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TradIsGood
Half fast climber
the Gunks end of the country
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Nefarius.
JB was wrong. He said the Fed was printing money which they do not do.
The Fed "injects cash" when they buy securities, or lend money.
Just like your bank injected you with cash when you sold them your mortgage. Of course, you did not keep that cash for long since it went to the seller.
(And likewise, you didn't see any hundred dollar bills in a suitcase either.)
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Jerry Dodrill
climber
Sebastopol, CA
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Topic Author's Reply - Sep 29, 2008 - 01:38am PT
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A "Look at us now" bump.
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Karl Baba
Trad climber
Yosemite, Ca
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Sep 29, 2008 - 04:07am PT
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"Nefarius.
JB was wrong. He said the Fed was printing money which they do not do.
The Fed "injects cash" when they buy securities, or lend money.
Just like your bank injected you with cash when you sold them your mortgage. Of course, you did not keep that cash for long since it went to the seller.
(And likewise, you didn't see any hundred dollar bills in a suitcase either.)"
Dude, Bachar knows that. Let's face it "creating money" through the process of loaning money (that wouldn't otherwise exist) is the modern equivalent of "printing money" even if none is printed.
We all know there is WAY more money in the system than actual bills.
Peace
Karl
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dirtineye
Trad climber
the south
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Sep 29, 2008 - 10:33am PT
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LOL, and when you say what Karl said in an economics class, (well maybe NOW days you'd get a different reaction, but back in the day is what I'm talking about) you get this look from the professor that says, "so you think we should just keep our money in the mattress right?".
The whole economy is built on FAITH. banks only have about 20% of their assets on hand.
Ask yourself, if there is supposed to be a finite amount of currency, then WHERE does interest come from?
Either someone eventually winds up with all the money, or money is crated out of thin air.
IT woudl be totally different if the bank loaned a farm 1000 bucks to buy chickens, and said, 'OK, pay us back the 1000, and give us 1000 eggs."
That's creation of 'wealth' in the form of goods. It's real.
BUT the bank says, OK, pay us back $1000 and $100 interest. SO the farmer sells eggs and pays back the 1100.
Unless the farmer (and everyone else) starts collecting interest from somewhere, pretty soon the bank should have all the money.
Just a simple idea, guaranteed to get you laughed out of economics classes.
OR someone MIGHT mention inflation.
PS I hate that this thread got bumped, case now it will take me ANOTHER YEAR to get that image of the mold under the breasts out of my head. UGH.
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