Inflation

[ActionianJacksonian]

Nope, they are fucked and know it, soon Russia will start falling apart economically, they used their oil money to modernize with western technology, the modern Russia you see in videos was bought from the west and so are the spare parts from cars to planes and trains. Ukraine has lot's of Gas and oil and can supply Europe. Inflation and gas prices are the same all over the world, it's not Biden's fault, it's Putin's fault. Have no worries though cause ole Joe is gonna fuck him real good, he stuck his neck out and we are gonna chop the fucking thing off.

It's kinda a funny that Trump and Putin are going down at around the same time, since they were joined at the hip anyway.

Yeah ok. So Russia decided to sell oil in their currency and not ours and the result is that they are selling more barrels at a higher price than before. That's all I meant.

Of course we took some supply off the world market too which helped drive that price up for them. Canada tried to help us and we turned them down so I guess now we are going hat in hand to Saudia Arabia.

 

[hanimmal]

Ok, so the cartoon I was referencing wad mad by the Fed. It was of little consequence really I just remember seeing it long ago and it describes exact what you describe. 10% reserve means 10 deposit so loan 9.

So that's right, like you're not wrong. It just helps my mind to think inversely of it which is the same.

You deposit 10 in a bank. There's 10 in the vault and 10 in your account and 10 less in circulation.
All balanced, no new supply.

I come to your bank and borrow 9 because I can't afford grip tape for my board so I go buy some with the loan.

So at this point you still have 10 on deposit in your account right? You have demanded no withdrawal. And I have put 9 in circulation right?

So the original 10 deposit plus the new 9 in circulation has become now 19 in money supply. You and I helped create 9 new units in the supply of currency facilitated by the bank vetting us both right?

So the skateboard shop I got the grip tape from deposits that 9 I got on loan from your deposit in their bank.

Now, someone borrows 8 from that deposit for a gallon of gas in California. So there's 8 new units in circulation that didn't exist before the loan because the depositors account still says 9 even though the vault only retains 90 cents.

And this goes on 7, 6, 5, ect. until your original 10 deposit facilitates 100 in new circulation/deposits that didn't exist before your deposit.

So I just presented this kind of inversely, but it's still the same. 10% of 100 is 10 like you say which is 90% Elasticity for that specific transaction but when you deposit the 90% over and over and over you see the initial deposit ends up having 900% Elasticity. It's all the same, you're not technically wrong. It's just better to look at the big picture really because it's much simpler.

But thinking the currency supply can't expand beyond deposits is just a logic error, not a technical one.

So if the currency supply could not expand beyond deposits then you would be dealing with and using instruments (bills, notes, ect.) we would call non-negotiable. Basically, you would be on a gold or a bitcoin standard. So are you like a gold bug? Lots of that going around lately and it's totally understandable when dealing with inflation. The currency we use as the world reserve currency is not non-negotiable for this very reason, the ability to expand and contract.

So you said you studied this so let's just reiterate how the money supply is totaled. It's deposits + circulation.

So the way you describe is only true if your original deposit of 10 only has demand withdrawal of 1 after I borrow 9 for griptape. But that's just not the case, your original 10 is always available to withdraw in full.

And BTW depositors demanding withdrawals beyond a banks liquidity forcing them to sell off securities or whatever at a loss happens a lot. They're basically insolvent by nature. It's what we call a bailout where the Fed creates reserve deposits through open market operations to deal with insolvencies quickly exactly as you described in your first sentences.

So that's a tiny bit more complicated because that is dealing with the collateral you bolded earlier mostly but it's the same in that it creates new currency that didn't exist before.

So the collateral must be as you bolded in a 1:1 ratio for currency created. Mostly this collateral is provided by our Congress on our behalf for the greater good. The collateral in whatever form, treasuries, bonds, sdr's or whatever are obligations of The United States and they are simply printed as easily as the currency.

You and I are bonding these obligations via endorsement with every transaction. This bond is the full faith and credit of The United States.

I think this is sort of important to grasp because you and I have levied this on the entire world and we sold it to them on the promise that the currency was as good as gold, that is, non-negotiable; which was basically a big fat lie.

That is a whole lot of text to try to mangle what you originally said (banks create currency) somehow correct, when it was not.

The explanation that you lay out in the increases in the money supply it should be said is not 'banks creating currency' as much as it is depositors and borrowers deciding to leverage their future earnings for a loan and the interest they are going to have to pay on top of it. And even that is capped (even if you don't consider things like how much the business is actually able to save after things like paying rent/costs of product, wages, taxes, etc, so it would not be the full amount available for deposit).

The condescension is a nice touch though, shame you go right into conspiracy land though with shit like 'banks are insolvent by nature' and that somehow a dollar is not worth a dollar, which is nonsense. What that dollar can purchase might change, but 1 dollar is always 1 dollar.

Glad you are trying to have that convo.

