Subject: [socialcredit] Rent for everyone:-
reply to John Rawson
Date: Tue, 14 Mar 2006 13:16:52 -0800
(John Rawson wrote:- ) Joe, just one caution on bank lending.
In this country, and possibly in Jeff's, banks make no
credit entry in the borrower's account and the new money doesn't show up as a
deposit until transferred to another account in credit. And of course, if
the other account is overdrawn by more than the deposit, it simply reduces the
recipient's overdraft without showing up as a deposit at all. The money has a
very brief life, the time involving the transfer from one bank to
another. It is cancelled out of existence when it meets an equivalent OD.
I just make this point to try to head off a long
discussion based on slightly different methods in different economies.
Incidentally, where does your bank show your
debt? In a totally different account?.
) I don’t have a Bank balance sheet at hand to see how
it’s actually stated, but I would imagine your debt (the bank
‘loan’) would be shown as a type of “Account
Receivable” on the books of the bank, and is classified as an
‘Asset’. Same as any other business would classify its
‘accounts receivable’ as part of its ‘Assets’.
Your ‘Promissory Note’ is the physical description of that
‘asset’, just like your ‘tractor’ might be the physical
description of an ‘asset’ in your books with a ‘money’
figure attached to it. Just like you with your tractor, the Bank or
anyone else holding a “promissory note’ (generally held along with
some attached collateral ‘security’, like a
‘mortgage’), can ‘sell’ that asset.
The bank’s ‘Loans’
are always considered to be its “Assets”, the corresponding ‘Deposits’
to those ‘Loans’, (and any ‘customer’ deposits, too)
are its ‘Liabilities’. As someone once said, “a bank can’t lend it ‘liabilities’
“, and it doesn’t. Whether the Bank collects on its
‘accounts receivable’ (from you), or not, it’s still on the
hook for whatever you’ve transferred out of your account as an
‘account payable’ (to others) so long as your account has a
positive balance sufficient enough to cover that amount. .
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