Fractional Reserve Banking Questions

BESman

Économiste Monétaire wrote: »

Just like Harry Potter is a good read.

How can we ever trust ÉM again?

Soil Mechanic

Forgive me for the over simplification.........
http://video.google.co.uk/videoplay?docid=-2550156453790090544#

the relevant website...
http://www.moneyasdebt.net/


Was just wondering what academic/professional economists made of the video conclusions, particularly with regard to the exploration of possible alternatives?
Surely as a thought experiment it is interesting, if nothing else?
Has there been serious economic only analysis of those alternative proposals NB. in isolation of political/ideaological viewpoints?

Thanks for yoru time folks, very interesting thread.

Cheers,
SM

Flamed Diving

I do not have time to watch these videos, sorry.

Pixel8

Économiste Monétaire wrote: »

First, the Fed is audited every year. Its accounts are on the Fed website. Second, the OP never referenced 'The Secret of Oz' in their first post, it doesn't appear on the first page even, so that wasn't what "the OP originally asked."

FYI, school-yard goading doesn't work on me , I have no intention of watching that.

Why is Ron Paul trying to introduce an "Audit The Fed" bill then? Im sure that pdf file you posted has everything we need to know about the Federal Reserve except who they are transferring money to internationally through the IMF, World Bank and other organisations, who they are bailing out with over 1 trillion dollars in Europe and trillions more to American banks and Corporations. If all countries have a National Debt then who is bailing out all these countries? They are not disclosing this information and his Audit The Fed bill is being blocked by the Senate in the U.S.

But its not just the Federal Reserve that is being targeted here, its ALL central banks around the world, they are all privately owned and connected somehow, lending money to governments at interest. Is this or is this not true? Im not sure if it is but im dying to find out and the Secret Of Oz definitely raises a lot of questions which you all need to see because this is info you definitely have not heard before, none of us have heard this before. The OP is definitely talking about Secret Of Oz, he raised this point in another thread and i watched it and im amazed by it too! I just want to know what the truth is about these systems, as im sure we all do.

Is this statement true? "All governments are actually corporations trading for profit" ? I was in at the bank protest the other day and got a flyer with the name Tír Na Saor on it making that statement, im seeing similar info in a lot of different places lately. This Moroccan dude called Taj Tarik Bey talks about the drivers licenses fraud but has a lot of other interesting info about law and government, comes in 15 parts, here's the first:

Governments and Banks are enslaving us and we're letting them.

Torakx

Interesting talk he gave there.It isnt anything new but he did add some more details over what i have read up on so far.
Governments are corporations afaik.John Harris does some great talks on lawfull rebellion,human rights and the legal world of ctracting yourself by mistake.Google video has a goodone of him and you will learn so much about the legal system here in ireland using his explanations of how the british system works.
My main quest here is to find the exact policies or agreements that controls banks spending and loaning.I understand how the fractional reserve works to a fair extent but that still does not prevent banks lending/borrowing each other money or from other sources from what i see,leading back to the practise or ability to expand the currency at interest on top of more interest from the ECB or whoever that goes to i would imagine supposedly the printers,although i thought taxes would cover the printing of the currency we use.
It really looks like to me the banks are set up in a way that they can expand and contract the currency to take advantage of this knowing how the system really works.They only need to pay 2% or whatever is agreed to pay back on top of that.Another question is if the money is printed out of thin air and the people at the bottom of the "pyramid" have to cover that 2% arent we slowly just giving away our country to whoever is collecting that 2%?

andrew

I havn't watched any of those videos or anything, but I was just wondering what the people posting them thought about those recovery bonds (or whatever they're called) that have been set up. Do you think that they should exist, given that they pay interest to the people who buy them?

