Is the Fractional Reserve System Really? The Root of the Problem? (credit, debt)

[gwynedd1]

Originally Posted by user_id

Your comments here are vague. The banks have the ability to increase the money supply and therefore increase inflation. But, inflation in terms of an increase in aggregate prices is not a tax collected by the banks. Inflation reduces the value of returned principle and interest they are currently collecting.

Hi user_id,

There is nothing vague about what is self evident. To create something of value and collect rent on it means banks benefit from inflation. Its pretty straight forward logic. Inflation transfers wealth to the new recipient, however its at rent. This means wealth moves to banks.
They actually can't lose if they were not so careless to value their secured loans. Unfortunately they only siphon off value rather than create it.

I don't bother reading websites that look like they were created by 10 year olds.

I read a lot of things that are more than 10 years old.

All money systems are unstable, its just a question of where the instability comes from.

This is vague. I already provided one stable example that was left without refutation. Silver was another post Roman, European, wildly successful money system.

A taxed backed system is just a debt backed system. The money system will either be based on debt in some form or a commodity of some sort.

No its not. I can't read your mind and there is nothing material in this post but based upon this, it seems you may not understand what a debt based money system is. Creating a legal tender and accepting it as taxes is not a debt based money system. A government can simply declare that their token is legal tender and acceptable to pay taxes. At its creation, who is owed and who is in debt? The actually money is rent free. Any tax levied has nothing to do with debt, but simply keeps prices stable to offset the inflation tax.

Several of your responses are poorly mannered and hypocritical with no actual information. I end with a rhetorical question. Why bother posting it?

[user_id]

Originally Posted by gwynedd1

There is nothing vague about what is self evident.

Your comments are vague, they still are vague. There is nothing self-evident about fuzzy claims, except perhaps in your head.

Originally Posted by gwynedd1

To create something of value and collect rent on it means banks benefit from inflation.

And this makes sense in your head? The banks create and "rent" money, the problem is money is not a fixed valued asset. Inflation destroys the value of the very money the bank is "renting" out. If the currency inflates, then the bank is worse off as its now getting paid back with $$ that are worth less.

Inflation benefits the borrower not the lender. Under your view the banks should have been doing great during the late 1970's, of course they did not. Inflation kills banks as they lend long and borrow short.

Originally Posted by gwynedd1

I read a lot of things that are more than 10 years old.

If someone can't figure out how to make a website that does not look/function like complete crap, I think the probability is pretty low that they have something to say that is worth reading. That was my point, just in case it was not obvious.

Originally Posted by gwynedd1

This is vague. I already provided one stable example that was left without refutation. Silver was another post Roman, European, wildly successful money system.

What is vague? My claim is that "All money systems are unstable", money itself is unstable. Regardless of the basis of your money system, it is ultimately based on faith. It only works so long as the people think the money has value. Silver was not a "wildly successful" money system. There were just as many financial problems under Silver and/or Gold money systems as there were our current debt based fiat system.

Originally Posted by gwynedd1

At its creation, who is owed and who is in debt?

Nobody, but the same can be said of monopoly money.
Anyhow, I said "debt based in some sense" for a reason. A taxed based system would not create a real currency. You'd have tax notes that could be used to pay the federal government, but the idea that the trading of these tax notes would create a stable currency is odd. Now, if the legal tender was for all debts public and private, then it would work. But I consider that a debt based currency "in some sense".

Originally Posted by gwynedd1

Several of your responses are poorly mannered and hypocritical with no actual information.

I would suggest the same of yourself, so I suggest you keep this sort of drivel to yourself. Nobody is interested in your pettiness.

[jimhcom]

Originally Posted by user_id

Nah, its not really the banks. Its the capital holders in general.

What capital holders? For most businesses, the downsides of economic bubbles are deadly, some do not survive and others are irreparably damaged. Banks on the other hand, accumulate assets at bargain prices thru default. I am not talking all banks here, but the monsters that are in control. JP Morgan is a perfect example; they made a killing in the last depression, and are now gobbling up smaller banks and brokerage firms using taxpayer monies.

Originally Posted by user_id

I'm talking about government debt. But, debt can be bad for the banker if it the loan defaults! The loan is considered an asset on his balance sheet. Individuals can choose to go into debt or not. Without the ability to borrow society would become extremely stratified. There would be no way for a small business to grow or start without the ability to borrow capital.

