Limits of State Power
POSTED BY: SergeantX
UPDATED: Sunday, December 14, 2025 21:53
VIEWED: 37205
PAGE 31 of 36
Quote:
Originally posted by rue:
http://carolynbaker.net/site/content/view/95/
"Banks create money, not from their own earnings or from the funds deposited by customers, but from the borrowers' promises to repay loans. Most importantly, borrowers not only promise to repay, but to repay with interest, and the bank writes the amount of money of both into the borrower's account."
http://www.discusseconomics.com/banking/where-do-banks-get-their-money/
"Turns out money creation sometimes appears out of thin air. All banks lend based on a reserve ratio of their deposit: they must keep a certain % of each deposit at the bank but can lend out the rest. Of course, the whole system is dependent on a) the bank being responsible with lending, b) everyone not defaulting on their loans. If these two things happen eventually the system collapses which is what we're seeing in the current market."
Posting nonsense from other websites doesn't suddenly make it true. Hell even your last quote doesn't support you, it says that it appears from thin air, but then fails to back up that assertion (it goes into some convoluted mathematics, but purely fails to prove anything).
In fact the "All banks lend based on a reserve ratio of their deposit: they must keep a certain % of each deposit at the bank but can lend out the rest" part supports what I've been saying.
Here's what happens when someone, anyone, makes up money on the spot: Zimbabwe. If money just appears from nowhere, then money becomes worthless. It's a concept so simple it even found it's way into the Hitch-hikers guide to the galaxy. Money only has value, because it has a finite supply, if it can be made up on the spot and written into a ledger, then money no longer has a finite supply, therefore it has no value.
Even if you take their rather convoluted example, it doesn't support what you said.
Ask yourself, if a private bank can just make money, why is forgery a crime? If a private bank can do it, why not a private individual with a printing press?
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Quote:
Originally posted by SignyM:
So if you agree that monopolization is an inherent economic force, and you don't like government control... how do you propose creating and maintaining real competition?
Well, I don't agree that monopolies are inherent. But, let's assume Marx was right. In that case we can vigorously disrupt monopolies when they occur. My point is, that's not what we're doing. What we do is intervene at all levels in a way that actual supports corporate domination. Can't we at least agree such policies need to end?
SergeantX
"It's cold and it's a broken hallelujah"
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Quote:I've just described several powerful mechanisms by which monopolies form from economics alone and many examples, as well as the general sweep of history, and all you can say is... "I don't agree"? You haven't addressed any of those points and this is where I think you go off into a belief-system.
Well, I don't agree that monopolies are inherent
Quote:Everything I know about monopolization I learned from studying standard economics and history, not Marx. Economies of scale, Investopedia:
But, let's assume Marx was right
www.investopedia.com/articles/03/012703.asp
For balance, here are the diseconomies of scale
www.investopedia.com/terms/d/diseconomiesofscale.asp There are far fewer diseconomies of scale than economies of scale.
Quote:How??? You need SOMETHING other than economic forces. But you don't like government. So, what are your options?
In that case we can vigorously disrupt monopolies when they occur.
Quote:You don't hear me supporting corporations, nor corporate control of government, do you? Of course we can agree; I've been agreeing on that point all along. What I'm proposing is something more active than just not fostering monopolies. I'm actually suggesting a complete revamp of the system to prevent ANY sort of power centralization, whether that power is the law, money, or the power of the pulpit.
Can't we at least agree such policies need to end?
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We should have strapped him into a glider, filled it nose heavy w/ explosives, and dropped his Allah lovin' ass into a large, empty field. After which, release wild boars into the area so they could make good use of his remains. Now THAT's justice.- rappy
Yeah, that's what Sheikh Issa said. Seems you both have a lot in common.- signy
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Citizen
I think you are arguing just because. Surely you have heard of capital ratio, capitalization etc ?
"The capital ratio is the percentage of a bank's capital to its risk-weighted assets."
Oddly enough, those 'assets' are outstanding loans the bank has made. Generally, banks are required to be between 4% and 8% capitalized - in other words, to have 4% to 8% of the value of outstanding loans in actual cash.
The rest is just made up out of thin air.
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As for interbank loans - they do not cover the value of all of the loans made. They are done to assure a bank meets its minimum percentage reserve.
"Banks are required to hold reserves, a monetary amount equal to a pre-set percentage of all outstanding loans and obligations. Reserves must be liquid such as cash, financial instruments that can be quickly used to cover withdrawals and other demands on the bank. ... When banks’ reserves drop below legal limits, they must borrow to make up the deficit."