Torakx

I would be one of those who mentioned The Secret of OZ and really reccomend you watch it.Covers the history on money aswell and i even learned about tally sticks!
I dont want to drift too far off the the main reason for the thread but i think your question might be relevant if you mean those savings accounts the Irish gov did years ago during the "boom" where people saved for five years or so and got high interest back.If you mean those i would wonder also if the banks back then were able to take each deposit given them and apply the fractional reserve practise to this money and use the excess created from those high interest returning savings accounts to expand the currency more and help perpetuate a boom as people were calling it.
The banks lent out so much with credit cards and loans in those years its no wonder everyone had so much money.Those schemes im sure benefited the people also who had the savings but really those people by saving more money had imo helped create in a small way the situation we are in now albeit unkowingly i would think.
I dont keep any money in my bank account anymore.I see now the more i save(with a bank) the more the bank is able to create.
I hope someone can show me how exactly the bank is prevented from doing this.I dont see how the fractional reserve practice or the interest gained back from it by the ECB or whoever that goes to again as enough of a control mechanism for this current system of currency managment.If i missed it or didnt understand please someone refer me back to a previous post.

I could be wrong Andrew about that question you asked,did you mean this nama thing thats going on with the bank bailouts?
Ok i should have done this before i posted but turns out i was spot on the first time
I just googled irish bonds and got this http://www.realirishpolitics.org/home/16-economy-/794-irish-recovery-bond

That sounds exactly like i was just talking about and i think will create alot more money as the more people give the bank the more the bank can lend out(see first few posts for fractional reserve numbers roughly done) and a mini boom will occur most likely with the banks lowering interest on new loans or some kind of super bonus special loans....actually like those bonds haha and inflate the currency.Dont know if thats enough to get the money flowing again in this country but it might help lift the seemingly uncontrollable mysterious entity known as the "economy".

When i see those bonds offered all i see at the moment is the banks saying "Hey can you lend us some money at 5%+ a bonus so we can turn it into way way more and lend it out and make an even bigger profit?"
Thats fair enough thats how the banking system works they perform a service and we pay them very well for it through % interest per loan.

I am curious about some things related to this myself.Firstly i think the Irish in general did do alot of stupid things and fell into the trap of borrowing too much at too high interest.
Now while i blame the people who were ignorantly borrowing(loans credit card type things) i also must ask if we elect a government to represent our needs, is covering the banks as when the ignorant citizens are being taken advantage of a good practise to be having?
Why do we have a recession in the first place?
As i understand it there isnt enough money in circulation.The currency has been contracted or else it would be out there on the streets keeping the "economy" monster moving forward or at least more active.Somebody at the top of the pyramid has called in the interest owed.The money must come back then as i see it from circulation or resources leaving people having to close/sell houses businesses or lose them outright.

This money coming back also has in alot of cases interest owed.Where is this interest expected to be generated by the general population?I guess they have to compete with each other and the loser loses his/her house or bussiness or just ends up running from debt collecters.Wheres the NAMA for all those people who did what the banks did by borrowing too much money and not being able to pay the interest or the money so fast.
After all we are the ones the bank and the ECB etc etc rely on to keep this system running.If we stopped using the banks they would not be able to expand money and make so much profit.
If we bail out the banks we are basically covering their ass for bloating the currency and throwing money onto the streets and then not being able to get it back or just plain losing it in overseas give away deals.
It looks like the Irish people are covering the banks debt and we individually on top of that have to cover our own private debts to the same people the banks do if they are not one and the same.

andrew

Firstly, I don't think you fully understand the process by which money is created, since you seem to think that the recovery bond will somehow increase the money supply. Secondly, the reason I asked is because some people (not necessarily you) have expressed the sentiment that the banks shouldn't profit from lending the government money by charging interest on it. When someone lends the government money, be it a bank or an individual, they buy government bonds. I asked about the individual, because I think most people can see that if an individual buys a government bond (ie. lend the government money) then it's only fair that they get interest on the money they lend. Similarly, if a bank lends the government money, then it's completely fair that they get interest on the money they lend.

Torakx

Thanks for clearing that up.How does this bond work exactly?
I am thinking the government have a bank that handles these bonds.Or where does the money go from the persons paying into them?

My main query is around the fractional reserve which the banks are held to.
Do these government bonds come into contact with this fractional reserve rule through any stage of its transfers?I suppopse i mean does the money at any stage get deposited in a bank.This would effect the amount of money the banks can lend out.The more they can get in the door the more they can lend out because of the fractional reserve practise.This i am thinking would have the effect if on a national scale so as to cause a boom with more money,more finance for new bussinesses etc.

