Where Does Your Money Come From (cont'd)

That form of public sector intervention in private sector market helps our republican form of government function more effectively; it is not what I would term a true failure of that banking service, merely the provider.

 

Like I have said a million times. Reserves are simply a monetary tool. They are not needed for banks to make loans, they are not needed for banks to invest in securities. The point of reserves is to allow the Fed to control the borrowing cost of money through the Fed Funds Rate. This cost of money is what adjusts the banks ability to lend at cheaper/more expensive rates.

Banks can always settle transactions, give depositors cash, etc as long as they have capital. Banks fail because they lost money and now they need to pay it back, through selling assets, and then through their deposits.

The FDIC insures the account by creating new deposits or rolling deposits over in to the acquiring bank. This process creates new debt for the Govt which has to equal the amounts of debits through taxation/debt issuance.

The problem with Dr. Righteous is he doesn't view deposits as money. He views only reserves as the ultimate form of money because that is what you can exchange deposits for. But reserves are simply a monetary tool for the Fed to control borrowing costs. As the papers I have sourced in this debate have shown, banks don't need reserves to make loans and banks don't need reserves to back all their deposits.

 

The FDIC did not exist 200 years ago. Nor did electronic transferring.

Nothing in that paragraph comes remotely close to suggesting that banks don't need reserves to lend.

Feel free to cite a source that proves your claim.

I've made my points and you continue to dodge or ignore them and bring up new points to me that are totally unrelated. So I will continue to address them to debunk the disinformation you continuously present.

 

I see you're trolling again. I never once said that "banks loan out all its money". Unless you can prove it by posting a quote and link to it.

 

Your source says nothing about banks not being reserve constrained. All it says is that the Fed is able to manipulate the required reserve ratio to implement a certain monetary policy and that it can provide certain banks the liquidity they need if they become insolvent or are on the verge of becoming insolvent AKA bailout.

 

The US has a central bank and its unemployment rate is ten percent

 

Sure it does. You just didn't read them obviously. Every paper I have shown you talks about banks not being reserve constrained, lol.

 

And?

I have shown you multiple sources that prove that banks don't need reserves to lend. You are obviously in super troll denial mode.

Already have. Please feel free to cite a source that proves your claim.

You don't make any points. I have no clue what you are even talking about these days. You argue against some of the most simplest concepts.

 

The modern monetary theorist can't explain why checking/saving deposits have to be insured.

 

500 posts. Time to kick this thread down the hole.

-Slashy