| Re: Scarcity - and how capitalism solves it |
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Group: alt.philosophy · Group Profile
Author: SeanSean Date: Sep 8, 2008 02:23
"Publius" nospam.comcast.net> wrote in message
news:Xns9B12C723BFFE3mpubliusnospamcomcas@216.196.97.136...>>> You're exactly right. However, writing or accepting a note (which
>>> is a promise to pay a certain sum at a certain time) is not
>>> producing money "out of thin air." The writer of the note must
>>> produce evidence of a capacity to pay when due.
>
>> It is producing money out of thin air, when the note writer doesn't have
>> the capacity to pay when due.
>>
>> Your discription above is how it should be, and how it is for
>> individuals who lend wealth to eachother, but not for banks. Banks
>> routinely loan out far more money than they have the capacity to pay.
>> Usually they get a way with it, sometimes (like during this housing
>> crisis) they don't, and it falls on all of *our* sholders to pay.
>
> Yes. They maintain reserves sufficient to cover *anticipated* demands for
> payment, which is less than the total amount due.
I see you're learning a little. Good on ya! :-)
Banks lend money/capital that does not in reality exist at all, untill they
loan it. Follow the Fed, works the same everywhere. Who makes the best
profit? The Govt. who gets paid a fee/%% everytime a central bank lends money
it does not actually have.
The rest of your commentary below is interesting waffle, but it's just
waffle and unimportant. The whole money, insurance, investments, stock/money
markets, credit, economic growth broohaha is an illusion via slight of hand.
The pea and shell game. Barely any of it is real.
It's an ink pen on a piece of paper..... well today more a desktop printers
ink on paper. Something that no one has any control over except a very small
handful of masters who simply cannot lose..... the rest is a house of
mirrors. :-)
That allows them to pay
> higher interest rates and higher dividends to stockholders. But it also
> exposes those depositors and investors to some risk. Those who prefer
> security to higher returns can convert their money to gold and bury it in
> the back yard.
>
> There is no economic reason for those risks to be passed on to non-
> depositors and non-investors, however. Banks carry deposit insurance, for
> which they pay premiums. If losses outrun the insurance coverage, tough
> luck for the inverstors and depositors.
>
> That is not how it works politically, of course. They'll all run to the
> gummint with their hands out, just like homeowners in Louisiana who build
> in flood plains, decline to build adequate levees or buy flood insurance,
> then run crying to the gummint when a hurricane strikes.
>
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