Government debt? Let me get this straight, the Federal Reserve (a secret group of the worlds largest bankers) prints money and loans it to the government at interest, and we pay the majority of our income taxes to service that debt, and that is something beneficial to us?
I am not saying all borrowing is bad, what I am saying is the large banks through the Federal Reserve create an unhealthy environment of debt and lead the sheep into believing they can borrow their way to prosperity. From its inception it took the Federal Reserve only 13 years to create enough debt to cause the first depression.

Originally Posted by user_id

As far as the consumer goes, the issue is that they are largely stupid. They borrow to increase their lifestyle, rather than borrow to increase future productivity/earnings. If the debt is not going to increase your productivity capacity or give you higher earnings, then you should not borrow.

Agreed.

Originally Posted by user_id

Bubbles benefit society in general and the collapse hurts everyone. I do not think bubbles are bad, often a lot of good can come out of them. The problem is when they get out of control. That does not always happen. For example, the tech-bubble did not cause massive systemic risk when it collapsed; it just resulted in a rather mild recession.

Bubbles are a pyramid schemes and only benefit those who are smart enough to get in and get out early. The tech bubble did irreparable damage to an industry which could have provided this country with an alternative to the manufacturing base we foolishly exported. The reason the recession was mild was that the Fed dropped interest rates and turned everyone's house into an ATM, inflating the real estate bubble and causing the depression we are in today.

Originally Posted by user_id

Nobody forces debt onto the "working class", they bake their own cake. If they only took on debt when it was likely to increase their financial means then there would be no problem.

The government, and the banks and corporations that control them, run the educational system, the news media, television and radio stations, the print media, and every other means of obtaining information. If baking your own cake means believing what you are told, then I guess you can blame the working class for their own demise, personally, I have done better by assuming everything the lying, cheating, ba***rds say is the complete opposite of the truth.

[user_id]

Originally Posted by jimhcom

What capital holders? For most businesses, the downsides of economic bubbles are deadly, some do not survive and others are irreparably damaged. Banks on the other hand, accumulate assets at bargain prices thru default

This is not true at all. Some businesses will fail and some banks will fail. Businesses can take advantage of the depressed environment just as well as banks.

Originally Posted by jimhcom

what I am saying is the large banks through the Federal Reserve create an unhealthy environment of debt and lead the sheep into believing they can borrow their way to prosperity.

The debt levels can get "unhealthy", but they will correct. The debt in itself is not bad though.

Originally Posted by jimhcom

.....From its inception it took the Federal Reserve only 13 years to create enough debt to cause the first depression.

The same sorts of things have occurred when there was no central bank. Central banks cannot eliminate systemic risks.

Originally Posted by jimhcom

The tech bubble did irreparable damage to an industry which could have provided this country with an alternative to the manufacturing base we foolishly exported.

What damage would that be? It funded a massive number of developments. Although many businesses failed after the bubble was over we were still left with a number of successful businesses. This is also not to mention all the infrastructure investment that we are still using to this day.

Originally Posted by jimhcom

The reason the recession was mild was that the Fed dropped interest rates and turned everyone's house into an ATM, inflating the real estate bubble and causing the depression we are in today.

The recession ended before housing bubble took off. When a large bubble collapses, it will most likely cause a recession. But they don't always cause financial crisis. It is the financial crisis that you want to avoid and they are caused when systemic ricks start building in the system. This did not occur in the tech-bubble.

The question is whether economy with slow and steady growth with no major cycles (if such a thing exists) would grow better than long term than an economy with cycles. I think at the end of the day bubbles push growth, they just need to be contained.

Originally Posted by jimhcom

If baking your own cake means believing what you are told, then I guess you can blame the working class for their own demise..

The information is freely available, nobody is hiding anything. But most of the working class don't even own a library card. They lack education and that is the problem, but they lack education due to their own perceptions of the world.

Anyhow, changing the monetary system is not going to change the fact that societies stratify themselves with a working class on the bottom and a sort of aristocracy on the top. In the US the aristocracy are the owners of capital, most importantly those in banking. In the USSR it was another group of people. The only real question is which side of the fence do you want to be on.

[gwynedd1]

Originally Posted by user_id

Your comments are vague, they still are vague. There is nothing self-evident about fuzzy claims, except perhaps in your head.

Hello user_id,

Its actually simple logic, as I will explain.

And this makes sense in your head? The banks create and "rent" money, the problem is money is not a fixed valued asset. Inflation destroys the value of the very money the bank is "renting" out. If the currency inflates, then the bank is worse off as its now getting paid back with $$ that are worth less.

