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  • Sep 16th, 2007 11:30 pm
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Sr. Member
Mar 14, 2006
629 posts
22 upvotes
I think I read or heard somewhere that 20% of all the money is actually real. The rest is all digital or a book figure.
Deal Fanatic
Jul 1, 2007
8068 posts
902 upvotes
If by "real" you mean exists in the form of paper currency, then you're probably right. Wouldn't be surprised if that number was lower.
Sr. Member
Aug 1, 2006
947 posts
62 upvotes
Thalo wrote:
Sep 14th, 2007 1:01 pm
My download crapped out after 3 minutes and I don't have time to watch the whole 47 mins anyway because I need to go to work, at the bank, where I magically create money out of thin air (I actually did do this the other day, in error, and got into bit of trouble for it as an internal account had a surplus and I could find nowhere to put that extra money).

The author of the video is right in one regard: the banking system "creates" money. He's wrong in his assumption of how it's done.

Any loan/mortgage the bank issues does have to have a deposit to offset it. The bank can't create the money out of thin air (like I did the other day, by accident). There is even a required reserve ratio, which stipulates that the bank can't lend out 100% of the money deposited, it has to keep some of the money on hand in case the depositors want it back. I think in Canada it's fixed at 20%. Don't quote me on that though, I learned my economics in the U.S., where the RRR can be changed by the Fed to increase or decrease the supply of money in the economy.

Here's some Econ 101, on how money is "created" by the banking system:

-Person A deposits $100,000 into Bank A. Assume Bank A has a 20% RRR.
-Bank A lends out $80,000 to Person B.
-Person B buys a Porsche from a private seller, person C.
-Person C deposits $80,000 into Bank B
-Bank B holds on to 20% of it and lends out $64,000 to Person D.
-Person D deposits it into Bank C
-Bank C holds on to 20% and lends out $51,200 to person D...

...you get the picture, it goes on and on like that. Just in the example above, person A's original $100,000 deposit has spawned $195,200 in additional deposits at other banks.
I find your reply arrogant. It seems that you know so much about the economy, do you have a degree in Finance or what?

The video material presented is excellent and well documented. Nothing is wrong in it. It is you who is wrong, the deposits made by the people in the bank can't be touched, they serve as a collateral or consolidated capital for the bank. The key element in a fractional based system is the Federal Reserve, the reserve that each chartered bank has with the central bank (a bank which btw is not publicly owned but private entity like the Feds from US).

This fractional based system - which forbids a Government to print it own money and get it with interest from the rapacious BANK instead - it is the biggest scam of all time. Many US presidents were assasinated simply because they tried to get the control back. Because of these greedy and few people, the Government must gather the interest from us, the simple people, in form of taxes.

I would refrain from making comments on matters that you don't know very well. And I'm not saying that I know much, but at least I'm learning.

That link to the video, which I also got from the milionaire dollar journey blog, is more than welcome in educating this country!
Deal Fanatic
Jul 1, 2007
8068 posts
902 upvotes
smihaila wrote:
Sep 16th, 2007 1:00 pm
I find your reply arrogant. It seems that you know so much about the economy, do you have a degree in Finance or what?

The video material presented is excellent and well documented. Nothing is wrong in it. It is you who is wrong, the deposits made by the people in the bank can't be touched, they serve as a collateral or consolidated capital for the bank. The key element in a fractional based system is the Federal Reserve, the reserve that each chartered bank has with the central bank (a bank which btw is not publicly owned but private entity like the Feds from US).

This fractional based system - which forbids a Government to print it own money and get it with interest from the rapacious BANK instead - it is the biggest scam of all time. Many US presidents were assasinated simply because they tried to get the control back. Because of these greedy and few people, the Government must gather the interest from us, the simple people, in form of taxes.

I would refrain from making comments on matters that you don't know very well. And I'm not saying that I know much, but at least I'm learning.

That link to the video, which I also got from the milionaire dollar journey blog, is more than welcome in educating this country!
Again, I didn't watch the whole video, I just refuted what was stated in the first few minutes that the banks create money out of thin air and that loans don't need to backed up by deposits. Regardless of what the following 44 minutes of video have to say, if someone makes such a ridiculous claim in just the three minutes, then it doesn't warrant my time.

