INTEREST.

INTEREST=DEBT=SLAVERY
Listen to the agent. he knows what he's talking about.

When you take out a mortgage, you are making a deal with a bank. What is the bank's side of the deal? They write a number in your account. It's credit out of thin air. The bank risks NOTHING. What's your end? Repay this newly conjured money with real sweat and toil (which is real value) and INTEREST on top of that. Furthermore, you must risk collateral (usually the home your family lives in - MORE real value) just for the right to work your ass off for the next 20 years to repay allthis money that the bank conjured out of thin air.

I might consider taking out a mortgage if I felt that the bank was actually risking something to help me out, but they're not. They're just STEALING real wealth from the economy.

Like I said before. There is money and there is wealth. Know the difference.
Please. Money out of thin air? Try deposits from other bank customers. For which they pay interest. It is not a number out of thin air. Where are you getting this stuff from?
Do a google search : Money As Debt
Watch the 47 minute video made around 2007 by a Canadian.

Do a google search : Fiat Empire
Watch the 58 minute video made around 2006.

The popular deposits from other bank customers "angle" is another example of what is perpetuated by the filtered media. It is only fractionally true.
I'll add that this is nothing new. It's gone on for centuries.

http://video.google.com/videoplay?docid ... 4876413449

G Edward Griffin's Classic from 1972 spells it all out.

The Federal Reseve System is FRAUD. It creates money out of thin air. Because Gerry, High Scool Consumer class even tells us that fractional reserve banking in Canada at 4% means that a bank need only hold 4% of it's deposits, which means that it can loan out 26 TIMEs the amount in its vaults - MONEY THAT DOES NOT EXIST. Plus, once I take out a loan and receive some of this newly created money, I can write you a check and you can go deposit this non-existent money into another bank and they can LOAN IT OUT 26 TIMES AGAIN!

Do the math. I'm serious. I did it when I was 20. get a piece of paper, draw an island with 10 people, have a bank issue them each $100 and start performing loans and transactions. After a while add up all the money on the island and there will be MORE than what you started with.
ping wrote:Funny thing is all argo fans should support the cats and vise-versa. There not our enemy, Montreal is!!
heh

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Re: Bailout

Post by prairiedog » Sun Mar 01, 2009 6:57 pm

Gerry wrote:Please. Money out of thin air? Try deposits from other bank customers. For which they pay interest. It is not a number out of thin air. Where are you getting this stuff from?
Gerry, it's quite simple once you get it. It took me a while to catch on myself.

Ok, we have a currency monopoly. The only insttution in canada permitted to print money is the Bank of Canada (a private institution). No one else is allowed, although there is foreign currency in our country but for all intents and purposes, we have a currency monopoly.

When the Bank of Canada "buys" bonds from the government, new money is printed to pay the govt for the bonds. What is a bond? A promise to repay - WITH INTEREST. Now the bond must be repaid in Canadian dollars. So ask yourself how the govt is supposed to pay back the total amount of canadian dollars ever printed PLUS INTEREST in more canadian dollars? It is mathematically impossible.

Once you get this, the rest all starts making sense. It's fraud.
ping wrote:Funny thing is all argo fans should support the cats and vise-versa. There not our enemy, Montreal is!!
heh

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Re: Bailout

Post by Gerry » Mon Mar 02, 2009 11:03 am

prairiedog wrote:
AGENT-784 wrote:
Gerry wrote:
prairiedog wrote:
AGENT-784 wrote:The corporations will never voluntarily surrender the keys which allow them to create DEBT...The corporations will never give back the keys which allow private banks to confiscate value via INTEREST.

INTEREST=DEBT=SLAVERY
Listen to the agent. he knows what he's talking about.

When you take out a mortgage, you are making a deal with a bank. What is the bank's side of the deal? They write a number in your account. It's credit out of thin air. The bank risks NOTHING. What's your end? Repay this newly conjured money with real sweat and toil (which is real value) and INTEREST on top of that. Furthermore, you must risk collateral (usually the home your family lives in - MORE real value) just for the right to work your ass off for the next 20 years to repay allthis money that the bank conjured out of thin air.

I might consider taking out a mortgage if I felt that the bank was actually risking something to help me out, but they're not. They're just STEALING real wealth from the economy.

Like I said before. There is money and there is wealth. Know the difference.
Please. Money out of thin air? Try deposits from other bank customers. For which they pay interest. It is not a number out of thin air. Where are you getting this stuff from?
Do a google search : Money As Debt
Watch the 47 minute video made around 2007 by a Canadian.

