The Creation of the Federal Reserve System (Part 3)

Discussion in 'Political Opinions & Beliefs' started by Dr. Righteous, Jan 8, 2012.

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  1. Dr. Righteous

    Dr. Righteous Well-Known Member

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  2. akphidelt2007

    akphidelt2007 New Member Past Donor

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    We left off with an agreement that deposits accounts are just like bank notes. Yes they are a "claim" on something, but they both are still money.

    And the fact that a dollar bill is nothing but a bank note... deposit accounts are just like dollars. Which is why they do not distinguish the difference between currency in the hands of the public and deposit accounts.
     
  3. Dr. Righteous

    Dr. Righteous Well-Known Member

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    Why do you continue to perpetuate this lie when you know that it is not true?'
    If your bank fails and you have your money in cash, you haven't lost anything. If you kept your money in the bank, it is gone.

    1. You said that deposit accounts are claims to your money.
    2. You said that deposit accounts are claims to cash.

    You are suggesting that cash is not money. Please explain how cash is not money.

    Sure it is. If I put my cash in the bank and the bank fails, I have lost my money. If I held onto the cash the whole time and the bank fails, I have lost nothing.

    Fabrication. I am not claiming "digits" with my account. I am claiming a portion of the bank's reserves.

    "Nope, they are the same form of money other than their physical differences."
    Are you trolling or what?

    So if I put my cash in the bank and the bank fails, I have lost my money. If I held onto the cash the whole time and the bank fails, I have lost nothing. Deposits are not cash. There is no cash in deposits.

    When you let your friend borrow money, you have a claim on the money you lent him. He lost your money and your claim on that money is worthless.

    If it's the same bank, that's what the "digits" are. Claims. The digits are not cash/reserves.

    So you finally admit that deposit accounts are claims and are not the same thing as cash/reserves?
     
  4. Dr. Righteous

    Dr. Righteous Well-Known Member

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    What you're saying would be true if we were talking about commodity backed bank notes. Federal Reserve Notes aren't a claim on anything but more Federal Reserve Notes.
     
  5. akphidelt2007

    akphidelt2007 New Member Past Donor

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    Deposits are nothing more than electronic bank notes. Just like bank notes that were claims on gold. Accounts are no different than Federal Reserve Notes. You can say a deposit account is a claim on reserves just like bank notes were a claim on gold. But people used bank notes as money just like people use their accounts as money.

    People realized it was much easier to just exchange bank notes rather than lugging around pounds of gold. Than people realized paying for things electronically was much easier than lugging around tons of bank notes.

    Deposits are money just like cash is money. You can call them claims too if that makes you happy!
     
  6. Dr. Righteous

    Dr. Righteous Well-Known Member

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    Wrong. Electronic reserves are no different than electronic bank notes. Deposits are claims on bank reserves.

    Total fabrication. I could have zero dollars in my account. Zero dollars is not the equivalent of a Federal Reserve Note.
    Go to Wal-Mart and try to buy something with your account statement.

    It's good to see that you are finally admitting that deposit accounts are claims on bank reserves.

    People don't use their accounts as money. They use the bank's reserves as money.

    People would never lug around pounds of gold except for the most expensive transactions.

    Sure.

    Depends on how you define "money".

    Cash and claims on cash are not the same thing. How is it that you are not grasping this yet?
     
  7. Dr. Righteous

    Dr. Righteous Well-Known Member

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    No agreement was ever reached. You are fantasizing.

    No, they are not. Deposit accounts are claims on Federal Reserve Notes. Federal Reserve Notes are claims on government debt.

    Depends on how you define "money".

    Repetetive and disproven in the last thread countless times.

    Sure they do. Why do you think there are different measurements of the money supply?
     
  8. Felix (R)

    Felix (R) New Member

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    Two threads, weeks of disussion, over a thousand posts, and this is where you guys are at thus far? Something must have happened somewhere to cause a digression, right?
     
  9. akphidelt2007

    akphidelt2007 New Member Past Donor

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    False, deposits are claims on reserves just like bank notes were claims on gold. It's still money just like cash is money. When I use my credit card I don't pay someone with reserves, I pay them with the little bytes in my account.

    Account statements aren't money. I can bring my debit card though and purchase something by transferring my money (in the form of bytes) to their account. Just like people used bank notes.

    I never said they weren't claims. I have said from the beginning that you can call them claims if you want. But in reality they are money. You guys are the ones saying they are claims and not money

    False, I do not use bank reserves as money. I use cash or my deposit account. Which both are the same.

