4 ms·

You're right that the banking system is a little more complicated than I made it out to be, but let's ignore that for now. You agree that the majority of the f

You're right that the banking system is a little more complicated than I made it out to be, but let's ignore that for now. You agree that the majority of the fortune 50 is holds more debt than credit, right? We don't have to speculate about how much debt rich people have, you can look at what % of equities is owned by the upper class and you can go compare consumer debt to corporate debt. Now as to the banking system, there's a little bit of a feedback loop here because they're really the ones creating money, so no they're not really a net creditor either. I owe my bank 700k on my house, but that's new money being created in some respects.

Manuel_D 5y ago
> You agree that the majority of the fortune 50 is holds more debt than credit, right? No. Not at all. Apple, #3 on the list for example, has hundreds of billions its loaning out because it has nothing better to do with its excess cash [1]. Almost every company on that list has positive total equity, some on them on the orders of hundreds of billions of dollars. > We don't have to speculate about how much debt rich people have, you can look at what % of equities is owned by the upper class and you can go compare consumer debt to corporate debt. I'm really baffled at what you mean by this? Yes, the rich own most equity. But how do you interpret this has having more debt? Equity isn't debt, it's ownership in a company. > Now as to the banking system, there's a little bit of a feedback loop here because they're really the ones creating money, so no they're not really a net creditor either. I owe my bank 700k on my house, but that's new money being created in some respects. Sort of? Banks don't get to regulate currency supply, the Fed does. It's true that banks leverage more than they have in their reserve, but that doesn't necessarily increase the money supply. And my point is if you owe 700k on your house and inflation doubles (all prices go up 2x, but so do all wages) then this is very good for you. You effectively got a house for half the price. If you are a multi-millionaire real estate mogul who's writing mortage loans, then this not good for you. That money invested in the home loan isn't even going to keep up with inflation. 1. https://en.wikipedia.org/wiki/Braeburn_Capital https://en.wikipedia.org/wiki/Braeburn_Capital
- VirusNewbie 5y ago
  Thanks for the detailed reply, we're really getting into the meat of it here in this debate. "has hundreds of billions its loaning out because it has nothing better to do with its excess cash " That's not really being a creditor if you're investing in something that doesn't cap the upside. Likely apple's fund is investing into companies that will benefit from inflation, and if in my contrived example the money supply doubles their valuation in said company doubles. It's really fixed rate loans that are 'creditors', not investment firms. Some googling tells me they also have ~230 billion in outstanding debt. So I think it's safe to say in this example they're a net debtor. >But how do you interpret this has having more debt? By proxy through being invested in corporations that themselves take out debt to invest in money making ventures. >Sort of? Banks don't get to regulate currency supply, the Fed does. Banks ARE the Fed! The local federal reserve banks aren't themselves buying assets its nationally chartered banks that are required to be part of the fed that are participating in this dance. >If you are a multi-millionaire real estate mogul who's writing mortgage loans, then this not good for you. Most multi-millionaire real estate moguls who are writing mortgage loans know this, which is why they sell them to the federal government or other government institutions.

Manuel_D 5y ago

> You agree that the majority of the fortune 50 is holds more debt than credit, right? No. Not at all. Apple, #3 on the list for example, has hundreds of billions its loaning out because it has nothing better to do with its excess cash [1]. Almost every company on that list has positive total equity, some on them on the orders of hundreds of billions of dollars. > We don't have to speculate about how much debt rich people have, you can look at what % of equities is owned by the upper class and you can go compare consumer debt to corporate debt. I'm really baffled at what you mean by this? Yes, the rich own most equity. But how do you interpret this has having more debt? Equity isn't debt, it's ownership in a company. > Now as to the banking system, there's a little bit of a feedback loop here because they're really the ones creating money, so no they're not really a net creditor either. I owe my bank 700k on my house, but that's new money being created in some respects. Sort of? Banks don't get to regulate currency supply, the Fed does. It's true that banks leverage more than they have in their reserve, but that doesn't necessarily increase the money supply. And my point is if you owe 700k on your house and inflation doubles (all prices go up 2x, but so do all wages) then this is very good for you. You effectively got a house for half the price. If you are a multi-millionaire real estate mogul who's writing mortage loans, then this not good for you. That money invested in the home loan isn't even going to keep up with inflation. 1. https://en.wikipedia.org/wiki/Braeburn_Capital https://en.wikipedia.org/wiki/Braeburn_Capital

VirusNewbie 5y ago
Thanks for the detailed reply, we're really getting into the meat of it here in this debate. "has hundreds of billions its loaning out because it has nothing better to do with its excess cash " That's not really being a creditor if you're investing in something that doesn't cap the upside. Likely apple's fund is investing into companies that will benefit from inflation, and if in my contrived example the money supply doubles their valuation in said company doubles. It's really fixed rate loans that are 'creditors', not investment firms. Some googling tells me they also have ~230 billion in outstanding debt. So I think it's safe to say in this example they're a net debtor. >But how do you interpret this has having more debt? By proxy through being invested in corporations that themselves take out debt to invest in money making ventures. >Sort of? Banks don't get to regulate currency supply, the Fed does. Banks ARE the Fed! The local federal reserve banks aren't themselves buying assets its nationally chartered banks that are required to be part of the fed that are participating in this dance. >If you are a multi-millionaire real estate mogul who's writing mortgage loans, then this not good for you. Most multi-millionaire real estate moguls who are writing mortgage loans know this, which is why they sell them to the federal government or other government institutions.