Do a google search : Fiat Empire
Watch the 58 minute video made around 2006.

The popular deposits from other bank customers "angle" is another example of what is perpetuated by the filtered media. It is only fractionally true.
I'll add that this is nothing new. It's gone on for centuries.

http://video.google.com/videoplay?docid ... 4876413449

G Edward Griffin's Classic from 1972 spells it all out.

The Federal Reseve System is FRAUD. It creates money out of thin air. Because Gerry, High Scool Consumer class even tells us that fractional reserve banking in Canada at 4% means that a bank need only hold 4% of it's deposits, which means that it can loan out 26 TIMEs the amount in its vaults - MONEY THAT DOES NOT EXIST. Plus, once I take out a loan and receive some of this newly created money, I can write you a check and you can go deposit this non-existent money into another bank and they can LOAN IT OUT 26 TIMES AGAIN!

Do the math. I'm serious. I did it when I was 20. get a piece of paper, draw an island with 10 people, have a bank issue them each $100 and start performing loans and transactions. After a while add up all the money on the island and there will be MORE than what you started with.
If I put $100 in a bank, fractional reserve at 4% says that they can lend out $96 of that money and that they must keep $4 on hand (for people to withdraw). The rest of my deposit is backed up by the $96 that they lent out. There is no money out of thin air, as some people like to describe it. The bank cannot lend out more money than the value of the deposits they carry on their books along with their own capital and profits.

Or, do you feel that a bank should retain 100% of it's deposits? How would that make any sense?

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Re: Bailout

Post by prairiedog » Mon Mar 02, 2009 12:35 pm

Gerry wrote:
prairiedog wrote:
AGENT-784 wrote:
Gerry wrote:
prairiedog wrote:
AGENT-784 wrote:The corporations will never voluntarily surrender the keys which allow them to create DEBT...The corporations will never give back the keys which allow private banks to confiscate value via INTEREST.

INTEREST=DEBT=SLAVERY
Listen to the agent. he knows what he's talking about.

When you take out a mortgage, you are making a deal with a bank. What is the bank's side of the deal? They write a number in your account. It's credit out of thin air. The bank risks NOTHING. What's your end? Repay this newly conjured money with real sweat and toil (which is real value) and INTEREST on top of that. Furthermore, you must risk collateral (usually the home your family lives in - MORE real value) just for the right to work your ass off for the next 20 years to repay allthis money that the bank conjured out of thin air.

I might consider taking out a mortgage if I felt that the bank was actually risking something to help me out, but they're not. They're just STEALING real wealth from the economy.

Like I said before. There is money and there is wealth. Know the difference.
Please. Money out of thin air? Try deposits from other bank customers. For which they pay interest. It is not a number out of thin air. Where are you getting this stuff from?
Do a google search : Money As Debt
Watch the 47 minute video made around 2007 by a Canadian.

Do a google search : Fiat Empire
Watch the 58 minute video made around 2006.

The popular deposits from other bank customers "angle" is another example of what is perpetuated by the filtered media. It is only fractionally true.
I'll add that this is nothing new. It's gone on for centuries.

http://video.google.com/videoplay?docid ... 4876413449

G Edward Griffin's Classic from 1972 spells it all out.

The Federal Reseve System is FRAUD. It creates money out of thin air. Because Gerry, High Scool Consumer class even tells us that fractional reserve banking in Canada at 4% means that a bank need only hold 4% of it's deposits, which means that it can loan out 26 TIMEs the amount in its vaults - MONEY THAT DOES NOT EXIST. Plus, once I take out a loan and receive some of this newly created money, I can write you a check and you can go deposit this non-existent money into another bank and they can LOAN IT OUT 26 TIMES AGAIN!

Do the math. I'm serious. I did it when I was 20. get a piece of paper, draw an island with 10 people, have a bank issue them each $100 and start performing loans and transactions. After a while add up all the money on the island and there will be MORE than what you started with.
If I put $100 in a bank, fractional reserve at 4% says that they can lend out $96 of that money and that they must keep $4 on hand (for people to withdraw). The rest of my deposit is backed up by the $96 that they lent out. There is no money out of thin air, as some people like to describe it. The bank cannot lend out more money than the value of the deposits they carry on their books along with their own capital and profits.

Or, do you feel that a bank should retain 100% of it's deposits? How would that make any sense?
Your honesty is your fatal flaw. Bankers aren't honest, they do their math differently.

bankers view deposits as liabilities, bcause thay have to PAY out interest ion them. They see outstanding loans and credit as assets because they get to COLLECT interest on them.

