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aliveandkicking

Bank Credit Is A Bank Loss Issued From Thin Air

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A bank creates credit in exactly the same way as you and I can create credit by writing out an "IOU to the note holder 100 pounds'. These notes can be used to claim your wealth.

Each note you produce creates a direct liability upon your wealth.

Banks function in exactly the same way as if you are issuing solicitor/lawyer witnessed IOU's for 100 pounds to anybody who will take them. You will be clearly losing money if you have no way of recovering your wealth that you will be for sure losing as you issue these valueable IOU's

Banks are happy to issue 'credit money as bank losses from thin air' because they expect the credit money loan document to perform to repay them the money they lost with interest to compensate then when they issued the 'credit money as a bank loss from thin air'.

:)

Edited by aliveandkicking

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"While economic textbooks claim that people and corporations are competing for markets and resources, I claim that in reality they are competing for money - using markets and resources to do so. Greed and fear of scarcity are being continuously created and amplified as a direct result of the kind of money we are using. For example, we can produce more than enough food to feed everybody, and there is definitely not enough work for everybody in the world, but there is clearly not enough money to pay for it all. In fact, the job of central banks is to create and maintain that currency scarcity. Money is created when banks lend it into existence When a bank provides you with a $100,000 mortgage, it creates only the principal, which you spend and which then circulates in the economy. The bank expects you to pay back $200,000 over the next 20 years, but it doesn't create the second $100,000 - the interest. Instead, the bank sends you out into the tough world to battle against everybody else to bring back the second $100,000."- Bernard Lietaer, Former Central Banker

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A bank creates credit in exactly the same way as you and I can create credit by writing out an "IOU to the note holder 100 pounds'. These notes can be used to claim your wealth.

Each note you produce creates a direct liability upon your wealth.

Banks function in exactly the same way as if you are issuing solicitor/lawyer witnessed IOU's for 100 pounds to anybody who will take them. You will be clearly losing money if you have no way of recovering your wealth that you will be for sure losing as you issue these valueable IOU's

Banks are happy to issue 'credit money as bank losses from thin air' because they expect the credit money loan document to perform to repay them the money they lost with interest to compensate then when they issued the 'credit money as a bank loss from thin air'.

:)

Bank credit is not a loss to them, it is a liability to exchange some money when you demand. So if you demand cash, they give it to you, the cash should be exchangable for something from the BoE. just what, im not sure.

I can issue credit with an invoice.

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Indeed, banking is the ultimate tool of social control. It ensures people compete like rats for limited resources. We arbitrarily attach value to various of our "occupations" and thereby create the illusion of social status. Money is truly the root of all evil and there are better, less brutal ways of keeping the world going than the tool of fiscal servitude that money creates.

There is enough for everybody. Fair allocation of everybodies needs would be a good start. From that basis a new kind of economy might emerge in which nobody would be considered better or worse than anybody else in terms of what they do and where they live. Resources would be allocated according to need and human creativity would be able to flourish because when people aren't fearful about their physical existence and its perpetuation, they would start using abilities that they didn't know they had.

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Bank credit is not a loss to them, it is a liability to exchange some money when you demand. So if you demand cash, they give it to you, the cash should be exchangable for something from the BoE. just what, im not sure.

I can issue credit with an invoice.

Via your logic if i stand at a street corner issuing certificates to claim my wealth as cash issued by the finest lawyers in the land and backed fully by contract law, then the liability i create is:

"a liability to exchange some money when they demand. So if they demand cash, you give it to them, the cash should be exchangable for something from the BoE. just what, im not sure.

??

Most people would conclude i think that i am giving my money away and they would attempt to restrain me and get me to seek urgent treatment or simply rob me blind.

But somehow you have come up with this thing about cash being this thing that is exchangeble for something but you are not sure what it is?

You have made a rediculously complicated statement to hide the simple truth of the clear liability the bank is exposed to.

Why are you doing that?

Edited by aliveandkicking

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Via your logic if i stand at a street corner issuing certificates to claim my wealth as cash issued by the finest lawyers in the land and backed fully by contract law the liability i create is:

"a liability to exchange some money when they demand. So if they demand cash, you give it to them, the cash should be exchangable for something from the BoE. just what, im not sure.

??

Thats how it works.

You ask for a loan. Bank gives you credit. This is an asset for the bank, exactly like the invoice I issue to you for services supplied. its a liability for you.

I, like the bank, expect my invoice paid.