Time Magazine

Torakx and Pixel8, not to be rude or condescending here, but neither of you have much of a clue what you're talking about.

You've admitted this yourselves. Torakx, you asked "How does this [Irish government] bond work exactly?" Pixel8, you've asked "If we print our own money, why do we have a national debt?" and claimed that "ALL central banks around the world [...] are all privately owned and connected somehow, lending money to governments at interest."

Pixel8, when you don't understand the difference between fiscal and monetary policy, who are you to claim that all central banks are privately owned? Here's a hint: our Central Bank was founded by the Oireachtas in 1943, and the foundation of the European Central Bank was passed by a referendum in 1997. Can you find me any verifiable reference anywhere that says our Central Bank lends money to the government at interest? (Here's another hint: If the Central Bank is controlled by the government, how could it lend itself money and why would it charge itself interest?)

Torakx, if you don't understand the basics of bond markets, why are you coming up with conspiracy theories about the SSIAs?

If you guys don't really have a grasp of this complicated subject, who are you to have decided that Nama is a bad idea; who are you to suggest we "Buy Gold or Silver fast if you have any savings left", or to tell us (us, those that are answering your questions) that we would learn from watching the Secret of Oz?

Again, I'm not trying to be rude here but rather I'm being a bit more up-front about it: When you haven't taken our advice to go read a book on monetary economics first, why should we spend time talking?

Put a little bit more bluntly: If you were a biologist, how long would you spend talking to a creationist?

Économiste Monétaire

And a fractional reserve thread descends into a conspiracy theory-laden rant about the Fed; how surprising. This is becoming an epic waste of my time, and I won’t be responding unless the direction of the thread turns back to reality, with sources provided for claims.

Pixel8 wrote: »

Why is Ron Paul trying to introduce an "Audit The Fed" bill then?

Why are you asking me what Ron Paul wants to do? If you have an argument to make, then state it. I'm not interested in posting to a Ron Paul/Youtube proxy.

Pixel8 wrote: »

Im sure that pdf file you posted has everything we need to know about the Federal Reserve except who they are transferring money to internationally through the IMF, World Bank and other organisations

What has this to do with a question about fractional reserve banking? If you’re going to make claims about the Fed, IMF and WB, then post reputable sources to support them. The IMF is funded by capital subscriptions from governments; the Quota list is available from their website.

Pixel8 wrote: »

who they are bailing out with over 1 trillion dollars in Europe

Source? Again, relevance to a thread on the mechanics of fractional reserve banking?

Pixel8 wrote: »

and trillions more to American banks and Corporations.

The Fed's daily OMOs are available on the NY Fed website. No central bank releases counterparty information on individual transactions due to the stigma associated with using central bank programmes. Try asking the HSE for files on individual patients.

Pixel8 wrote: »

If all countries have a National Debt then who is bailing out all these countries? They are not disclosing this information and his Audit The Fed bill is being blocked by the Senate in the U.S.

Who is not disclosing this? Bond funds are not disclosing this? Private investors lending money to governments: a strange and new concept to some. I don't see what the Fed has to do with this, though; as Time said, this is a fiscal, not monetary issue.

Pixel8 wrote: »

But its not just the Federal Reserve that is being targeted here, its ALL central banks around the world, they are all privately owned and connected somehow, lending money to governments at interest. Is this or is this not true?

Riiiight, it’s all one big conspiracy theory... Look at Ireland's recent Exchequer revenue figures here. You'll notice income to the government from the 'private' central bank in non-tax revenue. Want to see something even more amazing?!? The Federal Reserve earns the U.S. government money! Of course, you knew that, because you've extensively researched the subject and haven't simply formed your opinion from one video. Here's an Excel file detailing all U.S. government revenue receipts back to the 60s. It's under 'Deposit of Earnings, Federal Reserve System'. Can’t see the relevance to this thread though. Keep the conspiracy theories over in the CT forum, where one can debate lizard men concurrently with the Fed.