    Whatever the Govt says money is.

    I grasp it fully. It's you who can't get off this claims kick. I do not pay for anything with reserves. I pay for things with my account by transferring my money to another account. I can care less what banks do in the background.
     
  10. Dr. Righteous

    Dr. Righteous Well-Known Member

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    The first thread had much more discussion in it. Most of the second one and all of this third one have been Iriemon and I trying to convince akphidelt2007 that the money in deposit accounts are not the equivalent of cash/bank reserves.
     
  11. Dr. Righteous

    Dr. Righteous Well-Known Member

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    I agree with this. The key word is "were". Today, Federal Reserve Notes are not claims on anything other than government debt. It is good to see that you are finally admitting that deposits are claims on reserves.

    Banks do not transfer money from account to account. There is no money in your deposit account. If the bank doesn't transfer its reserves, the payee does not get the money. The only time reserves don't need to be transferred is if the payee and payer have the same bank. Then all the bank does is shift their bookkeeping to indicate that the payee has gained a claim on the bank's reserves equal to the amount of claim that the payer loses.

    That's not how it works. See above. Paying in cash is not the same thing as transferring funds through a bank.

    Sure you did:
    They get counted as money in some money supply equations, but they are not the same kind of money that cash/reserves are.

    They are not the same at all. Deposit accounts are worthless without reserves. Cash is not worthless without bank reserves.

    Reserves and cash are the same kind of money. Deposit accounts do not represent the same kind of money.

    Repetetive and already debunked.

    You should, because your transaction is not going to happen if the bank has insufficient reserves.
     
  12. akphidelt2007

    akphidelt2007 New Member Past Donor

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    I never said deposits weren't claims. I said they are money just like cash is money. And cash is still a claim. You guys were the ones trying to say there is nothing in your bank account.

    Lol, right on cue. Been over this a million times. When I use a debit card to make a purchase they transfer money from my account to another account. The reserves are done behind the scenes and after the fact. You will never learn!

    Of course it is. I don't pay for anything with reserves. I either pay for stuff with the numbers in my account or with cash.

    They are not the same as cash held in the bank vaults/reserves. They are the exact same as cash held by the public.

    No they aren't. And how do you cash in our system with out having reserves?

    No they aren't

    Sure it will. Been proven a million times. Banks can be in deficiency in reserves. Your transaction will not be declined if a bank has negative reserves. You are once again going over things that have been proven a million times. Try again!
     
  13. Dr. Righteous

    Dr. Righteous Well-Known Member

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    There isn't any cash that you can spend. There is only a claim on the bank's reserves, which get counted as money in some equations for deriving money supply. Please explain how "money" in a worthless deposit account from a failed bank is exactly the same as holding money in cash. This is extremely obvious and yet you are refusing to confront it because it contradicts your flawed and illogical position.

    "Nothing I say can disprove what you said because in your head you aren't open to learning. You have already made up your mind how the system works and there is absolutely nothing anyone in this world can do to change your mind."

    You are being this person.

    Iriemon sufficiently debunked your baseless claim long ago in the old thread.

    The reserve transfers are not done "after the fact". They are done after you initialize the transaction, but before the payee's account is credited.

    Bank reserves and cash are the same form of money. The numbers in your deposit account are not the same form of money as cash/reserves.

    Now you're just making stuff up. Deposit accounts are not cash. They are not cash held by the public.

    I have no idea what you're trying to ask me because your question was riddled with grammatical errors.

    Repetetive and previously debunked many many times.

    This is true. Banks can be deficient in reserves but the transaction cannot happen if the bank is too deficient in reserves.

    This is completely wrong. See Iriemon's quote above.
     
  14. Felix (R)

    Felix (R) New Member

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    I figured something went wrong.
     
  15. akphidelt2007

    akphidelt2007 New Member Past Donor

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    If no one would accept cash, it would be worthless. Doesn't mean the cash doesn't exist. Just like bank notes that people didn't accept were worthless.

    I understand fully what you are saying and what I'm saying. You guys are just too stubborn to admit that you are wrong. Deposits = Cash.

    No he didn't

    No they aren't.

    Deposit accounts != Cash in bank vaults/Reserves
    Deposit accounts = Cash in the hands of the public

    Of course they aren't cash. They are exactly like cash.

    Sure it can! Show me a source that states that banks NEED reserves for a transaction to take place.

    You and Iriemon are both completely wrong. Why would I see his quote for validation?
     
  16. akphidelt2007

    akphidelt2007 New Member Past Donor

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    So here's where we are at...

