Where Does Your Money Come From (part 3 cont'd)

Where Dr. Righteous is wrong is his inability to understand what makes deposit accounts money just like cash is money. Deposit accounts are not claims on Federal Reserve Notes. They are claims on goods and services in the United States of America just like Federal Reserve Notes are claims on goods and services.

The FDIC does not shut down banks because they run out of cash to give to their depositors. Banks fail because they run out of capital. They no longer have any assets or cash to back their deposits. Reserves are simply a monetary tool.

There is an unlimited amount of Federal Reserve Notes that the Fed can create. Any depositor that wants cash can get it, and depositor that wants to use their account for a transaction can transact as long as the bank has capital. It has nothing to do with reserves. Reserves are available for all banks if they have capital. And if too many people want to withdraw money the Fed can simply create more cash.

Dr. R has a fundamental misunderstanding of the banking system and it stems from trying to equate the 1700s banking system to the 2011 banking system.

 

I'm sure then you'll have no trouble proving it then. Until then, it's safe to assume that you're just making stuff up.

 

And saying that we are talking about the banking system as it was 200 years ago is incorrect. You're the one who doesn't even understand the reasoning behind the FDIC's existance, nor the difference between electronic transfers and transferring with cash. If anything, it is you whose understanding of the banking system is 200 years out of date.

You have done absolutely no such thing.

The burden of proof is on you for making a claim that you are incapable of proving with credible sources.

Of course you don't know what I'm talking about; you're a troll, you just make up your trolling as you go. Just when I think you can't top yourself, you do.

 

I see your OP starts off with trolling.

Wrong. Deposit accounts = Money. Cash = Money. Deposits != Cash. This has been proven to you by multiple people with multiple credible sources, and yet you are still continuing to perpetuate disinformation.

I said no such thing, troll. It would be more correct to say that they are claims on bank's reserves.

Deposits != Cash. Proven many, many, many times.

I never said that they did, troll.

Depends on how you define capital. Do you mean equity?

Sure.

Wrong a million times over. Tell that to depositors who had more than $150,000 in accounts in banks that failed.

What does it have to do with banks having capital? A bank could have $0.01 worth of capital, does that mean that the Fed is going to lend it reserves?

Strawman tactic, already debunked in a previous post.

 

I know you aren't a huge fan of reading anything over 1 page... but here it is again. Coming from the horses mouth itself. If you still can't understand than you are a lost cause. Embarrassing!

http://www.federalreserve.gov/pubs/feds/2010/201041/201041pap.pdf
http://www.federalreserve.gov/monetarypolicy/0693lead.pdf

"Since the creation of the
Federal Reserve System as a lender of last resort,
capable of meeting the liquidity needs of the entire
banking system, the notion of and need for reserve
requirements as a source of liquidity has all but
vanished. Instead, reserve requirements have
evolved into a supplemental tool of monetary
policy, a tool that reinforces the effects of open
market operations and discount policy on overall
monetary and credit conditions and thereby helps
the Federal Reserve to achieve its objectives."

 

Printed green paper based on absolutely, positively NOTHING.

 

Except for $15 trillion worth of our hard work and labor

 

Whose hard work and labor exactly? Certainly not the money flippers nor the pranksters that print that magical green paper out of thin air.

 

That is a horrible representation. There is plenty of us hard working American's that built this country and continue to work hard for the future.

While I agree the money is the country is being taken advantage of by Wall Street and the financial system and the Mitt Romney's of this country, it still comes down to our labor and our productivity.

 

Our labor and our productivity is like peeing into the wind. We produce almost nothing (except money schemes using other people's money, whom they probably swindled out of somebody else). The average Joe gets his throat cut by the fat cat (like PinkSlip Romney), for their profit. Sorry Bud, but this country and it's system has imploded. The smoke and mirrors crown on Wall street just keeps shuffling the numbers around to create the illusion there is an actual economy. Get a calculator and plug in the debt numbers and the first thing you should notice is that the number is realistically and entirely unrecoverable. If we turned off the faucets today, cut off every expenditure from every public source, it would still take us more than a decade to catch up. The number grows exponentially everyday and is unfixable. Corporate pigs like PinkSlip are scraping up whatever is left in this country and will shut it down completely if he gets in there. We're a few months away from Greece dude. Do the numbers. Any cuts the right wing talks about is strictly for political purposes.

