WisR:If enough people did as you were suggesting, Stranger, the gov't/Fed might chose to do away with FDIC rather than create the massive amount of new money necessary to prevent system wide bank failures. Without the FDIC, you wouldn't be defrauding the "public", but rather a portion of the customers of the bank you got your loan from.
Well I think there is some confusion as to where the fractional reserve loan comes from. Until the bank actually declares it as a profit, it doesn't have to use money from depositors to finance cash withdrawals. It's simply using its own credit. Declaring this credit null and void destroys the bank's profit and stock market capitalization but it doesn't really take from depositors.
The whole point anyway is to destroy the fractional reserve bank's credit and interdict its fractional reserve operations.
WisR: And it's obvious that the people who benefit the most from FRB are the banks and those who take out much more in loans than they have in savings, as the bank earns interest off of something they bring into existence, and the companies or individuals borrowing the money get to spend it before the inevitable rise in prices as the new money enters the economy.
And it's obvious that the people who benefit the most from FRB are the banks and those who take out much more in loans than they have in savings, as the bank earns interest off of something they bring into existence, and the companies or individuals borrowing the money get to spend it before the inevitable rise in prices as the new money enters the economy.
This is true, but that doesn't imply any complicity in the system. If you do not take out a loan, then someone else will and you will become a loser. It's a race to preserve wealth.
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Stranger: Well I think there is some confusion as to where the fractional reserve loan comes from. Until the bank actually declares it as a profit, it doesn't have to use money from depositors to finance cash withdrawals. It's simply using its own credit. Declaring this credit null and void destroys the bank's profit and stock market capitalization but it doesn't really take from depositors.
Could you explain this bit? Loans and assets are balance sheet posts. They have nothing to do with the income statement and profits, it is just the interest that show up in the income statement and affect profit. When a deposit is made it is immediatly added to the banks balance sheet as asset and on the other side as debt.
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caravelle: are you sure...couldnt a deposit go to redeeming a cd that has been withdrawn or come to maturity?
are you sure...couldnt a deposit go to redeeming a cd that has been withdrawn or come to maturity?
Ehm no. Every transaction have one entry in a companies books, first they book the deposit "(Assets - cash" increases and "Liabilities - savings" increases) then they can move on to book the issuing of debt ("Assets - total loans and leases" increase; "Assets - cash" decrease).
I think I understood what Stranger was getting at now though. It does work the other way around. The interests the bank gets in the income statement do appear in the balance sheet and can thus be lent. But it is minuscule and could never cover all the liabilities of a bank. One of the largest Swedish banks as example. Total liabilites 3 693 484 MSEK, net interest earnings: 35 091 MSEK.
how do you know this?
Accounting 101.
That banks take deposit account balances into there own books is absurd in the first place.A discount stock broker that did that with your deposited stocks would be thrown in jail, at least here. According to contracts for stock deposits the stock balance on the account belongs to me and they have no rights to it, the stocks can't be included in the companies assets if they go bust and they could never lend them to someone...
In the narrowest sense, a contract is a contract. However, in the broader view, banks are mass swindlers on every level, from FRB to the panoply of political activity. If you don't accept the rules of game, you don't get to benefit from them.
caravelle: if a check is deposited into a checking account does a bank then loan out most or much or in some cases all of 'what' was deposited and then somehow in meshing with the federal reserve keep somewhere near 10 percent in paper/coin cash of the total amount of lent funds???
if a check is deposited into a checking account does a bank then loan out most or much or in some cases all of 'what' was deposited and then somehow in meshing with the federal reserve keep somewhere near 10 percent in paper/coin cash of the total amount of lent funds???
There is no such a thing as a 10% reserve requirement. This is a myth. In reality banks can make loans as far as their credit allows them.
caravelle: i assume you arent mything here....when yuo say their credit...do you mean a credit max based on a federal reserve rule??? what is their credit???
i assume you arent mything here....when yuo say their credit...do you mean a credit max based on a federal reserve rule??? what is their credit???
Their credit is the willingness of other economic actors to accept their promises to pay in lieu of payment.