If I have a dollar, and you have a dollar, and I inflate my bank roll by one dollar, I have just reduced the value of the original 2 dollars which is the point you seem to try to make. You just failed to think it through.
Instead of 1/2 of the wealth I now have 2/3 of the wealth. So reducing the value of my original dollar from 1/2 to 1/3 is quite tolerable. Agree? Perhaps you understood this point but not that it is at rent. Would a bank expand your wealth free? No, it rents your wealth for the interest.

When banks expand the money supply they transfer wealth to borrowers just like the above example. However its not like driving off with a free new car. The bank has access to the new car which it is able to rent if it does not actually drive it. The one doing the renting has no stake in how the asset was acquired. If I win a free car and I rent out the free car to you, the car is not free to you but at the market rental rate . It is simple arithmetic not something in my head. As money expands, so does the rent only typically faster than the general economy for things outside the scope of finance. The new interest more than offsets the dilution of the general money supply.

Inflation benefits the borrower not the lender. Under your view the banks should have been doing great during the late 1970's, of course they did not. Inflation kills banks as they lend long and borrow short.

Not in a fractional reserve system with a central banks which attenuates and circumvents Gresham's Law. In this case they are much more free to debase the currency. Banks caused the inflation and were not victims of it You can argue this with the Austrian system itself because its one of their main points. This is not the same with peer lending where it is true inflation is the enemy of the creditor.

You are also incorrect on what hurts banks. High inflation did not kill the banks, high interest rates killed the banks when Paul Volker put an end to cheap money. Of course too many thrifts were getting a piece of it. Interest rates is a money creation tax that must be collected from the borrower and down the slope we go on the demand curve with little quantity demanded at that high price. When inflation is high, it means banks are lending like crazy pouring new money into the system. When that is cut off via high interest rates then banks will die.
It puts pressure on small banks that do not have bail out insurance passed out by congress which follows one of the capitalists rules of eliminate the competition, thus big banks are satisfied to remain dormant and survive after the purge, just like now. It was actually in the 80s after interest rates had moved up.

Why So Many Banks Go Belly Up - TIME

Bank failures used to come in isolated outbreaks. During the 1960s and '70s, they averaged fewer than ten a year. But despite the stronger-than-expected economic recovery, they are now occurring at a worrisome rate. Across the U.S., more than one bank a week is failing. By year's end, the number of failures, now 35, should easily beat the post-Depression record of 43 set in 1940. (Runner-up: 1982 with 42 failures.)

If someone can't figure out how to make a website that does not look/function like complete crap, I think the probability is pretty low that they have something to say that is worth reading. That was my point, just in case it was not obvious.

I tend to hate web 2.0 myself. That is why I run noscript and I loath HTTP based APIs and javscript coders use for yucks and bragging about it on twitter. There is nothing to function, just a web page to read.

What is vague? My claim is that "All money systems are unstable", money itself is unstable. Regardless of the basis of your money system, it is ultimately based on faith. It only works so long as the people think the money has value. Silver was not a "wildly successful" money system. There were just as many financial problems under Silver and/or Gold money systems as there were our current debt based fiat system.

Its not based on faith. It depends upon to some extent on the government's ability to enforce property rights including so called hard currencies. That is why I am for fiat currencies. I am however against the private creation of money by legal counterfeit and lending it out at interest where the society must carry it at a debt. Silver was a very successful currency given its problems which it certainly had.

However, you provide no explanation reference or insight. Do you cite historical examples? Do you cite effects of Peruvian silver mines on the European money system? Is that what you mean? Is it debasement? Are you citing Gresham's law? Do you mean examples of clipped coins coming into the bank of England at face value or are you talking about state debasement? Do you have examples of copper from Cyprus in the Roman system? Do you have a good comparison that equals the magnitude of moving to Nixon's float from Bretton Woods? Do you have a respected author that supports your view? Do you have a model of your own? No , you just say there were just as many problems having not demonstrated anything remarkable that we can trust your opinion at face value. Give me the facts, historical references or your own plausible models or its all iron pyrite to me.

Nobody, but the same can be said of monopoly money.
Anyhow, I said "debt based in some sense" for a reason. A taxed based system would not create a real currency. You'd have tax notes that could be used to pay the federal government, but the idea that the trading of these tax notes would create a stable currency is odd. Now, if the legal tender was for all debts public and private, then it would work. But I consider that a debt based currency "in some sense".

