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Where Is All The Money Coming From?


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UK debt is at record levels. Does it also mean that savings are at record levels? Where does the money come from?

:lol: God no.

Fractional Reserve Banking means that banks only need 3% of real capital to back a new loan, the rest is created out of thin air when the loan/mortgage is written.

The US actually has negative savings rates!

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A qwerty keyboard? Or maybe central banks have a big red button they press to magically create all this debt (then they could have a nodding bird pressing the button, just like on The Simpsons)?

Actually it's funny you should say that, the Bank of England has just updated the way it peforms daily open market operations, the need for the nodding bird has now been negated.

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Guest mattsta1964

:lol: God no.

Fractional Reserve Banking means that banks only need 3% of real capital to back a new loan, the rest is created out of thin air when the loan/mortgage is written.

The US actually has negative savings rates!

I think the term fractional reserve banking is becoming rather generous. Who was it who described the new money being created i the USA as 'helicopter money'?

A catastrophe in the making!

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It comes from the future.

JY

I'm sure I'll go to my grave not understanding how this can be anything but smoke and mirrors. The idea of fractional reserve banking makes some sort of surreal sense just as much as the 'future' being the provider - maybe these things are one and the same. But if tomorrows money is todays provider, then at what point does the inductive principal breakdown? What stops this becoming a perpetual virtuous circle?

Can anyone explain why if fractional reserve banking can work effectively on 3% of 'real' resources (whatever 'real' might possibly mean, god only knows) why shouldn't it work on a 1% basis which would presumably make us instantly globablly 3 times richer?...or any arbitrary tiny percentage come to that.

Is there a book in the Dummies series on this kind of thing?

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I think the term fractional reserve banking is becoming rather generous. Who was it who described the new money being created i the USA as 'helicopter money'?

A catastrophe in the making!

Ben Bernanke - recent new head of the Federal Reserve - an academic whose studies of the Great Depression led him in 2001 to say that - The effects of the depression were worsened by the credit crunch of the central bank and that it wouldn't happen under his tenure as he would simply print money and drop it from Helicopters as a way of maintaining liquidity.

Shame he never studied Weimar Germany or present day Zimbabwe where the citizens have all the money in the world yet can't afford anything.

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What's to stop anyone with a reasonable bit of cash opening their own bank? Er say like that Mr. Branson fella. Oh bu##er!

You need to get a licence and the reserve requirements for a new operation would be quite high, once you can show that you can keep the plates spinning you can write loans on the back of very low reserve requirements. Anyway, in banking the theme is for ever more consolidation, size means that money keeps flowing within your system between your own customers accounts or credit facilities.

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I'm sure I'll go to my grave not understanding how this can be anything but smoke and mirrors. The idea of fractional reserve banking makes some sort of surreal sense just as much as the 'future' being the provider - maybe these things are one and the same. But if tomorrows money is todays provider, then at what point does the inductive principal breakdown? What stops this becoming a perpetual virtuous circle?

Can anyone explain why if fractional reserve banking can work effectively on 3% of 'real' resources (whatever 'real' might possibly mean, god only knows) why shouldn't it work on a 1% basis which would presumably make us instantly globablly 3 times richer?...or any arbitrary tiny percentage come to that.

Is there a book in the Dummies series on this kind of thing?

Here is a good start, and a good collection of futher links Money Supply

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Guest mattsta1964

Ben Bernanke - recent new head of the Federal Reserve - an academic whose studies of the Great Depression led him in 2001 to say that - The effects of the depression were worsened by the credit crunch of the central bank and that it wouldn't happen under his tenure as he would simply print money and drop it from Helicopters as a way of maintaining liquidity.

Shame he never studied Weimar Germany or present day Zimbabwe where the citizens have all the money in the world yet can't afford anything.

I wonder if this is how the USA is going to pay off its debts? With trillions of worthless dollars. Th Asians will be pleased!

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