6
   

How the banks steal your money in the form of a loan

 
 
Glennn
 
  -1  
Reply Mon 20 Nov, 2017 09:23 am
@engineer,
Quote:
But what is sitting on the dealer's desk is not an IOU, it is a pile of US greenbacks.

You're allowing yourself to be fooled by the issuance of paper. If the bank records that it has lent you money, and that money was created out of thin air at the same time the loan was created (and this is supported by the former president of the Bank of England, the former Credit Manager of the Federal Reserve Bank of Atlanta, the former Governor of the Bank of Canada, and the former Secretary of the Treasury) , and that nonexistent money is recorded as a deposit in your account, then you are in fact lending the bank money. Ultimately, you will be providing the money that the bank transfers to the seller, all the while believing that the bank's mere record of their promise to pay you money is actual money.

Rather than lending you legal money, the banker is renting a record of a promise to pay legal money. Now, since neither the "money" that the bankers say they loaned, or the "money" we have loaned to them in the form of a deposit does not meet the definition of legal money, then the bank misrepresented the true value of the "consideration" component of the loan contract, which amounts to fraud. Further, their failure to put up consideration of value concerning the loan means that they gained dishonest advantage in the way of interest. And just so there is no misunderstanding as to what legal money is, Black's Law Dictionary defined it thusly:

A general, indefinite term for the measure and representative of value; currency; the circulating medium; cash. “Money” is a generic term, and embraces every description of coin or bank-notes recognized by common consent as a representative of value in effecting exchanges of property or payment of debts. Hopson v. Fountain. 5 Humph. (Tenn.) 140. Money is used in a specific and also in a general and more comprehensive sense. In its specific sense, it means what is coined or stamped by public authority, and has its determinate value fixed by governments. In its more comprehensive and general sense, it means wealth.

So, an electronic record of a promise to pay cash is not coined or stamped by public authority or government. In fact, according to the International Institute of Certified Public Accountants (IICPA) in an Open Letter to both the FASB (Financial Accounting Standards Board) and the IASB (International Accounting Standards Board) in May 2013, this codification of banks’ electronic ‘credits’ as (not representing but) actually being “cash” is also in breach of Generally Accepted Accounting Principles (GAAP) and the International Financial Reporting Standards (IFRS); Demand deposits referred to by the public as “cash in bank” is recorded and reported by monetary financial institutions (MFI) in units of account by double-entry bookkeeping in a process which the MFIs call “lending” — but which is effectively a nullity — by debiting loans receivable and crediting demand deposits.

Your thoughts?
engineer
 
  2  
Reply Mon 20 Nov, 2017 10:22 am
@Glennn,
Quote:
You're allowing yourself to be fooled by the issuance of paper.

Paper that has the full backing of the US behind and Max obtained a car with it.
Quote:
you are in fact lending the bank money.

Max never gave the bank money to give back to him to buy a car. He signed his loan papers, the bank gave greenbacks to the dealer, the dealer gave Max a car. This is what happened. Max has a car. The dealer has money. The money was provided by the bank. Depositors loaned the bank money, but Max didn't.
Quote:
Now, since neither the "money" that the bankers say they loaned, ... does not meet the definition of legal money

The stack of $100's on the dealer's desk meets the definition of legal money. Your insistence that is doesn't is not going to make sense to anyone who has ever purchased anything.
Quote:
Your thoughts?

My thoughts are about the same as they have been. Your interpretation of what you have read are pretty fantastic, but I'm willing to entertain them if they explain reality. Just because something explains reality doesn't make it right, but it makes it worth discussing. Your explanation doesn't explain reality. Max has not been harmed. The dealer has real money. Banks that write bad loans go bankrupt. Unless you can explain that, your hypothesis is invalid.
Letty
 
  -2  
Reply Mon 20 Nov, 2017 10:52 am
@maporsche,
Hello all. This is Letty's daughter. Please listen and share former zionist insider Ben H. Freedman's 1961 speech if people really want to know what is going on in America today. Blessings and happy Thanksgiving to all. Please share far and wide. Also, listen to and read everything you can by Eustice Mullins. Our lives, children and grandchildren's lives depend on the facts. <3. https://www.youtube.com/watch?v=aHdXiRKjwJI
0 Replies
 
Glennn
 
  -1  
Reply Mon 20 Nov, 2017 11:16 am
@engineer,
Quote:
Max never gave the bank money to give back to him to buy a car. He signed his loan papers, the bank gave greenbacks to the dealer, the dealer gave Max a car. This is what happened. Max has a car. The dealer has money. The money was provided by the bank. Depositors loaned the bank money, but Max didn't.

