G Edward Griffin, wtf? Listened to a speech and he was wrong about fractional reserv

[Deborah K]

^ I think I'm probably going to shoot myself over this....some people just really at the end of the day have no business trying to learn this stuff...

If you don't and still haven't gotten it yet after all of these explanations there is no hope.


One more time

"The commerical banks are permitted to create 'checkbook' money on top of federal reserve notes. That is to say, the commercial banks are only obliged by law to hold reserves in the form of federal reserve notes of 10% to back all demand deposits that they have. Ninety percent of the demand deposits are backed by nothing."

Let's say the Federal Reserve gives Bank A $100. Bank A in turn has to keep 10% of that, which leaves $90 for them to do whatever in the hell they want to do. Let's say Bank A gives a loan to consumer A for $90. Consumer A can then turn around and deposit that loan back at bank A, buy whatever he wanted with that loan (which means the person who receives that money will probably deposit it eventually), or deposit that money in a different bank B.

I'll go through all of the steps...let's say consumer A deposits that money in Bank A. Bank A now has required reserves of $10, a loan on the asset side worth $90, and demand deposits (liability) of $90. Because Bank A is required to keep 10% on hand Bank A now needs to add $9 to required reserves. From here a number of things can happen...more loans, invest in securities, leave the money as excess reserves...whatever. But anything that is really done after that becomes this "checkbook".

90% of deposits are really backed by nothing, BUT if it comes to it the Federal Reserve WILL print those notes if the demand for all deposits comes at once.

Back to the example...say Consumer A purchases a good from Producer A, in turn producer A deposits that money into Bank B. Bank B doesn't have that loan as an asset, but gets deposits of $90 and has to keep $9 on hand as required reserves. From there this bank can also do everything I mentioned above. Theoretically this can go on for about 9 more times, which is that common thought you always here in videos. (Making $1000 out of $100).

In REAL LIFE this DOESN'T happen 9 times. So don't believe all of the hype.

Geezus, what part of "The commerical banks are permitted to create 'checkbook' money on top of federal reserve notes" don't you understand????

 

[danberkeley]

I agree with Deborah K on this one. And I wouldnt rely much on anything the gov'ment publishes.

 

[gonegolfin]

Brian, the number of banks involved isn't the issue. It's the way the system is implemented that's the issue.

No, the "number of banks" and "loans" is entirely relevant here in refuting the claim that a single bank can make a single loan of $900 off of $100 in reserves. The $900 in new money can only be created by executing many loans. And the video acknowledges this when they refer to banks making loans, not a bank making a loan.

Brian

 

[icon124]

Geezus, what part of "The commerical banks are permitted to create 'checkbook' money on top of federal reserve notes" don't you understand????

WOW you have to be disabled? I'm hoping you say yes...the checkbook money comes from the Federal reserve notes the Fed sends to the banks. You know the reason why they create extra money aside from the $100. In your case that $900. 10% (Federal Reserve notes) and checkbook money (loans, etc.)


*grabs gun and loads bullets, please don't respond again with something like this. *

I hope your not asking what that means, but I do hope you are saying that is wrong.

 

[Deborah K]

No, the "number of banks" and "loans" is entirely relevant here in refuting the claim that a single bank can make a single loan of $900 off of $100 in reserves. The $900 in new money can only be created by executing many loans. And the video acknowledges this when they refer to banks making loans, not a bank making a loan.

Brian

Please explain the quote below then.

"The commerical banks are permitted to create 'checkbook' money on top of federal reserve notes. That is to say, the commercial banks are only obliged by law to hold reserves in the form of federal reserve notes of 10% to back all demand deposits that they have. Ninety percent of the demand deposits are backed by nothing."

 

[Chester Copperpot]

Im still having a hard time rationalizing this because the whole advantage of the goldsmiths was that they could lend out MORE receipts for the gold, than actual gold they had on deposit. Thats the whole benefit to the bankers, and how they maximize their profit.. In modern times, just the FRNs have replaced real gold as the underlying 'reserve'

 

[Deborah K]

WOW you have to be disabled? I'm hoping you say yes...the checkbook money comes from the Federal reserve notes the Fed sends to the banks. You know the reason why tehy create extra money aside from the $100. In your case that $900.


*grabs gun and loads bullets, please don't respond again with something like this. *

I hope your not asking what that means, but I do hope you are saying that is wrong.