 

You already posted this quote in the other thread, and I already debunked it. It in no way proves that banks are not reserve constrained. It only says that the Fed will bail out some (not all) banks that get into trouble, so that the Fed can continue to attempt to meet its monetary policy objectives.

 

Wall Street would be powerless without the federal government. For some reason you trust a centralized monopoly of power like the federal government...and trust the federal government having a monopoly over our money supply...but you don't trust a centralize monopoly of wealth like Wall Street that was built up by the monopolized power of the federal government. I don't follow your logic.

 

That's because there is none. It's why several posters have decided to put the poster on ignore.

 

He has proven many times that he is a troll. When he's proven wrong, he resorts to strawman tactics, ad hominem logical fallacies, mischaracterizing others' statements, changing his initial position, name-calling, etc.

 

Absolutely so. Putting him on ignore allows sniper attacks when convenient.

 

Did you notice he started an entire thread just to troll me?

 

Depends on how you define money. If you define money to include deposits (M1), then deposits are money. If you define money to mean cash and its equivalent (MB), reserves, deposits are not money.

"The FDIC does not shut down banks because they run out of cash ... Banks fail because ... no longer have any assets or cash."

??? That doesn't even start to make sense.

"Capital". Introducing a new term for your story.

Other than the fact that we now have an electronic form of cash that are reserve deposits at the FR, how is it different?

 

That doesn't prove it. That statement says that the "notion of and need" for reserve requirements has vanished.

It does not say that banks don't need reserves.

You apparently still do not understand fundamental concepts like reserve requirements and reserves.

 

If banks needed reserves than they mathematically wouldn't be able to create the number of loans they have. Banks need reserves to settle payments between banks and enough cash on hand to exchange for cash withdrawals.

Otherwise, the reserve requirement by the Fed is almost a thing of the past. We are basically working on a no reserve requirement right now.

 

False.

And they have to meet the 10% reserve requirement.

Not true, all banks maintain reserves.

If anything, the recent banking crisis argues that reserve requirements should be increased, IMO.

 

Iriemon, you are a smart dude. Read this paper written by the Federal Reserve... I'm not feeding you bull(*)(*)(*)(*).

For perspective, M2 averaged about $7¼ trillion in 2007. In contrast, reservable deposits were about $600 billion, or about 8 percent of M2. Moreover, bank loans for 2007 were about $6¼ trillion. This simple comparison suggests that reservable deposits are in no way sufficient to fund bank lending.

Source: http://www.federalreserve.gov/pubs/feds/2010/201041/201041pap.pdf

You never provide any sources whatsoever. You are too stubborn to try to learn how the system really works.

 

It has nothing to do with stubborness. Your own data completely proves your wrong.

With $600 billion in reserves, and a 10% reserve ration, if bank lend to capacity, you'd expect $6 trillion in loans and a little less than $7 trillion in deposits.

In other words, the data perfectly correlates what you would expect with a 10% reserve, which is the general rule.

You know, I try to educate you and be reasonable, but when you say flat out lies like that I'm about to turn you off. I provide sources for my statements more than any other person on this board. That's (*)(*)(*)(*)ing bull(*)(*)(*)(*). (*)(*)(*)(*)(*)(*)(*).

 

That is not what it is saying at all, lol. It is saying only 10% of deposits are reservable, as in 10% of deposits need reserves to meet the Fed requirement.

It is not saying 10% of deposits have reserves backing them.

 

I haven't seen you provide a single source to refute my statements. Sorry buddy!! But you are nothing but a con man lying through his teeth. Show me some sources where the Fed is saying what you are saying. Otherwise shut your (*)(*)(*)(*)ing mouth.

 

See, this is me providing you with facts. Unlike your lying ass. You just completely lied about what that paper was saying. It did not say that 10% of deposits were backed by reserves... it said 10% of deposits met the requirement to need reserves.



So until you can provide facts to back your lies, I suggest you start asking questions instead of making comments. Thanks!