We've already established that whether the bank gave physical dollars or simply entered the amount in a book, the "money" was created simultaneously with the loan. So, what value does this money created out of nothing have; where did it come from if it was created out of nothing?

And of course you're going to say . . .
Quote:
The money was provided by the bank. Depositors loaned the bank money, but Max didn't.

You keep repeating that in spite of the fact that I've provided plenty of examples of people in the finance industry as well as articles in respected publications that contradict you. In fact, you're even ignoring the ramifications of the content of an open letter from the Institute of Certified Public Accountants to the FASB and the IASB which confirm that the equating of banks' electronic credits as actually being cash is in breach of Generally Accepted Accounting Principles and the International Financial Reporting Standards. I have no trouble interpreting the meaning of that. Now why on earth would they say something like that? What do you think it means?
Quote:
The stack of $100's on the dealer's desk meets the definition of legal money.

No it doesn't. The central bank and all users of our monetary system consider the loan-money, which is created simultaneously as a customer deposit (out of thin air), indistinguishable from "real" deposits not newly invented by the banks. The fact is that there was no lawful consideration tendered to support the loan before the loan contract was signed. Your point seems to be that if everyone plays along, it's legal. But the fact remains that interest is being paid on money that didn't exist prior to the loan.

If you've forgotten the sources I provided which confirm that banks create money from nothing, let me know and I'll repost it.
engineer
 
  2  
Reply Mon 20 Nov, 2017 12:49 pm
@Glennn,
Glennn wrote:

We've already established that whether the bank gave physical dollars or simply entered the amount in a book, the "money" was created simultaneously with the loan.

No, I don't think we've established that, rather the opposite. Max was given real money and used it to buy a real car. Those greenbacks did not come into existence when Max signed the paperwork.
Glennn wrote:
Quote:
The money was provided by the bank. Depositors loaned the bank money, but Max didn't.

You keep repeating that in spite of the fact that I've provided plenty of examples of people in the finance industry as well as articles in respected publications that contradict you.

No, they don't contradict me, your interpretation of their writings does, and you can't make that interpretation match reality. I'd much rather those fine people come here and defend their words, we probably could solve this fairly easily.
Glennn wrote:

In fact, you're even ignoring the ramifications of the content of an open letter from the Institute of Certified Public Accountants to the FASB and the IASB which confirm that the equating of banks' electronic credits as actually being cash is in breach of Generally Accepted Accounting Principles and the International Financial Reporting Standards.

I'm not ignoring them, I'm asking you to demonstrate them. Demonstrate the ramifications by showing how Max has been injured. If the world is how you claim, then there should be direct, measurable ramifications to Max. After all, the title of the thread is "how the banks steal your money in the form of a loan". Max told us of his loan, show us the theft. If their are no ramifications, how can you continue to push your explanation?
Glennn wrote:

Quote:
The stack of $100's on the dealer's desk meets the definition of legal money.

No it doesn't.

Sorry, it does. I can take a $100 out of my wallet and buy $100 worth of goods anywhere in the US without the slightest difficulty and you know that to be true. Saying it isn't is absurd. There are probably a dozen or so folks reading along with us and I doubt a single one of them would say that money isn't real money.
Cycloptichorn
 
  1  
Reply Mon 20 Nov, 2017 12:56 pm
@engineer,
The point they're trying to make revolves around this:

Quote:
The money was provided by the bank. Depositors loaned the bank money, but Max didn't.


This is untrue, in that banks loan out many multiples of the actual amount of money that they are given by depositors or investors. The point that is being made is that banks are allowed to do so in ways that citizens are not: they basically 'invent' money to loan out, and if they end up going under... the taxpayers foot the bill as they are 'too big' to fail and end up being bailed out.