I'm not disabled. I'm not the only one interpreting fractional reserve banking in this way either as you may have noticed from other posters as well as Griffin, Rockwell and the Mises video. So go shoot yourself if you must.

 

[Deborah K]

Im still having a hard time rationalizing this because the whole advantage of the goldsmiths was that they could lend out MORE receipts for the gold, than actual gold they had on deposit. Thats the whole benefit to the bankers, and how they maximize their profit.. In modern times, just the FRNs have replaced real gold as the underlying 'reserve'

Exactly Mike.

 

[icon124]

Well I think we came to a good conclusion today. If you don't understand this yet, you shouldn't try. I mean everything has been explained over and over by a number of people in this thread, but yet the SAME question is asked over and over again.

 

[Josh_LA]

I'm not disabled. I'm not the only one interpreting fractional reserve banking in this way either as you may have noticed from other posters as well as Griffin, Rockwell and the Mises video. So go shoot yourself if you must.

Deborah, it is not that we are not willing to admit we are wrong. But are you?

And yes, no argument that Griffin, Rockwell, Rothbard has said what you said, but that does not mean they are right.

THINK, can you logically push your idea to reality?

IF somebody was allowed to pump 9x or 10x what Joe puts in the minute he puts it in, WHERE IS THE LIMIT OR CAP? WHY WOULD THEY STOP THERE?

The answer is, there is none. That's why they cap is even smaller, THEY ARE NOT ALLOWED to put $9 for $1 instantly in one transaction, they need 10+ more players to fulfill this supply.

 

[Deborah K]

Deborah, it is not that we are not willing to admit we are wrong. But are you?

And yes, no argument that Griffin, Rockwell, Rothbard has said what you said, but that does not mean they are right.

THINK, can you logically push your idea to reality?

IF somebody was allowed to pump 9x or 10x what Joe puts in the minute he puts it in, WHERE IS THE LIMIT OR CAP? WHY WOULD THEY STOP THERE?

The answer is, there is none. That's why they cap is even smaller, THEY ARE NOT ALLOWED to put $9 for $1 instantly in one transaction, they need 10+ more players to fulfill this supply.

It's not that you are not willing to admit that you're wrong but am I?? What the f'k does that mean?

And yes, no argument that Griffin, Rockwell, Rothbard has said what you said, but that does not mean they are right.

uh...I'll take their interpretations over forum posters any day. Sorry.

 

[Chester Copperpot]

An interesting posit:

The estimated $$ amount of derivatives floating around in the world is estimated to be $1 Quadrillion. Whereas the estimated amount of wealth on Earth has been estimated to be $100 Trillion.

If $100 Trillion were the 10% reserve, then the $1 Quadrillion in derivatives looks oddly like a 9 to 1 ratio going on.

And yet nobody in the financial world will talk about what derivatives are... Even Warren Buffet says he doesnt understand them..But it sounds like a shell game to me.. What else could such an immense face amount of debt be EXCEPT debt piled upon debt, piled upon debt, with this whole fractional reserve game??

 

[Josh_LA]

Im still having a hard time rationalizing this because the whole advantage of the goldsmiths was that they could lend out MORE receipts for the gold, than actual gold they had on deposit. Thats the whole benefit to the bankers, and how they maximize their profit.. In modern times, just the FRNs have replaced real gold as the underlying 'reserve'

MIKE, you are forgetting a real important factor here.

The goldsmith is not stupid. They only lend out what LOOKS LIKE they have on reserve, not 10x, not 100x, not 1000x, or he'd be raided and lynched.

The same thing with banks, they CANNOT AND DO NOT lend out more than an outrageous amount, or they'd be welcoming to robbers everytime they come "hey, take our money, we have 10x the minute you walk away!"

Banks can only and do only, lend out what they are allowed, which is what the public percieves as a realistic amount. Why hasn't housing prices 10x'd in a year if a bank can buy 10 houses everytime they're paid one house?

 

[teacherone]

Really how am I implying that? In the video, 3 steps results in $10,000 NOT a million.

Fine, five steps.

100-->1,000-->10,000-->100,000-->1,000,000

Doesn't matter, you're still wrong.

100 dollars can never become 1,000,000$ through fractional reserve banking.

If the Reserve Requirement is 10% than any deposit x becomes 10(x) as it travels through the system. A 100$ deposit reaches 1,000$ after 30+ transactions and can GO NO HIGHER THAN 1,000$ in the end.