A debt based currency is a generally understood concept. If you engage in any science from a C programming to botany one first disambiguates to prevent vagueness and ambiguity because otherwise people will poison themselves and the programs won't run. The same applies to economics. If there were some connection, it requires an explanation you did not provide. I see no connection without abusing the definitions. There is no debt inherent in establishing a legal tender and accepting it as payment of a tax. It is only used to resolve debt or for the payment of debts. That is not the same thing.

Your use of "real" currency also introduces vagueness by admission while being critical of vagueness by omission??? What is a real currency? Currency is simply when something is used as a medium of exchange, thus fruit loops, in a context of exchange, is a currency hence the Latin root currentum meaning "to run". If you which to define real as a government backed legal tender then we have disambiguated the term meant by "real". Confusion will result when I make up my own bailiwick as I please.

I would suggest the same of yourself, so I suggest you keep this sort of drivel to yourself. Nobody is interested in your pettiness.

Did I provoke the first instance of this? I believe it began when you casually discarded my post as vague and refused to address the reference for a superficial issue of presentation. The above is no different and completely unnecessary only usually serving to cause further provocation. If you are not interested in it, why did you express it in such a way that provokes it?

Well I am not playing along. Peace.

[user_id]

Originally Posted by gwynedd1

blah blah...You are also incorrect on what hurts banks. High inflation did not kill the banks, high interest rates killed the banks when Paul Volker put an end to cheap money.....blah blah

Its amusing that you think its "simple logic", yet can't address it in a simple fashion. Banks have a balance sheet, on one side are the assets. This includes capital, deposits, long term loans, commercial paper etc. On the other side you have liabilities, most notably loans you've originated. The loans are typically long term, yet the funding for those loans is all mostly short term. Depositors can leave the bank and commercial paper is short term. If inflation goes up the bank has to increase the rates of its commercial paper and rates on its deposits, if inflation gets too high the bank may have to pay more to get money than the average interest rate on its loan portfolio! If the bank does not, it will become (balance sheet) insolvent.

An increase in the money supply does not automatically increase an individual banks ability to lend as a result inflation can and does hurt banks.

Please explain your position from the individual banks balance sheet and its profits. You know, how banks actually function in this economy. Also, note as I said originally, I'm talking about real embedded inflation (i.e., high core inflation numbers), not just the monetary phenomenon.

Originally Posted by gwynedd1

I tend to hate web 2.0 myself. That is why I run noscript and I loath HTTP based APIs and javscript coders use for yucks and bragging about it on twitter. There is nothing to function, just a web page to read.

You loath HTTP based APIs? Huh?! The internet is built on HTTP. And javascript has nothing to do with this, you can create a nice website with it. So, like I said if someone can't figure out how to make a decent webpage, I'm not going to waste my time reading it.

Originally Posted by gwynedd1

I tend to hate web 2.0 myself. That is why I run noscript and I loath HTTP based APIs and javscript coders use for yucks and bragging about it on twitter. There is nothing to function, just a web page to read.

You loath HTTP based APIs? Huh?! The internet is built on HTTP. And javascript has nothing to do with this, you can create a nice website with it. So, like I said if someone can't figure out how to make a decent webpage, I'm not going to waste my time reading it.

Originally Posted by gwynedd1

Its not based on faith....

Of course it is, the system only works so long as the people believe in the money. They have faith. The government can try to strong arm a people into using a particular money, but the government can't force people to think of X as money. The minute the people change their mind about X being money, is the minute the money is destroyed.

Any money system is unstable for exactly this reason. It requiers people to believe something, whether it be a piece or paper or coin of gold, has a particular value when there is no intrinsic reason for it to have such a value.

Originally Posted by gwynedd1

....Give me the facts, historical references or your own plausible models or its all iron pyrite to me.

I have no desire to dig up the information for you. Needless to say, there has been financial crises in Europe since its formation as a civilization.

The fact that X was used for centuries does not imply it was stable.

In regards to the thread title, the US the same things have occurred with or without a central bank, minus the outfits this looks like it could be from today:

http://en.wikipedia.org/wiki/File:Wa...run_poster.jpg

But the tin foil hate crowd loves a good conspiracy, so everyone has hear a bunch of drivel about it.

Originally Posted by gwynedd1

A debt based currency is a generally understood concept. If you engage in any science from a C programming to botany one first disambiguates to prevent vagueness and ambiguity because otherwise people will poison themselves and the programs won't run.

Huh? C programming is not a science. You realize this is a forum right? Yes, what I said was ambiguous. But, again I said "debt backed in some sense..." for a reason. Namely to indicate that I was not strictly speaking about "debt backed" currency.

