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Message 434
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| Subject: | Re: [socialcredit] Re: the theorem CORRECTION | | Date: | Saturday, January 1, 2005 21:16:44 (-0000) | | From: | Tim Knight <Tim_Knight @........Com>
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Banks do not lend out deposits. I repeat, banks do not lend out deposits.
Loans are created using new credit money and when repaid the credit money is
destroyed.
Tim Knight now writes:
Surely, the banking system is merely one of many zero-sum 'books'. If a
buyer buys something from a seller, and pays through the banking system,
then:
1. The purchase transaction involves only the buyer's books and the seller's
books:
1.1. The seller debits the buyer in a receivables account, and credits
the profit and loss account.
1.2. The buyer debits the profit and loss account, and credits the
seller in a payables account.
2. The payment transaction involves the buyer's books, the seller's books
and the banking system's books:
2.1. The seller credits the buyer in a receivables account (thereby
reducing the balance to zero), and debits the banking system.
2.2. The buyer credits the banking system, and debits the seller in a
payables account (thereby reducing the balance to zero).
2.3. The banking system credits the seller, and debits the buyer.
That's it. End of the discussion about economic and administrative
fundamentals.
In any discussion about economic and administrative fundamentals, talk of
'money', 'lending out deposits', 'loans are created using new credit money',
and 'when repaid the credit money is destroyed' is all completely spurious
'noise'. Such expressions are relevant only in discussions about semantics.
Discussions using such expressions say nothing about the economic and
administrative fundamentals; they are merely spurious attempts to define
what the expressions might mean. Who cares. The expressions are redundant
because there are no economically-significant concepts on which to hang
them.
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