that is not true either. someone doesn't need credit to pay me back. they could earn more than I loaned them by the investment.
I never would have made the investment if they were going to have to borrow the money to pay me back that would
be a bad investment.
You still can't tell me where the increase is going to come from, if not from credit. If you make more than you invested, somebody else is making less.
Write it out on paper. If you have none of the inputs that I mentioned earlier (credit, deficits, trade surplus, or dis-saving), then it is impossible to increase demand just by moving money around.
*sigh* when has government ever paid off any old debt they keep wracking up debt. they are not paying it off.
companies have to pay it off they have no choice.
Companies
do pay off their debt. They also take out new loans. Get it yet? You can pay off your old loans and still be in debt. This is business as usual for companies.
no it doesn't. it grows on economic demand which can be had with little to no deficit spending. deficit spending should
only be used when there is an emergency need in the economy. even then it should go to people and businesses in the form
of tax credits.
Demand comes from income. If you earn $50,000, then you can buy $50,000 worth of stuff. If you want to increase your demand and buy more,
you will need credit.
If your neighbor also earns $50,000, and you borrow $10,000 from him so you can spend $60,000, he will only have $40,000 to spend, and total demand remains at $100,000, max. THAT is the same thing as "investing your savings." (It's also the same thing as your bank loaning out savings.) No outside injection of demand = no growth.
wow you just went off on something I never said.
If you bothered to read those links, they directly dispute your claim - that banks loan out savings.
the fact is that banks do loan out savings. savings is not the reserve just a part of it.
so if you deposit 100 dollars in a bank they can loan out all but 10 of those dollars if the reserve rate is 10%.
banks can fund the reserve in multiple ways.
http://www.cnbc.com/id/100497710
That is a very good article - I cite it myself pretty often. You should read it closer, because Carney agrees with my version, not yours.
Reserves are not a 10% chunk of your savings. Reserve accounts are settlement accounts, and the reserves that fill those reserve accounts remain within the walls of the Fed. When you deposit a check, all your bank gets is a check - it marks up your account. Way over at the Fed, some reserves move from one account to another to balance out that transaction. Not a chunk of your check, and not a chunk of any loan that your bank might create for you. Reserves just keep score of interbank settlement.
To demonstrate that your version is incorrect, banks can create loans without having the necessary reserves; they do this all the time. They create the loan, you spend the loan, the seller earns the money from your loan; your bank doesn't need to adjust its reserve balance until days later. Obviously, your bank didn't need
anything (previous deposits or reserves) in order to give you a loan and disburse the proceeds. It is just done on their books.