Originally Posted by gwynedd1

Your use of "real" currency also introduces vagueness by admission while being critical of vagueness by omission??? What is a real currency?

Of course it does, again this is a forum. Things are going to be vague and ambiguous. But you see I acknowledge that fact, unlike someone else.

What I mean by "real currency" was simply a fully functioning national currency as opposed to something that is currency like but only used in trade in a limited fashion.

[gwynedd1]

Originally Posted by user_id

Its amusing that you think its "simple logic", yet can't address it in a simple fashion.

Hi user_id,

It is simple logic. My explanation was complete because you keep accusing me of being vague. Quite simply the inflated wealth you keep speaking of diluting the value of their credit is profitable to a bank because it is collecting more rent on the newly created money, aka interest. It requires no factual input but is simply an exercise of logic.

Banks have a balance sheet, on one side are the assets. This includes capital, deposits, long term loans, commercial paper etc. On the other side you have liabilities, most notably loans you've originated. The loans are typically long term, yet the funding for those loans is all mostly short term. Depositors can leave the bank and commercial paper is short term. If inflation goes up the bank has to increase the rates of its commercial paper and rates on its deposits, if inflation gets too high the bank may have to pay more to get money than the average interest rate on its loan portfolio! If the bank does not, it will become (balance sheet) insolvent.

Did you have the impression I get all my information from Zeitgeist? Of course bank loans require banks to keep the liability of the principle on the books. If the borrower defaults, the bank loses the asset but retains the liability. That is what keeps banks from printing money with no strings. Its the accounting rules according to the charter to have assets above their liabilities. I have posted several threads on the accounting rules.

Many of the long term loans you speak of were or can be sold off at anytime, mortgages in particular to Fannie and Freddie. The term does not matter because its a marketable asset that can be sold. Also, once again, you confuse and casually equate inflation and interest rates. They are not the same thing yet you keep implying they are. Inflation does not hurt banks. Increases in interest rates hurt banks.

That why the banking dominated Japan went with low interest rates instead of lowing taxes. They lowered the tax for their product which is debt.

An increase in the money supply does not automatically increase an individual banks ability to lend as a result inflation can and does hurt banks.

If barbarians lose about 10% on any given raid there is certainly individual risk to the barbarians. There is risk to an individual bank if its not a politically connected bank like JP Morgan. However the victims never win and always lose to this banking system as a whole.

Please explain your position from the individual banks balance sheet and its profits. You know, how banks actually function in this economy. Also, note as I said originally, I'm talking about real embedded inflation (i.e., high core inflation numbers), not just the monetary phenomenon.

I already did above but then you tell me you don't want to bother digging up anything for me. You are all over the place. You tell me I am vague and make excuses for it when you are.

You loath HTTP based APIs? Huh?! The internet is built on HTTP. And javascript has nothing to do with this, you can create a nice website with it. So, like I said if someone can't figure out how to make a decent webpage, I'm not going to waste my time reading it.

This is a perfect example. Talk about things you actually have expertise in. You have no idea what you are saying. The Internet was built on the TCP/IP suite and HTTP is a layer 7(OSI) application protocol casually known as the web on top of the TCP/IP layer. Its one of many layer 7 protocols of the OSI model including FTP, SMTP, POP, IMAP, and Usenet etc. which comprises the Internet. The Internet and the web is not synonymous.

I also said I don't like HTTP APIs which is not the original scope of HTTP that allows lazy programmers to insert single points of failure remotely with blocking I/O via SOAP or XML-RPC. Its a modern day goto. I implemented a demo of an HTTP RPC before most people even heard of HTTP APIs about 8 years ago. Lotus Notes did not have a class 4 Java driver for Solaris so I needed to do inserts on a remote NT machine. The demo was in ODBC and JDBC simply passing a url encoded GET to the NT RPC machine. In that case, there was no choice. There is nothing wrong with the originally intended HTTP protocol. I insisted such thing be used sparingly even then.


Why should anyone listen to you when you speak with phony authority? Go ahead and pretend to understand what I just said above.

Of course it is, the system only works so long as the people believe in the money. They have faith. The government can try to strong arm a people into using a particular money, but the government can't force people to think of X as money. The minute the people change their mind about X being money, is the minute the money is destroyed.

The sky is blue. People need to think money is valuable. If not being jailed for tax evasion is considered valuable then it is a useful currency and legal tender.