Pixel8 wrote: »

Im not sure if it is but im dying to find out and the Secret Of Oz definitely raises a lot of questions which you all need to see because this is info you definitely have not heard before, none of us have heard this before. The OP is definitely talking about Secret Of Oz, he raised this point in another thread and i watched it and im amazed by it too! I just want to know what the truth is about these systems, as im sure we all do.

Who is 'we'? Have you studied economics? If not, I don't see how you can make claims or judgements about what I do or do not know.

Pixel8 wrote: »

Is this statement true? "All governments are actually corporations trading for profit" ? I was in at the bank protest the other day and got a flyer with the name Tír Na Saor on it making that statement, im seeing similar info in a lot of different places lately. This Moroccan dude called Taj Tarik Bey talks about the drivers licenses fraud but has a lot of other interesting info about law and government, comes in 15 parts, here's the first:

Governments and Banks are enslaving us and we're letting them.

And this has zero relevance to this discussion/forum and I have no interest in your videos. Peddle them elsewhere.

Torakx wrote: »

Interesting talk he gave there.It isnt anything new but he did add some more details over what i have read up on so far.
Governments are corporations afaik.John Harris does some great talks on lawfull rebellion,human rights and the legal world of ctracting yourself by mistake.Google video has a goodone of him and you will learn so much about the legal system here in ireland using his explanations of how the british system works.
My main quest here is to find the exact policies or agreements that controls banks spending and loaning.I understand how the fractional reserve works to a fair extent but that still does not prevent banks lending/borrowing each other money or from other sources from what i see,leading back to the practise or ability to expand the currency at interest on top of more interest from the ECB or whoever that goes to i would imagine supposedly the printers,although i thought taxes would cover the printing of the currency we use.
It really looks like to me the banks are set up in a way that they can expand and contract the currency to take advantage of this knowing how the system really works.They only need to pay 2% or whatever is agreed to pay back on top of that.Another question is if the money is printed out of thin air and the people at the bottom of the "pyramid" have to cover that 2% arent we slowly just giving away our country to whoever is collecting that 2%?

You're sort of referring to endogenous money supply, the book I linked earlier covers this. Leverage ratios, capital requirements, a pool of reputable borrowers: these are some of the things that stop banks lending an amount approaching infinity. Central banks don’t target monetary aggregates. What do you think the central bank does with the interest that’s returned from temporary operations? They have employees who need to be paid, who then spend the money back into the economy. The surplus above these operating expenses is then returned to the government; and governments love to spend.

Again, the monetary economics book I linked to earlier covers this. If people aren’t willing to read from this, then you’re wasting my time.

The Recliner

Économiste Monétaire wrote: »

And a fractional reserve thread descends into a conspiracy theory-laden rant about the Fed; how surprising. This is becoming an epic waste of my time, and I won’t be responding unless the direction of the thread turns back to reality, with sources provided for claims.

Hopefully people will be able to bring themselves to stay on topic, if not there will have to be sanctions

To people in general
This is the economics forum, there is a forum for Conspiracy Theories, they have no relevance here and are not welcome, from here on anyone who posts about conspiracy theories will be banned

It is ok if you don't understand something, just ask and the nice people on this forum will explain it too you or link you to where the information can be found, be prepared for a bit of reading though, it wont be spoonfed to you

Oh and Youtube links are generally a waste of everybodies time

Torakx

Ok guys thanks again for all the replies.I am not creating a conspiracy theory as more trying to prove it wrong for my own satisfaction.
I am genuinely trying to find out for myself and while i agree with some of pixel8's posts some i have not proven true/false yet also and thats why im here regarding the fractional reserve.
If i can find for myself solid evidence that the whole CT on this is wrong i can help alot of other people like myself come to some realisations.

