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>They "loan" out money that THEY DO NOT OWN! When issuing a loan, they credit themselves with assets, create a liability at the central bank, then when they get

by Aunche 6y ago

>They "loan" out money that THEY DO NOT OWN! When issuing a loan, they credit themselves with assets, create a liability at the central bank, then when they get paid back they pocket the interest. I'm not super familiar with banking or accounting, but this doesn't sound remotely accurate. The whole point of a bank is that they're loaning customers with other customers' money. Fractional reserve banking just makes this easier, but the concept is still the same. If one bank's reserve is too low, they generally will just loan the money from another bank. The Fed will only loan out money to banks when all of them are running out of reserve.

andrepd 6y ago
> The whole point of a bank is that they're loaning customers with other customers' money. Ahh, you would think so, wouldn't you? In fact I bet that's how most people still think about banks. Sadly that's not been the case for a while now. Check this blogpost: the first few sections explain the basics and the immediate consequences of this arrangement: https://www.lowimpact.org/why-the-banks-have-so-much-power-and-how-we-can-take-it-away-from-them/ https://www.lowimpact.org/why-the-banks-have-so-much-power-a... Then he gets into his proposed solution and it's a matter of agree or disagree.
6510 6y ago
> this doesn't sound remotely accurate. It is accurate. > The whole point of a bank is that they're loaning customers with other customers' money. This is mythology. When you "buy" a house your signature is worth the value of the house because you're obligated to pay much more than that AND/OR return the house. The bank "buys" the contract but since there is zero risk for them they don't have to bring anything to the table. They push a button and the seller gets 500 k. But something else happens at the same time. There is now a new document in circulation that is worth 500 k AND that 500 k in the sellers account. Both didn't exist the day before. It would be even better if the house was worth 600 k. The moment the hard working buyer can pay 600 we should raise the housing prices. Prices will chase your income because there is to much to gain. The way I see it homeless people are the most valuable assets in the economy. They make truly convincing advertisement. If you can't pay the market rate, that guy over there, that could be you! Imagine the disaster if we would not just build but create a housing surplus. The details are a bit to elaborate to get into but we have plenty of tools, materials and idle hands to make homes that are both crazy cheap and fantastic to live in. Even just relaxing the permission to build (or lack thereof) could potentially ruin the big money creation scheme. I live in NL, we have houses 500 years old. A 300 euro per hour "professional" "expert" must value the home.... but they dont know anything. I know what the cracks in the wall mean. I know the meaning of the white and black mold spots. I know which structural parts have to be replaced. I know exactly how hard it is to modernize the building and hide all the tubing in the walls. I can tell what is quality plumbing or wiring and what is not. Non of these things play any role in valuing the home. Solar panels, nice new carpet or wooden floors, a fresh paint job, square meters. Those are important. You know, like selling a used car. It doesn't matter if the roof leaks as long as you cant see it. If there was any interest in establishing the real value of the building they would be doing it. All they care about is how it looks. It has to be just good enough for the client to drive the old clunker out of sight. For me, there is no reason to think other parts of this industry are based on sound logic after they fool themselves like that.
- Aunche 6y ago
  Home mortgages are more complicated, but at the end of the day, all transactions are based on real money. The 500k that the seller receives comes from the bank. The 500k that the bank receives comes from Fannie Mae and Freddie Mac. When Freddie Mae and Freddie Mac start running out of money, then the Fed will loan them money of buy equity from them.
  - 6510 6y ago
    There is nothing at the end of the tunnel. All of the value comes out of the contract you sign. It obligates you to pay until everything is paid. This contract is worth the value of a house. The illusory money tunnel that pretends to provide the funds end with national debt that is irrelevant but if it was it is again your obligation to pay for. You could examine it as a black box. Joe builds homes. He build homes for years in order to earn the right to get a mortgage. He then folds over a lot of the money he earns to pay for the home over the next 30 years. The number of houses he has to build in order to earn his own is completely ridiculous. He is old now! He most likely has to keep building homes to continue to earn the right to live in one. Someone has to be running off with his earnings. People who are not involved in building houses physically only mentally. Whatever [deceptive] story they tell isn't worth listening to as the numbers say it all.
deleted 6y ago
[deleted]

