Comments on: Where Do Banks Get Their Money? Fractional Reserve Banking http://www.discusseconomics.com/banking/where-do-banks-get-their-money/ Join the conversation on a variety of economic and finance discussions. Sun, 05 Feb 2012 11:15:00 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Mike http://www.discusseconomics.com/banking/where-do-banks-get-their-money/comment-page-4/#comment-33710 Mike Sun, 05 Feb 2012 11:15:00 +0000 http://www.discusseconomics.com/articles/banking/where-do-banks-get-their-money/#comment-33710 What is the 850 liability in the second balance sheet? Since the bank has sold a 850 loan without giving up any cash because who ever the bank lent it too put it straight back into the bank then both the capital and the interest are profit. Profit is still a liability but it is money owed to the shareholders. Have I understood correctly? What is the 850 liability in the second balance sheet? Since the bank has sold a 850 loan without giving up any cash because who ever the bank lent it too put it straight back into the bank then both the capital and the interest are profit. Profit is still a liability but it is money owed to the shareholders. Have I understood correctly?

]]> By: A series of readings to improve your understanding of economics | Politics, Economics, and Development http://www.discusseconomics.com/banking/where-do-banks-get-their-money/comment-page-4/#comment-33709 A series of readings to improve your understanding of economics | Politics, Economics, and Development Sat, 04 Feb 2012 09:57:54 +0000 http://www.discusseconomics.com/articles/banking/where-do-banks-get-their-money/#comment-33709 [...] reserve banking system Lecture notes from International Economics Class on Balance of Payments What is Fractional Reserve Banking ? Filed Under: Economics Tagged With: monetary policy About [...] [...] reserve banking system Lecture notes from International Economics Class on Balance of Payments What is Fractional Reserve Banking ? Filed Under: Economics Tagged With: monetary policy About [...]

]]> By: aussietone http://www.discusseconomics.com/banking/where-do-banks-get-their-money/comment-page-4/#comment-33694 aussietone Sat, 14 Jan 2012 11:05:00 +0000 http://www.discusseconomics.com/articles/banking/where-do-banks-get-their-money/#comment-33694 well put, short and sharp. Yes I'm nearly there, Idon't own much but I'm practically debt free. and it is a feeling of self power, but as a double edged sword it can feel a little less of a man etc. Just keep thinking beyond the materialistic urge we were warned against and things start to feel better. well put, short and sharp. Yes I'm nearly there, Idon't own much but I'm practically debt free. and it is a feeling of self power, but as a double edged sword it can feel a little less of a man etc. Just keep thinking beyond the materialistic urge we were warned against and things start to feel better.

]]> By: aussietone http://www.discusseconomics.com/banking/where-do-banks-get-their-money/comment-page-4/#comment-33693 aussietone Sat, 14 Jan 2012 10:59:00 +0000 http://www.discusseconomics.com/articles/banking/where-do-banks-get-their-money/#comment-33693 Well that is precisely the way it should have stayed, as it was in Australia up until the 90's when banking deregulations started to take hold. Fortunately our Reserve bank over here is not a privately organised one like in the USA. We should all remember that not everybody should be allowed to borrow too much $ to start with. So what if there is slower growth and thus ,slower profit taking by huge banks and multinational companies. That's all it has been about. . . How the select fortunate few can maintain and continue to reap in, the vast majority of the world's economic power and control. Thus they maintain their wealthy status quo. If commercial banks didn't engage in such promisory notes etc. then there would be alot less people aquiring loans (of whom probably should have them anyway) there would be slower global growth (therefore less of an appetite for buying shit we don't need) and there would also be much less profit being made by "The Banks" and let's not forget the multinationals... OH NO, that can't be allowed to happen now can it. The enviroment and the resources of the earth might be stronger and more capable of sustaining us all, but instead we must all be allowed to aquire debt so we can keep a bunch of bankers, economists (no insult intended to the individual) top ranking shareholders, directors etc. and politicians rolling flush with money. The US federal reserve bank should have remained like Australia's reserve bank. . . NOT PRIVATELY RUN AND CONTROLLED . Well that is precisely the way it should have stayed, as it was in Australia up until the 90's when banking deregulations started to take hold. Fortunately our Reserve bank over here is not a privately organised one like in the USA. We should all remember that not everybody should be allowed to borrow too much $ to start with. So what if there is slower growth and thus ,slower profit taking by huge banks and multinational companies. That's all it has been about. . . How the select fortunate few can maintain and continue to reap in, the vast majority of the world's economic power and control. Thus they maintain their wealthy status quo.

If commercial banks didn't engage in such promisory notes etc. then there would be alot less people aquiring loans (of whom probably should have them anyway) there would be slower global growth (therefore less of an appetite for buying shit we don't need) and there would also be much less profit being made by "The Banks" and let's not forget the multinationals... OH NO, that can't be allowed to happen now can it. The enviroment and the resources of the earth might be stronger and more capable of sustaining us all, but instead we must all be allowed to aquire debt so we can keep a bunch of bankers, economists (no insult intended to the individual) top ranking shareholders, directors etc. and politicians rolling flush with money. The US federal reserve bank should have remained like Australia's reserve bank. . . NOT PRIVATELY RUN AND CONTROLLED .

