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Did you read the article? It implies banks are lending money based on loans counted as assets on their books. OK, all well and good, so far.
Now when push comes to shove, from WHERE does the bank get the money to FUND a loan that is based on other loans on their books being counted as assets? Where does the actual money come from to FUND the loan?
An example, I own my home outright (no mortgage) but I decide to sell. At closing, the buyer has taken out a mortgage and I get the cash proceeds for the sale of my home. Where does the cash to pay me at closing come from if the buyer's mortgage is based not on the bank's financial reserves but only on a bookkeeping entry?
The buyer's lender creates a new loan, and that creates the necessary deposit that transfers to your bank.
The buyer's lender creates a new loan, and that creates the necessary deposit that transfers to your bank.
How is that possible if the buyer's loan is based on nothing but their banks' bookkeeping entries? I get actual cash at closing, not a bookkeeping entry. Where does the cash come from?
How is that possible if the buyer's loan is based on nothing but their banks' bookkeeping entries? I get actual cash at closing, not a bookkeeping entry. Where does the cash come from?
If the buyer's loan is based on only the loans his bank holds being counted as assets and NOT on the actual cash reserves the bank has, WHERE did the money come from to pay me cash at closing?
How banks make money is they ORIGINATE loans which are then sold as MBS to either investors or the Federal Reserve. Banks get a small fee for originating the loan, and sometimes ongoing fees for servicing the loans.
US mortgage debt is currently about $18 trillion, most of it held by investors including everyone who has a pension and/or retirement account. Another $2.5 trillion in MBS is held by the Federal Reserve.
THAT'S where the funding comes from. The banks are not creating money out of nothing. They're selling the loans they originate to investors or the Federal Reserve.
None of this has anything to do with fractional reserve lending.
How is that possible if the buyer's loan is based on nothing but their banks' bookkeeping entries? I get actual cash at closing, not a bookkeeping entry. Where does the cash come from?
An illusion, vapor guaranteed by the banking system/Fed assuming current laws are followed. The cash deposit is created by the loan document. The bank itself has created new money, not the Fed.
Benefits in social security are quickly running out and democrats want to do nothing to fix this growing crisis. Even the NYT and cnn have recently published articles that highlight the need to fix social security.
“There is nothing complicated about fixing Social Security, according to R. Douglas Arnold, the William Church Osborn Professor of Public Affairs, Emeritus, and professor of politics and public affairs, emeritus, at Princeton University. Legislators could simply raise taxes or they could cut benefits — by raising the retirement age, for example. What remains complicated are the politics of fixing Social Security, Arnold argues in a new book published by Princeton University Press.”
Why won’t the democrat party do anything to help fix social security? Don’t they care?
It's funny- democrats don't mind blowing billions on illegal immigrants. Yet when those expenditures threaten any entitlement programs, they go ballistic!
I am a conservative. I understand that social security and medicare are the only two federal programs that have actually reduced poverty in the US. We do, as civilized people, have a moral obligation to insure that the vunerable in society do not live like animals, particularly at an advanced age.
If ever there were two "social programs" we should defend, its medicare and social security. I will never benefit from either, despite paying in the max every year, as I will continue to work until I die (I still enjoy practicing medicine) and will thus have private health insurance and would have to "reimburse" social security for continuing to receive an income.
How about we take care of Americans first, and not the rest of the world? Democrats have "big hearts" until they actually have to sacrifice something for those desires, then their sentiments suddenly change. Dems tend to be selfish and greedy and never want to contribute a dime or a minute of thier own time to someone else.
An illusion, vapor guaranteed by the banking system/Fed assuming current laws are followed. The cash deposit is created by the loan document. The bank itself has created new money, not the Fed.
If what you claim is true, there'd be no reason for banks to ever sell any of the loans they originate. They could just keep them all on their books and become worth infinitely more. Note that such does NOT happen.
In fact, the money to fund loans comes from investors or the Federal Reserve, both of which buy the loans that banks originate.
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