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Just as a quick post to the problem of money creation: The only "real money" that banks have on-hand (aside from whatever is in the safe-deposit boxes!) is their tier one capital. That capital is not rumor, but solid. It is fact. 
http://en.wikipedia.org/wiki/Tier_1_capital
Beyond that, a bank's value gets fuzzy. Perhaps we are arguing definitional terms, but I do get the point that speculation encourages debt, which injects a very money-like burst of consumption and demand. All without a single extra dollar bill being printed. If that isn't money creation I don't know what is.
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We should have strapped him into a glider, filled it nose heavy w/ explosives, and dropped his Allah lovin' ass into a large, empty field. After which, release wild boars into the area so they could make good use of his remains. Now THAT's justice.- rappy
Yeah, that's what Sheikh Issa said. Seems you both have a lot in common.- signy
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Quote:
Originally posted by rue:
I think you are arguing just because. Surely you have heard of capital ratio, capitalization etc ?
Yeah, that must be it. Or maybe you're just arguing just because?
Quote:
Oddly enough, those 'assets' are outstanding loans the bank has made. Generally, banks are required to be between 4% and 8% capitalized - in other words, to have 4% to 8% of the value of outstanding loans in actual cash.
The rest is just made up out of thin air.
Perhaps you don't understand capitalisation? It's not "you have to have this much, and the rest you can just make up".
Capitalisation just means they have to keep a reserve, a percentage of a total amount of money that has been deposited, and I'm pretty sure it has to keep a reserve of it's deposits, not loans, so people with accounts can withdraw their money. There's a requirement to cover your deposits, because that's money you might have to pay out. Why would you need a percentage of your outward loans in reserve, that doesn't even begin to make sense.
So in actuality, banks are required to keep a certain percentage of deposits in cash, while the remained of those deposits can be loaned out (hey now, isn't that what I've been saying?). Banks have to have the money to loan it, they can't make it up, they just can't, and the closest you've come to showing they can, only shows your own misunderstanding of the source material, frankly.
The only possible way for banks to "create" money is the multiplier effect, which is a systemic issue, not one of banks "making up money". It's also an apparent effect, rather than the litteral one you claim.
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Citizen
READ THIS:
"Banks are required to hold reserves, a monetary amount equal to a pre-set percentage of all outstanding loans and obligations (NOTE: NOT a percentage of deposits). Reserves must be liquid such as cash, financial instruments that can be quickly used to cover withdrawals and other demands on the bank (NOTE: these are to cover daily CASH transactions made at the bank.). ... When banks’ reserves drop below legal limits, they must borrow to make up the deficit."
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Silence is consent.
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Quote:
Originally posted by rue:
Citizen
READ THIS:
"Banks are required to hold reserves, a monetary amount equal to a pre-set percentage of all outstanding loans and obligations (NOTE: NOT a percentage of deposits). Reserves must be liquid such as cash, financial instruments that can be quickly used to cover withdrawals and other demands on the bank (NOTE: these are to cover daily CASH transactions made at the bank.). ... When banks’ reserves drop below legal limits, they must borrow to make up the deficit."
Rue
READ THIS:
The reserve requirement (or required reserve ratio) is a bank regulation that sets the minimum reserves each bank must hold to customer deposits and notes.
http://en.wikipedia.org/wiki/Reserve_requirement
My quote even comes with a cite.
Again, why would they have to keep a percentage of the loans they've made? That makes no sense whatsoever. The cash transactions will be made on the money deposited at the bank, not loaned by it.
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Not the same as capitalization ratio, is it ?
Now, what were we talking about ? Oh yes - capitalization ratio. Cash on hand compared to assets, which, oddly, are outstanding loans, reserve notes and other IOUs.
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Silence is consent.
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Citizen- You're confusing reserve requirements with capitalization requirements. Reserve requirements have to do with deposits; typically they are fiat money held against a sudden increase in w/drawals. Capitalization requirements limit the amount of loans a bank can make and is based on the stocks and retained earnings, but has nothing to do with actual bank deposits.
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We should have strapped him into a glider, filled it nose heavy w/ explosives, and dropped his Allah lovin' ass into a large, empty field. After which, release wild boars into the area so they could make good use of his remains. Now THAT's justice.- rappy
Yeah, that's what Sheikh Issa said. Seems you both have a lot in common.- signy
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