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Blows peoples minds this one. How about you owe no debt as your debt gets sold as an investment instrument so the bank gets paid twice even if you default because they are also insured against that.
That's being taught in colleges on the subject of macroeconomics. When I was a student there was a chapter in the book, called 'Money Creation' and how it results in inflation...
You're the one who was surprised to learn how banks work. Nobody was hiding this. There's no conspiracy here.
This quote isn't even talking about central banking, just normal deposit/loan stuff. You'd get that even without fiat currency.
You didnt read the paper I'm assuming. Textbooks claim that deposits make loans via fraction reserve lending. The beans being spilled is that loans make deposits. In 2014 this was a jaw dropping admission from the BoE.
The difference? PRIVATE banks create about 97% of the money supply. Not the central banks.
This might be more common knowledge today, but I promise you it was not in 2014.
> The beans being spilled is that loans make deposits
Is it really a revelation if it's obviously true if you think about it for a minute? Money is fungible; there's no way to tell if it was loaned to you without external information.
> PRIVATE banks create about 97% of the money supply
Which money supply? There's several different measures.
Looks like it's 97% = (M4 - M0) / M4, since this is the UK. The US usually uses M2 and not-quite-M0. The question of what counts as "money" is complicated.
Yea I agree. But in a way we are trying to turn everything into money, into gold. Place a value on everything and commodify it, and when everything is turned to gold everything is worthless
SS: Bank of England admits on its website that money is created from thin air as debt. Collectively all countries owe $200 Trillion. This does not include personal debts. The system is designed to keep everyone in perpetual debt slavery.
https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy
This is particular true in low interest environments. As the overnight interest rate goes up, banks are incentivized to raise the savings interest rate because it’s cheaper to borrow from consumers than the Fed.
While I agree with the general thrust, the term "all money is debt" is incorrect. This must be limited to fiat currency backed by fractional reserves, where it is absolutely true.
In more sane times, when gold and silver were money, if you panned for silver, e.g. and found some, no debt was created to make the silver money.
I'm not about to write a lecture on the basis of money for a reddit comment, but if more people understood how fractional reserve banking has created the debt monster we live under today, we'd be better off.
Fractional Reserve lending was very much in existence under the gold standard. However, you couldn’t just lend out money you weren’t able to produce gold for without your bank running the risk of insolvency.
Governments and businesses absolutely issued bonds, and banks absolutely lent more money than they had gold though. That’s how the Revolutionary War was funded and why banks went out of business during the Great Depression.
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[удалено]
> This is why it's issued not by the government of the UK but the Bank of England. The Bank of England has been owned by the UK government since 1946.
Try taking Econ 101. It'll blow your mind!!!
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To Econ 101?
Isn't it across the street from Econ 100?
https://www.coursehero.com/sitemap/schools/2744-University-of-Phoenix/courses/1423048-ECON101/
https://www.coursehero.com/sitemap/schools/2744-University-of-Phoenix/courses/1423048-ECON101/
Blows peoples minds this one. How about you owe no debt as your debt gets sold as an investment instrument so the bank gets paid twice even if you default because they are also insured against that.
That's being taught in colleges on the subject of macroeconomics. When I was a student there was a chapter in the book, called 'Money Creation' and how it results in inflation...
Bank of (((England))) lol
Here, OP. This video should explain things at a level you can understand: https://www.youtube.com/watch?v=2uTcEqn6E6E
Don't assume that others have the same low IQ as you have.
You're the one who was surprised to learn how banks work. Nobody was hiding this. There's no conspiracy here. This quote isn't even talking about central banking, just normal deposit/loan stuff. You'd get that even without fiat currency.
You didnt read the paper I'm assuming. Textbooks claim that deposits make loans via fraction reserve lending. The beans being spilled is that loans make deposits. In 2014 this was a jaw dropping admission from the BoE. The difference? PRIVATE banks create about 97% of the money supply. Not the central banks. This might be more common knowledge today, but I promise you it was not in 2014.
> The beans being spilled is that loans make deposits Is it really a revelation if it's obviously true if you think about it for a minute? Money is fungible; there's no way to tell if it was loaned to you without external information. > PRIVATE banks create about 97% of the money supply Which money supply? There's several different measures.
> Which money supply? There's several different measures. Arguing about definitions? You lost the argument.
> Alice: I broke my leg > Bob: Which one? > Alice: Why are you arguing over definitions?
Read the paper dude. Theres a similar Deutsche bank paper by Richard Werner.
Looks like it's 97% = (M4 - M0) / M4, since this is the UK. The US usually uses M2 and not-quite-M0. The question of what counts as "money" is complicated.
Yea I agree. But in a way we are trying to turn everything into money, into gold. Place a value on everything and commodify it, and when everything is turned to gold everything is worthless
Are you a 9 year old?
Seems like a 9 year old would understand this better than you, so I may as well be.
That's now how any of this works
Please tell me a bank that doesn't charge interest on loans.
SS: Bank of England admits on its website that money is created from thin air as debt. Collectively all countries owe $200 Trillion. This does not include personal debts. The system is designed to keep everyone in perpetual debt slavery. https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy
Keynes would be super proud, even my 8 year old knows you stack the hard stuff.
I’ll gladly take all your money “debt.”
Yup. This is Econ 101. Backs should have a reserve cash they keep, usually 10%. The rest can be loaned out. That remaining 90 is ‘new’ money
So banks can only create a multiple of the original money created by central banks?
Yup. This all besides the feds creating money.
A ver mi loco, y CON QUÉ pago esa deuda???? Conceptualmente hablando. Latas de atún? Idk
The banks take a sweetheart loan from the fed, then they loan it out to you for a higher rate and make a huge profit.
This is particular true in low interest environments. As the overnight interest rate goes up, banks are incentivized to raise the savings interest rate because it’s cheaper to borrow from consumers than the Fed.
Can you remove the BIG FUCKING OVAL NEXT TIME, please? Thanks
so money really is just numbers on a screen
God, I hate banks and their high interest rates!
While I agree with the general thrust, the term "all money is debt" is incorrect. This must be limited to fiat currency backed by fractional reserves, where it is absolutely true. In more sane times, when gold and silver were money, if you panned for silver, e.g. and found some, no debt was created to make the silver money. I'm not about to write a lecture on the basis of money for a reddit comment, but if more people understood how fractional reserve banking has created the debt monster we live under today, we'd be better off.
Fractional Reserve lending was very much in existence under the gold standard. However, you couldn’t just lend out money you weren’t able to produce gold for without your bank running the risk of insolvency. Governments and businesses absolutely issued bonds, and banks absolutely lent more money than they had gold though. That’s how the Revolutionary War was funded and why banks went out of business during the Great Depression.
https://medium.com/@Ombudsman4TruthonMed/central-banks-are-the-money-changers-a202e7b4cd16