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#51
06-12-2007, 07:50 PM
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Re: an argument against the gold standard
Yes, or that. Don't get me wrong I'm not claiming every cent gets redeposited.
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#52
06-12-2007, 08:24 PM
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Re: an argument against the gold standard
[ QUOTE ]
[ QUOTE ] [ QUOTE ] [ QUOTE ] [ QUOTE ] [ QUOTE ] Yes, the FED just prints up the appropriate amount of $ based on the value of the bond. The banks then lend the $ that the fed has lent them. Only, they effectively lend out $5 for every $1 they borrow because of the reserve rules. [/ QUOTE ] They wish. They lend out 80-90 cents for every dollar of deposits. [/ QUOTE ] Source? [/ QUOTE ] The reserve requirement (or required reserve ratio) is a bank regulation that sets the minimum reserves each bank must hold to customer deposits and notes. and further down the US is shown at 10% [/ QUOTE ] "As this fractional-reserve banking process continues, the banks can expand the initial deposit of $100 into a maximum of $1,000 of money." I should have known I wasn't on crack when I remembered my econ class saying a bank could essentially make $10 out of $1. [/ QUOTE ] No. The banking SYSTEM could do that under extreme circumstances, and even under extreme circumstances tat is not the result and an individual bank. At the end of the following process each individual bank still only has lent out 90% of its deposits, not 4-5x its deposits which is what the post I was responding to claimed. The extreme process is that a bank reserves say 10%, loans out 90%. That 90% loan is redeposited in some bank (maybe the original), which then reserves 10%, loans out 90% which is redeposited etc., which would result in a 1/.1=10x multiplier. However, even to the extent that the banks investment is loans (a lot of their deposits are invested in bonds, stocks, real estate of their own, etc.), the borrower almost always has a purpose for the loan and doesnt redeposit it..they buy a house, pay bills, buy a car etc. Thus the effective multiplier throughout the system is far below the extreme maximum. [/ QUOTE ] They buy something or they invest it or they save it. That money gets to someone, who eventually deposits it somewhere. Guess what that gets used for... more loans!
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#53
06-12-2007, 09:24 PM
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Re: an argument against the gold standard
Ding. Ding. Ding. Ding.
WINNAR!
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#54
06-12-2007, 09:26 PM
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Re: an argument against the gold standard
What is the purpose of fractional reserve banking, in your opinion?
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#55
06-12-2007, 09:45 PM
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Re: an argument against the gold standard
Treasury bonds and other securities are taken into account when a bank calculates its deposits/assets, and calculates how much it can loan, right? So, when the Fed reduces the money supply by selling some of its treasury bonds, does it even really reduce the money supply? (at least to the extent that those treasury bonds are deposited in banks - whoever bought the bonds would tend to deposit them, right?) Doesn't the money that the Fed gets in return for the treasury bonds become an asset of the Fed and, by extension, part of the money supply?
I'm sure that I'm missing something key, and, to some extent I'm just thinking out loud... just trying to understand it
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#56
06-12-2007, 10:11 PM
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Re: an argument against the gold standard
[ QUOTE ]
Ding. Ding. Ding. Ding. WINNAR! [/ QUOTE ] If all transactions were immediately deposited into US banks it would be a winn"a"r. they arent.
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#57
06-12-2007, 11:39 PM
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Re: an argument against the gold standard
[ QUOTE ]
[ QUOTE ] Ding. Ding. Ding. Ding. WINNAR! [/ QUOTE ] If all transactions were immediately deposited into US banks it would be a winn"a"r. they arent. [/ QUOTE ] lol @ teh noob for not knowing the word "winnar".
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#58
06-12-2007, 11:49 PM
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Re: an argument against the gold standard
[ QUOTE ]
[ QUOTE ] Ding. Ding. Ding. Ding. WINNAR! [/ QUOTE ] If all transactions were immediately deposited into US banks it would be a winn"a"r. they arent. [/ QUOTE ] So there is a delay of how long? A few days? Do businesses keep a large portion of their cash assets in cash on hand? Do they not deposit checks for months at a time? So on a 10% reserve, the amount of money "created" might be 7.5x the original loan, not 10x. BFD.
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#59
06-13-2007, 09:19 AM
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Re: an argument against the gold standard
[ QUOTE ]
[ QUOTE ] [ QUOTE ] Ding. Ding. Ding. Ding. WINNAR! [/ QUOTE ] If all transactions were immediately deposited into US banks it would be a winn"a"r. they arent. [/ QUOTE ] lol @ teh noob for not knowing the word "winnar". [/ QUOTE ] Winnar isn't a word, it's an aggrandized typo. ---> PWNED!!!!!!1!11!!1!eleven!
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