It is funny how it is essentially identical to the bullshit trolling over a decade ago when the Right wing propagandists were pulling the original Tea Party nonsense.

 

[HGCC]

It has been a while since I saw fractional banking come up. My catchphrase bingo card had "Austrian economics" on it, so I didn't win. Gold Standard or death!!!!

The simpler days of Ron Paul and the libertarians, not rand and the q-publicans, as the weirdos you encounter on the internet.

 

[ActionianJacksonian]

That is a whole lot of text to try to mangle what you originally said (banks create currency) somehow correct, when it was not.

The explanation that you lay out in the increases in the money supply it should be said is not 'banks creating currency' as much as it is depositors and borrowers deciding to leverage their future earnings for a loan and the interest they are going to have to pay on top of it. And even that is capped (even if you don't consider things like how much the business is actually able to save after things like paying rent/costs of product, wages, taxes, etc, so it would not be the full amount available for deposit).

The condescension is a nice touch though, shame you go right into conspiracy land though with shit like 'banks are insolvent by nature' and that somehow a dollar is not worth a dollar, which is nonsense. What that dollar can purchase might change, but 1 dollar is always 1 dollar.

It is funny how it is essentially identical to the bullshit trolling over a decade ago when the Right wing propagandists were pulling the original Tea Party nonsense.

I did not say banks create new currency. I said you and I do with our business needs.

You said they can only loan 90% deposits thus nothing new is created and simply glossed over or chose to ignore that deposits aren't recalculated on loans outstanding.

This fact, that a $10 deposit of which $9 is loaned and $1 held for reserve, still has a deposit balance of $10 that is totaled in the supply along with the $9 circulating loan is really so elementary it doesn't warrant further discussion.

Wherever you learned that this is not the case seems pretty suspect and might have an agenda or maybe is a pawn of Putin or something.

Because even a child that opens their first bank account knows their deposit balance does not change based on the loans made on the banks deposits.

 

[HGCC]

So why exactly do you think fractional banking is a problem?

 

[Kassiopeija]

Sure did, I also studied the banking

Your deposit would allow them to only lend out about $5,454, not $60k. They can only lend out about 90% of the money they have in deposits

hmmm so 90% from 60k is just 5 and a half dollar?!? Or does it mean 5.454$? How did you calculate this my expert?

 

[DIY-HP-LED]

So why exactly do you think fractional banking is a problem?

Because they think for every dollar created Elon Musk (the richest man in the world) makes ten, that the guberment just gives him! If he isn't in the illuminate or whatever, it is, nobody is, if he ain't then that Devil Soros better let him in!

 

[DIY-HP-LED]

So why exactly do you think fractional banking is a problem?

Ya would think all those economists at all those universities all around the world, would have caught on by now? It must be a conspiracy, or maybe a bad fucking discredited idea that is peddled by morons with a case of Dunning Kruger?

 

[ActionianJacksonian]

So why exactly do you think fractional banking is a problem?

It's really not as long as everyone has faith and confidence in the system. When we create new currency through loans and pay it back we grow the economy.

Panics and uncertainty cause the potential for problems though so it's a bit of a Faustian bargain don't you think?

If I borrow 9 of your 10 and pay it back we have inflated the supply by 9 with no price increases because my 9 grew goods and services with a real demand.

If I borrow the same 9 and default and you panic and withdrawal all 10 in the next moment this isn't a huge deal unless say, 10% of members panic as well. So who is left holding the bag there at the fdic insured bank?

So this of course is exponential when government is borrowing because they go big and never home. Don't let the conservatives fool you they are right there in the game.

And that's all it is really is just a game. We have been though this multiple times already with all 13 colonies and 2 National banks. Where did those banks go and why aren't they still here?

 

[HGCC]

Well, bank runs really aren't a big concern. The wiki on the topic covers quite a bit of what goes on that makes that not a big issue.

Regarding who holds the bag at the fdic insured bank, its the federal government. They only insure up to a certain amount per person, but its not like they can run out of money. The central banking structure serves as a backstop for quite a bit of the retail/commercial/institutional banking industry to prevent the sort of problems you indicate.

 

[ActionianJacksonian]

What that dollar can purchase might change, but 1 dollar is always 1 dollar.

So ok this part is pretty cool I think and BTW thanks for the lively discussion

So you're well versed in the laws of Banking and money so please define a US dollar in our Law.

 

[ActionianJacksonian]

Well, bank runs really aren't a big concern. The wiki on the topic covers quite a bit of what goes on that makes that not a big issue.

Regarding who holds the bag at the fdic insured bank, its the federal government. They only insure up to a certain amount per person, but its not like they can run out of money. The central banking structure serves as a backstop for quite a bit of the retail/commercial/institutional banking industry to prevent the sort of problems you indicate.

Right. I covered that earlier with open market operations and what is used as collateral and what specifically bonds the collateral.

Of course bank runs aren't a big concern when we can just bail them out by printing collateral.

