Ok then, If it ain't MMT ....

[JohnfrmClevelan]

It is being counted over and over again. The $3.8t is the Fed creation. The rest (which I didn't say was broad money) is actually accounted for in Asset vs Liability in the Private banking. Meaning if you borrow $100k from Bank A and it goes to Bank B (sale of a home), Bank B has $90k in asset (which is loanable), and so on and so forth as you go down the banking line.

No, the only asset that Bank B gets is $100K in reserves, which is transferred concurrently with the check. And reserves are NOT loanable. They remain on account at the Fed.

$10K of Bank B's new reserves are needed to cover their new $100K liability (the increased account balance), so $90K (out of the $100K) are excess reserves; these allow Bank B to increase their liabilities by $900K and remain within reserve requirements.

 

[jaeger19]

:lamo

No, I read (and understood) the whole paper. It's an MMT paper by an MMTer, and you were too foolish to understand that you were trying to use an MMT paper to undermine an MMT argument. But that's what happens when you just post the first Google result that comes up without checking it out.

We are less than 15 posts in to this thread, and you have already painted yourself into a corner.

I read these papers because 1) I'm interested in the subject, and 2) I have to, in order to check out your false claims of what they contain. This paper did not talk about the fractional reserve system, as you falsely claimed it did, just like the paper you cited in the other thread did not contain the false quote you attributed to it. So if anybody is debating dishonestly here, Ludin, it's you. You are making stuff up, then making the compounding mistake of attributing your made-up garbage to a real paper.

Bullcrap. All you wish to do is try to discredit the poster to deflect from the fact that the assumptions you have made regarding MMT are false.

 

[JohnfrmClevelan]

Bullcrap. All you wish to do is try to discredit the poster to deflect from the fact that the assumptions you have made regarding MMT are false.

Did you read the paper? If so, why don't you try to dig up where the author talks about fractional reserve banking? Otherwise, butt out.

 

[jaeger19]

Did you read the paper? If so, why don't you try to dig up where the author talks about fractional reserve banking? Otherwise, butt out.

Poop.

We all know what this is.

When did MMT theory start John?. when was it called MMT theory?.

Take your pick the after 1995, 2000? When?

Now.. you really want to tell me that NO ONE.. no ONE... no economists, no bankers, no one understood HOW THE FRACTIONAL RESERVE SYSTEM OF BANKING WORKED.... prior to MMT?

HOW ABSURD.

So no.. MMT is not just explaining the fractional reserve system and fiat currency's works. THATS KNOWN... what' differentiates MMT is the ASSUMPTIONS it makes regarding what a government can do based on how a fiat currency and fractional reserve system works. And the purpose of those assumptions is to support greater deficit spending.

But you don't want to defend the problems with MMT's assumptions... that's because you can't.. as I have shown.

what you do instead is discredit posters to deflect.

 

[austrianecon]

No, the only asset that Bank B gets is $100K in reserves, which is transferred concurrently with the check. And reserves are NOT loanable. They remain on account at the Fed.

$10K of Bank B's new reserves are needed to cover their new $100K liability (the increased account balance), so $90K (out of the $100K) are excess reserves; these allow Bank B to increase their liabilities by $900K and remain within reserve requirements.

You clearly don't understand Banking in a Fractional Reserve system or how assets and liabilities are created and what reserve and capital requirements are and how applied.

No, when Bank B gets that $100k deposit, it's required to keep 10% ($10k), at that point the Bank is covered. That other $90k is used to loan which creates an asset which requires capital reserves of X% (depending on the type of loans).

 

[JohnfrmClevelan]

Poop.

We all know what this is.

When did MMT theory start John?. when was it called MMT theory?.

Take your pick the after 1995, 2000? When?

The term "Chartalism" was coined in 1905. It's basically the same thing.

Now.. you really want to tell me that NO ONE.. no ONE... no economists, no bankers, no one understood HOW THE FRACTIONAL RESERVE SYSTEM OF BANKING WORKED.... prior to MMT?

Of course there were some people that understood how banking worked. But, just like today, most people didn't understand. That includes economists. That much shouldn't be surprising - if all it took were facts to get people to understand things, ignorance would not rule the day, as it does now.

