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>> The more money the banks print, the richer they get This is wrong. You’ve misunderstood the creation of credit and money. See https://www.sciencedirect.com

>> The more money the banks print, the richer they get This is wrong. You’ve misunderstood the creation of credit and money. See https://www.sciencedirect.com/science/article/pii/S1057521914001434#bb0040 https://www.sciencedirect.com/science/article/pii/S105752191... - but then spend time reading the relevant legislation pieces. You can safely ignore most of the mainstream economist schools of thought since the actual operational side of money as required by law is mostly a blind spot for them. Economic schools of thought do not link to relevant legislation when sharing their fairy tales since the laws the banks operate under result in behaviour distinct from that claimed by any major economic school of thought.

npoc 3y ago
Although a great deal of smoke and mirrors is used when justifying the banks unique right to print money, and it's easy to miss the wood for the trees as you get lost in the details, the bigger picture is quite simple: 1) the banks print new money every time a loan is taken out and charge interest on that money 2) the amount of money loaned out is increasing every year 3) the total amount of money currently loaned is essentially all the fiat money in existence i.e. even 2% interest is a mind-blowing amount of annual income Sure, we can debate about between the banks and government, who receives what proportion of the interest, but if you disagree with any of those three points, please explain.
- lupire 3y ago
  That created money is lent to borrowers, who in aggregate benefit from it more than the interest costs. The banks don't get to just spend the deposits. Lending out money at the rate of inflation is 0 profit after inflation.
  - npoc 3y ago
    All the fiat currency units in existence are a loan to a bank somewhere. That is over a hundred trillion dollars for the US alone. If you're receiving 2% of $100,000,000,000,000 each year, for money you printed out of thin air, you're not going to worry about the effects of CPI on your monthly budget.
- CraigJPerry 3y ago
  1) incomplete statement - When the bank creates new money (its liability to you) it does so because it agreed a loan contract with you (its asset). The consequences of this are wide ranging, but relevant to this thread, it means a bank does not get richer when creating money, it gets richer when you pay interest in excess of its costs of providing you with money. Although the bank created the loan money from nothing, it still ends up with significant costs to provide that money, for example through capitalisation regulations on the asset. Another relevant consequence of this is that a bank is not incentivised to have a huge balance sheet - which it would have if it only made loans. Instead these loans made are securitised and removed from the bank’s assets. This means interest paid on the loan no longer goes to the bank but to whoever bought the loan.
  - npoc 3y ago
    I appreciate you filling in the details. > it gets richer when you pay interest in excess of its costs of providing you with money. Apart from the costs of running the bank, any other costs are simply what I would call money laundering (i.e. smoke and mirrors - as I mentioned, we can argue over who exactly receives what proportion of the money, but it doesn't escape the facts that the population is paying interest on trillions and trillions that were created out of thin air by a select few). > This means interest paid on the loan no longer goes to the bank but to whoever bought the loan. The key words here are "...whoever bought the loan". So someone has paid the bank money (I assume relatively equal to the outstanding balance of the loan) for money (the loan) that the bank printed effortlessly. This is simply more money laundering.
    - notahacker 3y ago
      The costs of running the bank include the costs of administering the loans, the cost of the bank paying interest on reserves it needs to borrow and the costs of defaults. No "money laundering" is involved. Banks are going to earn money on the margin between the rate they can lend at and the rate they need to pay to secure reserves regardless of monetary system. The alternative without Fed access is the population paying much more interest plus random bank busts, and this doesn't seem to be an obvious improvement to anyone except the superrich earning much more interest on the money they can offer long term loans on.

npoc 3y ago

Although a great deal of smoke and mirrors is used when justifying the banks unique right to print money, and it's easy to miss the wood for the trees as you get lost in the details, the bigger picture is quite simple: 1) the banks print new money every time a loan is taken out and charge interest on that money 2) the amount of money loaned out is increasing every year 3) the total amount of money currently loaned is essentially all the fiat money in existence i.e. even 2% interest is a mind-blowing amount of annual income Sure, we can debate about between the banks and government, who receives what proportion of the interest, but if you disagree with any of those three points, please explain.

lupire 3y ago
That created money is lent to borrowers, who in aggregate benefit from it more than the interest costs. The banks don't get to just spend the deposits. Lending out money at the rate of inflation is 0 profit after inflation.
- npoc 3y ago
  All the fiat currency units in existence are a loan to a bank somewhere. That is over a hundred trillion dollars for the US alone. If you're receiving 2% of $100,000,000,000,000 each year, for money you printed out of thin air, you're not going to worry about the effects of CPI on your monthly budget.
CraigJPerry 3y ago
1) incomplete statement - When the bank creates new money (its liability to you) it does so because it agreed a loan contract with you (its asset). The consequences of this are wide ranging, but relevant to this thread, it means a bank does not get richer when creating money, it gets richer when you pay interest in excess of its costs of providing you with money. Although the bank created the loan money from nothing, it still ends up with significant costs to provide that money, for example through capitalisation regulations on the asset. Another relevant consequence of this is that a bank is not incentivised to have a huge balance sheet - which it would have if it only made loans. Instead these loans made are securitised and removed from the bank’s assets. This means interest paid on the loan no longer goes to the bank but to whoever bought the loan.
- npoc 3y ago
  I appreciate you filling in the details. > it gets richer when you pay interest in excess of its costs of providing you with money. Apart from the costs of running the bank, any other costs are simply what I would call money laundering (i.e. smoke and mirrors - as I mentioned, we can argue over who exactly receives what proportion of the money, but it doesn't escape the facts that the population is paying interest on trillions and trillions that were created out of thin air by a select few). > This means interest paid on the loan no longer goes to the bank but to whoever bought the loan. The key words here are "...whoever bought the loan". So someone has paid the bank money (I assume relatively equal to the outstanding balance of the loan) for money (the loan) that the bank printed effortlessly. This is simply more money laundering.
  - notahacker 3y ago
    The costs of running the bank include the costs of administering the loans, the cost of the bank paying interest on reserves it needs to borrow and the costs of defaults. No "money laundering" is involved. Banks are going to earn money on the margin between the rate they can lend at and the rate they need to pay to secure reserves regardless of monetary system. The alternative without Fed access is the population paying much more interest plus random bank busts, and this doesn't seem to be an obvious improvement to anyone except the superrich earning much more interest on the money they can offer long term loans on.