How “money” is combined in a fractional haven banking system. M0 as well as M1 definitions of a income suppy. The multiplier effect.
Banking 4: Multiplier effect and the money supply
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Tax and Banking Financial
Personal Tax and Financial Banking
*yawn*
Until this point it seems a good idea. If it was run by the right people.
But there is some irony in all this. After all USA is a very young Nation, and your history kind of begins with an escape from a economical slavery from the UK Central Bank.
There is no chance to escape from the brain washing machine than humans are becoming, more and more. I believe that there is no point in denning.
One thing is certain, this Planet will just continue to be insignificant to the Universe.
People just have to give a little time learning about this subjects.
Ops, realize that there are an immense amount of people that truly dose not have the time to do it.
The General Population is in the ands of the ones with knowledge.
This is a real turning point in the path of Human specie.
I guess we can all yawn, cause there is no point fighting it…
There are bigger issues in the table, our beloved galaxy is going to crash against another galaxy. Old on to something… LOL
Banks crashed !
NWO bulls… now?
See yourself => watch?v=DITRgs3bZ78
Refuse to be an enemy, dude
Intelligent people r smart enough to demask the brainwash of the BELIVE HOAX called “Moneysystem” beyond all false mathematics.
I am sure you do not like that enlightenment, CodeKitten
McDonalds btw is just changing there CI 4 a “greenish” appearance.
Dont know whether that “perception management” will generate more revenues.
At least it will achieve that people digg into the REAL polluting sources => Overproduction and Overwaste = Moneysystem
Dude. Shouldn’t you be in copenhagen right now, throwing rocks and burning down McDonalds?
Why dont you shut up, CodeKitten, and allow people to put these theories in the right realistic context?
We dont need your muzzle here.
I am using my right of free speech.
Are you here for censoreship?
..but ONLY IF the increased production in apple farming offsets the increase in the money supply. ”
That´s the point people and “experts” always nebulise, DreamTerrorist.
In other words this is the reason why politicians always cry for MORE GROWTH!
That ist the reason why the PLANET ist polluted with needless waste.
That is the big LIE implemented in the money RELIGION.
could you be quiet for a moment. People are trying to learn what banks really are. We don’t need your screaming here.
This final problem of “asset bubbles” can only be addressed by removing the moral hazard which exists in the current system. This would require adopting a mentality antithetical to what is propounded in mainstream Keynsian economics. More specifically, true reform would consist of the removal of monopoly interest rate price controls (The Federal Reserve), monopoly insurance upon bank deposits (The FDIC), and the general removal of bailouts as a tool of powerful politicians or technocrats.
In fractional-reserve banking there are three parties at risk when a bank makes a loan: the borrower, the lender, and everyone who uses the currency. In 100% reserve banking, only the lender and the borrower stand to lose if the investment fails. Since losses are not socialized by monetary inflation in a 100% reserve system, loans are scrutinized in more detail, and the buildup of massive amounts of risky loans (think subprime mortgages) is less likely, though it will still be possible.
Because there was no expansion of the money supply, even if the apple farmer’s investment fails to increase his supply of apples, there will be no risk of inflation. In fact, the only people at risk under a 100% reserve system are the borrower and the lender. The general populous cannot be harmed by inflation – they are only exposed to the potential benefits if the investment is successful.
If the investments do not prove to actually increase the supply of apples, everyone will be hurt as inflation sets in. Now, in a 100% reserve banking system, investment is still possible. People save, and apple farmers can borrow these savings. Just like in a fractional reserve system, if the apple farmer’s investment proves profitable, then delation will occur, since more apples are available, and apples will be cheaper for everyone.
To the extent that the investment produces gains in physical resources (i.e. apples) greater than what were previously available, deflation will occur. This is true in both fractional-reserve banking and 100% reserve banking. You and Khan are both correct that the dollar will not necessarily lose value in relation to apples, but ONLY IF the increased production in apple farming offsets the increase in the money supply.
Money is not “working” at all.
It is BRAINWASH RELIGION.
The PRIVATE FEDERAL RESERVE BANK is the root of ALL EVIL.
It is a big HOAX with lots and lots of but´s and when´s and if´s.
Se the big lie behind it?
This is so true. Thank you for your great video. I remember back in the 80′s our union visited my work place and asked all the workers to sign a payee agreement. This would allow our employer to deposit our PAY directly into our bank accounts. This is simply adding to your equation and giving the banks control of our money. Shortly after this was complete, the government placed fees on all our account for withdraws and deposits. We are suckers.
It was not Hayek, it was Mises, but great reference. The academic theory is called the Cantillon Effect.
But the value of the money is not diluted as the invested money generates wealth – actual goods like an irrigation ditch, more apples and more darm implements. The additional money in the system is backed by additional real goods that can be consumed. When money is printed and introduced into the economy without being backed by increased production then value is being destroyed.
Savings and investment work best when a currency is not elastic. If 100% reserve banking is practiced, a loan actually represents a consistent number of resources – those that someone else saved. Within the context of a fractional-reserve system, instead of relying only upon savings, banks rely upon creation of new funds, which causes misallocations in resources and inflation. When they create new money, they are simply diluting the rest. This is not sustainable.
vornvalley,
i am not forgetting production. the point i was trying to make is that by increasing the supply of the money, you are not actually making more resources available to invest, you are simply diluting the value of the current money. concurrently, the Cantillon effect will come into play as those who receive the newly created money benefit bc the resources/money ratio will reflect historic prices. everyone else will be hurt as inflation sets in.
this can easily be remedied by simply having honest banking: Give people the option at the bank of 1- just putting the money in a secure location and be charged money, or 2- give the bank X amount of time to lend out your money and collect interest.
This way the money supply isn’t increased, production and money lending will still happen, bank runs won’t be a problem, and there won’t be any misallocation of resources due to the trickanery of inflation.
i’m not sure if i totally buy that argument. Production is surely what generates Wealth, but if the amount of money is increased, then the value of the money decreases, and so the wealth of the production would be offset to some degree by the inflation. Plus, in order to actually begin the production, you’d find out that the money your using isn’t worth as much as it should be worth – thus you’ll begin projects you can’t pay actually pay for; prices will rise as you’re constructing.
I think DT made a mistake himself – he forgot productivity. If the land yields more apple i.e is made more productive, and the workers produce more apples and produce more farm implements, then the increase in the value of the land and the labour of the workers is justified. The maker of the video did stress “real economy” i.e. tangible goods and services. We need to look at the complete picture – DT should start by setting aside any biases and concentrate on the facts.
This was a very well done demonstration. Full props to whomever made it.
BUT!!!
He forgot the most important part. It’s the last, and most important step –
“…and then there’s a bank run… And the banker is hung.”
The problem is that money has to obey supply and demand as well. The people who get the money first are benefited greatly, those who get it last can get screwed. Hayek’s (was it hayek?) famous brick layer.
Damn!! I was actually watching this and thinking “man, i guess fractional reserve banking isn’t SUCH a horrible thing…”
Then i read what you wrote.
ugh… i failed.
Good post, good sir.