But even among people who should know, there is still disagreement.

HOW ABSURD.

You are slipping into MR territory here with your reasoning. If it was so easy, why doesn't everybody understand it? Why isn't everybody in agreement already?

So no.. MMT is not just explaining the fractional reserve system and fiat currency's works. THATS KNOWN... what' differentiates MMT is the ASSUMPTIONS it makes regarding what a government can do based on how a fiat currency and fractional reserve system works. And the purpose of those assumptions is to support greater deficit spending.

It's not as widely "known" as you would like to believe. What differentiates MMT is that we put a premium on understanding the mechanics of banking and money creation, and we keep politics and morality out of it. And the only purpose of that attention to detail is to be correct. The reason most people are wrong about this stuff is because they let politics and morality get in the way. They let their mistrust of banks, or the Fed, or their own concepts of fairness cloud their thinking. That most of those people happen to be self-described conservatives is not our fault.

If you wade through the literature, the Fractional Reserve people can't get their stories straight. The credit creation theory, on the other hand, has no such problems.

But you don't want to defend the problems with MMT's assumptions... that's because you can't.. as I have shown.

You greatly overestimate your own debating abilities.

what you do instead is discredit posters to deflect.

Well, sometimes I do get sick of dealing with idiots. Sorry. But if you go back and check, I have always started off patient and polite. Unfortunately, my patience is not infinite. I don't know how mmi does it.

 

[JohnfrmClevelan]

You clearly don't understand Banking in a Fractional Reserve system or how assets and liabilities are created and what reserve and capital requirements are and how applied.

No, when Bank B gets that $100k deposit, it's required to keep 10% ($10k), at that point the Bank is covered. That other $90k is used to loan which creates an asset which requires capital reserves of X% (depending on the type of loans).

Basics of Banking: Loans Create a Lot More Than Deposits

This is a great piece written by John Carney.

The reserve requirement arises with the creation of the deposit (the bank's liability), while the capital requirement arises with the creation of the loan (the bank's asset). So loans create capital requirements, deposits create reserve requirements.

Let's imagine a bank that is starting off from scratch. Scratch Bank lends $100 to Mr. Parker. It does this by crediting Mr. Parker's deposit account at Scratch Bank with $100. The bank must now immediately figure out how to meet its two new liabilities: its reserve requirement and its capital requirement.

He makes it very clear that loans do not require any previously-existing reserves, or loanable funds.

When you deposit a check, the bank doesn't get anything tangible anyway. They just mark up an account - more liabilities for the bank. The only assets involved remain behind the Fed's walls.

 

[mmi]

my patience is not infinite. I don't know how mmi does it.

I can be patient with people who have a little class. Otoh, I seem to jump right into the sewer with those who don't. A complete lack of nobility, I'm sorry to say.

 

[Moderate Right]

Of course there were some people that understood how banking worked. But, just like today, most people didn't understand. That includes economists.

I find your arrogance totally amazing. Someone who admits to not having one degree in economics and only doing this as a "hobby" for five years and yet you claim to understand more than all of the mainstream economists, claiming that you understand how banking works while they do not and thinking that you have the standing or credentials to critique their views and their far superior education in this field. You do not. An economist is an economist. A hobbiest is a hobbiest. Maybe you should take up model trains instead. I'll take your statement that "most people, including economists, don't understand" as an affirmation that MMT thought is in the minority. That is why it is out of the "mainstream", because it is in the minority.

 

[jaeger19]

The term "Chartalism" was coined in 1905. It's basically the same thing.

Actually not really. But that's a different discussion

Of course there were some people that understood how banking worked. But, just like today, most people didn't understand. That includes economists. That much shouldn't be surprising - if all it took were facts to get people to understand things, ignorance would not rule the day, as it does now.

that's funny. do you hear yourself "some people understood how banking worked". Right.. all the bankers, all the economists in the country, all the advisors.. all the people that study economics for a living.. had no clue how banking has worked in this country for decades. Just clueless.

Sorry but ignorance does NOT rule the day. We know how banking works. We also know that the assumptions that the MMTers make on that system are incorrect.