    Are deposit accounts money?
    My Position: Yes
    Your guys Position: It's a claim on reserves and money depending on what you call money.

    Why you are wrong: People do not use reserves to make payments. People do not accept reserve for payments. People use their deposit accounts to transfer MONEY from their account to another account. So yes, deposits are money and we pay for things with our deposits.

    Are deposits like cash held by the public?
    My Position: Yes, paying with my debit card is no different than paying with my cash

    Your Position: No, cash is like reserves. Deposits are claims on reserves.

    Why you are wrong: If you take cash out of the bank to make a payment, you are draining that banks reserves and if the cash gets deposited in another bank you are increasing their reserves.

    When you make a payment with your deposit account you are draining reserves from that bank and transferring reserves to another bank. But this is done electronically instead of physically.

    Deposits and cash are no different. If a bank doesn't have cash then you can't get cash to transfer just like if a bank can't get reserves (because it doesn't have capital) you can't transfer money from deposit accounts.


    Deposits are absolutely no different than cash. It is money like cash is money.
     
  17. Dr. Righteous

    Dr. Righteous Well-Known Member

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    That's an excellent observation, but it really has absolutely nothing to do with my point that you are responding to. It doesn't answer the question I posed to you either.

    They are not. They are claims on a bank's reserves. Claims on a bank's reserves are not cash.
    If you give your friend $5,000, you do not have the cash anymore. If he spends it on his loan shark, he does not have the cash anymore. You still have a claim against him for $5,000. You cannot go to Wal-Mart and buy $5,000 worth of stuff with the claim you have against your friend.

    Wrong. If my bank fails, my deposit account becomes worthless. I have no cash in my hands.

    Blatant contradiction.

    MMM, Step 6:

    Because his post is a direct citation of MMM. In light of that, it's good to see that you are finally coming out in the open and saying that you believe that MMM is wrong. At least now you have admitted it and we can deem your points as uncredible.

    Now if we can only get you to admit that you were talking about yourself here.
     
  18. akphidelt2007

    akphidelt2007 New Member Past Donor

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    Sure it does. It explains fully how deposit accounts are money just like cash is money. I'll give you the point that it is a claim on something. But all money is a claim. Cash is a claim on goods and services in the US. If people didn't accept cash, cash would be worthless, if banks don't accept transfers of deposits from another bank, than that deposit is worthless. Doesn't mean they don't exist and their not used as money.

    There is no difference between me having $5,000 in my wallet or my friend holding $5,000 for me other than the physical location of the money. Both instances all you do is have a claim on $5,000 worth of spending. If you are going to call everything claims, than be truthful across the board. The cash in your wallet is a claim also.

    Cash in your hands has to come from some bank.

    Yes, but reserves can be deficient, so the transfers are not reserve constrained, as in the transfer can still go through if the bank doesn't have enough reserves.

    No, MMM is not wrong. It's a simple explanation of how the banking system works. I have never said reserves are not transferred between banks. I said they are not a constraint on our deposit accounts being transferred.
     
  19. Dr. Righteous

    Dr. Righteous Well-Known Member

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    I have never once claimed that people "use reserves" to make payment or "accept reserves" for payment. That is a gross mischaracterization of my position.

    The fact that you are explaining this as being a reason that I am wrong shows how little you understand about my position.

    If the reserves don't exist, the transaction doesn't take place because the bank is insolvent. If there was spendable money in your deposit account, then bank runs wouldn't occur and you could still spend money even if your bank failed.

    The "money" that you're referring to that gets transferred to another account is a claim that is transferred. This claim is what gets counted as money in some money supply equations that count deposits as money. The actual cash reserves are transferred behind the scenes at the bank before the recipient account can be credited with an equal claim that is being deducted by the sending account. If the reserves cannot be transferred or do not exist, then the payment does not occur.

    Depends on how you define "money". By the strictest definition, no they are not.
    By the more broad definition, they are. But you have to understand that it is the deposit claim on reserves that is considered "money" by the broad definition.

    We do not pay for things with our deposits. We attempt to redeem our claim on our deposits with the bank in order to transfer some or all of our claim to another account. This transfer of claim cannot occur if the reserves are unable to be transferred.

    I agree with this. Withdrawing cash from a bank is the equivalent of redeeming some or all of your claim on a bank's reserves.

    The fact that you are explaining this as being a reason that I am wrong shows how little you understand about my position.

    Sure. But if the reserves can't be transferred, then the transaction does not take place.