Now you got your loan, what do you wish to do with it? cash? pay someone? whatever you like.

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Thats how it works.

You ask for a loan. Bank gives you credit. This is an asset for the bank, exactly like the invoice I issue to you for services supplied. its a liability for you.

I, like the bank, expect my invoice paid.

Now you got your loan, what do you wish to do with it? cash? pay someone? whatever you like.

Why are you going out of your way to hide the liability the bank has also??????????

If you issue credit and people take your goods you are horribly exposed to losses if you are not paid.

You seem determined to create the belief that:

1. The bank only profits from this arrangement and

2. Is not taking a risk which it is entitled to be compensated for.

Edited by aliveandkicking

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Why are you going out of your way to hide the liability the bank has also??????????

If you issue credit and people take your goods you are horribly exposed to losses if you are not paid.

You seem determined to create the belief that:

1. The bank only profits from this arrangement and

2. Is not taking a risk which it is entitled to be compensated for.

What liability?

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Why are you going out of your way to hide the liability the bank has also??????????

If you issue credit and people take your goods you are horribly exposed to losses if you are not paid.

You seem determined to create the belief that:

1. The bank only profits from this arrangement and

2. Is not taking a risk which it is entitled to be compensated for.

The cash that I've obtained as a result of a bank loan could be paid straight back into the bank into somebody else's account. The bank can then re-lend this money. This process happens many times in the real economy. Now, what was the bank's original liability?

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The cash that I've obtained as a result of a bank loan could be paid straight back into the bank into somebody else's account. The bank can then re-lend this money. This process happens many times in the real economy. Now, what was the bank's original liability?

When the bank credits the borrowers loan account it loses full control of that amount of reserves

When the borrower spends the money, the same amount of loss of control of the reserves goes to the seller

You are attempting to argue that banks are all one bank and no real liability is ever created. I find this a rediculous notion.

You might not.

In my universe there are clearly winners and losers in the banking world. There are clearly better banks and clearly less good banks

That might not exist in your universe however.

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When the bank credits the borrowers loan account it loses full control of that amount of reserves

When the borrower spends the money, the same amount of loss of control of the reserves goes to the seller

You are attempting to argue that banks are all one bank and no real liability is ever created. I find this a rediculous notion.

You might not.

In my universe there are clearly winners and losers in the banking world. There are clearly better banks and clearly less good banks

That might not exist in your universe however.

youve lost it mate. Join the Nulabour cabinet, do not pass go, but collect £200,000.

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youve lost it mate. Join the Nulabour cabinet, do not pass go, but collect £200,000.

I do not believe wealth can be created from thin air.

Do you??

Are you honestly telling me that you think a bank has no liability when it creates a loan agreement?

Edited by aliveandkicking

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I do not believe wealth can be created from thin air.

Do you??

Are you honestly telling me that you think a bank has no liability when it creates a loan agreement?

no, you are telling me there is a liability.....what?

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I do not believe wealth can be created from thin air.

Do you??

Are you honestly telling me that you think a bank has no liability when it creates a loan agreement?

yes it creates an asset and a liability that cancel each other out.

Not sure what you are arguing with Bloo Loo about because Bloo Loo is right.

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yes it creates an asset and a liability that cancel each other out.

Not sure what you are arguing with Bloo Loo about because Bloo Loo is right.

Clearly there exists a liability and there exists an asset

These two cannot disappear in some star trek device.

At least in my universe this is true.

It could be different in your universe

:)

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Clearly there exists a liability and there exists an asset

These two cannot disappear in some star trek device.

At least in my universe this is true.

It could be different in your universe

:)

The asset moves from the banks current account to your loan account.

YOU then owe the asset back. the bank has lent you the asset which still belongs to the bank. Still cant see the banks liability.

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I do not believe wealth can be created from thin air.

Banks do not create wealth- they don't produce anything. The only wealth that is created by a loan is the charge on the future productivity of the borrower.

So if the value of a loan document is input by only one side of the two parties involved, it is reasonable to claim that the other party is gaining the spoils without doing anything to earn them.

The notion that interest is compensation for loss of opportunity only makes sense if the lender actualy surrenders something of value- but since the only value in loan contract is supplied by the borrower, in the form of his future productivity, the contribution of the bank to a loan contract is the entirely negligable time and effort required to process the loan agreement through a digital system.