by Aunche 6y ago

andrepd 6y ago

> The whole point of a bank is that they're loaning customers with other customers' money. Ahh, you would think so, wouldn't you? In fact I bet that's how most people still think about banks. Sadly that's not been the case for a while now. Check this blogpost: the first few sections explain the basics and the immediate consequences of this arrangement: https://www.lowimpact.org/why-the-banks-have-so-much-power-and-how-we-can-take-it-away-from-them/ https://www.lowimpact.org/why-the-banks-have-so-much-power-a... Then he gets into his proposed solution and it's a matter of agree or disagree.

6510 6y ago

> this doesn't sound remotely accurate. It is accurate. > The whole point of a bank is that they're loaning customers with other customers' money. This is mythology. When you "buy" a house your signature is worth the value of the house because you're obligated to pay much more than that AND/OR return the house. The bank "buys" the contract but since there is zero risk for them they don't have to bring anything to the table. They push a button and the seller gets 500 k. But something else happens at the same time. There is now a new document in circulation that is worth 500 k AND that 500 k in the sellers account. Both didn't exist the day before. It would be even better if the house was worth 600 k. The moment the hard working buyer can pay 600 we should raise the housing prices. Prices will chase your income because there is to much to gain. The way I see it homeless people are the most valuable assets in the economy. They make truly convincing advertisement. If you can't pay the market rate, that guy over there, that could be you! Imagine the disaster if we would not just build but create a housing surplus. The details are a bit to elaborate to get into but we have plenty of tools, materials and idle hands to make homes that are both crazy cheap and fantastic to live in. Even just relaxing the permission to build (or lack thereof) could potentially ruin the big money creation scheme. I live in NL, we have houses 500 years old. A 300 euro per hour "professional" "expert" must value the home.... but they dont know anything. I know what the cracks in the wall mean. I know the meaning of the white and black mold spots. I know which structural parts have to be replaced. I know exactly how hard it is to modernize the building and hide all the tubing in the walls. I can tell what is quality plumbing or wiring and what is not. Non of these things play any role in valuing the home. Solar panels, nice new carpet or wooden floors, a fresh paint job, square meters. Those are important. You know, like selling a used car. It doesn't matter if the roof leaks as long as you cant see it. If there was any interest in establishing the real value of the building they would be doing it. All they care about is how it looks. It has to be just good enough for the client to drive the old clunker out of sight. For me, there is no reason to think other parts of this industry are based on sound logic after they fool themselves like that.

Aunche 6y ago
Home mortgages are more complicated, but at the end of the day, all transactions are based on real money. The 500k that the seller receives comes from the bank. The 500k that the bank receives comes from Fannie Mae and Freddie Mac. When Freddie Mae and Freddie Mac start running out of money, then the Fed will loan them money of buy equity from them.
- 6510 6y ago
  There is nothing at the end of the tunnel. All of the value comes out of the contract you sign. It obligates you to pay until everything is paid. This contract is worth the value of a house. The illusory money tunnel that pretends to provide the funds end with national debt that is irrelevant but if it was it is again your obligation to pay for. You could examine it as a black box. Joe builds homes. He build homes for years in order to earn the right to get a mortgage. He then folds over a lot of the money he earns to pay for the home over the next 30 years. The number of houses he has to build in order to earn his own is completely ridiculous. He is old now! He most likely has to keep building homes to continue to earn the right to live in one. Someone has to be running off with his earnings. People who are not involved in building houses physically only mentally. Whatever [deceptive] story they tell isn't worth listening to as the numbers say it all.

deleted 6y ago

[deleted]