    The fact that you are explaining this as being a reason that I am wrong shows how little you understand about my position.

    Repetetive and wrong.

    Now we're starting to make some progress. It's good to see that you've finally admitted that you were wrong about claiming that money is transferred directly from the sender's account to the recipients account, regardless of the bank's reserve status.

    Repetetive and wrong.
     
  20. dairyair

    dairyair Well-Known Member

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    They are not the same at all. Deposit accounts are worthless without reserves. Cash is not worthless without bank reserves.[/QUOTE]

    Isn't cash worthless without faith?

    Reserves and cash are the same kind of money. Deposit accounts do not represent the same kind of money.



    Repetetive and already debunked.



    You should, because your transaction is not going to happen if the bank has insufficient reserves.[/QUOTE]

    Sorry for the interruption.
     
  21. akphidelt2007

    akphidelt2007 New Member Past Donor

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    That's completely false. Like the above poster said. Even cash is based on faith. If people stopped accepting cash would it still be "spendable money". Deposits are electronic forms of bank notes. Electronic cash if you want to call it.

    Reserves are money to the banking system. I'm referring to the money I use. I don't use reserves to make purchases, I use the money in my account to make purchases.

    All money is a claim if you want to go by that definition

    Fine, if you want to call transferring deposits transferring claims, than purchasing things with cash is transferring claims also.

    So than what's the difference between cash and deposits?

    Repetitively claiming my repetitive statements are wrong is repetitive.

    I've never said deposits weren't claims. It's good to see you admitting deposits and cash are the same!
     
  22. Dr. Righteous

    Dr. Righteous Well-Known Member

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    Of course. Paper money doesn't naturally occur in a free market. The only reason we even use Federal Reserve Notes is because of government force.
     
  23. Dr. Righteous

    Dr. Righteous Well-Known Member

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    Your say-so is not good enough.

    The only "faith" that cash is based on is the faith that the government will competently enforce legal tender laws, and the faith that the currency won't hyperinflate or self-destruct by some other mechanism.

    No it wouldn't. Money is not spendable if people stop accepting it. It would be completely worthless. But that will only happen one of two ways: legal tender laws are repealed, or the Federal Reserve Note hyperinflates. I wonder which is going to happen first.

    They are not electronic bank notes. They are electronic claims on bank notes/reserves.

    Sure. But as soon as reserves leave the bank vault, they are spendable cash. You can't spend your deposit account.

    This statement is too vague to be meaningful in any way. They are claims on totally different things. Deposits are claims on bank reserves/notes. Federal Reserve Notes are claims on government debt.

    They are different claims. Transferring through a bank account is a transfer of claims on bank reserves. But I agree that transferring cash is transferring a claim on government debt.

    Deposits are a claim on cash. Cash is a claim on government debt. There exists up to 10 times the amount of deposits/claims on cash than there is actual cash in reserves.

    Yes. Extremely repetetive. Your astute observation is noted.

    I've already showed you where you said that mine and Iriemon's "claims" argument was "silly". There is no further explanation needed. You can deny it all you want, but your words were loud and clear.

    I've admitted no such thing.
     
  24. akphidelt2007

    akphidelt2007 New Member Past Donor

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    No one really cares much about any of this. They care about what cash will buy them. Once cash stops giving them what they want, they will lose faith in it.

    People can lose faith of money even with legal tender laws.

    False

    No, they are claims on goods and services. Cash is not spendable unless someone accepts it in an exchange. Just like deposits.

    No they aren't. Federal Reserve Notes are not claims on Govt Debt whatsoever.

    Transferring through a bank account is an electronic transfer of bank notes to another bank. Amazing!

    I rarely ever use cash. I simply put my electronic money in to someones account so I don't have to take out cash and waste my time.

    I have never said that deposits accounts weren't claims. I simply said they were money used in transactions and reserves are an after affect of transactions... not a necessity for transactions.
     
  25. Dr. Righteous

    Dr. Righteous Well-Known Member

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    Plenty of people care about it.

    That's my point. Price inflation is a loss in the faith of a currency by the private sector.

    Cash/Reserves = Spendable Money.
    Deposits != Cash/Reserves.
    Deposits != Spendable Money.
    Deposits = Claims on Cash.
    Deposits = up to 10x amount of Cash

    Deposits are not spendable like cash is.

    Sure they are. Federal Reserve Notes are manufactured for the purpose of the Fed claiming government debt.

    It has already been proven to you many, many times that this is not how it works. See MMM Step 6.

    No cash/reserves, no transaction.
     
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