If it had not been for FRACTIONAL RESERVE BANKING, capitalism would have died long ago. The only way capitalism could survive, was to create money out of thin air.
The whole idea that I have some capital, I start a business, then I pay you what you are worth to produce a product for me to sell at a profit is phantasmagoric. The whole process depends on me not paying those who produce their actual worth. It also is incumbent that I borrow non-existent money to buy infrastructure. Not to mention the non-existent money must be paid back with interest.
In other words the whole system is a pyramid scheme. Those in the bottom 90% slave for those at the top. That is the only way fractional reserve has been able to avoid scrutiny. What a bunch of cucks you all have been.
Yes it means that, but it also means that the bank takes on the same value of the loan as debt against the bank.
So once you've paid that loan off back to the bank, the money is used to pay back that debt, the only money left over for the bank is whatever interest you paid to the bank on top of the loan, which is money already in circulation.
FRB doesn't "create money out of thin air" it just shuffles debt around to allow a greater number of loans to be made, allowing the economy to grow faster than it otherwise would.
Justin Turner
While the loan is being paid back, the principal of the loan does not exist.
Connor Miller
True capitalism was never tried
Nathaniel Anderson
Correct, yes. Instead, an equivalent amount of debt exists on the banks books.
If the loan in paid back in full that debt is written off and no money has been created.
If the loan defaults and cannot be reasonably paid back, then the bank keeps the remaining debt and has to pay for that debt out of their profits.
Banks do not just make 1 loan, they make thousands of loans, the interest of those loans is calculated so that the interest of the loan can pay off the few loans that fail. So the principal of the loans is essentially in the interest of the other loans. The biggest mistake trying to understand FRB is thinking of it as a single loan, FRB only works when many loans are made at once.
Either way, the net total amount of money in the system remains the same, no new money is created, that's an incomplete understanding of FRB.
Nathan Sanders
>The whole idea that I have some capital, I start a business, then I pay you what you are worth to produce a product for me to sell at a profit is phantasmagoric. The whole process depends on me not paying those who produce their actual worth. It also is incumbent that I borrow non-existent money to buy infrastructure. Not to mention the non-existent money must be paid back with interest. Fuck off with this commie shit. 'Those who produce' too only because they have contractual access to your capital and means of production. If they want to be paid more they can buy their own offices/factories, and do all the work themselves. Then they can take all the risk and all the reward themselves.
Henry Cooper
>FRACTIONAL RESERVE BANKING You could save a lot of typing just saying Jews. Fractional reserve banking is something like 700 years old and hails from a time when only Semites even handled money. It's really no surprise that the first central bank was in Sweden. Sweden is always the guinea pig.
Brayden Green
>The only way capitalism could survive, was to create money out of thin air. More like, exploatation of another man. Just like any other system, except for kekicracy.
Caleb Hill
Debt is not a tangible asset. It is potential but not real here and now. Therefore it is a phantasm believed by far too many
Cameron Sanchez
What Marx left out of the theory is that 9/10 business fail. All these kids who read Marxist theory like to point out the rich capitalists but completely ignore the fact that for every 1 successful business another 9 failed.
The most effective way to break this delusion is to have a conversation with these people about them starting their own business. Why don't these people simply start their own business?
The answer is risk. Do they want to save up the necessary capital over years or decades of saving and then risk spending that on a venture that has a 9/10 chance of failing? The simple fact is that anyone can do this but few people do because most people are risk averse.
Going back to the original question of labour and value. The communist argues that you don't pay the workers what their labour is worth. And that's correct, you do not. You pay them less and yourself more because you took the risk of putting the capital down to buy the machines and equipment, and they took no such risk.
People in general prefer to work on a salary because they want zero risk. It means if the business doesn't make a profit one month, the workers still get paid regardless.
Risk is part of the economic equation, there's a cost associated with risk. If you're taking no risk yourself if means you're selling that risk to someone else at your personal expense. You could salary up with another business and get paid £30k a year with no risk, or you could work for yourself and manage your own business and take home £50k a year but take 100% of the risk.
The only problem with this system is that some people don't want any of the risk, yet demand all of the reward at the same time. These are the people that find communism attractive.
Connor Cruz
Money in the first place is a make-believe, so.
Kevin Cruz
Itt- poorfag failures
Jordan Perez
Itt - persons whohave no rebuttals except adhominen
Dominic Hall
Zzzz failing to take into account there is very little risk because a significant percentage of entrepreneurs already come from a wealthy family that can absorb the cost of failure
Michael Cooper
Well said. I agree completely, however I also believe the system was created by the few, in order to benefit the few, in the grand scheme. There's really no way around that. Maybe not in its inception, but over time it has certainly been geared in that direction.
Grayson Hughes
its the other way around fractional reserve banking is killing capitalism and is responsible for most of the shit liberals cry about this debt economy and that non-existent money are why things are so expensive and inflation is eroding the middle/working class' wealth and enslaving them to the banks for life capitalism isn't new or intricate, in its most basic form it's nothing more than voluntary exchange and contracts, it's the most natural, long-lived, and fair system there is
Camden Johnson
If the bank is only holding a FRACTION of your deposit in RESERVE................ THATS NOT CAPITAL.
>rich people lose money all the time, goy >that's why they're rich! t. homeless poorfag
Camden Sanders
Top kek and free bump for that ink brother.
Lucas Gutierrez
Actually that's wrong. This is one of those myths that again is common among those people who don't understand how business actually works. The majority of businesses do not get started by family money, if you care to actually know you can go and look it up. And that makes sense, right. The people who were smart enough to make good business decisions to accrue that wealth in the first place, do not blow it on bad investments.
