| Subject: | [socialcredit] John Hermann's nutty "debt virus" theory | | Date: | Thursday, July 29, 2004 11:33:17 (-0700) | | From: | william_b_ryan <william_b_ryan @.....com>
|
"That's semantic quibbling. 'Freed up' simply means
they are excess reserves. 'Transferred' in this
context also implies freed up."
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John, you're very confused. "Excess reserves" are
not transferred from one bank to another. Funds are
transferred from one bank to another. It is
acceptable to say that "reserves" are transferred
from one bank to another, if you prefer that term to
"funds." The total reserves that a particular bank
has are its deposits in other banks, plus cash in its
vault and till. Additionally, the bank may have
lines of credit at other banks. Whether or not a
particular bank has "excess reserves" depends
entirely on the regulatory environment of that
particular bank, or, in the absence of regulations,
the prudence of the particular banker.
---
"Excess reserves are an essential basis for creating
new bank loans (along with capital adequacy)."
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I suppose you could say that a bank's convenient
location is an "essential basis" for creating new
bank loans. You are conflating the general concept
of banking with a particular specialization in
banking--the local commercial bank. The basis of any
loan is the credit of the borrower. The bank
provides a service to the borrower (and the general
community at the same time) by endorsing the
borrower's credit instrument, and exchanging it for
the bank's credit instrument, which is recognized and
accepted by the general community.
---
> Reserves are necessary for settling
>accounts between banks.
"Not in dispute."
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But that's all that reserves do. They are certainly
not the "basis" for loans.
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John Hermann's nut
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