In the 10th grade our BC govt school system taught me that in Canada we have 4% fractional reserve meaning that a bank can loan out roughly 26 times the amount ion its vaults. This is the GOVT SCHOOL SYSTEMs words not mine. The number 26 times is printed in the text books. And you can confirm this with any banker or economist you can find. Because 4 (% reserve) x 26 = roughly 100%. In the US, the reserve is 10%, so that Amwerican banks loan out roughly 9 or 10 times what is in their vaults.

Bankers do their math differently, and the reason it makes little sense to the average Joe is because it is fraudulent by design. it's not supposed to add up. The stuff in the vaults never gets loaned out. They just create credit accounts to max their total assets (as defined above) to as close to 26 times the vault amount as possible, meaning that the vault is theoretically 4% of the assets. Talk to any bank manager you can find, he will not deny any of this. An accountant might, but accountants aren't bankers. They don't necessarily know.

Go read ANY book on introductory banking. Might I recommend Walter L Stewart's "Towers of Gold, Feet of Clay" he explains the Canadian banking System in detail, including parliament bond auction and all of fractional reserve.

Or watch the links above. Watching a 40 minute video is much quicker than reading, and is just as effective.
ping wrote:Funny thing is all argo fans should support the cats and vise-versa. There not our enemy, Montreal is!!
heh

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Re: Bailout

Post by Gerry » Mon Mar 02, 2009 7:20 pm

Sorry, pdawg. I'm not interested in the videos.

I gave you a simple example of 4% fractional reserve as I see it. Never mind what the bankers call the client's deposits, or the client's loans. Never mind what an economist or an accountant calls anything.

You seem quite sure of your position that bankers pull money out of thin air. That makes no sense to me, and if you are so sure of yourself, you should be able to explain it by showing me how my example a couple of posts up is wrong.

The whole subject of what the government does with bonds, printing money etc. is another subject altogether. I've heard a lot of conspiracy type conversation about that as well lately but haven't looked into it very much, and like I say, that's another subject.

But I have heard this idea about the banks producing money out of thin air before and it's all hog wash. I've seen people's "proofs" for it before, and they are illogical.

What it boils down to is that you are saying that banks should not be allowed to lend out any of the money that their clients deposit into their bank. They would have to leave it all in the vault. Any amount of loans out over deposits held would be a fractional reserve of some percentage and would have you doom and gloom conspiracy types crying that they are creating money out of thin air, which is, to my way of seeing things, ridiculous.

Please. If you are so sure of yourself, tell me in your own words how banks create money out of nothing.

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Re: Bailout

Post by Gerry » Mon Mar 02, 2009 7:46 pm

prairiedog wrote:
The Federal Reseve System is FRAUD. It creates money out of thin air. Because Gerry, High Scool Consumer class even tells us that fractional reserve banking in Canada at 4% means that a bank need only hold 4% of it's deposits, which means that it can loan out 26 TIMEs the amount in its vaults - MONEY THAT DOES NOT EXIST.
If this is your logic, dawg, then it's quite easy to show you how you're looking at it wrong.

First of all, the number is 24. 24 times. A fractional reserve of 4% means that when I deposit $100 (that's real honest to goodness dollars in any form you like, sweat, gold whatever) into a bank, they put that number down as an asset to me and a liability to them in the amount of 100. They have to keep 4 of those 100 on hand, or in the vault if you will. The other 96 they lend out to people and businesses at a higher interest rate than what they are paying me for the original 100. That's how they make money and stay in business.

The net effect is that they have $4 in the vault and $96 out on loan. So yes, they have 24 times as much lent out as what they hold, but none of the $96 is out of thin air. It's still my original $100.

It's true that the whole system depends on solvency. If the bank doesn't get the money back from the people they lent the $96 to, they'll have a hard time giving me back my $100 if I suddenly wanted to withdraw it. At some point someone decided that 4% was enough, that no more than that would be demanded in a short period of time.

So, do you still feel that it's money out of thin air? What am I missing, as you see it?

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Re: Bailout

Post by Gerry » Mon Mar 02, 2009 8:05 pm

prairiedog wrote:
Gerry wrote:Please. Money out of thin air? Try deposits from other bank customers. For which they pay interest. It is not a number out of thin air. Where are you getting this stuff from?
Gerry, it's quite simple once you get it. It took me a while to catch on myself.

Ok, we have a currency monopoly. The only insttution in canada permitted to print money is the Bank of Canada (a private institution). No one else is allowed, although there is foreign currency in our country but for all intents and purposes, we have a currency monopoly.

