4 votes

Does anyone have a "document" that explains how a 1k loan adds 10k to the money supply?

I understand how it works and I have several excellent videos on the topic but the guy I was trying to explain it to today kept insisting I was wrong. (I must not have done a very good job explaining it and/or he just couldn't grasp it)

Anyway, this guy reads EVERYTHING I print out and give him. He's in his mid 60's and is slowly waking up. He lives out in the woods where he gets charged by the minute for internet service so he never watches videos I email him.

If anyone has a document or a link to one that I could print out and give to him, I'd appreciate it.

Thanks!

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Thanks all! I even found a link I had saved

that has some real good pdf's too. I now remember why I "forgot" where my documentation for fractional reserve lending and money creation were kept...IT always PISSES ME OFF when I read this crap! Arrgh!

Can't wait to bury my buddy with all this documentation. If he's like me (after I read End the FED), he will want to hang a banker. lol.

http://paulgrignon.netfirms.com/MoneyasDebt/references.htm

actually, you're close but not exact.

It's not a 1k "new loan" that becomes 10k in new money. It is a 1k deposit that allows the bank to loan out 9k(if given a 10% reserve ratio and a succession of payments and deposits through various banks depositing and loaning). The reason it totals 10k though is because the bank still claims the 1k original deposit still exists, when nothing could be further from the truth.

Now, that's not to say that 1k couldn't be borrowed by Willy Nilly to buy a used car from Joe Blow.. Then Joe deposits that 1k in his bank account and THEN... The bank can loan 9k against it (again in sucessive loans and deposits not all necessarily at the same bank).

So you had it close, just reverse 1k loan for 1k deposit.

Paul

Cyril's picture

Check out also Chris Silber's blog - books page:

Check out also Chris Silber's blog - books page:

At the bottom, you'll find link to Murray Rothbard's “The Mystery of Banking” - exactly relevant to your post:

http://chrissilber.blog.com/books/

"Cyril" pronounced "see real". I code stuff.

http://Laissez-Faire.Me/Liberty

"To study and not think is a waste. To think and not study is dangerous." -- Confucius

Download this...

Modern Money Mechanics: The purpose of this booklet is to describe the basic process of money creation in a "fractional reserve" banking system.
http://archive.org/details/ModernMoneyMechanics

De criminalize Liberty!

first 13 pages are the best

explanation of fractional reserve banking I have found. Last 37 pages more esoteric. The early pages explain:

1) Money is created on loan origination.
2) Money is destroyed on loan repayment. (Self-destruct Mechanism)
3) Created money (with no backing) from both tiers is used as reserves.
4) The system has two tiers:
a) FED creates cash at whim, cash exchanged for US Bonds enters circulation.
b) Commercial Banks use cash and originated credit as reserves for loans.
5) There are three types of debt (had to make this up myself to grok it)
a) Simple Debt: the kind most people understand, paying the plumber recognized in cash accounting.
b) Obligatory Debt: A contractual promise to assume debt in future, kids college, social security, medicaid. Recognized in GAAP based accounting.
c) Monetary Debt: the other side of the balance sheet in a loan from the money, credit or cash. The Anti-matter. Extinguishes buying power on loan repayment.

Cyril's picture

In other words:

In other words:

THE PERFECT SCAM.

"Cyril" pronounced "see real". I code stuff.

http://Laissez-Faire.Me/Liberty

"To study and not think is a waste. To think and not study is dangerous." -- Confucius

Google this..

"federal reserve act"

Take it from there..

www.youtube.com/truefictions

I try to change people every day. Do You?

You may want to read this too..

Cyril's picture

Fractional reserve banking?

I take it you're alluding to the broad and calamitous practice of "fractional reserve banking" over deposits and loans?

Well, while this is not only fundamentally immoral but also economically disastrous, it is quite well documented:

http://en.wikipedia.org/wiki/Fractional_reserve_banking#Mone...

'HTH,

"Cyril" pronounced "see real". I code stuff.

http://Laissez-Faire.Me/Liberty

"To study and not think is a waste. To think and not study is dangerous." -- Confucius

Thanks Lysiandad! Never even considered Wikipedia

I've pretty much stopped using wikipedia for source documentation but it appears to provide me just what I need in this case.

Thanks again!

Cyril's picture

'Welcome, just pay attention to the fundamental fraudulent flaw

'Welcome,

Just pay attention to the fundamental fraudulent flaw that I, for one, see as a Ponzi scheme:

1. the virtual money is created by the commercial banks, thru this scheme

2. this is of course in addition to traditional usury via interests

3. central banks (e.g., the Fed) are supposed to protect the system from collapsing if too much withdrawals, but they only add to the moral hazard since soon or late they end up doomed to inflate the actual money supply...

4. from 3) the currency is debased/destroyed

5. from 3) also the cronies pockets are filled...

6. the entire thing on the money multiplier, etc, formulas is just an excuse to justify with dumb math that it makes sense... and indeed, it does:

it explains in plain view the legal fraud that Keynesians brag about.

Outrageous.

"Cyril" pronounced "see real". I code stuff.

http://Laissez-Faire.Me/Liberty

"To study and not think is a waste. To think and not study is dangerous." -- Confucius