Is the US national "debt" an illusion?

[Tinark]

what?

Sorry, the abbreviations are the same, I thought you were asking about the federal reserve bank.

As was discussed in several posts previously, fractional reserve banking creates money by loaning out funds while still allowing all depositors the ability to have a demand claim on their deposits.

 

[Matthew Libman]

I just found this slideshow online. It has a bunch of pictures, including some activism work I did with Rev. Jesse Jackson Sr., Texas Governor Rick Perry, NAACP president Ben Jealous, Newt Gingrich, Occupy Wall Street, and Ron Paul. And a picture of the Libman family.

There are also shots of my old house - a Chicago NATO summit protest site - before and after (boarded up by police). Feel free to take a look:

http://flickeflu.com/mobile/photos/94809731@N02/interesting

 

[kmoney]

Sorry, the abbreviations are the same, I thought you were asking about the federal reserve bank.

Oh, I see. No, wasn't mentioning them.

As was discussed in several posts previously, fractional reserve banking creates money by loaning out funds while still allowing all depositors the ability to have a demand claim on their deposits.

After taking another look, it wasn't accurate to say that they lend more than they have. If I deposit $10 they can't lend out $100 based on that deposit. I guess I was just getting thrown off by the idea that banks don't have to keep enough reserves to satisfy all the deposit accounts.

However, I think I still take some issue with you saying that regulation is telling banks what they can do with their own property. FRB creates an odd scenario in which for practical purposes there are two owners of the same money because even though the bank is the owner of the money the depositor can, at any time, go back to the bank and request that same money (not the same physical money but some physical money in the same amount they deposited). It seems to me that at least it isn't interference in someone's personal property in the conventional sense.

Just to be clear, are you against any regulation for this?

 

[Matthew Libman]

Here is a 30 minute collection of clips from my political activism with Jesse Jackson, Newt Gingrich, Ron Paul, Rick Perry, Mitt Romney, Occupy Wall Street, and others - all in 2012. If you are interested in seeing some of my other work, take a look:


Tribune Boycott: http://www.youtube.com/watch?v=CIbj5CXJqwM
Bank Reform: http://www.youtube.com/watch?v=A3wDjAugaRg
Jesse Jackson Extended: http://www.youtube.com/watch?v=OvJzVYvmtHI
Compilation: https://vimeo.com/68334998

 

[Tinark]

Oh, I see. No, wasn't mentioning them.



After taking another look, it wasn't accurate to say that they lend more than they have. If I deposit $10 they can't lend out $100 based on that deposit. I guess I was just getting thrown off by the idea that banks don't have to keep enough reserves to satisfy all the deposit accounts.

However, I think I still take some issue with you saying that regulation is telling banks what they can do with their own property. FRB creates an odd scenario in which for practical purposes there are two owners of the same money because even though the bank is the owner of the money the depositor can, at any time, go back to the bank and request that same money (not the same physical money but some physical money in the same amount they deposited). It seems to me that at least it isn't interference in someone's personal property in the conventional sense.

Just to be clear, are you against any regulation for this?

I haven't looked into it too deeply, but I think I'm OK with regulation requiring a certain percentage be held as reserves. Without that regulation, banks were far more aggressive in their reserve levels, leading to greater numbers of bank failures when things took a turn.

I am NOT ok with a regulation requiring a 100% reserve requirement.

Finally, as was explained to Nimrod previously, it's not two people owning the _same_ money.

I suppose you could say that multiple people have a claim on the same _pool_ of money in the form of a demand claim upon request (and that pool is insufficient to satisfy all demands if everyone were to make a demand at the same time), but the cash is owned by the bank and only the bank until the withdraw is made (by either the depositors or by a borrower). And also note that this situation arises all by agreement between the bank and the depositors (and borrowers when they are part of the picture).

In its simplest description, you effectively have a group of people putting their money together into one pool (the depositors), agreeing to allow any depositor to make withdraws from the pool at any time they desire up to the amount they've contributed, and authorizing the bank, as the manager of the pool of money, to make low risk loans, reducing the pool of money below the total amount that can be withdrawn by the depositors. If the depositors agree to the situation, I see no reason for government to stick their nose into these people's business.

 

[Matthew Libman]

I haven't looked into it too deeply, but I think I'm OK with regulation requiring a certain percentage be held as reserves. Without that regulation, banks were far more aggressive in their reserve levels, leading to greater numbers of bank failures when things took a turn.

I am NOT ok with a regulation requiring a 100% reserve requirement.

Finally, as was explained to Nimrod previously, it's not two people owning the _same_ money.

I suppose you could say that multiple people have a claim on the same _pool_ of money in the form of a demand claim upon request (and that pool is insufficient to satisfy all demands if everyone were to make a demand at the same time), but the cash is owned by the bank and only the bank until the withdraw is made (by either the depositors or by a borrower). And also note that this situation arises all by agreement between the bank and the depositors (and borrowers when they are part of the picture).

