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Then I'm not wasting any time to watch any links dodgy economic theories you post. Simple. This discussion will obviously go nowhere.
And as for the cause. It's two things: The Central banks having the right to purchase securities with money they can legally create out of nothing. All QE is nothing more than these loans, bonds etc.. bought with money that didn't exist the day before. That's the first cause of monetary expansion.
The second cause is banks having a requirement to hold just a fraction of money in their accounts and being able to loan out the rest. Being able to lend out money that they don't have.
Here is a calculator...
originally posted by: Astyanax
a reply to: TheBandit795
The video you posted is almost thirteen minutes long. In comparison, it took me roughly two minutes to read the article at my link. But perhaps you don't read as fast as I do.
This is fantasy economics. The money isn't 'legally created out of nothing';
(translated in English)
4.4 Creation of the banks money
Money is created by "money creation". Both [central banks] and private commercial banks can create money. In the euro monetary system [money creation] arises mainly through the granting of
loans, as well as the fact that central banks or commercial banks to
buy assets such as gold, foreign currencies, real estate or securities.
If the central bank granted a loan from a commercial bank and crediting
the amount in the account of the bank at the central bank, created
“central bank money.”
Commercial banks create money, in the form of bank deposits, by making new loans. When a bank makes a loan, for example to someone taking out a mortgage to buy a house, it does not typically do so by giving them thousands of pounds worth of banknotes. Instead, it credits their bank account with a bank deposit of the size of the mortgage. At that moment, new money is created. For this reason, some economists have referred to bank deposits as ‘fountain pen money’, created at the stroke of bankers’ pens when they approve loans.
its value resides in securities held by other parties, which are bought up by the central bank. It's a straightforward asset swap: liquid cash for illiquid securities. The amount of money in the economy does not increase. Here's a short article that explains the process; read it or not, just as you like.
As we're going to see, money in our modern banking system has the ability to multiply through bank lending. Each time a loan is made, money is created. Out of where, you may ask? Out of thin air. Most people would attribute this feat only to the Federal Reserve, but in actuality, every bank does it with every loan they make.
Let's walk through a hypothetical example to show how the act of bank lending creates new money. Say that person A has $100 dollars in cash and decides to deposit this money into a bank. The bank has a reserve ratio of 10%, and so it must keep $10 in reserves but can loan out the other $90. Let's say the bank makes a $90 loan to person B.
Time to stop and recap what just happened. Person A originally had $100 cash and consequently $100 worth of purchasing power. When person A deposits this money into a bank, they still have $100 in purchasing power. The bank then loaned out the $90 that it was not required to hold as reserves and this money went to person B. Now person B has $90 worth of purchasing power, and person A still has $100 of purchasing power. Money was just created.
You seem to think that the power to lend money not held in direct reserves is some kind of scandalous falsehood. It is not. As for creating money 'out of thin air', this is tripe. The money is created based on a borrower's promise of repayment; in other words, it is the fruit of increased economic production. This is the process by which economic value is converted into money.
I'll go with you as far as this: people who don't understand the rules of finance shouldn't play the game. Eschew credit, buy nothing you cannot afford to pay for with cash on the nail, and you will be safe and sound.
I've rarely seen any posts of you in which you do not attempt to belittle whoever you are talking to.
But you have the same amount of time to post on ATS... smh...
Let me put it simple for you.