When the Bank of Canada "buys" bonds from the government, new money is printed to pay the govt for the bonds. What is a bond? A promise to repay - WITH INTEREST. Now the bond must be repaid in Canadian dollars. So ask yourself how the govt is supposed to pay back the total amount of canadian dollars ever printed PLUS INTEREST in more canadian dollars? It is mathematically impossible.

Once you get this, the rest all starts making sense. It's fraud.
This is typical of the responses I get when I challenge people on their silly claims. You start off and end up being condescending. Check out your first, second,and second-last sentences.

Then, check out my quote that you are responding to. I was talking about banks and their claimed ability to produce money out of thin air. You respond with another subject altogether, government bonds. You don't even address the post you are responding to.

I'll ask the question again. Where are you getting this stuff from? And, I don't want a literal answer. I don't really want a link to a video. I want you to explain yourself what you are "getting".

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Re: Bailout

Post by AGENT-784 » Tue Mar 03, 2009 12:07 pm

Okay, let us suppose that a new bank has opened on my street, and I am their only customer who deposits 100 dollars, as soon as the doors are open...

For the sake of simplicity, let us just follow the 100 dollars...

My work created 100 dollars of VALUE which is now in the vault...

From the 100 dollars, the bank deposits 96 dollars, as a LOAN, into the account of Borrower #1, and immediately accrues COMPOUND interest.

From that 96 dollars, the bank can now CREATE a paper deposit of 92.16 dollars, as a LOAN, into the account of Borrower #2, and immediately accrues COMPOUND interest. This 92.16 dollars does not represent VALUE, it represents DEBT, because it was CREATED outside the equation of 96+4=100.

From that 92.16 dollars, the bank can now CREATE a paper deposit of 88.48 dollars, as a LOAN, into the account of Borrower #3, and immediately accrues COMPOUND interest. This 88.48 dollars does not represent VALUE, it represents DEBT, because it was CREATED outside of the equation 96+4=100.

From that 88.48 dollars, the bank can now CREATE a paper deposit of 84.94 dollars, as a LOAN, into the account of Borrower #4, and immediately accrues COMPOUND interest. This 84.94 dollars does not represent VALUE, it represents DEBT, because it was CREATED outside of the equation of 96+4=100.

The bank can, and will continue to replicate this pattern of CREATING paper deposits, AND accruing interest, until it is unable to generate a loan of as little 0.01 dollars.

By the time the bank has CREATED a paper deposit for Borrower #10, the bank is accruing COMPOUND interest on over 804.40 dollars. But that is just the tip of the ice-berg, because the line-up of borrowers is outside the door, and down the block. Remember, there was only 100 dollars of actual VALUE in the vault.

This continuing CREATION of paper deposits is the root of INFLATION, and ensures the theft of VALUE, via COMPOUND interest, from working people.

Wherever the word DEBT is used, the true definition is SLAVERY.
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Re: Bailout

Post by Gerry » Tue Mar 03, 2009 12:26 pm

AGENT-784 wrote:Okay, let us suppose that a new bank has opened on my street, and I am their only customer who deposits 100 dollars, as soon as the doors are open...

For the sake of simplicity, let us just follow the 100 dollars...

My work created 100 dollars of VALUE which is now in the vault...

From the 100 dollars, the bank deposits 96 dollars, as a LOAN, into the account of Borrower #1, and immediately accrues COMPOUND interest.

From that 96 dollars, the bank can now CREATE a paper deposit of 92.16 dollars, as a LOAN, into the account of Borrower #2, and immediately accrues COMPOUND interest. This 92.16 dollars does not represent VALUE, it represents DEBT, because it was CREATED outside the equation of 96+4=100.

From that 92.16 dollars, the bank can now CREATE a paper deposit of 88.48 dollars, as a LOAN, into the account of Borrower #3, and immediately accrues COMPOUND interest. This 88.48 dollars does not represent VALUE, it represents DEBT, because it was CREATED outside of the equation 96+4=100.

From that 88.48 dollars, the bank can now CREATE a paper deposit of 84.94 dollars, as a LOAN, into the account of Borrower #4, and immediately accrues COMPOUND interest. This 84.94 dollars does not represent VALUE, it represents DEBT, because it was CREATED outside of the equation of 96+4=100.

The bank can, and will continue to replicate this pattern of CREATING paper deposits, AND accruing interest, until it is unable to generate a loan of as little 0.01 dollars.