EM some of the things you mentioned were Leverage ratios, capital requirements, a pool of reputable borrowers.Thats pretty much the response i have been searching for.
You may only need to throw down some key words and i can search online so as to understand the connection and how it works.
I do remember you clearly posting a link for a book i should read.I havent gotten around to the library recently to see if its there as i am trying desperately to finish off 3 other books before i run out of renewals lol.Cant afford to buy one so if the library doesnt have it i will try i guess to find one similar.
You are indeed right that if i am to come to question our monetary system i should learn a basic understanding of it.I had hoped a couple of posters here putting down key words would suffice with guiding me.
Id like to keep conspiracy theories out of this thread and deal with pure facts also just regarding the topic.
I am trying to find all the components that are the main gears of this monetary system.I think really everyone should be doing this,it might cut down on over borrowing in 20 years again

I dont have a problem reading a book or two about this but if i can find all the information online i can pass it on to others like myself who would like to understand how this all works.
I dont have a wish to discuss the FED and Jekyl Island etc id like to stick with the European Central banks relationship with Ireland if we can.I know were most posters in this forum probably stand in relation to these conspiracies so i dont wish to challenge anyones beliefs, only ask people who might have a deeper insight than the average person.I would expect the same from you if you wanted to know about conspiracy theories.

Il go ahead and look into Leverage ratios, capital requirements, a pool of reputable borrowers and get an idea of how they work in the monetary system.
Dont close my thread just yet mods please
Feel free to clean up any posts that you feel break the forum rules.
Some posts were not quite all about the fractional reserve but i think anythign related to money tends to hit on that right now because im still learning which is effected by fractional reserves and Leverage ratios, capital requirements, a pool of reputable borrowers is still fairly new to me right now.
So il be back at some stage hopefully a bit more up to date with this topic.

Pixel8

Time Magazine wrote: »

Pixel8, you've asked "If we print our own money, why do we have a national debt?" and claimed that "ALL central banks around the world [...] are all privately owned and connected somehow, lending money to governments at interest."

Pixel8, when you don't understand the difference between fiscal and monetary policy, who are you to claim that all central banks are privately owned? ... If the Central Bank is controlled by the government, how could it lend itself money and why would it charge itself interest?)

Look im not here to patronise or condescend to people and i'd hope that the people in this forum feel the same about talking down to people, economics is not my primary interest or study, im an IT person, i only did economics in secondary school so i don't claim to be an expert at all or even be up to date on any of this stuff. The reason why im in this forum in the first place is to get answers about these questions raised in a few different documentaries (and not conspiracy documentaries). It's hard enough though, getting the answers...

This is not about who has the biggest balls for crying out loud...

We're all aware that you guys know LOADS about economics and everything to do with money etc. and thats why these questions are being asked here and not the conspiracy theory forum. We value your input, really!
But talking down to us is just childish and yes i may be guilty of getting a bit involved in this too so i apologise for that but its because of the original answers some of you guys give back to us, its like, jaysis how stupid are these people, what are you doing in this elite economics forum in the first place, go read some books etc. that just doesnt help anyone.

When you don't look into the sources which we gave you such as "The Secret Of Oz", "Money As Debt", "Money As Debt II", "The Creature From Jekyl Island", "Web Of Debt", "Babylon Banksters" etc. then how the hell are we supposed to communicate this info across to you when yes, we're not economists... thats why we need you to look into these things with all your wisdom and insight, not because we feel these issues are truth or gospel but just because we feel the issues raised in them are IMPORTANT. Especially for people who understand this type of information. And more so, because the people who have made these documentaries and written those books claim to be economists themselves so one would assume that they atleast know what they're talking about.

So my question would be then if you guys are economists and so are they, then why do you have different opinions on these issues? Something is up here, im not sure what yet, but its definitely to do with modern enslavement by banks, governments and corporations. And please, this is not conspiracy theory, its pure human nature, greed and selfishness how this system was set up in the first place. Just because these things were not taught in economics class does NOT mean there's no substance to them so please, keep an open mind until you're positive you're justified in what you are saying yourself when you dismiss them because as i said already, although we're not economists ourselves, we can clearly see that something is not right here, thats all and again, apologies if anyone has got upset at anything i've said, im not here to cause arguments, i just want to know if people with the expertise in this subject have something good or bad to say about these sources after they have looked into them and without second guessing the information.