The problem here is, there was no actual market demand for the new printing. It's just plugging a hole and didn't create any new goods or services but it did increase the money supply.

Just as OP said it's all really supply and demand. Increase in money supply with no increase in goods and services results in price increases. But the price increases aren't the inflation, the increase in the supply of currency is the inflation, and it doesn't always create higher prices but that's not to say that it never does.

 

[hanimmal]

I did not say banks create new currency. I said you and I do with our business needs.

This is incorrect. New currency is not created by anyone but the Treasury.

You said they can only loan 90% deposits thus nothing new is created and simply glossed over or chose to ignore that deposits aren't recalculated on loans outstanding.

This fact, that a $10 deposit of which $9 is loaned and $1 held for reserve, still has a deposit balance of $10 that is totaled in the supply along with the $9 circulating loan is really so elementary it doesn't warrant further discussion.

Wherever you learned that this is not the case seems pretty suspect and might have an agenda or maybe is a pawn of Putin or something.

Because even a child that opens their first bank account knows their deposit balance does not change based on the loans made on the banks deposits.

lmao.

hmmm so 90% from 60k is just 5 and a half dollar?!? Or does it mean 5.454$? How did you calculate this my expert?

Read the full post in the link if you are confused. lmao at your attempt to troll too. In America the comma $5,454 is five thousand 4 hundred and fifty four dollars.

So why exactly do you think fractional banking is a problem?

Because it is a conspiracy!

So ok this part is pretty cool I think and BTW thanks for the lively discussion

So you're well versed in the laws of Banking and money so please define a US dollar in our Law.

100 cents.

Right. I covered that earlier with open market operations and what is used as collateral and what specifically bonds the collateral.

Of course bank runs aren't a big concern when we can just bail them out by printing collateral.

The problem here is, there was no actual market demand for the new printing. It's just plugging a hole and didn't create any new goods or services but it did increase the money supply.

Just as OP said it's all really supply and demand. Increase in money supply with no increase in goods and services results in price increases. But the price increases aren't the inflation, the increase in the supply of currency is the inflation, and it doesn't always create higher prices but that's not to say that it never does.

Are you saying that the Treasury was printing currency or that there was a bond sale by the Treasury that nobody was buying?

Because lol at 'new printing' otherwise.

 

[ActionianJacksonian]

100 cents.

Circular definition. Might as well say a dollar is 2 half dollars or a dollar is a dollar.

No wonder you're stuck in a loop. Good luck with that.

 

[Lucky Luke]

He does like a good loop.

I'm no good with these but ill give it a go.

What's a dollar worth?
A dollar is worth nothing. It's the idea of it being tradeable that gives it any value and that value depends on the person trading for it.

More computerised "money" exists than actual printed or cast tokens.

 

[Lucky Luke]

 

[hanimmal]

Circular definition. Might as well say a dollar is 2 half dollars or a dollar is a dollar.

No wonder you're stuck in a loop. Good luck with that.

That is the problem with the conspiracy theorists nonsense that gets tossed around online.

They think that there is some nefarious meaning behind everything.

A dollar is a dollar, it is divisible into 100 cents, it is just a method of denomination in our currency here in America. Thinking that it has to mean something more is the silliness that comes with believing there has to be some whatever it is that you feel the definition of a dollar should be.

He does like a good loop.

I'm no good with these but ill give it a go.

What's a dollar worth?
A dollar is worth nothing. It's the idea of it being tradeable that gives it any value and that value depends on the person trading for it.

More computerised "money" exists than actual printed or cast tokens.

I think it is because people who have radicalized themselves online never stop and think about why they are wrong before going on to the next 'but what about this next bit of bullshit...'.

The brute force method of trolling is annoying, and tends to rely on people giving up on pointing out the obvious flaw they build their crap foundation around.

When you build a foundation on 10-9 = 100, it is pretty difficult to move onto to anything more advanced.

But I get that is the point I was making when I originally brought up this guys post in this thread, conspiracy theories around the American banking system have been pushed for decades by trolls to try to reduce faith in our system because it is complex and confusing.

 

[Lucky Luke]

theories around the American banking system have been pushed for decades by trolls to try to reduce faith in our system because it is complex and confusing.

My comment was for every country. Dollar or Rupee, Pound, whatever. It's not always about America.., lots of countries have Dollars.

America's banking system btw is archaic. You guys still widely use cheques... so 1980's

 

[hanimmal]

My comment was for every country. Dollar or Rupee, Pound, whatever. It's not always about America.., lots of countries have Dollars.

Is this just some lame attempt to try to be negative towards what I responded to your post with?

If you read it, I only brought up America to explain why I even started to post in this thread. Are you so anti-American that just the word triggers you?

 

[Lucky Luke]

Is this just some lame attempt to try to be negative towards what I responded to your post with?

If you read it, I only brought up America to explain why I even started to post in this thread. Are you so anti-American that just the word triggers you?

Your back in your loop.