By the time the bank has CREATED a paper deposit for Borrower #10, the bank is accruing COMPOUND interest on over 804.40 dollars. But the line-up of borrowers is outside the door, and down the block. Remember, there was only 100 dollars of actual VALUE in the vault.

This continuing CREATION of paper deposits is the root of INFLATION, and ensures the theft of VALUE, via COMPOUND interest, from working people.

Wherever the word DEBT is used, the true definition is SLAVERY.
Barring your conclusions that this is slavery, creation of money, theft...so what? You neglect to mention that the bank is also paying interest on the money that is deposited into the accounts of their clients. That amount adds up in exactly the same way as the interest on the loans. And, there have to be subsequent deposits in order for there to be subsequent loans, don't there? So, the difference on a dollar basis between what they pay and what they charge is the exact difference between their stated interest rate on loans versus savings, GICs etc.

Your post is an interesting look at how money circulates, but that is all it is. No one creates anything out of nothing. There is no theft or slavery involved. You have also shown no correlation at all with this modern, universal banking practise and inflation.

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Re: Bailout

Post by Ron » Tue Mar 03, 2009 12:32 pm

Warren Buffet quote

Funders that have access to any sort of government guarantee – banks with FDIC-insured deposits, large entities with commercial paper now backed by the Federal Reserve, and others who are using imaginative methods (or lobbying skills) to come under the government’s umbrella – have money costs that are minimal.

Conversely, highly-rated companies, such as Berkshire, are experiencing borrowing costs that, in relation to Treasury rates, are at record levels. Moreover, funds are abundant for the government-guaranteed borrower but often scarce for others, no matter how creditworthy they may be.

This unprecedented “spread” in the cost of money makes it unprofitable for any lender who doesn’t enjoy government-guaranteed funds to go up against those with a favored status. Government is determining the “haves” and “have-nots.” That is why companies are rushing to convert to bank holding companies, not a course feasible for Berkshire.

Though Berkshire’s credit is pristine – we are one of only seven AAA corporations in the country – our cost of borrowing is now far higher than competitors with shaky balance sheets but government backing. At the moment, it is much better to be a financial cripple with a government guarantee than a Gibraltar without one.
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Re: Bailout

Post by AGENT-784 » Tue Mar 03, 2009 2:11 pm

Gerry wrote:
AGENT-784 wrote:Okay, let us suppose that a new bank has opened on my street, and I am their only customer who deposits 100 dollars, as soon as the doors are open...

For the sake of simplicity, let us just follow the 100 dollars...

My work created 100 dollars of VALUE which is now in the vault...

From the 100 dollars, the bank deposits 96 dollars, as a LOAN, into the account of Borrower #1, and immediately accrues COMPOUND interest.

From that 96 dollars, the bank can now CREATE a paper deposit of 92.16 dollars, as a LOAN, into the account of Borrower #2, and immediately accrues COMPOUND interest. This 92.16 dollars does not represent VALUE, it represents DEBT, because it was CREATED outside the equation of 96+4=100.

From that 92.16 dollars, the bank can now CREATE a paper deposit of 88.48 dollars, as a LOAN, into the account of Borrower #3, and immediately accrues COMPOUND interest. This 88.48 dollars does not represent VALUE, it represents DEBT, because it was CREATED outside of the equation 96+4=100.

From that 88.48 dollars, the bank can now CREATE a paper deposit of 84.94 dollars, as a LOAN, into the account of Borrower #4, and immediately accrues COMPOUND interest. This 84.94 dollars does not represent VALUE, it represents DEBT, because it was CREATED outside of the equation of 96+4=100.

The bank can, and will continue to replicate this pattern of CREATING paper deposits, AND accruing interest, until it is unable to generate a loan of as little 0.01 dollars.

By the time the bank has CREATED a paper deposit for Borrower #10, the bank is accruing COMPOUND interest on over 804.40 dollars. But the line-up of borrowers is outside the door, and down the block. Remember, there was only 100 dollars of actual VALUE in the vault.

This continuing CREATION of paper deposits is the root of INFLATION, and ensures the theft of VALUE, via COMPOUND interest, from working people.

Wherever the word DEBT is used, the true definition is SLAVERY.
Barring your conclusions that this is slavery, creation of money, theft...so what? You neglect to mention that the bank is also paying interest on the money that is deposited into the accounts of their clients. That amount adds up in exactly the same way as the interest on the loans. And, there have to be subsequent deposits in order for there to be subsequent loans, don't there? So, the difference on a dollar basis between what they pay and what they charge is the exact difference between their stated interest rate on loans versus savings, GICs etc.

