People vs The Banks

[clv101]

I say again interest charge requires growth or inflation to satisfy but that is entirely separate to the question of FRB. No quibble at all from me that interest requires growth or inflation in order to pay off debt.

I don't follow your bit in bold. Where does the new money (for growth or inflation) come from if not from loans/debt in accordance with fractional reserve banking?

That is a very worthy but different question. When money is lent at interest we lock ourselves in to an endless cycle of growth/inflation that requires the issuance of new money. How we justify this new money to ourselves is another debate.

Is it a different question? Neither growth nor inflation create money, that only comes from 'issuance of new money', as you say. Steve's pointed out quite clearly where this money comes from.

[JavaScriptDonkey]

Point it out.

You count the money deposited in to a bank as in circulation AND you count it when it is lent out as in circulation. You count it repeatedly.

If bank 1 lends out £800 then there is £800 in circulation. When that money goes to bank 2 to form its capital it is no longer in circulation and must be subtracted.

Get 100 pennies out and do the experiment on a table top and you'll see that there are only 9 beans.

If you want to create money you just need to manufacture an appreciating asset and use that as your capital. Just like the banks did.

[JavaScriptDonkey]

Is it a different question? Neither growth nor inflation create money, that only comes from 'issuance of new money', as you say. Steve's pointed out quite clearly where this money comes from.

That's an issue for central banks and Governments not ordinary banks. Ordinary banks must balance their books or go bust.

Or be bailed out by the taxpayer.

[kenneal - lagger]

.......

If bank 1 lends out £800 then there is £800 in circulation. When that money goes to bank 2 to form its capital it is no longer in circulation and must be subtracted.

......

When that money goes into bank 2 to form its capital FRB kicks in and 90% or so of it can be lent out again and so on.

[kenneal - lagger]

.......That's an issue for central banks and Governments not ordinary banks. Ordinary banks must balance their books or go bust. .....

They balance their books because the signed loan note for the outgoings becomes an asset and balances the money that goes out.

Seemples!!