Any money system is unstable for exactly this reason. It requiers people to believe something, whether it be a piece or paper or coin of gold, has a particular value when there is no intrinsic reason for it to have such a value.

Correct, all money floats. However I do not recall silver being debased on the scale of the post Bretton Woods dollar.

I have no desire to dig up the information for you. Needless to say, there has been financial crises in Europe since its formation as a civilization.

You have no ability to do so. And interesting you ask me to do so about banking. You are clearly an intelligent person that relies on your basic intelligence to win points and try to craft arguments to allow face saving escape hatches such as the debt currency argument you tried to make. I meet many people like you who are intelligent but are just lazy intellectually and don't do the homework. Unfortunately they run into people who can nail their scruffy neck to the wall with facts from time to time. That's too bad since you will tend to hang around people that don't challenge you. I hang around people who pound me when I don't have my facts straight.

The fact that X was used for centuries does not imply it was stable.

In regards to the thread title, the US the same things have occurred with or without a central bank, minus the outfits this looks like it could be from today:

File:War of wealth bank run poster.jpg - Wikipedia, the free encyclopedia

But the tin foil hate crowd loves a good conspiracy, so everyone has hear a bunch of drivel about it.

Wikipedia is not something I read as an authoritative source. I recently was sent a reference claiming that the Marian genealogy theory of Luke was 15th century and laughed at the ridiculous assertion since I knew it was a least 4th century. You see, I have actually read the early Christian works. Anyway, its late 19th century which is like yesterday in the history of money. At that time, bank notes were the dominating currency for only a few years. Yes they kept getting worse with fiat fractional reserve currency displacing coins or for that matter green backs.

Huh? C programming is not a science. You realize this is a forum right? Yes, what I said was ambiguous. But, again I said "debt backed in some sense..." for a reason. Namely to indicate that I was not strictly speaking about "debt backed" currency.

Funny me taking a C course in computer science. And again ambiguous or vague is just fine for you.

Of course it does, again this is a forum. Things are going to be vague and ambiguous. But you see I acknowledge that fact, unlike someone else.

Then why did you start by attacking my statements as vague? You could have politely asked for a better explanation. Now you make excuses.

What I mean by "real currency" was simply a fully functioning national currency as opposed to something that is currency like but only used in trade in a limited fashion.

If you had made more statements like this we could have had a discussion. A real currency is anything that works as an exchange. What you are looking for is a legal tender.

[user_id]

Originally Posted by gwynedd1

It is simple logic. My explanation was complete because you keep accusing me of being vague. Quite simply the inflated wealth you keep speaking of diluting the value of their credit is profitable to a bank because it is collecting more rent on the newly created money, aka interest. It requires no factual input but is simply an exercise of logic.

Again, demonstrate how inflation (in the sense I'm speaking of) benefits either the bank's balance sheet or its profits. Save the generalities about "rents" for the tin foil hate crowd. State your position in relation to how individual banks are actually run.

You keep talking about "newly created" money, yet an individual bank does not automatically get any of the "newly created money".

Originally Posted by gwynedd1

Did you have the impression I get all my information from Zeitgeist?

No, I was more so thinking "The creature from Jekyll Island". A classic in the tin foil hater library.

Originally Posted by gwynedd1

Many of the long term loans you speak of were or can be sold off at anytime, mortgages in particular to Fannie and Freddie. The term does not matter because its a marketable asset that can be sold.

If they sold them off, then they are not on their balance sheet are they? I'm perfectly aware of the securization process. If the bank is still holding onto the security (or loan) when the market changes, then selling it does not save the problem as obviously what someone is willing to buy the security (or loan) for will change.

Originally Posted by gwynedd1

Also, once again, you confuse and casually equate inflation and interest rates. They are not the same thing yet you keep implying they are. Inflation does not hurt banks. Increases in interest rates hurt banks.

Never said they were the same thing. But when inflation increases (in the sense I'm using the word) depositors and those buying commercial paper will demand higher returns.

Originally Posted by gwynedd1

I already did above but then you tell me you don't want to bother digging up anything for me.

You did no such thing.

Originally Posted by gwynedd1

This is a perfect example. Talk about things you actually have expertise in. You have no idea what you are saying. The Internet was built on the TCP/IP suite and HTTP is a layer 7(OSI) application protocol casually known as the web on top of the TCP/IP layer.

More fallacious garbage. Nothing I said was inaccurate, the internet is built on top of HTTP. The fact that HTTP is built on top of TCP/IP does not change that or that you could use another protocol is irrelevant.

