Writing the unthinkable in the Telegraph

JavaScriptDonkey · Post by **JavaScriptDonkey** » 29 Oct 2012, 00:58

Only central banks can create money.

Commercial banks do not create money.

Commercial banks have creditworthiness guaranteed by the assets of their backers - much like Lloyds Insurance.

Lehmans was a commercial bank as was Bear Sterns and Barings

If they could just magic money into existence they would still be here.

They went bust because their liabilities exceeded their liquidity. Liquidity governed by their assets not some multiple of their assets.

Fractional Reserve banking is just about retaining a fraction of the deposits on reserve and nothing else. It is an application of probabilistic theory to human economic activity.

Little John · Post by **Little John** » 29 Oct 2012, 01:01

JavaScriptDonkey wrote:Only central banks can create money.

Commercial banks do not create money.

Commercial banks have creditworthiness guaranteed by the assets of their backers - much like Lloyds Insurance.

Lehmans was a commercial bank as was Bear Sterns and Barings

If they could just magic money into existence they would still be here.

They went bust because their liabilities exceeded their liquidity. Liquidity governed by their assets not some multiple of their assets.

Fractional Reserve banking is just about retaining a fraction of the deposits on reserve and nothing else. It is an application of probabilistic theory to human economic activity.

Show me the FRB regulations that limit the capacity of commercial banks to lend money they don't have

Post by **kenneal - lagger** » 29 Oct 2012, 04:23

JSD look at the Money As Debt films on Youtube

Money As Debt 1

Money As Debt 3

Yes, only central banks can create cash but nearly all money is now created as an entry onto a bank's electronic ledgers. That's excepting QE money which is how money should be created but not for the purpose this QE money has been created. Governments should create money for capital spending or the purchase of goods and services.

UndercoverElephant · Post by **UndercoverElephant** » 29 Oct 2012, 10:00

JavaScriptDonkey wrote:Only central banks can create money.

Wrong.

Commercial banks do not create money.

Wrong.

Commercial banks have creditworthiness guaranteed by the assets of their backers - much like Lloyds Insurance.

Yep, like somebody who promises to lend you umbrella, until the day it actually rains.

Lehmans was a commercial bank as was Bear Sterns and Barings

If they could just magic money into existence they would still be here.

Wrong again. They could magic money into existence, but not limitless amounts of it. That's why it is called "fractional reserve" banking and not "no reserve banking."

They went bust because their liabilities exceeded their liquidity. Liquidity governed by their assets not some multiple of their assets.

Wrong.

Fractional Reserve banking is just about retaining a fraction of the deposits on reserve and nothing else. It is an application of probabilistic theory to human economic activity.

Wrong.

extractorfan · Post by **extractorfan** » 29 Oct 2012, 10:14

UndercoverElephant wrote:
Fractional Reserve banking is just about retaining a fraction of the deposits on reserve and nothing else. It is an application of probabilistic theory to human economic activity.
Wrong.

sorry to butt in but I'm pretty sure this is correct.

The calculation of probable (by the bank) may be wrong, but the statement itself I think is correct.

JavaScriptDonkey · Post by **JavaScriptDonkey** » 29 Oct 2012, 10:41

extractorfan wrote:
UndercoverElephant wrote:
Fractional Reserve banking is just about retaining a fraction of the deposits on reserve and nothing else. It is an application of probabilistic theory to human economic activity.
Wrong.
sorry to butt in but I'm pretty sure this is correct.

The calculation of probable (by the bank) may be wrong, but the statement itself I think is correct.

All the statements are correct. Don't worry about it, I've questioned the basis of their hate for 'banksters' and am therefore a non-believer and justly damned.

I doubt any one of them has ever spoken to an investment banker to find out for themselves though.

UndercoverElephant · Post by **UndercoverElephant** » 29 Oct 2012, 12:30

Probably not a good idea to put me and an investment banker in the same room.

Fractional reserve banking means that for every £1 you have deposited at your bank, you can magic another £9 (for example) into existence. Describing it as JSD has done makes no difference to the reality, as explained in the Telegraph article. It is an exorbitant priviledge, and it has been abused to the extent that the priviledge must now be withdrawn.