In its simplest description, you effectively have a group of people putting their money together into one pool (the depositors), agreeing to allow any depositor to make withdraws from the pool at any time they desire up to the amount they've contributed, and authorizing the bank, as the manager of the pool of money, to make low risk loans, reducing the pool of money below the total amount that can be withdrawn by the depositors. If the depositors agree to the situation, I see no reason for government to stick their nose into these people's business.

Lowering the current reserve requirement would be the fastest way to get banks lending to small businesses and consumers, and would have a dramatic stimulative effect on the US economy.

 

[Tinark]

Lowering the current reserve requirement would be the fastest way to get banks lending to small businesses and consumers, and would have a dramatic stimulative effect on the US economy.

Banks aren't constrained in their lending today primarily due to a lack of available funds to loan out but rather a lack of sufficient number of credit worthy borrowers desiring to take out loans.

Don't know what data you are basing your conclusions off of.

 

[Mocking You]

Lowering the current reserve requirement would be the fastest way to get banks lending to small businesses and consumers, and would have a dramatic stimulative effect on the US economy.

Banks are not in trouble because they are up against the reserve requirement. They are in trouble because businesses are not taking out loans. Even at 4.75% - 5% interest rate.

 

[kmoney]

I haven't looked into it too deeply, but I think I'm OK with regulation requiring a certain percentage be held as reserves. Without that regulation, banks were far more aggressive in their reserve levels, leading to greater numbers of bank failures when things took a turn.

OK.

I am NOT ok with a regulation requiring a 100% reserve requirement.

It seems that would effectively remove a bank's ability to lend.

Finally, as was explained to Nimrod previously, it's not two people owning the _same_ money.

I didn't say there are two owners. I said that for practical purposes there are two owners because the depositor can go back at any time and request their money back.

I suppose you could say that multiple people have a claim on the same _pool_ of money in the form of a demand claim upon request (and that pool is insufficient to satisfy all demands if everyone were to make a demand at the same time), but the cash is owned by the bank and only the bank until the withdraw is made (by either the depositors or by a borrower). And also note that this situation arises all by agreement between the bank and the depositors (and borrowers when they are part of the picture).

In its simplest description, you effectively have a group of people putting their money together into one pool (the depositors), agreeing to allow any depositor to make withdraws from the pool at any time they desire up to the amount they've contributed, and authorizing the bank, as the manager of the pool of money, to make low risk loans, reducing the pool of money below the total amount that can be withdrawn by the depositors. If the depositors agree to the situation, I see no reason for government to stick their nose into these people's business.

I wonder how many depositors know what they are agreeing to. I bet if you'd ask 10 people if they are still the owner of the money they have in their bank the majority would say yes. Not that I think that piece of knowledge would lead them to take their money out. Not having a bank just isn't very practical these days. People are almost forced into agreement.

 

[Mocking You]

Banks are not in trouble because they are up against the reserve requirement. They are in trouble because businesses are not taking out loans. Even at 4.75% - 5% interest rate.

Corporate America has so much cash sitting in the bank that it could purchase the Dallas Cowboys 437 times without borrowing a dime.


http://money.cnn.com/2015/03/20/inv...ecord-cash-level-oil/index.html?category=home

 

[Matthew Libman]

Is it even possible to discuss US monetary policy without a quantitative understanding of M3? Foreign central banks have resumed reporting their M3 money supplies and the information has been vital to responsibly stimulating their economies. The Fed stopped reporting M3 under Bush. Does Obama have what it takes to force the Fed to resume reporting this stastitic, or is that going to be the job of future President Paul?

 

[Matthew Libman]

Zero Hedge Submits

Zero Hedge Submits

Zero Hedge hears the call and starts the drumbeat for QE4:

http://www.zerohedge.com/news/2015-0...-balloning-qe4

 

[Mocking You]

Zero Hedge hears the call and starts the drumbeat for QE4:

http://www.zerohedge.com/news/2015-0...-balloning-qe4

Link doesn't work. However if the article is about the Fed wanting to do a QE4 the writer is a flake.

 

[Matthew Libman]

Link doesn't work. However if the article is about the Fed wanting to do a QE4 the writer is a flake.

Sorry, here is the article. I agree a lot of ZH is crap.

http://www.zerohedge.com/news/2015-03-22/next-move-fed-trial-balloning-qe4

 

[Mocking You]

Sorry, here is the article. I agree a lot of ZH is crap.

http://www.zerohedge.com/news/2015-03-22/next-move-fed-trial-balloning-qe4

Opening sentence:

With the idea of a Federal Reserve interest rate hike quickly fading the only real question left to ponder is what is their next move…if any?

The Fed interest rate hike has faded...from June to September. It will happen. There is no way the Fed will do QE4. Article finishes by saying the Yen will collapse.

 

[Matthew Libman]

Opening sentence:

With the idea of a Federal Reserve interest rate hike quickly fading the only real question left to ponder is what is their next move…if any?

The Fed interest rate hike has faded...from June to September. It will happen. There is no way the Fed will do QE4. Article finishes by saying the Yen will collapse.

I hope it goes better than that. But the Yen looks vulnerable.