THERE'S AN INCORRECT STATEMENT ON THIS VIDEO. At 4 minutes into the video, it states that the 10b deposit converts into 19b through the reserve ratio. This fails to mention that the person who deposited their 10b is only entiled to cash out 1b (if theoretically the bank had only one account). If the 10b to 19b statement was correct, then banks would never colapse under a bank run, and there would be no need for deposit insurance. Adien
yes, you're correct ...( 2 weeks ago by ekjohnson9)
yes, you're correct, the origonal depositor is entitled to withdraw his 10b... but the other depositors are entitled to withdraw from their accounts... you are incorrect in assuming that a bank has 1 account... if they did have 1 account you would be correct, but they dont, the added 90% of the 10b is in OTHER accounts.... this transaction involves more than 1 person...
Ok, so apply the ...( 2 weeks ago by adien209)
Ok, so apply the same idea to 1000 accounts of 10b in one bank. That bank cannot lend more than 90% of all the depositor's money (1000 x 10b), otherwise it would be creating money out of "thin air". Only the government can create money out of "thin air". Bottom line, the bank cannot lend more money that what has been deposited (the combined total of all accounts).
yes but the money ...( 2 weeks ago by ekjohnson9)
yes but the money for the loans does not come out of the depositors account... the money is created when the loan contract is signed... then assuming i get a loan credit to my account... the amount of money reserves in that bank increases...
How is the money ...( 1 week ago by adien209)
How is the money created (when the loan is signed). Have you ever sold a car or a house to a buyer who financed the money? Do you not get a check from the buyer's lender? That money that you receive comes from the bank. That check must have funds available. Those funds are held by the lender.
Who created or ...( 1 week ago by adien209)
Who created or posted this video? It's got great presentation but the "bank money creation" part is very misleading. Only the government can create money. I suggest that you do some research on a trusted website or go to the library. A bank cannot lend money that it doesn't have. It's scarry to think that information is taken at face value without questioning...Please be careful of the DETAILS presented in any material, especially online.
only the government ...( 1 week ago by AzowRagbak)
only the government can create money. When was the last time the treasury gave out money? If I'm right it is the Federal Reserve responsible for this, and the Federal Reserve is not owned by the government.
and even primary ...( 1 week ago by AzowRagbak)
and even primary banks can create money. through creating loans. all of our money is actually in hands of commercial institutions.
like china does ...( 1 week ago by AzowRagbak)
like china does have government controlled currency and banks.
Economics 101... ...( 1 week ago by adien209)
Economics 101...Creating loans is not creating money. It facilitates purchasing power (to buy a house or car, start a business, etc) by lending money that is saved. When you save money, you either keep it in a safe or keep it in the bank. The bank offers interest on savings, of which it acquires through interest received from lending. Risk and operating costs (along with competition from other banks) account for the difference between the interest of a loan and the interest of a savings account
TWILIGHT ZONE??? ...( 1 week ago by adien209)
TWILIGHT ZONE??? These coments and the video itself are crazy. Can someone explain to me how its possible for a bank to lend more money than what it has in total deposits? This is nonsense yet most of the individuals posting comments here believe it to be true! This worries me!
Read about the ...( 1 week ago by Chaoticmass)
Read about the fractional reserve banking system. Also lookup fiat currency.
adien, our banks ...( 1 week ago by AzowRagbak)
adien, our banks need to have 10% in deposits. and yes look up fractional reserve banking. you will see. and also we do not have the gold in our reserves to back up our money. they were disconnected from gold long time ago.
fractional reserve ...( 1 week ago by AzowRagbak)
fractional reserve banking Definition A banking system in which only a fraction of the total deposits managed by a bank must be kept in reserve. The amount of the deposits equals the amount of the reserves times the deposit multiplier. In the U.S., this system is maintained by the Federal Reserve Board
AzowRagbak: Yes the ...( 1 week ago by adien209)
AzowRagbak: Yes the banks needs to keep 10% of "All the money deposited by its customers" in cash. In the video it states that 9b are created out of 10b (totalling 19b). That is incorrect. 9b is lent out of 10b, and 1b is kept in the bank. What do you think that happens in a "bank run"? Wachovia, WAMU, etc. their customers requested the deposits back but 90% is lent out. That means the bank starts running out of money, and then they are taken over by the Feds or bought out.
the lender is the ...( 1 week ago by ekjohnson9)
the lender is the bank... they create the money and credit it to your account upon signing hte loan contract... that is how fractional reserve banking works...