You are slipping into MR territory here with your reasoning. If it was so easy, why doesn't everybody understand it? Why isn't everybody in agreement already?

Because they do. People do understand how it works. Just because someone who has never been educated in money doesn't understand the banking system fully doesn't mean that economists, bankers, the workers at the fed don't understand how the banking system works. Please.

The reality is that most people ARE in agreement John. that's why MMT is not considered a major deal by economists. they know how the banking system works.. they certainly don't need MMT to explain what has been going on for decades. whats not accepted is the assumptions that MMT proponents make about the banking system. That deficits don't really matter etc.

But even among people who should know, there is still disagreement

No john.. there is no real disagreement in how banking works.. the disagreement is in what that means for policy and economies. MMTers make the assumption that debt and deficit really don't matter because "technically" the government can never default cause it can just create money (in a fiat currency situation)/. Knowledgeable people know that assumption is false because the value of money is based on peoples belief in its value.. and that depends on whether the government is spending in their view.. appropriately.

It's not as widely "known" as you would like to believe. What differentiates MMT is that we put a premium on understanding the mechanics of banking and money creation, and we keep politics and morality out of it

Of course its well known. You really want us to believe that all the economists at the fed.. are clueless how banking works.? All the economists that study banking in the world are clueless? Come now.

What differentiates MMT is that they want to inject a defense for more deficit spending. For "increasing growth" and "maximizing production" etc. MMT is all about politics and morality.

Its all about.. "see.. you guys worry for nothing.. spend away".

You greatly overestimate your own debating abilities.

Oh.. I have a pretty good understanding of my debating abilities. And I tell your BS when I see it.

Well, sometimes I do get sick of dealing with idiots. Sorry. But if you go back and check, I have always started off patient and polite. Unfortunately, my patience is not infinite. I don't know how mmi does it.

I think if you do a little self assessment you will realize that if you go back and check.. you will see you don't start of "patient and polite". You start off condescending and assuming anyone that does not ascribe to exactly what you do.. is an "idiot".

 

[Mr Person]

then where DOES the currency come from?

A necessary mass delusion.

 

[austrianecon]

Basics of Banking: Loans Create a Lot More Than Deposits

This is a great piece written by John Carney.





He makes it very clear that loans do not require any previously-existing reserves, or loanable funds.

When you deposit a check, the bank doesn't get anything tangible anyway. They just mark up an account - more liabilities for the bank. The only assets involved remain behind the Fed's walls.

watch all 3 videos.


Btw, 3rd video is what I support and what the Fed and Government agencies are pushing on banks right now.. so that's a win for Austrian theory (Rothbard).

 

[ludin]

I find your arrogance totally amazing. Someone who admits to not having one degree in economics and only doing this as a "hobby" for five years and yet you claim to understand more than all of the mainstream economists, claiming that you understand how banking works while they do not and thinking that you have the standing or credentials to critique their views and their far superior education in this field. You do not. An economist is an economist. A hobbiest is a hobbiest. Maybe you should take up model trains instead. I'll take your statement that "most people, including economists, don't understand" as an affirmation that MMT thought is in the minority. That is why it is out of the "mainstream", because it is in the minority.

yeah pretty funny I posted actual economist and experts in the field and he claims they are wrong and he is right.
it is very hard to take someone seriously when they are doing that.

he is wrong on our banking system as we operate under a fractional reserve system.
he is wrong on MMT because no country in the world uses MMT as an economic model.

there have been a few attempts at it but they failed miserably and only amplified
that countries economic misery.

 

[fmw]

But you still can't tell me where new money comes from.

Business profits.

 

[Critter7r]

Business profits.

Kidding, right?

 

[Gimmesometruth]

Business profits.

Sure, because consumers print up what they spend.

Wow.

 

[fmw]

Sure, because consumers print up what they spend.

Wow.

So now printing is required to create money. Wow.

 

[fmw]

Kidding, right?

Wrong.

 

[Gimmesometruth]

So now printing is required to create money. Wow.

Well the other method would be to hack yer bank account to add some electronic funds, so are you arguing consumers are going this route.....or are you saying that businesses are creating "new" money themselves by either creation path I brought up?

What in the hell ARE you saying?