Your post is an interesting look at how money circulates, but that is all it is. No one creates anything out of nothing. There is no theft or slavery involved. You have also shown no correlation at all with this modern, universal banking practise and inflation.
In my simplified example, I am the only bank customer who has made a deposit of 100 dollars for the purpose of SAVING, every other customer has taken a loan for the purpose of writing a cheque. When Borrower #10 has written his cheque, the total amount of cheques is 804.40 dollars...hardly equal to the 100 dollars which initially was in the vault. So, we know where 100 dollars came from...Where did the 704.40 dollars come from ? From the banker's own pocket...Not a chance.

If the bank pays interest at 4 percent and collects interest at 8 percent :

After the first interest period, the bank pays me 4 dollars, but will have collected 64.33 dollars from just the first ten borrowers, leaving a profit of 60.33 dollars. Repeat this with the second person who comes in off the street with 100 dollars to deposit into a SAVINGS account...and so on...

I worked to earn 100 dollars in order to collect 4 dollars of interest. The bank leveraged my 100 dollars to collect 64.33 dollars from just the first ten borrowers.

As for INFLATION, there was no such thing remotely similar to it in North America until the Federal Reserve set up shop, which was also when the current Personal Income Tax came into being.

By the way, What are you afraid of seeing in the videos. By my reckoning, these were made by honourable people whose wish was to expose some details which are documented historically, and are worth discussing.

Do watch the videos, and then, by all means, refute any of the statements which you disagree with.
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Re: Bailout

Post by Gerry » Tue Mar 03, 2009 3:54 pm

AGENT-784 wrote:Okay, let us suppose that a new bank has opened on my street, and I am their only customer who deposits 100 dollars, as soon as the doors are open...

For the sake of simplicity, let us just follow the 100 dollars...

My work created 100 dollars of VALUE which is now in the vault...

From the 100 dollars, the bank deposits 96 dollars, as a LOAN, into the account of Borrower #1, and immediately accrues COMPOUND interest.
The bank now has $4 in the vault, which is essentially idle, useless money. It has $96 out on loan, on which it is making money. But don't forget that they are paying interest on $196, being your $100 and the $96 into borrower #1's account.
From that 96 dollars, the bank can now CREATE a paper deposit of 92.16 dollars, as a LOAN, into the account of Borrower #2, and immediately accrues COMPOUND interest. This 92.16 dollars does not represent VALUE, it represents DEBT, because it was CREATED outside the equation of 96+4=100.
The bank now has $4 + $3.84 = $7.84 in it's vault which is idle money. It has $188.16 out as loans, on which it collects interest. And, they are paying interest on $288.16. They'd better hurry up and lend out this money, eh? Or they'll go broke.
From that 92.16 dollars, the bank can now CREATE a paper deposit of 88.48 dollars, as a LOAN, into the account of Borrower #3, and immediately accrues COMPOUND interest. This 88.48 dollars does not represent VALUE, it represents DEBT, because it was CREATED outside of the equation 96+4=100.
The bank now has $4 + $3.84 + $3.69 = $11.53 of idle money in its vault. It has lent out $276.63 on which it makes money. It is paying interest on $376.63.
From that 88.48 dollars, the bank can now CREATE a paper deposit of 84.94 dollars, as a LOAN, into the account of Borrower #4, and immediately accrues COMPOUND interest. This 84.94 dollars does not represent VALUE, it represents DEBT, because it was CREATED outside of the equation of 96+4=100.
Now it's $15.07 in idle money (the reserve). They're lending out and making money on $361.56. They're paying interest on $461.56.
The bank can, and will continue to replicate this pattern of CREATING paper deposits, AND accruing interest, until it is unable to generate a loan of as little 0.01 dollars.
Except that the bank does not do this. The bank AND its clients do this. For someone to lend, someone else has to borrow. The bank in turn is also a borrower. You conveniently neglect to mention that. As I have shown you step by step, at each step in your example, the bank's debt is increased as well as its cumulative clients'.
By the time the bank has CREATED a paper deposit for Borrower #10, the bank is accruing COMPOUND interest on over 804.40 dollars. But that is just the tip of the ice-berg, because the line-up of borrowers is outside the door, and down the block. Remember, there was only 100 dollars of actual VALUE in the vault.
By my math, the number is $804.34 that the bank is lending out and making money on. If you stop the chain here and assume that borrower #10 does not deposit the money but spends it instead, we can take a look at where we end up. Doing a bit more math also shows that the are paying out interest on $837.87 in deposits that all of their clients have in accounts. And they have reserve funds of $33.53.