SleeperService · Post by **SleeperService** » 29 Oct 2012, 13:15

JavaScriptDonkey wrote: All the statements are correct. Don't worry about it, I've questioned the basis of their hate for 'banksters' and am therefore a non-believer and justly damned.

I doubt any one of them has ever spoken to an investment banker to find out for themselves though.

Sorry when you were talking about deposits and overdrafts I thought you meant retail banking. Investment banks are attached to retail banks like BZW was to Barclays before it became Barclays Capital.

Investment Banks AKA Merchant Banks don't offer retail services.

Several in the family and some friends are in banking, and I'm not talking counter staff here, I speak to them quite often. All of them tell me the game is changing, none of them know where the industry is heading hence the systemic lock up at the moment. Hints here:

http://www.bbc.co.uk/news/business-20120206

and, not unrelated

http://www.bbc.co.uk/news/business-20104177

Little John · Post by **Little John** » 29 Oct 2012, 14:32

JavaScriptDonkey wrote:
extractorfan wrote:
UndercoverElephant wrote: Wrong.
sorry to butt in but I'm pretty sure this is correct.

The calculation of probable (by the bank) may be wrong, but the statement itself I think is correct.
All the statements are correct. Don't worry about it, I've questioned the basis of their hate for 'banksters' and am therefore a non-believer and justly damned.

I doubt any one of them has ever spoken to an investment banker to find out for themselves though.

I have a close family member who is a part of the management team of an international financial organisation that is at the very heart of the global investment banking system. You have a bit of a habit, I have noticed, of throwing ad-hominems about based on knowing precisely bugger-all about other posters. Pack it in.

stumuzz · Post by **stumuzz** » 29 Oct 2012, 19:26

UndercoverElephant wrote:Probably not a good idea to put me and an investment banker in the same room.

Why?

Little John · Post by **Little John** » 30 Oct 2012, 00:07

stumuzz wrote:
UndercoverElephant wrote:Probably not a good idea to put me and an investment banker in the same room.
Why?

Oh please, you really will have to do better than that. As you well know, UE was merely making the point, by way of mild facetiousness, the level of very real disgust that he and many others have for a particular class of high-rolling, WE ARE DODGY investment bankers.

ziggy12345 · Post by **ziggy12345** » 30 Oct 2012, 06:14

JavaScriptDonkey wrote:Only central banks can create money......

Actually they don’t. They create imaginary money against a bond issued by the government and has to be paid back. the money is lent to commercial banks at the base rate and then multiplied by fractional reserve banking and lent to industry.

Industry creates the real money and pays back the banks leaving most of the real money in circulation. Some is kept by the commercial banks and some is kept by the central banks, the bond is paid off and the imaginary money destroyed.

The real money needs energy for its creation and a growth in this economy needs a growth in energy use. Hence the problem with banks now we are at peak oil (use, demand, supply, geological constraints.. whatever...)

Therefore

Money = Energy

extractorfan · Post by **extractorfan** » 30 Oct 2012, 08:02

ziggy12345 wrote:They create imaginary money....

Cue philosophical debate, is it not all "imaginary" money, just a means of exchange?

ziggy12345 wrote: Money = Energy

Yes, I expect almost all of us will agree with this, it's the crux of the serious matter of peak oil as it doesn't require any kind of moral or humanitarian world view to understand the seriousness of the situation. It's what awakened me to the predicament. [and I'm not ashamed, no point].

stumuzz · Post by **stumuzz** » 30 Oct 2012, 08:05

stevecook172001 wrote:]Oh please, you really will have to do better than that. As you well know, UE was merely making the point, by way of mild facetiousness, the level of very real disgust that he and many others have for a particular class of high-rolling, WE ARE DODGY investment bankers.

Ahh, it was a joke. OK. Thanks for that.

Little John · Post by **Little John** » 30 Oct 2012, 08:11

stumuzz wrote:
stevecook172001 wrote:]Oh please, you really will have to do better than that. As you well know, UE was merely making the point, by way of mild facetiousness, the level of very real disgust that he and many others have for a particular class of high-rolling, WE ARE DODGY investment bankers.
Ahh, it was a joke. OK. Thanks for that.

You're pathetic