]]> By: Et tu, Union Bank? http://www.discusseconomics.com/banking/where-do-banks-get-their-money/comment-page-4/#comment-33684 Et tu, Union Bank? Sat, 31 Dec 2011 06:51:34 +0000 http://www.discusseconomics.com/articles/banking/where-do-banks-get-their-money/#comment-33684 [...] and make $9,000 for every $1,000 I leave parked in a checking account. Unlike banks, I cannot create money out of thin air.  I’m sure they won’t miss our very long term relationship.  Imposing higher fees on [...] [...] and make $9,000 for every $1,000 I leave parked in a checking account. Unlike banks, I cannot create money out of thin air.  I’m sure they won’t miss our very long term relationship.  Imposing higher fees on [...]

]]> By: Bitcoin - Een virtuele valuta - Pagina 17 - 9lives - Games Forum http://www.discusseconomics.com/banking/where-do-banks-get-their-money/comment-page-4/#comment-33652 Bitcoin - Een virtuele valuta - Pagina 17 - 9lives - Games Forum Wed, 30 Nov 2011 21:29:25 +0000 http://www.discusseconomics.com/articles/banking/where-do-banks-get-their-money/#comment-33652 [...] als het van wiki en een youtube-filmpje komt moet het wel kloppen. Omdat ik zelf ook te lui ben: Where Do Banks Get Their Money? Fractional Reserve Banking | Discuss Economics Blog => [...] [...] als het van wiki en een youtube-filmpje komt moet het wel kloppen. Omdat ik zelf ook te lui ben: Where Do Banks Get Their Money? Fractional Reserve Banking | Discuss Economics Blog => [...]

]]> By: Dr. House http://www.discusseconomics.com/banking/where-do-banks-get-their-money/comment-page-4/#comment-33649 Dr. House Tue, 29 Nov 2011 18:50:00 +0000 http://www.discusseconomics.com/articles/banking/where-do-banks-get-their-money/#comment-33649 You say that like it is a bad thing. People's willingness to sell their future life and livelihood for gratification today is the root problem (and the theme of many, many fables.) If people were /unwilling/ to sell their souls and instead insisted on paying themselves for the work they do and saved money they would not become wage-slaves and would be able to modulate their behavior accord to their values. Today 99% of the population cannot because 99% of the population so greatly wishes to live beyond their means that they compromise their values in order to do. FICO only matters if you are owned by a bank. It's a measure of how good of slave you are. Once you are a free man your FICO score becomes 0. If you live debt-free then you exit the system and make the banks one iota weaker. If, over time, many people stopped living in debt the system would wane in power. The religious undertones of all of this are difficult to ignore. I am an Atheist so permit me the liberty to recast God as the collective human wisdom of the ages. We knew better. We were warned. We didn't listen. You say that like it is a bad thing.

People's willingness to sell their future life and livelihood for gratification today is the root problem (and the theme of many, many fables.)
If people were /unwilling/ to sell their souls and instead insisted on paying themselves for the work they do and saved money they would not become wage-slaves and would be able to modulate their behavior accord to their values.
Today 99% of the population cannot because 99% of the population so greatly wishes to live beyond their means that they compromise their values in order to do.

FICO only matters if you are owned by a bank.
It's a measure of how good of slave you are.
Once you are a free man your FICO score becomes 0.

If you live debt-free then you exit the system and make the banks one iota weaker.
If, over time, many people stopped living in debt the system would wane in power.

The religious undertones of all of this are difficult to ignore.
I am an Atheist so permit me the liberty to recast God as the collective human wisdom of the ages.
We knew better. We were warned. We didn't listen.