Originally Posted by gwynedd1

There is nothing wrong with the originally intended HTTP protocol. I insisted such thing be used sparingly even then.

Great, I'm not really interested. Today, the internet is based on HTTP. You can type as many paragraphs as you wish and its not going to change that. But, I did misinterpret your original comment as nonsensical and understand what you meant by it now.

Originally Posted by gwynedd1

Why should anyone listen to you when you speak with phony authority? Go ahead and pretend to understand what I just said above.

I don't speak from any authority, let alone phony authority. I don't play the authority game as some (looks your way) like to do.

Originally Posted by gwynedd1

You have no ability to do so. And interesting you ask me to do so about banking. You are clearly an intelligent person that relies on your basic intelligence to win points and try to craft arguments to allow face saving escape hatches such as the debt currency argument you tried to make...

No, I don't have the desire to big up the citations. You are free in a similar fashion to avoid answering me, just don't pretend as if you have.

And again, you go off the sagacious drivel. You have not "called me out" on anything. I stated openly that I had no interest in trying to justify my claim here, it would take time that I'm not willing to spend. You can interpret that as "I can't" all you wish, does not bother me at all.

Originally Posted by gwynedd1

Wikipedia is not something I read as an authoritative source....blah blah boring details...

Good thing I just posted a picture from it huh?

Originally Posted by gwynedd1

Funny me taking a C course in computer science. And again ambiguous or vague is just fine for you.

Really? Me too! But I knew computer science was not a science despite the misleading name of the field.

Originally Posted by gwynedd1

Then why did you start by attacking my statements as vague? You could have politely asked for a better explanation.

Because they were vague and I don't think suggesting they are is being rude. I'm not a polite person.

[gwynedd1]

Originally Posted by user_id

Again, demonstrate how inflation (in the sense I'm speaking of) benefits either the bank's balance sheet or its profits. Save the generalities about "rents" for the tin foil hate crowd. State your position in relation to how individual banks are actually run.

Well no.

"No, I don't have the desire to big up the citations."

You keep talking about "newly created" money, yet an individual bank does not automatically get any of the "newly created money".

All a bank needs to do is borrow a reserve at the federal funds rate, having no deposit of their own, and have a borrower with a promise to pay and walla, new money.

No, I was more so thinking "The creature from Jekyll Island". A classic in the tin foil hater library.

Then you didn't read it because he specifically addresses the liability side of a bank balance sheet. You didn't read the book obviously, yet you feel comfortable criticizing it as you so often do.

I agree that many conspiracy media fail to mention the issue for an individual banks and the liability side of the balance sheet. You just lumped it all together not knowing one from the other. The banking system itself can never collapse with a currency of debt instruments. I see it for what it is as a tool to wipe out the small banks.

If they sold them off, then they are not on their balance sheet are they? I'm perfectly aware of the securization process. If the bank is still holding onto the security (or loan) when the market changes, then selling it does not save the problem as obviously what someone is willing to buy the security (or loan) for will change.

If banks don't manage their portfolio ,yes. And any small bank is vulnerable to the larger banks that use this instability to purge the competition. Its the two rules of monopoly capital, expand the market, kill the competition.

Never said they were the same thing. But when inflation increases (in the sense I'm using the word) depositors and those buying commercial paper will demand higher returns.

Yes you did. You keep saying how inflation is bad and keep repeating the fall out of high interest rates. You act as if they are the same thing. What is with this "in a sense"? You make up your own meaning, fail to explain it and refuse to look at material that does not suit your presentational tastes. Its so you can keep changing to weasel out of the reality you are as poorly informed as the tin man you prop up. Your straw man is armor plated.

You did no such thing.

I am doing it again.

More fallacious garbage. Nothing I said was inaccurate, the internet is built on top of HTTP. The fact that HTTP is built on top of TCP/IP does not change that or that you could use another protocol is irrelevant.

Really? Show me one authoritative reference refuting me. Show me one that supports you that Internet = HTTP like no one uses email or IM or we can all see clearly that you will plant you flag on a hill of midden in many areas.

Great, I'm not really interested. Today, the internet is based on HTTP. You can type as many paragraphs as you wish and its not going to change that. But, I did misinterpret your original comment as nonsensical and understand what you meant by it now.

No you see it not. Twitter for example the new toy is build on SMS application layer not HTTP.

