interest rates

GroupDIY Audio Forum

Help Support GroupDIY Audio Forum:

This site may earn a commission from merchant affiliate links, including eBay, Amazon, and others.
dmp said:
And actually individuals can create money also - say I build a microphone and 'sell' it to someone  for $1000 but instead of paying me money, they owe me the money. Now $1000 has been created through that debt.
Well...not quite.

I can't go spend that $1000 that you say was created from the debt - there is no money created at all. With a bank, they "deposit" money (fake money, credit, aka "air") into your account that you CAN go "spend" somewhere else because it's "in" your account as an actual credit or spendable money.

With your buddy you who you lent the microphone to (you haven't sold anything until he gives you something in return) - there's no way you can go spend that non-existent money that he hasn't yet given you. Because you actually haven't sold it to him until he pays you real money. Big difference.

Banks get away with murder. And it's all legalized with a special name. Amazing.
 
Phrazemaster said:
Well...not quite.
If he created a new mic from parts and sold that for $1000 irrespective of how he got paid, he created wealth from the difference between his cost, and selling price (affectionately known as profit).
I can't go spend that $1000 that you say was created from the debt - there is no money created at all. With a bank, they "deposit" money (fake money, credit, aka "air") into your account that you CAN go "spend" somewhere else because it's "in" your account as an actual credit or spendable money.
Banks do not create "wealth" from fractional reserve banking, but they do expand the money supply which encourages GDP growth (which actually does create wealth).
With your buddy you who you lent the microphone to (you haven't sold anything until he gives you something in return) - there's no way you can go spend that non-existent money that he hasn't yet given you. Because you actually haven't sold it to him until he pays you real money. Big difference.
If he "promised" to pay $1000 that promise is a receivable that can be carried on your balance sheet (perhaps discounted for expectation of full payment).
Banks get away with murder. And it's all legalized with a special name. Amazing.
Banks are so heavily regulated it is hard to imagine legally sanctioned murder, while they are guilty of less than lethal shenanigans that routinely get exposed. Wells Fargo had to pay $B in fines to federal regulators for shady practices that defrauded customers.

JR

PS: I saw a blurb about efforts to privatize Fannie and Freddie the federally backed mortgage insurers that were at the center of the last housing melt down. About friggin time. We need to get taxpayers off the hook for this, while I suspect it will always enjoy some level of government guarantees... because it is such a key part of mortgage origination.
 

Latest posts

Back
Top