[Steve_American]

This thread is about several things that Dr. Steve Keen says.

The title I chose is about the Rational Actor simplifying assumption. One element of it, according to Dr. Keen, is that the rational actors are all able to predict the future very accurately.

This is obviously false.

Why can I assert this with 100% confidence and be willing to bet my life on it?

It is because the professional economists are all (by the assumption) "rational actors", and yet at most 2 of the mainstream economists predicted the GFC/2008 before it started. AFAIK, every single economist of the few who predicted the GFC was a heterodox economist and so didn't believe in the Rational Actor assumption.
So, mainstream economists assume that the man on the street can accurately predict the economic future, but none of them could get that prediction right. Doesn't this prove that rational actors can't predict the future, and so every conclusion proved with this premise is not proved and is invalid?
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[Puffer Fish]

I have Dr. Steve Keen on my side. In the video that apparently you didn't watch, he shows that you can't cancel out credit when the banks create money to make loans. But, when banks are loaning their depositors' money the 2 +& - credits do cancel each other out.

I don't believe banks do create their own money, in the way you imagine.
Not any longer. Only the Central Bank (which is run by government) does that.

[Steve_American]

I don't believe banks do create their own money, in the way you imagine.
Not any longer. Only the Central Bank (which is run by government) does that.

1] Well, at least you believe that central banks a re functionally part of the national gov.

2] I don't imagine anything. I'm basing my opinion on statements made by professional economists, on a paper from 2014 about the experiment that proved it, on a paper by the Bank of England in 2014, on Warren Mosler, and on the order of events.

The order of events in the banking industry is that a borrower wants a loan, the bank decides that she has collateral and is a credit worthy person, and makes the loan, the bank types a figure into the borrower's acc. at the bank, the borrower generally spends the money. A week later the bank needs to have deposits to support the loan, or it can borrow reserves from another bank on the overnight market, or as a last resort it can borrow from the central bank.

That 1 week delay is critical. It gives the bank time to get additional deposits. In a small town this can happen with the money never leaving the town. But, more often the bank gets deposits from another town or city. However, the bank can also borrow in the overnight market or borrow from the central bank. In this case it is not lending a depositor's money, right?
. . . Note that, by making the loan the bank has increased the total deposits of all the banks in the nation. Also, when the loan was made, that action didn't reduce the deposits at the lending bank or any other bank.

That 1 week is also critical because if the bank didn't have the needed deposits on the day the loan was made, where did it get the money to loan?

[I have seen reports about a bank in the north of the UK that had a business model of not having depositors and instead it always borrowed on the overnight market. Or from the central bank. IIRC, its name included the words North and Rock. It failed in the GFC/2008.]

The thing is that almost all of these transactions are done on computers. For example, a local business like a car dealership may do most of its business with checks. Every day it takes the day's checks to its bank and deposits them. The bank usually has to clear them with the central bank. There is almost never any cash money going in and out of the bank. It is all just numbers in computers.

A few minutes later I'm adding this.
I googled "the us money supply is 95% from banks making loans".

The 1st result for me (you may get a different one because of our algorithms may be different) is this =>

Positive Money
https://positivemoney.org › How Money Works

How Banks Create Money

97% of money in the modern economy is created by banks when they make loans. The government only create 3% of money.

It seems like someone besides me disagrees with you P_F.
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