News Money Per Person: How Much Would We Get?

[Burnsys]

gravenewworld i understand what you are saying...

But when the bank lent money, all they do is open an account (in the same bank) with the amount of the loan.. let's say $1000.. When they do that they only must have 10% of that amount in real money...

After that i (the borrower) decide if i take the 1000$ in cash., or if i make a check or i leave the money in the same bank... but what i am saying is that the bank to lent 1000$ only need to have 100$ real dolars...

Is that right?

 

[hitssquad]

You were implying that American banks lend more than they retain on deposit.

what i am saying is that the bank to lent 1000$ only need to have 100$ real dolars.

We all seem to be in agreement that that is what you are saying.

Is that right?

The links you posted say the opposite.

 

[gravenewworld]

But when the bank lent money, all they do is open an account (in the same bank) with the amount of the loan.. let's say $1000.. When they do that they only must have 10% of that amount in real money...

After that i (the borrower) decide if i take the 1000$ in cash., or if i make a check or i leave the money in the same bank... but what i am saying is that the bank to lent 1000$ only need to have 100$ real dolars...

No, you are still confusing what is on paper with what is actually going around. The bank can not loan out $1000 dollars directly from $100 physical cash. The maximum amount of money that can be created from $1000, but this only exists as numbers on a piece of paper (or in a computer if you would prefer), however this still is money.


I deposit $100 dollars physical cash into the bank, bank holds onto 10%, and loans rest.

Amt of money deposited in bank:100
Amount loaned out:90

after the 90 is loaned out the $100 dollars i deposited only exists on paper, the bank lent out 90% of my money that i deposited.

person 2 redeposits into same bank, bank lends out

amt of money deposited in bank: 100 and 90
Amount loaned out:90, and 81

and so on ad infinitum.

Now sum the totals of the amount of money deposited into the bank and the amount loaned out. Amount of money deposited=$190 Amount of money loaned out=$171=90% of amount of money deposited. The bank never along this chain loans out $1000 from $100. The bank loans $1000 off of $1111.11111111111.... in total deposits.

$100 real dollars are floating around, but you are forgetting the fact that the amount that everyone deposits into the bank still is counted in the supply of money. This is what is meant when they say banks can "create" money--$100 in physical cash turned into $1011.11111... in new deposits which is still counted in the supply of money.

 

[Art]

Burnsys is right in principle but wrong in the details this discussion has become one of mere semantics.

 

[Informal Logic]

Burnsys is right in principle but wrong in the details this discussion has become one of mere semantics.

A discussion degenerating into mere semantics? Imagine that.

 

[russ_watters]

Russ,

Please do not misquote me. It's irritating.

Please show me precisely where I have misquoted you and I will apologize. AFAIK, all I did was cut and bold your actual words.

My opening premise was banks create money
My closing premise is banks create money

Art, as I said before, you appear to understand the issue just fine. Its just that you jumped into the middle of something and unknowingly took the wrong side. However, I'm glad you now realize and acknowledge your mistake in agreeing with Burnsys:

Burnsys is right in principle but wrong in the details this discussion has become one of mere semantics.

Thank you. So can we drop it now?

 

[Art]

Please show me precisely where I have misquoted you and I will apologize. AFAIK, all I did was cut and bold your actual words.

That line was an accompaniment to a detailed explanation I had provided and so I consider it a misquote to quote outside it's full context when that affects or obscures it's meaning. You will also note that I very deliberately said banking industry rather than a bank so as to be accurate and avoid the silly semantics you were arguing with Burnsys which began when you obviously checked and realized your original assertion that all money comes from the fed was wrong and were floundering around to save face.