Privatized gains built upon legal fictions, socialized losses. It truly is a theft of wealthy from the middle and lower classes.

Cycloptichorn
engineer
 
  1  
Reply Mon 20 Nov, 2017 01:33 pm
@Cycloptichorn,
Banks lend out multiples of their reserves, not of their deposits. I posted this earlier from Page 16 of the Bank of America annual report.

At year-end 2016
Total loans and leases $ 906,683
Total assets 2,187,702
Total deposits 1,260,934

B of A has deposits in excess of loans. Banks that are too big to fail are an interesting topic themselves but if you think Max is somehow harmed by borrowing from a bank as opposed to borrowing from an individual, I'm open to the argument if you can demonstrate it.
Cycloptichorn
 
  1  
Reply Mon 20 Nov, 2017 01:51 pm
@engineer,
engineer wrote:

Banks lend out multiples of their reserves, not of their deposits. I posted this earlier from Page 16 of the Bank of America annual report.

At year-end 2016
Total loans and leases $ 906,683
Total assets 2,187,702
Total deposits 1,260,934

B of A has deposits in excess of loans. Banks that are too big to fail are an interesting topic themselves but if you think Max is somehow harmed by borrowing from a bank as opposed to borrowing from an individual, I'm open to the argument if you can demonstrate it.


I mean, the reserves are based in large part on deposits. I am aware that banks and other lenders have additional assets at their disposal but deposits make up the lion's share of them.

More importantly, you have to keep in mind that the majority of those 'assets' are incapable of absorbing losses so mean nothing when the bill comes due during a crisis.

There's also the problem of derivative trading via foreign and other subsidiaries. I guarantee that BofA is as busy doing this as everyone else in the market. This isn't on their balance sheet NOW, but when a crash happens, pressure to bring those losses back onto the books will be tremendous and it will happen. It DID happen in 2008 and 2009. So the numbers B of A provided aren't worth **** - and they know it.

Max (or anyone) isn't harmed by the act of borrowing from a bank, but all citizens are harmed by our country allowing banks to operate in the fashion that they do.

Cycloptichorn
engineer
 
  1  
Reply Mon 20 Nov, 2017 01:57 pm
@Cycloptichorn,
Cycloptichorn wrote:

Max (or anyone) isn't harmed by the act of borrowing from a bank, but all citizens are harmed by our country allowing banks to operate in the fashion that they do.

You will get no argument from me there. I'm all for bank regulation, stress tests and separation of banking and investment arms.
0 Replies
 
Glennn
 
  1  
Reply Mon 20 Nov, 2017 08:26 pm
@engineer,
Quote:
Banks lend out multiples of their reserves, not of their deposits.

Really?

Bank reserves are the currency deposits that are not lent out to a bank's clients. A small fraction of the total deposits is held internally by the bank in cash vaults or deposited with the central bank. Minimum reserve requirements are established by central banks in order to ensure that the financial institutions will be able to provide clients with cash upon request.

. . . Bank reserves are typically held by financial institutions to avoid bank runs and have sufficient cash on hand, should an unexpected and large withdrawal request come up.

https://www.investopedia.com/terms/b/bank-reserve.asp
Glennn
 
  1  
Reply Mon 20 Nov, 2017 09:26 pm
@engineer,
Quote:
No, I don't think we've established that

Yes we have. I've provided quotes from many financial industry insiders, both past and present, that establish that the money for a loan is created simultaneously when the loan contract is signed. You're just confused by the fact that money might have changed hands. You're banking on the premise that all such finance activity is conducted using greenbacks. But the bank, in all likelihood, transferred the amount of the loan to the car dealer. And in all likelihood, the car dealer deposited that money in the bank, and the car is the collateral for the loan.
Quote:
No, they don't contradict me, your interpretation of their writings does, and you can't make that interpretation match reality.