Remember that people (the bank included) are lending and borrowing this money back and forth.
This continuing CREATION of paper deposits is the root of INFLATION, and ensures the theft of VALUE, via COMPOUND interest, from working people.
Bull. By the time everyone has paid everyone back, the bank will have made higher interest on the $804.34 it lent out and paid lower interest on the $837.87 it borrowed and made no money on the reserve. Everyone will have gotten exactly what they knew they were going to get going in and paid exactly what they knew they were going to pay. The bank merely gets paid for keeping track of it all, and don't forget that if one of the borrowers defaults, the bank is still liable for paying out on the deposits. I'd dare say that the bank is a safer bet to pay than any of the individuals involved. No one steals and everyone benefits.
Wherever the word DEBT is used, the true definition is SLAVERY.
That's funny. Try again.

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Re: Bailout

Post by Gerry » Tue Mar 03, 2009 4:27 pm

AGENT-784 wrote:
Gerry wrote:
AGENT-784 wrote:Okay, let us suppose that a new bank has opened on my street, and I am their only customer who deposits 100 dollars, as soon as the doors are open...

For the sake of simplicity, let us just follow the 100 dollars...

My work created 100 dollars of VALUE which is now in the vault...

From the 100 dollars, the bank deposits 96 dollars, as a LOAN, into the account of Borrower #1, and immediately accrues COMPOUND interest.

From that 96 dollars, the bank can now CREATE a paper deposit of 92.16 dollars, as a LOAN, into the account of Borrower #2, and immediately accrues COMPOUND interest. This 92.16 dollars does not represent VALUE, it represents DEBT, because it was CREATED outside the equation of 96+4=100.

From that 92.16 dollars, the bank can now CREATE a paper deposit of 88.48 dollars, as a LOAN, into the account of Borrower #3, and immediately accrues COMPOUND interest. This 88.48 dollars does not represent VALUE, it represents DEBT, because it was CREATED outside of the equation 96+4=100.

From that 88.48 dollars, the bank can now CREATE a paper deposit of 84.94 dollars, as a LOAN, into the account of Borrower #4, and immediately accrues COMPOUND interest. This 84.94 dollars does not represent VALUE, it represents DEBT, because it was CREATED outside of the equation of 96+4=100.

The bank can, and will continue to replicate this pattern of CREATING paper deposits, AND accruing interest, until it is unable to generate a loan of as little 0.01 dollars.

By the time the bank has CREATED a paper deposit for Borrower #10, the bank is accruing COMPOUND interest on over 804.40 dollars. But the line-up of borrowers is outside the door, and down the block. Remember, there was only 100 dollars of actual VALUE in the vault.

This continuing CREATION of paper deposits is the root of INFLATION, and ensures the theft of VALUE, via COMPOUND interest, from working people.

Wherever the word DEBT is used, the true definition is SLAVERY.
Barring your conclusions that this is slavery, creation of money, theft...so what? You neglect to mention that the bank is also paying interest on the money that is deposited into the accounts of their clients. That amount adds up in exactly the same way as the interest on the loans. And, there have to be subsequent deposits in order for there to be subsequent loans, don't there? So, the difference on a dollar basis between what they pay and what they charge is the exact difference between their stated interest rate on loans versus savings, GICs etc.

Your post is an interesting look at how money circulates, but that is all it is. No one creates anything out of nothing. There is no theft or slavery involved. You have also shown no correlation at all with this modern, universal banking practise and inflation.
In my simplified example, I am the only bank customer who has made a deposit of 100 dollars for the purpose of SAVING, every other customer has taken a loan for the purpose of writing a cheque. When Borrower #10 has written his cheque, the total amount of cheques is 804.40 dollars...hardly equal to the 100 dollars which initially was in the vault. So, we know where 100 dollars came from...Where did the 704.40 dollars come from ? From the banker's own pocket...Not a chance.
If you are saying that each other customer has taken the loan for the purpose of writing a cheque, then your whole premise falls apart. If borrower number 1 does not deposit or leave his money in in the bank, that money is not there for the bank to lend to borrower number 2. Either a bank account has money in it or it does not. I'll assume that you know that and don't mean what you are saying here.
If the bank pays interest at 4 percent and collects interest at 8 percent :