If you havent got time to watch a full documentary then thats fair enough, most people dont and thats why we are where we are, people only seem to have enough energy these days to veg out in front of the tv when they get home from work and fall asleep on the couch.
And im sorry to post a *youtube* video after being told not to (its just a medium after all, not a source), but here's a radio interview of someone about the Babylon Banksters which is the exact same issue brought up in Secret Of Oz and you dont have to look at it, just listen in the background on your headphones...:

And anyway, who ever said this was a conspiracy theory? The OP was wrong about calling this a conspiracy theory and yet all of you who havent even researched the info in Secret Of Oz were all very fast to jump on the whole conspiracy theory bandwagon and dismiss it without investigation just because of the words conspiracy theory being used in the same post, wow, now thats brainwashing at its best and without even being sure if it really is one or not... and all from the people who were adamant they're not going to even watch it, yet they're sure its a conspiracy theory? i dunno, that says a lot really.

Torakx

Just an update. im having a look right now at what Leverage ratios, capital requirements and a pool of reputable borrowers entails.
They kind of speak for themselves i guess,what i am looking around online for now is a source of info on how these fit in with banking or monetary policy/standards.
As i said i have other irons in the fire so wont be getting round to an economics book soon and i dont expect others to do the same to understand my research when i later put it to them.
So if anyone has links to sites that shows how these fit into the system i would greatly appreciate the direction.
My only thoughts otherwise is to start off with wiki...

One quick question i was wondering, are irish banks held by the basel or basel 2 system?

Anonymous1987

Torakx wrote: »

So if anyone has links to sites that shows how these fit into the system i would greatly appreciate the direction.

How about the ECB website? check out the resources thread. EM linked to this, gives a nice short overview, doesn't really get into the financial system until the role and tasks section http://www.boards.ie/vbulletin/showpost.php?p=58252923&postcount=21 and also worth having a look around this website http://www.bis.org/about/index.htm

The Recliner

Torakx wrote: »

One quick question i was wondering, are irish banks held by the basel or basel 2 system?

Basel 2 as far as I remember from when I used to work in one

Anonymous1987

Pixel8 wrote: »

The reason why im in this forum in the first place is to get answers about these questions raised in a few different documentaries (and not conspiracy documentaries). It's hard enough though, getting the answers...

Surely you should familiarise yourself with the mainstream before examining alternative history?

Pixel8 wrote: »

And more so, because the people who have made these documentaries and written those books claim to be economists themselves so one would assume that they atleast know what they're talking about.

Well educated people can use their education to legitimise their views or sell their books but the clip you showed has fundamental flaws. Central Banks are not private they are independent and until recently government had control of monetary policy (i.e. the money supply). Today their primary goal is to maintain price stability (i.e. fight inflation). Really they are a government institution separate from other government so as to prevent politicians manipulating the money supply (in a way similar to the judiciary). He also mentioned that banks charge interest on principal and thus cause scarcity of money. This is nonsense, private banks actually increase the money supply by lending based on their reserves (hence fractional reserve banking). In turn central banks manage the money supply so they do not lend so excessively, one of the causes of the current crisis was the CB's kept the interest rates too low for too long leading to excessive lending). You borrow money with the expectation to make money over and above the interest charged and pay back the principal in time. Banks need to make a return for taking on the risk and actually lending their money so they charge you interest which for the borrower is basically the cost of borrowing the money. It is up to you as a borrower to make sure that you put the money to good use so that it was worth the cost of borrowing in the first place and of course a minimum return for yourself. Also it is up to the lender to manage their own risk. This is a very simple outline and if any of the experts here would like to correct me or add to this, work away.

Pixel8 wrote: »

So my question would be then if you guys are economists and so are they, then why do you have different opinions on these issues? Something is up here, im not sure what yet, but its definitely to do with modern enslavement by banks, governments and corporations.

Economists do not always agree, they are subject to the same personal biases and self interest as the rest of the population. However some sources are better than others e.g. respected organisations subject to public scrutiny such as the OECD versus sensationalist book writers.