I've posted the quotes from the former president of the Bank of England, the former Credit Manager of the Federal Reserve Bank of Atlanta, the former Governor of the Bank of Canada, the former Secretary of the Treasury, and a couple of scholars in the field of economics who make clear that the amount of a loan is created from nothing when the loan contract is signed. If you wish, I'll repost their words and you can give your own interpretation, and we'll see if that interpretation matches the reality reflected in their words.
Quote:
I'm not ignoring them, I'm asking you to demonstrate them. Demonstrate the ramifications by showing how Max has been injured. If the world is how you claim, then there should be direct, measurable ramifications to Max. After all, the title of the thread is "how the banks steal your money in the form of a loan". Max told us of his loan, show us the theft. If their are no ramifications, how can you continue to push your explanation?

Besides the fact that the bank is being unduly enriched by receiving interest on one of the many multiples of the actual amount of money that they are given by depositors or investors which they have lent to Max, your scope of view is limited to Max's outcome. Cycloptichorn said it best: . . . all citizens are harmed by allowing banks to operate in the fashion that they do. The point that is being made is that banks are allowed to do so (create money) in ways that citizens are not: they basically 'invent' money to loan out, and if they end up going under... the taxpayers foot the bill as they are 'too big' to fail and end up being bailed out.

Privatized gains and socialized losses sums it up rather well. It truly is a theft of wealthy from the middle and lower classes.

And yes you are ignoring the ramifications of the content of an open letter from the Institute of Certified Public Accountants to the FASB and the IASB which confirm that banks' electronic credits as actually being cash is in breach of Generally Accepted Accounting Principles and the International Financial Reporting Standards.

They didn't mince words. Tell me what you think they're talking about, and exactly what their point is. It seems pretty cut and dried to me.
engineer
 
  1  
Reply Tue 21 Nov, 2017 05:56 am
@Glennn,
Glennn wrote:

Quote:
No, I don't think we've established that

Yes we have. I've provided quotes

Yes, you have definitely provided quotes. No you haven't shown how those quotes impact the real world.
Glennn wrote:

Quote:
No, they don't contradict me, your interpretation of their writings does, and you can't make that interpretation match reality.

I've posted the quotes from the former president of the Bank of England, the former Credit Manager of the Federal Reserve Bank of Atlanta, the former Governor of the Bank of Canada, the former Secretary of the Treasury, and a couple of scholars in the field of economics

Again, that is the issue. Lots of quotes, no "ramifications".
Glennn wrote:

Quote:
I'm not ignoring them, I'm asking you to demonstrate them. Demonstrate the ramifications by showing how Max has been injured. If the world is how you claim, then there should be direct, measurable ramifications to Max. After all, the title of the thread is "how the banks steal your money in the form of a loan". Max told us of his loan, show us the theft. If their are no ramifications, how can you continue to push your explanation?

Besides the fact that the bank is being unduly enriched by receiving interest on one of the many multiples of the actual amount of money that they are given by depositors or investors which they have lent to Max

Great, show that. Show us how Max is hurt. If the bank is being unduly enriched, it has to come at someone's expense, right? That someone has to be Max.
Glennn wrote:
your scope of view is limited to Max's outcome.

I limit there because it is clear and precise. The banks' business model is just Max's loan repeated millions of times. If you can't show harm to Max, you aren't going to be able to show harm to anyone else. It's easy to make a handwaving argument, selecting a nebulous group and claiming in high terms they are being harmed, but if they are being harmed in the aggregate, they are being harmed individually. You can't show that ... because it's not true.
Glennn wrote:

And yes you are ignoring the ramifications of the content of an open letter

I'm not ignoring them because you haven't shown them. I am asking you, very specifically, to show them. Not handwaving, not pontificating, just a specific demonstration of the ramifications. Show the harm to Max and you have me considering your statement. Fail to show any ramifications and no matter how many quotes you post, no matter how many names you drop, you are wrong. You are saying IF A THEN B. In logic, the contrapositive is also true. IF NOT B THEN NOT A. Your statement is "The banks are operating in a way that harms Max, cheats him of his money." But if Max is not cheated of his money, then your statement falls apart.
engineer
 
  1  
Reply Tue 21 Nov, 2017 06:05 am
@Glennn,
Glennn wrote:

Bank reserves are the currency deposits that are not lent out to a bank's clients. A small fraction of the total deposits is held internally by the bank in cash vaults or deposited with the central bank. Minimum reserve requirements are established by central banks in order to ensure that the financial institutions will be able to provide clients with cash upon request.

