tag:blogger.com,1999:blog-2761684730989137546.post6601077553078004611..comments2024-03-28T07:50:06.102-04:00Comments on Mike Norman Economics: It's mostly fiscal — Christian Kopfmike normanhttp://www.blogger.com/profile/03296006882513340747noreply@blogger.comBlogger35125tag:blogger.com,1999:blog-2761684730989137546.post-39024062936227737202020-10-24T17:00:12.151-04:002020-10-24T17:00:12.151-04:00That's why we now have deposit insurance and c...<i>That's why we now have deposit insurance and central banking.</i> Tom Hickey<br /><br />Government guarantees of private bank deposits would not be necessary if all citizens (at least) could use their Nation's fiat via accounts of their own at the Central Bank.<br /><br />Then we would have TWO payment systems:<br />1) The current, at-risk payment system that must work through private banks.<br />2) An additional, risk-free payment system via accounts for all at the Central Bank.<br /><br />Then the banks would no longer hold the Nation hostage via a single payment system that mixes what should be risk-free deposits with those that are inherently at-risk (e.g. bank "loans").Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-21513150880236017902020-10-24T16:58:02.073-04:002020-10-24T16:58:02.073-04:00This comment has been removed by the author.Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-21337903835039571142020-10-24T14:25:33.102-04:002020-10-24T14:25:33.102-04:00I agree, Greg. My comments on loans above are answ...I agree, Greg. My comments on loans above are answers to the question about what a loan is, which includes how it works. One reason it is legal is that both parties are taking on financial exposure under contract law. The art of banking involves correctly assessing the interest premium based on risk.<br /><br />This has another interesting aspect. All the "money" that is created by bank loans is in a sense government money since the government stands behind both parties in aggregate through deposit insurance and bank supervision for bank customers on one hand and the cb as lender of last resort and government support in the event of a financial crisis on the other. If government did not to absorb this risk, capitalism would be a lot shakier ground—as it was previously. That's why we now have deposit insurance and central banking.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-49478026958449020602020-10-24T13:56:06.467-04:002020-10-24T13:56:06.467-04:00That is all true Tom of course. I’m only talking ...That is all true Tom of course. I’m only talking about these arguments about monetary policy where banks are inserted as a sort of third party that takes some savers money and funds a borrower. This is where these discussions of interest rate policy and CB management of such policy, which then start integrating with overall macro management ultimately end up.<br />The idea that a loan to me involves someone giving up something and that the govt is actually supporting private sector loans by flooding system with reserves is ubiquitous and erroneous Greghttps://www.blogger.com/profile/03139782404004492965noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-35591443766240839232020-10-24T12:29:40.532-04:002020-10-24T12:29:40.532-04:00So let’s talk about what banks really do when they...<i>So let’s talk about what banks really do when they enter a loan agreement with you. They make sure you have an income stream, ask for some collateral and then they get a legal right to remove x dollars a month from your income stream. They don’t need any reserve liabilities to make that loan, they just need you to have a secure income stream. They aren’t lending anything out, they are taking something of yours in, with your consent. That’s it</i><br /><br />From the side of the bank, in making a loan the bank is taking on risk of non-payment, which is offset by collateral, whether secured or unsecured. Interest charged is based on the policy rate, expectation of future inflation, and both a term premium and a credit risk premium based on credit assessment.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-77332452766767538172020-10-24T12:06:46.440-04:002020-10-24T12:06:46.440-04:00So let’s talk about what banks really do when they...So let’s talk about what banks really do when they enter a loan agreement with you. They make sure you have an income stream, ask for some collateral and then they get a legal right to remove x dollars a month from your income stream. They don’t need any reserve liabilities to make that loan, they just need you to have a secure income stream. They aren’t lending anything out, they are taking something of yours in, with your consent. That’s it Greghttps://www.blogger.com/profile/03139782404004492965noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-56979996907089346102020-10-24T11:08:56.314-04:002020-10-24T11:08:56.314-04:00"Bank loans create bank deposits" is one..."Bank loans create bank deposits" is one of the most powerful statements ever made wrt banking and exposes government-privileged banks as the racket they are - a counterfeiting cartel for the sake of themselves and for the so-called "credit worthy."<br /><br />Therefore I will not obfuscate a clear truth with jargon that largely only the thieves themselves and their supporters understand.Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-25558615358567978972020-10-24T10:18:31.165-04:002020-10-24T10:18:31.165-04:00Loan agreements are legit. "Loan" agreem...Loan agreements are legit. "Loan" agreements are problematic.Peter Panhttps://www.blogger.com/profile/09473311771939167712noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-69721520307524378992020-10-24T09:58:20.674-04:002020-10-24T09:58:20.674-04:00"Destroy" is an antonym for "create...<i>"Destroy" is an antonym for "create". Then, if "Bank loans create bank deposits" then the repayment of those "loans" destroys deposits.</i><br /><br />"Create" and "destroy" here are problematic unless one knows further what they actually mean. They are shorthand for a series of operations involving law and accounting. Many people have only a vague idea of this and could not explain the actual meaning of these terms or meet objections posed.<br /><br />This stuff is sophisticated. Look at the freshman mistakes that ZH recently made in criticizing MMT's claim that loans create deposit. And those people are supposed to be experts in finance.