"And it’s obvious that the people who benefit the most from FRB are the banks and those who take out much more in loans than they have in savings, as the bank earns interest off of something they bring into existence, and the companies or individuals borrowing the money get to spend it before the inevitable rise in prices as the new money enters the economy."
if a company or individual borrows money is not a depositor getting bank-credit applied to an account at roughly the same time???
Well I think there is some confusion as to where the fractional reserve loan comes from. Until the bank actually declares it as a profit, it doesn’t have to use money from depositors to finance cash withdrawals. It’s simply using its own credit. Declaring this credit null and void destroys the bank’s profit and stock market capitalization but it doesn’t really take from depositors.
The whole point anyway is to destroy the fractional reserve bank’s credit and interdict its fractional reserve operations.
This is true, but that doesn’t imply any complicity in the system. If you do not take out a loan, then someone else will and you will become a loser. It’s a race to preserve wealth.
Could you explain this bit?
Loans and assets are balance sheet posts. They have nothing to do with the income statement and profits, it is just the interest that show up in the income statement and affect profit. When a deposit is made it is immediatly added to the banks balance sheet as asset and on the other side as debt.
“When a deposit is made it is immediatly added to the banks balance sheet as asset and on the other side as debt.”
are you sure…couldnt a deposit go to redeeming a cd that has been withdrawn or come to maturity?
how do you know this?
Ehm no. Every transaction have one entry in a companies books, first they book the deposit “(Assets - cash” increases and “Liabilities - savings” increases) then they can move on to book the issuing of debt (“Assets - total loans and leases” increase; “Assets - cash” decrease).
I think I understood what Stranger was getting at now though. It does work the other way around. The interests the bank gets in the income statement do appear in the balance sheet and can thus be lent. But it is minuscule and could never cover all the liabilities of a bank. One of the largest Swedish banks as example. Total liabilites 3 693 484 MSEK, net interest earnings: 35 091 MSEK.
Accounting 101.
That banks take deposit account balances into there own books is absurd in the first place.
A discount stock broker that did that with your deposited stocks would be thrown in jail, at least here. According to contracts for stock deposits the stock balance on the account belongs to me and they have no rights to it, the stocks can’t be included in the companies assets if they go bust and they could never lend them to someone…
“Well I think there is some confusion as to where the fractional reserve loan comes from.”
thousands of pages here online, accounting 101 and there is confusion about where the fractional reserve loan comes from? are you being serious or not telling the truth???
“The Depository Institutions Deregulation and Monetary Control Act of 1980 had begun phasing out interest-rate ceilings on deposits and modified reserve requirements in complex ways. Combined with subsequent administrative deregulation under Greenspan through January 1994, these changes left all the financial liabilities that M2 adds to M1 — savings deposits, small time deposits, money market deposit accounts, and retail money market mutual fund shares — utterly free of reserve requirements and allowed banks to reclassify many M1 checking accounts as M2 savings deposits. M2 and the broader measures became quasi-deregulated aggregates with no legal link to the size of the monetary base…”
whatever a fractional reserve loan is. if the above is true.
if a check is deposited into a checking account does a bank then loan out most or much or in some cases all of ‘what’ was deposited and then somehow in meshing with the federal reserve keep somewhere near 10 percent in paper/coin cash of the total amount of lent funds???
In the narrowest sense, a contract is a contract. However, in the broader view, banks are mass swindlers on every level, from FRB to the panoply of political activity. If you don’t accept the rules of game, you don’t get to benefit from them.
"if a check is deposited into a checking account does a bank then loan out most or much or in some cases all of ‘what’ was deposited and then somehow in meshing with the federal reserve keep somewhere near 10 percent in paper/coin cash____of the total amount of lent funds along with the creation of spendable credit (according to federal reserve rules) .???
rules of what game???
There is no such a thing as a 10% reserve requirement. This is a myth. In reality banks can make loans as far as their credit allows them.
if a check is deposited into a checking account does a bank then loan out most or much or in some cases all of ‘what’ was deposited and then somehow in meshing with the federal reserve keep somewhere near 10 percent in paper/coin cash of the total amount of lent funds???
ok…is there a specified amount of cash that a bank keeps on hand??? or is required to keep on hand???
i dont know about the 10 percent myth as you call it. in reading “you can profit from the coming devaluation” on page 39 , copyright 1970 harry browne says the federal reserve required city banks to keep a 16.5 reserve…was that a myth??? a lie?? was it changed to 10 percent later on???
The Depository Institutions Deregulation and Monetary Control Act of 1980 had begun phasing out interest-rate ceilings on deposits and modified reserve requirements in complex ways.
was there a 10 percent reserve ratio in the past…and now has been modified in complex ways???
“In reality banks can make loans as far as their credit allows them.”
i assume you arent mything here…when yuo say their credit…do you mean a credit max based on a federal reserve rule??? what is their credit???
"if a check is deposited into a checking account does a bank then loan out most or much or in some cases all of ‘what’ was deposited and then somehow in meshing with the federal reserve keep somewhere near 10 percent in paper/coin cash____of the total amount of lent funds along with the creation of spendable credit (according to federal reserve rules) .???
is what i have asked here near to what actually happens with banks now?? i said somewhere near 10 percent…how much cash on hand is a bank required to keep???
Their credit is the willingness of other economic actors to accept their promises to pay in lieu of payment.
"if a check is deposited into a checking account does a bank then loan out most or much or in some cases all of ‘what’ was deposited and then somehow in meshing with the federal reserve keep somewhere near 10 percent in paper/coin cash____of the total amount of lent funds along with the creation of spendable credit (according to federal reserve rules) .???
is what i have asked here near to what actually happens with banks now?? i said somewhere near 10 percent…how much cash on hand is a bank required to keep???
do you mean a credit max based on a federal reserve rule???
does the federal reserve have a rule that requires banks to keep a certain amount of cash on hand based on some total outstanding liabilities??
ok…is there a specified amount of cash that a bank keeps on hand??? or is required to keep on hand???
i dont know about the 10 percent myth as you call it. in reading “you can profit from the coming devaluation” on page 39 , copyright 1970 harry browne says the federal reserve required city banks to keep a 16.5 reserve…was that a myth??? a lie?? was it changed to 10 percent later on???
“There is no such a thing as a 10% reserve requirement. This is a myth.”
by ‘this’ do you mean a reserve ratio??? was it changed to 10 percent after it was 16.5 percent???
"in reading “you can profit from the coming devaluation” on page 39 , copyright 1970 harry browne says the federal reserve required city banks to keep a 16.5 reserve…was that a myth???
“The Depository Institutions Deregulation and Monetary Control Act of 1980 had begun phasing out interest-rate ceilings on deposits and modified reserve requirements in complex ways…M1 — savings deposits, small time deposits, money market deposit accounts, and retail money market mutual fund shares — utterly free of reserve requirements and allowed banks to reclassify many M1 checking accounts as M2 savings deposits. M2 and the broader measures became quasi-deregulated aggregates with no legal link to the size of the monetary base…”
true???