Also, I don’t think you know what the money multiplier is: It’s the Mathematical relationship between the monetary base and money supply of an economy. It explains the increase in the amount of cash in circulation generated by the banks ability to lend money out of their depositors’ funds. When a bank makes a loan, it ‘creates’ money because the loan becomes a new deposit from which the borrower can withdraw cash to spend. This money-creating power is based on the fractional reserve system under which banks are required to keep at hand only a portion (between 10-15 percent, typically 12 percent) of the depositor’s funds. The rest may be converted into loans, thereby increasing the available cash by a factor that is a multiple of the initial deposit
Again you expose yourself. You support fractional reserve banking and appose a gold standard. Another statist who read one chapter from TMC wasting a lot of people’s time.
Huerta de Soto, IIRC, suggests that money loaned should come from timed savings accounts, where the depositor surrenders rights over his money for a specific time period.
"Now how loans in a 100% reserve bank work is that the banker would ask for a time deposit and he would formalize when the depositor has drawing rights to his money. This means that $10 in gold becomes both $10 money at time T1 (the present) and $10 money at time T2 (when the original depositor gets the right do withdraw the money again)
In a fractional reserve system all that’s different is that there is no formalizing of dates. Instead the entrepreneur bares this as a risk instead. Instead of saying “look you can’t take your money out till february 2010” the entrepreneur anticipates that the depositor won’t take his money out till then.
There is absolutely no difference between the two.
In the time deposit there are two or more claims to the money but at different times. In the FRB situation there are two or more claims to the money at different times only the times are not formalized and its up to the entrepreneur to bare risk."
No, because the banks recycle money in the form of credit, thus compromising their liquidity position. 100% reserves mean that the banks are always liquid and don’t offer credit which is not covered by the actual savings supply.
I remember you now. You were the guy who was trying to “correct” Mises and Hayek’s business cycle theory. I believe you claimed that the structure of production was meaningless and that roundabout production methods don’t yield more efficient production processes.
Huerta de Stoto is correct. The economics are such that with time deposits, there is no increase in the money supply, where as with FRB, there is. But some of the FRB proponents here do not see how the two are NOT equivalent (how time deposits also do not increase the money supply). Maybe you have better innovative ideas on how to show the difference.
Money multiplier also increase money supply but it’s transactions between banks and it’s not same like fractional reserve system, because in fractional reserve system money go out from banking system into real system.
Not at all. I’m showing you are just making empty assertions which are not in line with methodological individualism.
So what’s the substantial and magical number here ? I thought you were a ‘scientist’. You should provide a formula or something defining your number instead of waving your hands.
Furthermore, how do you know that people rank money before other things ? Are you going to poll them ? And then you are going to compare the ‘subjective’ rankings of different individuals ? You know they can’t be compared no ?
Wow. Thick as a brick. Now it seems that anybody who DOESN’T confuse bank tickets with real wealth is an advocate of the LTV. I guess that’s a new low for advocates of fraudulent reserve banking.
lol, i’m selling good sense and reason, and whoops Angurse!, you broke it you bought it! pay up!!!. and dont say its not backed by anything…dont say it was ‘thin air’ and lacks commodity status, i expended real resources to produces the reason and good sense that you are destroying
You know, when somebody makes a point simply saying “no” doesn’t count as a refutation. Of course, this is just helping to confirm my suspicion that your beliefs regarding FRB are more of a religion nature than scientific.
I’m going to ignore your pedantry from now on, you don’t even attempt to come to any understanding. I’m sorry for challenging your quasi-religious beliefs though, in future I’ll be more sensitive to your faith.
By the way, to add to what Jake is saying, if you think that FRB causes the business cycle you should also believe that loans should all be perfectly matched and that financial instruments such as loans with put and call options are illegitimate. In other words, you want to destroy the modern financial system.
in frb, money is a commodity in fiduciary its a mix of commodity and thin air, and under fiat its entirely thin air.
another way of saying this is that the money is gold, and your paper notes are money substitutes. i.e. not money. they are placeholders for money. when you give someone a note of so-called ‘paper money’ under a commodity standard, you are transferring both a piece of paper, and the rights of ownership over some actual gold. (i.e. money) . the only way to increase the supply of gold is by producing more gold. writing numbers on the the tickets will not change the supply of gold, it will only represent or misrepesent the truth of what gold is there backing it up. whereas if you make the mistake of believing that the piece of paper itself is money, you can add 0’s to notes, and increase the supply of money without reference to a commidity. without reference to anytihng. instead of writing lots of zero’s, you could right ‘infinity’ on it. money supply increase. maybe used less ink than to write a big number with lots of zero’s on it.
Kid, I clearly explained your basic mistakes and why it is that you are just parroting macroeconomic gibberish. Thanks for admitting that your comments on “substantial amounts of people” wanting X are meaningless.
If you don’t understand that credit can only exist when it’s backed by ‘real’ savings, you are the typical crank who doesn’t get basic economics.
Uh oh. Maybe a sizable amount of the modern financial system is a destructive parasite that lives off the real economy. You know, just like its partner the state. Nothing wrong with wanting to destroy that.