. . . Bank reserves are typically held by financial institutions to avoid bank runs and have sufficient cash on hand, should an unexpected and large withdrawal request come up.

You realize this posting of yours tends to refute your own argument, right? "Bank reserves are the currency deposits that are not lent out to a bank's clients" because all the other deposits ARE lent out to a bank's clients. Not funny money, deposits. If the banks were lending out imaginary money as you claim, they wouldn't need reserves.
Glennn
 
  1  
Reply Tue 21 Nov, 2017 11:44 am
@engineer,
Quote:
You realize this posting of yours tends to refute your own argument, right? "Bank reserves are the currency deposits that are not lent out to a bank's clients" because all the other deposits ARE lent out to a bank's clients.

Wrong. You said that banks lend out multiples of their reserves, not of their deposits. I've already provided you with information that proves that this is wrong.

The percentage of a deposit held as reserves is ten percent of the deposit. The other eighty percent is multiplied and each multiple is lent out. For example, out of one-hundred dollars deposited, eighty dollars is magically multiplied into eight hundred dollars of further loans, thereby drawing interest on money that is not there. Perhaps that explains why in an open letter from the Institute of Certified Public Accountants to the FASB and the IASB they said that the idea of banks' electronic credits as actually being cash is in breach of Generally Accepted Accounting Principles and the International Financial Reporting Standards.
Quote:
If the banks were lending out imaginary money as you claim, they wouldn't need reserves.

Wrong again. If someone who has deposited a thousand dollars in a bank wants to withdraw it, the bank must have the reserves on hand to comply with the request. And since the ten percent the bank held as a reserve on that deposit is not enough to cover the return, the money is pulled from total bank reserves. Even so, if even half of depositors wanted to withdraw their money at the same time, there would not be enough to pay everyone.
Glennn
 
  1  
Reply Tue 21 Nov, 2017 11:58 am
@engineer,
Quote:
If the bank is being unduly enriched, it has to come at someone's expense, right?

Yes, yes it does, and the video below explains in no uncertain terms what that expense is. Watch it, and then tell me which parts you disagree with. Then we can get to the bottom of your confusion concerning the consequences of magical money multiplication.

https://www.youtube.com/watch?v=23DNe0cJhcU
________________________________________________

To all: This video presents a picture that allows for no wriggle-room when it comes to avoiding the facts concerning the fraud committed by the banking system.
maxdancona
 
  1  
Reply Tue 21 Nov, 2017 01:30 pm
@Glennn,
That video is bullshit Glennn. I got to the point where they are advocating the gold standard. Is that what this is about? You want to go back to the gold standard. [Giggles] There is a reason that we left the gold standard, and a reason that over the long term, America has prospered ever since.

The biggest problem that you and these conspiracy theorists have, Glennn, is that banking system is working. It works for me; I can work, get paid, buy all the food I need, educate my kids, and buy a house and a car on credit. The economy is almost always very stable, and when it occasionally goes haywire, our society ways to fix it.

The system is working... and it has worked pretty well (except for a couple brief periods of instability) since we left the gold standard in 1933.
Glennn
 
  1  
Reply Tue 21 Nov, 2017 01:56 pm
@maxdancona,
Quote:
That video is bullshit Glennn.

I'm afraid you're going to have be more specific.
Quote:
I got to the point where they are advocating the gold standard. Is that what this is about? You want to go back to the gold standard.

No. I'm not an advocate of a return to the gold standard.
Quote:
There is a reason that we left the gold standard,

Yes, that was explained in the video. If you disagree, then explain why you believe we closed the gold window in 1971.
Quote:
over the long term, America has prospered ever since.

Umm, you're not familiar with the petrodollar system, are you?
Quote:
The economy is almost always very stable, and when it occasionally goes haywire, our society ways to fix it.

Sure. Like when the to-big-to-fail institutions socialize their losses and is bailed out by people who had nothing to do with their failings.
___________________________________________

Now back to your claim that the video is bullshit. What part did you find inaccurate?

Oh, and who has the power to create money?
0 Replies
 
engineer
 
  1  
Reply Tue 21 Nov, 2017 02:21 pm
@Glennn,
Glennn wrote:

Quote:
You realize this posting of yours tends to refute your own argument, right? "Bank reserves are the currency deposits that are not lent out to a bank's clients" because all the other deposits ARE lent out to a bank's clients.