I give up, you guys ...( 1 week ago by adien209)
I give up, you guys are right. I'm going to open up a bank so the I can CREATE MONEY. Why have I been working my whole life to make money when I can just create it through opening up a bank along with friends and investors. I must be stupid! In fact why isn't every large company in the banking business. You create your own money through lending it to yourself, and you don't have to worry about your bottom line!
wow unbelievable( 1 week ago by naomibee)
wow unbelievable
its obvious that ...( 1 week ago by ekjohnson9)
its obvious that you do not understand fractional reserve banking... im not calling you stupid i just think you are idealistic and misinformed.... look up modern money mechanics and the fractional reserve system... this isn't made up, it is the cause of inflation... if the money the bank loaned literally came out of its deposits then there would be no inflation, which is a fancy word for a greater amount of money without a proportionate increase in goods/services.
Yes, inflation is ...( 1 week ago by adien209)
Yes, inflation is greater money with a lesser proportionate amount of goods and services. There are serveral factors that lead to inflation, but the bank cannot lend more than what it has. JUST ASK ANY BANKER. Cheap, low interest loans do contribute to inflation because money becomes more accessible. Please, just take a minute and ask anyone in the banking industry if a bank lends more than what it has.
If low reserve ...( 1 week ago by adien209)
If low reserve ratios caused inflation, then Switzerland, with a required reserve ratio of 2.5% should have greater inflation than the U.S. According to Modern Money Mechanics, a low 10% reserve ratio leads to inflation. But for that theory to work, everyone in the banking ladder must "lend their money". So if everyone is "lending" their money, then everyone is saving and nobody would need a loan. There would always be a balance between money saved and money loaned.
hehehe yeah things ...( 1 week ago by AzowRagbak)
hehehe yeah things in banking can be so so difficult. But where is the balance in the system now? There are trillions of dollars (in loans) going towards the banks, while the value of their goods (houses) is going down so much. What will this lead to? I also wonder what happens to the financial balance of any company, once the value of their buildings plummets. How do they correct this on their balance, through the cost of what?
Taken over by the ...( 1 week ago by AzowRagbak)
Taken over by the Feds yes, a commercial bank which is taking over everything. The Fed is not really related to the government. Well congress has a bit to say about them, but also not too much. The main chief of the Fed does get appointed by the US president, but that's it. Why is the issue of currency not in hands of the US treasury? Makes more sense to me.
Great video. Keep ...( 1 week ago by erato99)
Great video. Keep them coming. Everyone should see this, but instead we will all become further victims when the next bailout plan shows up in 2009.
Adien
It's scarry to think that information is taken at face value without questioning...Please be careful of the DETAILS presented in any material, especially online.
all of our money is actually in hands of commercial institutions.
and also we do not have the gold in our reserves to back up our money.
they were disconnected from gold long time ago.
A banking system in which only a fraction of the total deposits managed by a bank must be kept in reserve. The amount of the deposits equals the amount of the reserves times the deposit multiplier. In the U.S., this system is maintained by the Federal Reserve Board
Switzerland, with a required reserve ratio of 2.5% should have greater inflation than the U.S. According to Modern Money Mechanics, a low 10% reserve ratio leads to inflation. But for that theory to work, everyone in the banking ladder must "lend their money". So if everyone is "lending" their money, then everyone is saving and nobody would need a loan. There would always be a balance between money saved and money loaned.
But where is the balance in the system now? There are trillions of dollars (in loans) going towards the banks, while the value of their goods (houses) is going down so much.
What will this lead to?
I also wonder what happens to the financial balance of any company, once the value of their buildings plummets. How do they correct this on their balance, through the cost of what?
The Fed is not really related to the government. Well congress has a bit to say about them, but also not too much.
The main chief of the Fed does get appointed by the US president, but that's it.
Why is the issue of currency not in hands of the US treasury? Makes more sense to me.