The reason we are in this current mess is due to the fact that the banks have been able to create far more credit than their own reserves can cover- which implies that they do indeed have the abiltiy to manufacture debt from 'thin air' and in our system money and debt are synonymous.

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The asset moves from the banks current account to your loan account.

YOU then owe the asset back. the bank has lent you the asset which still belongs to the bank. Still cant see the banks liability.

Bloo Loo

The loan document contains two promises

The asset is *in* the loan document promising to repay the loan amount

The liability is *in* the loan document promising to pay out cash to whoever the borrower specifies

At this point in time no money is created.

The loan account contains the created money as the first part of the banks promise or liability

Then the created money is spent. The banks liabilitiy is now in the sellers account.

Just as if you held my 'iou to the note holder to pay 100 cash'.

The bank and myself are liable to meet the terms of the agreed promise. It is our liability. Or liability to pay out our own wealth to the note holder.

The bank and myself (hopefully :) ) have a promise that the money will be returned to us. This promise to repay with interest is our asset which is a valueable document.

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Bloo Loo

The loan document contains two promises

The asset is *in* the loan document promising to repay the loan amount

The liability is *in* the loan document promising to pay out cash to whoever the borrower specifies

At this point in time no money is created.

The loan account contains the created money as the first part of the banks promise or liability

Then the created money is spent. The banks liabilitiy is now in the sellers account.

Just as if you held my 'iou to the note holder to pay 100 cash'.

The bank and myself are liable to meet the terms of the agreed promise. It is our liability. Or liability to pay out our own wealth to the note holder.

The bank and myself (hopefully :) ) have a promise that the money will be returned to us. This promise to repay with interest is our asset which is a valueable document.

the bank will have a liability to you if they start the loan but dont credit you with it. But the moment its signed and sealed the credit goes to your loan account.

of course there is a double entry book keep to all this, but lts all simultaneous.

at the moment of start, you have the liability, you have the banks' asset.

Whether or not you pay it back or not later is irrelevant.

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Clearly there exists a liability and there exists an asset

These two cannot disappear in some star trek device.

At least in my universe this is true.

It could be different in your universe

:)

I agree :)

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When you get a loan - broad money is deposited into your bank account (where you might have some savings already). This is the bank liability.

The asset is the loan-agreement. This stays on the bank ledger at all times.

You transfer money from your bank account to your account at another bank.....the liability is dropped in the ledger - a cash asset is transferred via a payment system CHAPS say (operated in conjuction with the central bank) to the destination bank (the banks bank-account). That bank then creates a new liability in its ledger - an increase in your bank deposit account. You have a balance to draw against there.

Edited by Hancial

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The bank and myself (hopefully ) have a promise that the money will be returned to us. This promise to repay with interest is our asset which is a valueable document.

But in the bank's case the money did not pre exist the document- the money came into existance as a consequence of the signing of the document, so from the banks point of view this money is an asset created out of nothing- for which they then charge interest.

So it looks like the banks have the ability to conjure wealth from nothing, since the interest is paid to them for doing no more than creating a document.

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The notion that interest is compensation for loss of opportunity only makes sense if the lender actualy surrenders something of value

If you come to me to tell me your wife is terribly sick and needs an urgent operation and flight to Geneva and you are working but otherwise pennyless I can fund this for you.

I can issue you with a bond or note to take to my banker who can issue you with my cash to help you.

My note is money. It is a means of exchange that i created from thin air using a pen and paper.

Clearly if you have my note i am suffering a loss of opportunity. I cannot spend my money which you now have until you return it to me unless we exchange loan documents so that i can sell the loan document or use it as security to cover my loss of opportunity.

The question then becomes what is the cost of that? Do i do it out of some kindness to you and belief in human nature or do i do it as a line of buisiness?

Edited by aliveandkicking

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I do not believe wealth can be created from thin air.

Do you??

Are you honestly telling me that you think a bank has no liability when it creates a loan agreement?

You are right to doubt some of the posts here. Try this link.

http://www.housepricecrash.co.uk/forum/ind...st&p=984233

The "from thin air" line is a very misleading way of describing fractional reserve banking. It ignores regulatory capital. It is a well discussed topic on here, read about it, and make your mind up. Few here are prepared to get into a dicussion on the matter after the first couple of times they get involved in long running threads, the truth is more mundane...

Optobear

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at the moment of start, you have the liability, you have the banks' asset.

No - you have the banks liability - your asset. A bank account is a banks liability - or an asset to you.

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  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
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      • up 5%



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