 

[Critter7r]

Wrong.

inoright!!??

Seriously, business profits are not the "new money" being asked about.

If the entire economy consisted of a trillion dollars, business profits simply get drawn from dollars that are spent within that pool of one trillion dollars.

Conversely, the question was, how do we increase the number of total dollars to 1.1 trillion? And the answer is : the government creates that money. That money is created through the issuance of bonds, and some of them may be purchased by dollars already existing within the original trillion dollar pool, but the external purchase of those bonds is not required for the federal government to spend those dollars into the economy, and increase the size of the pool. The Fed can simply hold it's own bonds and issue the currency.

 

[JohnfrmClevelan]

yeah pretty funny I posted actual economist and experts in the field and he claims they are wrong and he is right.
it is very hard to take someone seriously when they are doing that.

he is wrong on our banking system as we operate under a fractional reserve system.
he is wrong on MMT because no country in the world uses MMT as an economic model.

there have been a few attempts at it but they failed miserably and only amplified
that countries economic misery.

How can I take you seriously when you make up a quote that supports your claim and attribute it to the author of your link? When I pointed out what you had done, you left the thread.

http://www.debatepolitics.com/econo...ic-growth-until-doesn-t-9.html#post1065908812

 

[JohnfrmClevelan]

inoright!!??

Seriously, business profits are not the "new money" being asked about.

If the entire economy consisted of a trillion dollars, business profits simply get drawn from dollars that are spent within that pool of one trillion dollars.

Conversely, the question was, how do we increase the number of total dollars to 1.1 trillion? And the answer is : the government creates that money. That money is created through the issuance of bonds, and some of them may be purchased by dollars already existing within the original trillion dollar pool, but the external purchase of those bonds is not required for the federal government to spend those dollars into the economy, and increase the size of the pool. The Fed can simply hold it's own bonds and issue the currency.

You can also get there with bank created credit and net exports. But you are right, it has to come from somewhere, and that is what the "business fixes everything" crowd is missing.

 

[fmw]

inoright!!??

Seriously, business profits are not the "new money" being asked about.

If the entire economy consisted of a trillion dollars, business profits simply get drawn from dollars that are spent within that pool of one trillion dollars.

Conversely, the question was, how do we increase the number of total dollars to 1.1 trillion? And the answer is : the government creates that money. That money is created through the issuance of bonds, and some of them may be purchased by dollars already existing within the original trillion dollar pool, but the external purchase of those quired for the federal government to spend those dollars into the economy, and increase the size of the pool. The Fed can simply hold it's own bonds and issue the currency.

I buy something and then sell it at a profit. I won't argue about drawing from the economy to buy it. When it sells the value of the product increases and I can spend the difference. I don't have to draw from the economy to spend the profit. The act of earning a profit was all that was necessary. Perhaps that isn't money by your definition but it sure works for me. I pay all my bills from business profits.

 

[fmw]

Well the other method would be to hack yer bank account to add some electronic funds, so are you arguing consumers are going this route.....or are you saying that businesses are creating "new" money themselves by either creation path I brought up?

What in the hell ARE you saying?

I'm saying that most money isn't printed. It is electronic book keeping. I earn a profit. I spend the profit. There was no involvement at all by the government or the banking system. I created money all by myself.

 

[Critter7r]

I buy something and then sell it at a profit. I won't argue about drawing from the economy to buy it. When it sells the value of the product increases and I can spend the difference. I don't have to draw from the economy to spend the profit. The act of earning a profit was all that was necessary. Perhaps that isn't money by your definition but it sure works for me. I pay all my bills from business profits.

It's money, but it isn't new money. The sale price of your item includes your profit and come from someone else. It was already contained within the economy, it was just in someone else's pocket before coming to you.

I'm saying that most money isn't printed. It is electronic book keeping. I earn a profit. I spend the profit. There was no involvement at all by the government or the banking system. I created money all by myself.

That's not the kind of "money creation" being discussed.

You did not create money in your scenario, you merely put more currency in your wallet by selling your product than you took out of your wallet to manufacture it. You are richer for having sold it, but someone else is poorer for having bought it. The overall number of dollars in the economy is unchanged.