If every 100$ deposited in a bank became 1,000,000$ after five transactions you would be knee deep in cash right now.

 

[icon124]

Griffin, Rockwell, Rothbard, Mises, etc. all understand this stuff fully. They try to dumb it down as much as they can for people like you who obviously don't. When they do that they take out valuable information (which we are trying to get across to you).

They must do that for a reason...something tells me they tried to explain the full process a million times over, but they ran across to many Deborahs.

An interesting posit:

The estimated $$ amount of derivatives floating around in the world is estimated to be $1 Quadrillion. Whereas the estimated amount of wealth on Earth has been estimated to be $100 Trillion.

If $100 Trillion were the 10% reserve, then the $1 Quadrillion in derivatives looks oddly like a 9 to 1 ration going on.

And yet nobody in the financial world will talk about what derivatives are... Even Warren Buffet says he doesnt understand them..But it sounds like a shell game to me.. What else could such an immense face amount of debt be EXCEPT debt piled upon debt, piled upon debt, with this whole fractional reserve game??

derivatives are a whole nother ball game. They didn't have regulations like banking. The leverage in some cases reached over 200 to 1.

 

[Deborah K]

Fine, five steps.

100-->1,000-->10,000-->100,000-->1,000,000

Doesn't matter, you're still wrong.

100 dollars can never become 1,000,000$ through fractional reserve banking.

If the Reserve Requirement is 10% than any deposit x becomes 10(x) as it travels through the system. A 100$ deposit reaches 1,000$ after 30+ transactions and can GO NO HIGHER THAN 1,000$ in the end.

If every 100$ deposited in a bank became 1,000,000$ after five transactions you would be knee deep in cash right now.

NO, we'd be knee deep in debt money circulated as wireless transactions.

I'm wrong, Rockwell is wrong, Griffin is wrong, Mises is wrong, Grignon is wrong, but you guys are all right. Whatever.

 

[Chester Copperpot]

Griffin, Rockwell, Rothbard, Mises, etc. all understand this stuff fully. They try to dumb it down as much as they can for people like you who obviously don't. When they do that they take out valuable information (which we are trying to get across to you).

They must do that for a reason...something tells me they tried to explain the full process a million times over, but they ran across to many Deborahs.





derivatives are a whole nother ball game. They didn't have regulations like banking. The leverage in some cases reached over 200 to 1.

DO you know what derivatives are then?

 

[Chester Copperpot]

Fine, five steps.

100-->1,000-->10,000-->100,000-->1,000,000

Doesn't matter, you're still wrong.

100 dollars can never become 1,000,000$ through fractional reserve banking.

If the Reserve Requirement is 10% than any deposit x becomes 10(x) as it travels through the system. A 100$ deposit reaches 1,000$ after 30+ transactions and can GO NO HIGHER THAN 1,000$ in the end.

If every 100$ deposited in a bank became 1,000,000$ after five transactions you would be knee deep in cash right now.

YOu should read your history on the creation of the First Bank of the United States... Because that is how the bankers paid for their part of the bank.. They deposited a little, took out bigger loans, redeposited that loan back into the back, got back an even BIGGER loan, etc.

The newspapers of the day called it the greatest swindle, because the only "person" who paid their fair share was the US Govt. Everybody else got a free ride off the inflationary, fractional reserve bandwagon

 

[Deborah K]

Griffin, Rockwell, Rothbard, Mises, etc. all understand this stuff fully. They try to dumb it down as much as they can for people like you who obviously don't. When they do that they take out valuable information (which we are trying to get across to you).

They must do that for a reason...something tells me they tried to explain the full process a million times over, but they ran across to many Deborahs.





derivatives are a whole nother ball game. They didn't have regulations like banking. The leverage in some cases reached over 200 to 1.

LOL. So their answer was to mislead everyone and only you brilliant people understand everything they were trying so hard to distill down to us morons? You don't even make any sense now. How old are you? 15, 16 years old?

 

[wizardwatson]

Im still having a hard time rationalizing this because the whole advantage of the goldsmiths was that they could lend out MORE receipts for the gold, than actual gold they had on deposit. Thats the whole benefit to the bankers, and how they maximize their profit.. In modern times, just the FRNs have replaced real gold as the underlying 'reserve'

This is really starting to get funny. It's like everyone is 'saying' pretty much the same thing, but apparently they are thinking something entirely different.