I don't consider myself an expert, I didn't major in finance (too boring) or economics (almost minored in it though). I do remember my Econ 101 though and I aced an ECON course on "Money and Banking". I majored in International Business, have worked for a bank for almost three years, completed CSC, PFPC and am enrolled to write the CFA level I exam in June.
Sr. Member
User avatar
Feb 12, 2007
677 posts
4 upvotes
Thalo wrote:
Sep 16th, 2007 1:44 pm
Again, I didn't watch the whole video, I just refuted what was stated in the first few minutes that the banks create money out of thin air and that loans don't need to backed up by deposits. Regardless of what the following 44 minutes of video have to say, if someone makes such a ridiculous claim in just the three minutes, then it doesn't warrant my time.

I don't consider myself an expert, I didn't major in finance (too boring) or economics (almost minored in it though). I do remember my Econ 101 though and I aced an ECON course on "Money and Banking". I majored in International Business, have worked for a bank for almost three years, completed CSC, PFPC and am enrolled to write the CFA level I exam in June.
seems to me like you should have listened to the entire video before commenting. :|
Deal Fanatic
Jul 1, 2007
8068 posts
902 upvotes
I did watch the whole thing just now. This guy is one of those wack-jobs who probably wants to repeal Bretton Woods, makes wild assumptions on how banking and the economy work and presents it in the form of a Michael Moore like propaganda piece.
Sr. Member
User avatar
Feb 12, 2007
677 posts
4 upvotes
I'm interested. What false assumptions is he making (and I'm not asking this in a confrontational manner...)?
Deal Addict
Sep 1, 2005
2469 posts
2 upvotes
smihaila wrote:
Sep 16th, 2007 1:00 pm
This fractional based system - which forbids a Government to print it own money and get it with interest from the rapacious BANK instead - it is the biggest scam of all time. Many US presidents were assasinated simply because they tried to get the control back. Because of these greedy and few people, the Government must gather the interest from us, the simple people, in form of taxes.

"many US presidents" Theres only been 4 assassinated to begin with...

I'd think the word many would need to be applied to a group of 4 (2 = couple, 3 >= few) or more so are you claiming Lincoln, Garfield, McKinley, and Kennedy where all killed by/for the banking industry? Now who's creditable?
Sr. Member
Jul 13, 2007
728 posts
247 upvotes
Toronto
Firstly, I didn't watch the video, or RTFA.
Secondly, I'm not a banker, and I haven't taken any more than economics 020 at UWO.

Canadian banks actually no longer have any reserve requirements and can in theory lend out 100% of their deposits. Credit Unions usually have some requirements through their centrals, which makes sense, since smaller institutions are more vulnerable and less liquid (as well as not being very well diversified geographically/amongst employers)
Are you sure you wish to carry out this operation? You betcha.
Deal Fanatic
Jul 1, 2007
8068 posts
902 upvotes
HammerRFDer wrote:
Sep 16th, 2007 9:04 pm
Firstly, I didn't watch the video, or RTFA.
Secondly, I'm not a banker, and I haven't taken any more than economics 020 at UWO.

Canadian banks actually no longer have any reserve requirements and can in theory lend out 100% of their deposits. Credit Unions usually have some requirements through their centrals, which makes sense, since smaller institutions are more vulnerable and less liquid (as well as not being very well diversified geographically/amongst employers)
There still has to be a deposit to lend out at 100%. The video professes that a bank only needs to make a small deposit with the central bank in order to lend out 10x as much, which is ludicrous. Banks can only lend out what their customers deposit. And banks have to lend out as much of their deposits as they can in order to balance their books. A deposit, on which they need to pay interest, is a liability for them that needs to be offset by a loan, an asset for them. If banks had significantly more liabilities than assets they would risk becoming insolvent and we'd all be in trouble.

The video also talks about some magical monetary theory that the governments of the world should be printing the currency they spend, rather than taxing us or borrowing it. Years back I worked in a paint store and I remember one paint contractor who was a regular who always brought us his newsletters with his wild theories of New World Order and how the government should be printing money instead of taxing us. He was also one of those nut jobs who worked on a cash-only basis and didn't pay any taxes. The government took him to court on it and he made a scene and it was on the news. :cheesygri
Sr. Member
Jul 13, 2007
728 posts
247 upvotes
Toronto
Ah, I guess what I should have said is that Canadian banks are not required to keep any particular percentage of their deposits in Bank of Canada accounts as a reserve.

Does that sound correct?
Are you sure you wish to carry out this operation? You betcha.

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