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-70598088835319316262020-10-24T09:52:42.272-04:002020-10-24T09:52:42.272-04:00The term "loans" is problematic. What ar...<i>The term "loans" is problematic. What are "they", really?</i><br /><br />Lonas are a type of legal obligation involving debt (promise to repay under specific conditions). This is dealt with in contract law. You know, like the loan agreement one signs before the deposit account is credited.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-80764088837087156522020-10-24T09:50:25.336-04:002020-10-24T09:50:25.336-04:00The "loans" are not actual lending but t...The "loans" are not actual lending but the creation of additional liabilities for fiat.<br /><br />However, due to government privilege, the liabilities of banks are largely a sham since, for examples:<br /><br />1) The non-bank private sector may not even use fiat except in the form of grubby, unsafe Central Bank Notes and coins and then only in limited amounts.<br /><br />2) The Central Bank stands ready to create fiat as necessary for the banking system should they not have enough to meet their liabilities for it.Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-63342124676541708232020-10-24T07:39:45.303-04:002020-10-24T07:39:45.303-04:00https://www.freshbooks.com/hub/accounting/debit-an...https://www.freshbooks.com/hub/accounting/debit-and-credit<br /><br />“ A debit increases asset or expense accounts, and decreases liability, revenue or equity accounts. A credit is always positioned on the right side of an entry. It increases liability, revenue or equity accounts and decreases asset or expense accounts.”<br /><br />You should say “debit Deposit Liabilities”...<br /><br />No figurative language... then everyone knows what you are talking about...Matt Frankohttps://www.blogger.com/profile/11082502216984169113noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-57371267383661111132020-10-24T04:45:01.172-04:002020-10-24T04:45:01.172-04:00The term "loans" is problematic. What ar...The term "loans" is problematic. What are "they", really?Peter Panhttps://www.blogger.com/profile/09473311771939167712noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-42606437647634687682020-10-24T02:51:29.307-04:002020-10-24T02:51:29.307-04:00"Destroy" is an antonym for "create..."Destroy" is an antonym for "create".<br /><br />Then, if "Bank loans create bank deposits" then the repayment of those "loans" destroys deposits.Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-89970574817386569202020-10-23T22:45:15.398-04:002020-10-23T22:45:15.398-04:00Cancel.Cancel.Peter Panhttps://www.blogger.com/profile/09473311771939167712noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-36605946903359457782020-10-23T22:44:52.333-04:002020-10-23T22:44:52.333-04:00Delete, erase, nullify.Delete, erase, nullify.Peter Panhttps://www.blogger.com/profile/09473311771939167712noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-37092519920532444402020-10-23T20:29:43.434-04:002020-10-23T20:29:43.434-04:00The reification error is in using the word “destro...The reification error is in using the word “destroys “...,Matt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-83309668271316697282020-10-23T14:34:18.199-04:002020-10-23T14:34:18.199-04:00No, because I didn't say that bank credit repa...No, because I didn't say that bank credit repayment destroys ALL bank deposits; it only destroys those deposits created as bank "loans", not those deposits created by Federal spending.Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-29403533085806618112020-10-23T14:24:54.761-04:002020-10-23T14:24:54.761-04:00" the repayment of bank credit DESTROYS depos..." the repayment of bank credit DESTROYS deposits."<br /><br />Reification error...Matt Frankohttps://www.blogger.com/profile/11082502216984169113noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-57517830392042917642020-10-23T13:16:11.543-04:002020-10-23T13:16:11.543-04:00Specifically MMT tells us why "helicopter mon...<i>Specifically MMT tells us why "helicopter money" cannot be used in anything other than the shortest of terms.</i> NeilW<br /><br />Ignores that the public has been driven* into onerous debt that "helicopter money" could be used for WITHOUT an increase in the money supply since the repayment of bank credit DESTROYS deposits.<br /><br />*via government privileges for a usury cartel.Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-54588438623662094112020-10-23T13:05:27.932-04:002020-10-23T13:05:27.932-04:00Specifically MMT tells us why "helicopter mon...<i>Specifically MMT tells us why "helicopter money" cannot be used in anything other than the shortest of terms.</i><br /><br />I believe that was included in Friedman's toy model, though-experiment, or whatever. It was a one-time limited untargeted "drop" (fiscal injection by the cb).Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-6247588376504748812020-10-23T13:02:23.547-04:002020-10-23T13:02:23.547-04:00This comment has been removed by the author.Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-28939684350594752402020-10-23T13:02:13.702-04:002020-10-23T13:02:13.702-04:00A currency is ultimately worth what you have to do...<i>A currency is ultimately worth what you have to do to get it.</i> NeilW<br /><br />Then paying people to waste their time should reduce the value of it.Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-83351844133115991422020-10-23T12:43:33.776-04:002020-10-23T12:43:33.776-04:00A currency is ultimately worth what you have to do...<i>A currency is ultimately worth what you have to do to get it.</i> NeilW<br /><br />And that shouldn't include, in addition to lawful taxation, having to slave for a government-privileged usury cartel and the so-called "credit worthy" of what is, in essence due to government privilege, the PUBLIC'S credit but for private gain.<br /><br />The game's up, Neil, at least conceptually. Why then does the MMT School cling to and seek to perpetuate a thieving remnant of the thieving Gold Standard?Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-56249494447424896992020-10-23T12:34:53.176-04:002020-10-23T12:34:53.176-04:00Specifically MMT tells us why "helicopter mon...Specifically MMT tells us why "helicopter money" cannot be used in anything other than the shortest of terms. <br /><br />A currency is ultimately worth what you have to do to get it. NeilWhttps://www.blogger.com/profile/11565959939525324309noreply@blogger.com