- 18 Jul 2018 13:36
#14933648
Actually, mainstream economics defines money in terms of M1, M2, and M3, in descending numbers based on degree of liquidity (with M1 being the most liquid) M1 includes bank deposits. The same mainstream theory states that when a bank lends its fractional reserves, the money is generally deposited anew in the bank (thus providing basis for continued lending), and these deposits are classed as 'money'. So, I agree with Steve on this one particular point here.
B0ycey wrote:I don't know how many times I need to say the same thing but in a different format @Steve_American. The US dollar is merely a national IOU from the government. A bank cannot create it as it is not an IOU from them. All a bank does is circulate existing deposits into assets via a method of risk and rules (fractional reserve). If it over steps the mark and these assets become toxic, they either go bankrupt or they need a government bailout - as they do not have the ability to print new Dollars. After all, why would the bank need to attract deposit customers (and pay interest) if they could just create money anyway? And that is the last I will say on the subject. You either understand that or you don't.
As for evidence as to why a nation cannot just print money to get out of debt...
https://en.m.wikipedia.org/wiki/Hyperinflation_in_the_Weimar_Republic
Actually, mainstream economics defines money in terms of M1, M2, and M3, in descending numbers based on degree of liquidity (with M1 being the most liquid) M1 includes bank deposits. The same mainstream theory states that when a bank lends its fractional reserves, the money is generally deposited anew in the bank (thus providing basis for continued lending), and these deposits are classed as 'money'. So, I agree with Steve on this one particular point here.