Its specified under RFC(Request for Comments) 1568

SMS and MMS Toolkit - RFC 1568

You can find the HTTP RFC here its the current 1.1.

http://www.ietf.org/rfc/rfc2616.txt


This is me on the Internet with me getting a 550 based on RFC 821 SMTP drafted in 1982 well before gopher even existed let alone the web .

telnet smtp1.attglobal.net 25
Trying 12.154.55.30...
Connected to smtp1.attglobal.net.
Escape character is '^]'.
550 unauthorized interface

There is no HTTP in sight. You just wanted to be the expert.

I don't speak from any authority, let alone phony authority. I don't play the authority game as some (looks your way) like to do.

You sure act like you do. I don't expect anyone to believe me which is why I provide references, facts and my own logical progressions.

No, I don't have the desire to big up the citations. You are free in a similar fashion to avoid answering me, just don't pretend as if you have.

Right. One line opinions it the style I pick up.

And again, you go off the sagacious drivel. You have not "called me out" on anything. I stated openly that I had no interest in trying to justify my claim here, it would take time that I'm not willing to spend. You can interpret that as "I can't" all you wish, does not bother me at all.

Anyone else can now see I did and take it into account.

Good thing I just posted a picture from it huh?


Really? Me too! But I knew computer science was not a science despite the misleading name of the field.

Another "in a sense" its not a science.

sci⋅ence

  /ˈsaɪəns/ Show Spelled Pronunciation [sahy-uhns] Show IPA –noun 1. a branch of knowledge or study dealing with a body of facts or truths systematically arranged and showing the operation of general laws: the mathematical sciences. 2. systematic knowledge of the physical or material world gained through observation and experimentation. 3. any of the branches of natural or physical science. 4. systematized knowledge in general. 5. knowledge, as of facts or principles; knowledge gained by systematic study. 6. a particular branch of knowledge. 7. skill, esp. reflecting a precise application of facts or principles; proficiency.

Because they were vague and I don't think suggesting they are is being rude. I'm not a polite person.

You certainly can be impolite. I honestly don't know if its a mistake or an admission. I think the gist of my initial comments was that your post was useless and empty of material even refusing to read the material in my post after having stated there are no alternatives. Your later posts were the provocative ones. I am just pointing out you are not a reliable source of information.

[user_id]

Originally Posted by gwynedd1

Well no.

"No, I don't have the desire to big up the citations."

That is fine, like I said you are free to respond to whatever you wish. Just don't pretend that you have responded when you have not.

In my case, I just don't want to spend the time to dig up the appropriate information. I'd have to thumb through books,etc, to get the proper citations.

Originally Posted by gwynedd1

All a bank needs to do is borrow a reserve at the federal funds rate, having no deposit of their own, and have a borrower with a promise to pay and walla, new money.

This is extremely short term, the bank will only use this if it beliefs its going to have the money coming in soon from other sources. It can't rely on interbank lending to support long term loans.

Originally Posted by gwynedd1

Yes you did. You keep saying how inflation is bad and keep repeating the fall out of high interest rates....

Again , I have never suggested they are the same. Rather that inflation (in the way I'm using the word) will tend to cause increases in rates that are important for the bank, e.g., commercial paper, deposit rates, etc.

Originally Posted by gwynedd1

Really? Show me one authoritative reference refuting me. Show me one that supports you that Internet = HTTP like no one uses email or IM

I never said "internet = http", I said its currently based on http. And given the context, it should be obvious I'm talking about the web. The word is often used with this connotation rather than the more general meaning.

Why you keep going on about this is beyond me. You want to rumble on about this, but not justify your position. Like I said, I only mentioned it in the first place because what you stated initially sounded odd. I still think calling HTTP an "API" is odd, but you clarified what you meant. Done.

I'm perfectly aware of the variety of protocols used on the internet. You aren't teaching me anything.

Originally Posted by gwynedd1

Another "in a sense" its not a science.

No, not another "in a sense". Computer science is not a science. Period.
Its not even worth talking about, anybody that mistakes computer science for a science (in the sense that physics, biology, etc) are sciences does not know anything about science. Computer science is methodologically more akin to Mathematics and Philosophy than science. Both of which are likewise not sciences.
Anyhow, I've seen a number of your posts. And its the same slick again and again. You hide in generality and ambiguities and you never fresh out what you are saying in concrete terms. You have not even come close to refining your position stated here on inflation in an intelligible matter. Instead, typing endlessly about internet protocols (You seem to know more about that than economics). You're not here to discuss, you want to pretend to be a sage stating your tin foil hater drivel as established fact.

Let me know when you want to discuss the actual issues.