After the first interest period, the bank pays me 4 dollars, but will have collected 64.33 dollars from just the first ten borrowers, leaving a profit of 60.33 dollars. Repeat this with the second person who comes in off the street with 100 dollars to deposit into a SAVINGS account...and so on...
Okay, you're keeping it simple and saying that you have received $4 interest on the $100 (.04x100=4.00) and that they have collected $64.33 on the $804.40 (.08x804.40=64.35). Our numbers do not quite jive, but they're close enough. But what about the $837.87 that is deposited with them that they have to pay interest on? You've only accounted for $100 of that money with your $4 payout of interest. The only way your progression works is if each of the borrowers deposits their loan money so that the bank can lend it out again. They have to pay interest on ALL of those deposits, not just the original one. The sum of all of the deposits required to make your example work is $837.87. The actual total interest they pay out is $33.51 (.04x837.87=33.51). They have made a profit of $30.84 (64.35-33.51=30.84). That's quite a different amount, isn't it? And don't forget that this is not a net gain. They have costs.
I worked to earn 100 dollars in order to collect 4 dollars of interest. The bank leveraged my 100 dollars to collect 64.33 dollars from just the first ten borrowers.
That's your way of looking at it. I've already showed you that they didn't end up with what you say they did, but only about half. They have handled 9 bank accounts and made 10 loans. They have safeguarded $33.53 of reserve money, for which they are liable. And they have made some money, paid employees, paid rent, paid taxes, and paid shareholders.

Good for them, I say.
As for INFLATION, there was no such thing remotely similar to it in North America until the Federal Reserve set up shop, which was also when the current Personal Income Tax came into being.
I haven't looked into that yet, but you are obviously blaming the banks or the banking system for the inflation. Perhaps you are right. I don't know for sure. But if you are following the same logic and are getting it from the same sources that prove to you that banks create money out of thin air and pay out $4 in interest while collecting $64.35 in interest at the same time, then I don't have much time for the argument.
By the way, What are you afraid of seeing in the videos. By my reckoning, these were made by honourable people whose wish was to expose some details which are documented historically, and are worth discussing.
I've already wasted my time watching one video (in another discussion about the same topic on another site) about fractional reserve saying exactly the same things you and pdog are saying. I didn't agree with the conclusions after watching that video. It was a one sided twist job on how banks "create" money, just as you have attempted to do here, but if you take the time to do ALL the math, the story is quite different.
Do watch the videos, and then, by all means, refute any of the statements which you disagree with.
Let's keep it simple. You refute my math or conclusions and I'll refute yours. If we can't even handle the basics, we'd better stay out of the complex stuff. I'm not an economist, but I can use a calculator and follow a logical progression.

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Re: Bailout

Post by prairiedog » Tue Mar 03, 2009 11:39 pm

Gerry wrote:This is typical of the responses I get when I challenge people on their silly claims. You start off and end up being condescending. Check out your first, second,and second-last sentences.

Then, check out my quote that you are responding to. I was talking about banks and their claimed ability to produce money out of thin air. You respond with another subject altogether, government bonds. You don't even address the post you are responding to.

I'll ask the question again. Where are you getting this stuff from? And, I don't want a literal answer. I don't really want a link to a video. I want you to explain yourself what you are "getting".
I'm certainly never have been trying to be condescending. I've been answering every question you've asked. I think that in this case any condescention may be in the eyes of the reader. Calling my stance a silly claim however, could be taken as condescending, but I do not take it that way, because I know you fairly well.

So if I am to understand you correctly, you want me to explain myself all over again to remove every last doubt from my stance, but I'm not allowed to use math or quote sources. Hrmmm. Do you not think that may be just a wee tad unreasonable?
ping wrote:Funny thing is all argo fans should support the cats and vise-versa. There not our enemy, Montreal is!!
heh

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Re: Bailout

Post by AGENT-784 » Wed Mar 04, 2009 12:04 am

Gerry wrote:
If you are saying that each other customer has taken the loan for the purpose of writing a cheque, then your whole premise falls apart. If borrower number 1 does not deposit or leave his money in in the bank, that money is not there for the bank to lend to borrower number 2. Either a bank account has money in it or it does not. I'll assume that you know that and don't mean what you are saying here.


In my example, all of the borrowers borrowed the money to write cheques, and therefore would not be earning interest, as you suggest. Why borrow money charged at 8 percent, and leave it with the bank to collect 4 percent. No working person would deliberately do that. But I digress. Back to the statement above in bold. What borrower #1 does with his money has no impact on the bank's ability to loan to borrower #2. Your assumption is not correct...what I said is what I meant to say. The fractional system allows the banks to create the money for loaning to borrower #2.
Savings on hand versus Loans outstanding has validity at a credit union, or similar not-for-profit financial institution. The banks play an entirely different game.
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