| Subject: | [socialcredit] Re: The role of bank reserves | | Date: | Friday, July 30, 2004 08:55:28 (-0700) | | From: | william_b_ryan <william_b_ryan @.....com>
|
*Preliminary comment: The juvenile comment "John
Hermann's nutty 'debt virus' theory" says more about
the person using it than the person to whom it is
directed. According to Ed Flaherty, who seems to have
made a study of this subject, the central thesis of
"debt virus" is that there exists in the economy an
insufficient quantity of money to repay both the
principal and the interest on all the currently
outstanding debt. This viewpoint is so wildly
divergent from anything I have espoused that I can
only question the motives and/or mental stability of
the person who insists on repeating the lie.*
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---------------------------
I'm sorry John, but your theory IS debt virus. You
remind me of the "multi-level marketing" scammer who
says his scheme isn't multi-level marketing, as he is
led off to jail after his conviction for fraud. It's
just that you confuse the matter with mumbo-jumbo, as
scammers typically do. Perhaps you have fooled
yourself. You may have the arrogance to think you
are actually on to something, that you are the great
genius who will save the world.
You have made so many nutty claims; I don't know
where to begin. You said that "interest is collected
on interest" when the banker invests rather than
spends his income--therefore debt increases
exponentially. That's debt virus.
The correct explanation for exponentially increasing
debt is C. H. Douglas's A+B Theorem.
Why won't you make the effort to learn it?
---
*...this list is not a political forum - it is
supposed to be a forum for exchanging views in the
hope that all of its members will learn something
useful. Lets try to stick to that objective.*
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This list is SUPPOSED to be a forum for discussing
social credit, not John Hermann's nutty theory. You
have been off-topic from day one.
---
... 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 problem with using the word "funds" is that it
might be confused with "money". And reserves are not
part of the money supply.*
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That is purely arbitrary definition. It is defined
that way to avoid double counting in the statistics.
Reserves are that portion of the money supply that
are assets of the banks held at other banks. With
credit expansion through loans, the banks' deposit
liabilities outpace their deposit assets. But let's
say that a bank receives a deposit in transfer from
another bank. The clearing bank credits the bank for
the deposit; the other bank is debited. The bank in
turn credits its customer for the deposit. In this
case there is no credit expansion. So the money
supply in a fractional reserve system is two-tiered:
one is for clearings between banks; the other is for
clearings between members of the public. If the
central bank purchases a security from a member of
the public, that member of the public's bank account
is credited. His bank receives an equal credit to
its clearing account at the central bank.
---
*...It's not just a rhetorical question, as I am
interested in gaining a better understanding of the
U.S. system.*
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The U.S. and Australian banking systems are identical
in fundamental substance; what differ are details in
regulation. By the way, Hummel is not a "financial
economist," but an economics hobbyist in his
retirement (rapidly approaching his dotage, I think),
with no formal training in economics. He is wrong
about many things. He argues from arbitrary
definitions, as do you.
---
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