While you're at it, look at the state of family wealth. 70% of wealthy families lose their money by the 2nd generation and 90% of wealthy families have lost their wealth by the 3rd generation.
Try and avoid conspiratorial thinking, there's no doubt that the systems benefits some people more than others, some people own huge amounts of the wealth, but that is generally because they have provided things that are of great value to society. Watch some of Petersons lectures of distribution of creative ability and how it stacks so that a tiny handful of people produce most of the creative output, that is perfectly sufficient to explain what we see today, you don't need a conspiracy.
Asher Lopez
That is literally how it works bong. I give the bank 10$ to hold and they turn it into 100$ and lend it out. Wtf is wrong with you user?
Aiden Hill
but if I take out a 1 million dollar loan for a house, and the bank only needs to have 50k in reserve for reasons - has there not just been $950 million added to the pool of shekels in existence?
If I pay off the loan in full, the only thing that happens is the property title changes hands to me from the bank, the amount of money that I borrowed and paid to seller is still circulating around causing inflation. I don't think conventional fiat/fractional reserve banking has a use case that's any better than bitcoin.
Out of curiosity.. what's your opinion on eating pork?
Mason Cox
Because that's an incomplete description of what they do. You're missing the part where at the same time as lending out 100$ to someone they create 100$ of debt on their account.
So if they have -100$ debt And a borrower has +100$ credit
What's the total?
Andrew Hill
Sorry but the problem isn't capitalism, we've never had real capitalism because the banking system has always been controlled by "people' who have turned a means of exchange into a tool to enrich themselves and gain power unironically >not real capitalism yet it has still produced the biggest healthiest populations the world has ever seen imagine >what real capitalism could do
>quantive easing >is a good thing >speculative markets >always deliver
Joshua Hughes
Irrelevant. More money being spent in the market - more demand - prices rise. You can clearly see how markets people rely on loans for rise at a far faster rate than the rest of the economy. It's a scheme to get everyone in debt, paying interest. The majority can't participate at all anymore without borrowing. The whole point of FRB, admitted by those who promote it, is to increase the money supply by sidestepping the government.
Benjamin Walker
If you take out a $1M loan the bank sends you $1M to spend on a house. At the same time it creates a $1M debt on its books.
If we assume $50k in reserve there's now $950 thousand extra in circulation. But when you pay back that $950,000 to the bank they don't KEEP that money, they use it to pay off the debt they put on their books when they created the loan in the first place.
Bacon rolls are the best.
Robert Price
No, that's not what happens on average. If your loan is merely to spend into the market, in other words you're using a loan to get some product now rather than saving. Then an extra $100 is spent in the market now, but then when you have to pay back that $100 back to the bank you have $100 less to spend in the market.
Shifting purchases into the present rather than deferring them into the future does not mess with supply/demand on average because the sum total of money is the same over time.
Actually the opposite to what you're saying actually happens. Because some of those loans are used not for purchasing luxury goods, but instead are used as loans to start businesses or other enterprises that add value into the market, and as more competition and innovation crops up the prices of goods fall.
That's what's so good about FRB, we can make a lot more loans at the same time and drive economic growth which increases GDP and makes the currency worth more, which makes everyone richer by increasing the purchasing power of the $.
The government control FRB though setting rates and policy, so how is that side stepping government? Money supply and total amount of actual money in circulation are 2 different things, you're confusing them.
In FRB more loans can be made more rapidly that causes more growth, but the total amount of money in circulation stays the same.
Justin Sanders
>pays back debt the absolute state of keynesian cult members!
we both know one doesn't pay back their loans. They take out more loans, this is how we ended up with the Porsche SUV being a thing - home owners having access to large sums of money post their property price going up many times over.
Honestly I like helicopter money too, and QE for that matter but where does it end? If we don't find another land mass full of 3rd worlders who want call centre jobs we're screwed.
William Phillips
>pays back debt >the absolute state of keynesian cult members! Some don't some default in which case the debt the bank holds to create that loan, remains as debt they have to pay off, and that debt comes out of their profits.
>we both know one doesn't pay back their loans. It doesn't matter. Every single loan that is made is itself not a net addition to the total amount of money, so you can make many of those loans and the net additional money supply is still zero.
>property price going up many times over Property value going up over time is perfectly normal and occurs with or without FRB, some assets just naturally appreciate in value, property typically goes up in value as area urbanize and the land becomes more valuable.
And all these other things like QE, again has nothing to do with FRB, you can have QE with or without FRB.
Gabriel Reed
If I understand correctly, the banks are NOT paying interests and taxes over the denbts they create to loan money to the average goy. It smell like fraud to me.
Asher Bennett
Depends on the government, the monetary policy and the tax laws. The bank will pay taxes on it's profits and the interest generated by the loans will generate a certain amount of revenue for the bank, and that is what gets taxed.
Grayson King
If you create a denbs, you must pay interest on it, it's economic 101. Instead, banks don't pay interests, but the states and the privates do.
The taxes you pay on profits are another, totally irrelevant matter. Bankers are scammers, prove me wrong.
Carson Stewart
If banks are borrowing from a central bank to cover the cost of the loans then yes they pay interest to the central bank, that's what it means for the central bank to set interests rates. All the private banks do is set their interest on their loans high enough to cover the central bank interest.
Banks aren't scamming anyone, loans are completely voluntary, if you take out a loan it's up to you to read and understand the terms of the loan and agree to them.
Lincoln Foster
W-...why would you get "BRAAAP" tattooed on your hand? What degenerate memery is this?
Asher Miller
This is why the bank that produces the money needs to publicly owned instead of privately having interest on money constantly debases the currency to pay it off