]]> By: se7ensnakes http://www.discusseconomics.com/banking/where-do-banks-get-their-money/comment-page-3/#comment-33120 se7ensnakes Sat, 06 Aug 2011 00:11:49 +0000 http://www.discusseconomics.com/articles/banking/where-do-banks-get-their-money/#comment-33120 In a foreclosure the banks exchanges a paper called a promissory note for a real assets. The trick is to get people to sign in the dotted line. Imagine that a home sells for 200k. 75k went for hiring engineers, architect, land purchase, permits and materials. Another 75k went for labor and rental equipment to aid in building the home. The contractor, subsequently, sells the home for 200k and pockets 50k for his effort. Some credit worthy customer comes along and decides they are going to buy the home and so they put up 50k for down payment and a bank finances the rest, 150k. In a matter of 15 years, depending on the interest rate, the banks would have profited 150k from the interest. The payment of the principal will eventually come unless...something happens to the debtor and he cannot fulfill his promissory obligation. Now the homes goes into foreclosure. The banks gets the house, the previous 50k down payment, all the payments the debtor made to that point. What did the bank need to do to get this deal? Just write out a check to the debtor based on the idea that he will pay it back. It is not that banks loan money from deposits but that banks loans money for deposits. In this system you can imagine why and how Washington is full of politicians who cater to these powerful institutions. The probably have controlling interest in all major companies. The future is bleak for the common worker. There does not appear to be any where to invest money for retirement. inflation will eat at it in the bank. and real estate and the stock market are primarily for the insiders that know when economy is going to take a downturn. In a foreclosure the banks exchanges a paper called a promissory note for a real assets. The trick is to get people to sign in the dotted line. Imagine that a home sells for 200k. 75k went for hiring engineers, architect, land purchase, permits and materials. Another 75k went for labor and rental equipment to aid in building the home. The contractor, subsequently, sells the home for 200k and pockets 50k for his effort. Some credit worthy customer comes along and decides they are going to buy the home and so they put up 50k for down payment and a bank finances the rest, 150k. In a matter of 15 years, depending on the interest rate, the banks would have profited 150k from the interest. The payment of the principal will eventually come unless...something happens to the debtor and he cannot fulfill his promissory obligation. Now the homes goes into foreclosure. The banks gets the house, the previous 50k down payment, all the payments the debtor made to that point. What did the bank need to do to get this deal? Just write out a check to the debtor based on the idea that he will pay it back. It is not that banks loan money from deposits but that banks loans money for deposits. In this system you can imagine why and how Washington is full of politicians who cater to these powerful institutions. The probably have controlling interest in all major companies. The future is bleak for the common worker. There does not appear to be any where to invest money for retirement. inflation will eat at it in the bank. and real estate and the stock market are primarily for the insiders that know when economy is going to take a downturn.

]]> By: Steve http://www.discusseconomics.com/banking/where-do-banks-get-their-money/comment-page-3/#comment-32816 Steve Sun, 26 Jun 2011 01:54:00 +0000 http://www.discusseconomics.com/articles/banking/where-do-banks-get-their-money/#comment-32816 The financial institutions around the world are past fixing or understanding. You can see how confusion & misinformation has infested the reality of the financial industry. This greatly benefits ongoing corruption witch is precisely what the industry wants. While we are forever discussing, & debating exactly what the financial institutions are, & how they work, they will still be getting there trillion dollar profits, & if not, be bailed out by governments {the public money}grants. You {the general public} really don’t need banks. It doesn’t matter where you get your income from; it only counts where you invest it. Bypass the banks. Profit from investments, stocks, superannuation, business ventures; invest in anything but banking/finance institutions. Banks are just glorified middle men that produce nothing & take as much as possible, because they can & no one or nothing can stop them. & while you keep involving them with your wealth, they will always corrupt. As for the question, “what is money”? Money is, in the main, just a large IOY. Dose anyone really think that there is a physical dollar out there for every one spent? What do you think would happen if there was a global cyber attack on the finance institutions; witch resulted in destroying all credit & debit records? Would you get all your money in cash? I don’t think so. The financial institutions around the world are past fixing or understanding. You can see how confusion & misinformation has infested the reality of the financial industry. This greatly benefits ongoing corruption witch is precisely what the industry wants. While we are forever discussing, & debating exactly what the financial institutions are, & how they work, they will still be getting there trillion dollar profits, & if not, be bailed out by governments {the public money}grants.
You {the general public} really don’t need banks. It doesn’t matter where you get your income from; it only counts where you invest it. Bypass the banks. Profit from investments, stocks, superannuation, business ventures; invest in anything but banking/finance institutions. Banks are just glorified middle men that produce nothing & take as much as possible, because they can & no one or nothing can stop them. & while you keep involving them with your wealth, they will always corrupt.
As for the question, “what is money”? Money is, in the main, just a large IOY. Dose anyone really think that there is a physical dollar out there for every one spent? What do you think would happen if there was a global cyber attack on the finance institutions; witch resulted in destroying all credit & debit records? Would you get all your money in cash? I don’t think so.

]]> By: Bob http://www.discusseconomics.com/banking/where-do-banks-get-their-money/comment-page-3/#comment-32811 Bob Sat, 25 Jun 2011 10:05:43 +0000 http://www.discusseconomics.com/articles/banking/where-do-banks-get-their-money/#comment-32811 The inhabitants of countries are faced with the scourge that Thomas Jefferson mentions below. Politicians have allowed the scourge to fester & grow. As one lad said .... Banking........a giant ponzi scheme supported by laws & Judiciary & Politiicans and a giant conga line of other so called learned leeches most joyous to suck the life force out of the community with no conscience. Thomas Jefferson said in 1802: I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property - until their children wake-up homeless on the continent their fathers conquered. The inhabitants of countries are faced with the scourge that Thomas Jefferson mentions below. Politicians have allowed the scourge to fester & grow. As one lad said .... Banking........a giant ponzi scheme supported by laws & Judiciary & Politiicans and a giant conga line of other so called learned leeches most joyous to suck the life force out of the community with no conscience.

Thomas Jefferson said in 1802:
I believe that banking institutions are more dangerous to our liberties than standing armies.
If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property - until their children wake-up homeless on the continent their fathers conquered.

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