Wrong. You said that banks lend out multiples of their reserves, not of their deposits. I've already provided you with information that proves that this is wrong.

The only hard information we've seen on this thread concerning loans, deposits and reserves is what I provided from the BofA annual report. There are plenty of banks to choose from, I chose BofA pretty much at random. Show me a bank annual report where loans are more than deposits. The only explanation of loan accounting was the one I provided showing how the accounting would look for Max's loan.

Glennn wrote:
The percentage of a deposit held as reserves is ten percent of the deposit. The other eighty percent is multiplied and each multiple is lent out. For example, out of one-hundred dollars deposited, eighty dollars is magically multiplied into eight hundred dollars of further loans, thereby drawing interest on money that is not there.

That is exactly the types of claim you should be able to back up with hard data from an annual report.

Glennn wrote:
If someone who has deposited a thousand dollars in a bank wants to withdraw it, the bank must have the reserves on hand to comply with the request. And since the ten percent the bank held as a reserve on that deposit is not enough to cover the return, the money is pulled from total bank reserves. Even so, if even half of depositors wanted to withdraw their money at the same time, there would not be enough to pay everyone.

Agreed, but that is my point. If they were lending out funny money as you claim, then they should have plenty of money on hand. You have claimed that banks wouldn't care of 90% of their loans went unpaid because it wasn't real money. That is completely false. Even a 10% default rate would be difficult for banks to handle.

Back to basic logic: You assert if banks behave the way you describe, then borrowers are harmed. The direct corollary is if borrowers are not harmed, then banks are not acting in the way you describe. Just show us how Max is harmed and you will go a decent way to proving your point. Failure to show Max is harmed pretty much torpedoes your argument.
Glennn
 
  1  
Reply Tue 21 Nov, 2017 03:00 pm
@engineer,
Quote:
Show me a bank annual report where loans are more than deposits.

You've seen this, but apparently you need to see it again.

Economics professor Richard Werner – who obtained his PhD in economics from Oxford, was the first Shimomura Fellow at the Research Institute for Capital Formation at the Development Bank of Japan, Visiting Researcher at the Institute for Monetary and Economic Studies at the Bank of Japan, Visiting Scholar at the Institute for Monetary and Fiscal Studies at the Ministry of Finance, and chief economist of Jardine Fleming – was granted access to study a bank’s books, and confirmed that private banks create money when they simply create fictitious deposits into a borrower’s account.

How would that affect a balance sheet?
Quote:
That is exactly the types of claim you should be able to back up with hard data from an annual report.

You mean you want me to explain fractional reserve banking practices to you again?
Quote:
If they were lending out funny money as you claim, then they should have plenty of money on hand.

But you're forgetting what the banksters themselves have said on this issue. The deposit is created at the same time as the loan contract is signed. They only have to have ten percent in reserve to cover the ninety percent which was just entered into a book. I would think that you would trust the money mechanics when they tell you how things really work.

I'm wondering why you're against government issuing its own currency instead of borrowing it at interest from another entity, thereby creating exponentially increasing debt.

Also, what is the first fact in the video I provided that you disagree with? Then we can decide whether it's true or false.
engineer
 
  1  
Reply Tue 21 Nov, 2017 03:24 pm
@Glennn,
Glennn wrote:

Quote:
Show me a bank annual report where loans are more than deposits.

You've seen this, but apparently you need to see it again.
private banks create money when they simply create fictitious deposits into a borrower’s account.

Yet when Max withdrew that money to buy the car, the bank provided real money. I detailed all the accounting transactions several pages ago (completely in accordance with your quotes). You didn't dispute one of them, other than to say that stacks of $100 bills are not money.
Glennn wrote:

Quote:
That is exactly the types of claim you should be able to back up with hard data from an annual report.

You mean you want me to explain fractional reserve banking practices to you again?

No, that would be humorous, but no. Just show some annual reports.

Or just show Max was harmed. Connect the dots for us from bank is acting unethically to Max is harmed. You do believe that Max was harmed, right?
 

 
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