How to get out of debt - funny

This is just a case of symmetrical debts canceling. This is what a clearing house is for.

@OP: this is one of the most ridiculous threads on this site.

@"Money is evil" people: just stop using money if thats what you believe. You bunch of hypocrites.

In ancient Greece, upon coming into power (by being chosen by the people), Solon cancelled all debts, and made it illegal to collect on any debts existent at the time. He also made it illegal to get yourself into debts that you had no real hope of paying off. This actually lead to a greatly increased productive society. Sure, the debtors were out what they had loaned, but as is typical of most debtors today, they could afford being out what they had loaned most of the debtee's.

The reserve requirement is 10%.
A bank receives a $100 deposit. It may lend out $90 of that.
The borrower writes a check to another person who deposits $90.
The bank that receives that deposit can lend out $81... until a maximum of $1000.

$100.00 + $90.00 + $81.00 + $72.90 + $65.61 + $59.05 + $53.15 + $47.84 + $43.06 + $38.75 + $34.88 + $31.39 + $28.25 + $25.43 + $22.89 + $20.60 + $18.54 + $16.69 + $15.02 + $13.52 + $12.17 + $10.95 + $9.86 + $8.87 + $7.98 + $7.18 + $6.46 + $5.81 + $5.23 + $4.71 + $4.24 + $3.82 + $3.44 + $3.10 + $2.79 + $2.51 + $2.26 + $2.03 + $1.83 + $1.65 + $1.49 + $1.34 + $1.21 + $1.09 + $0.98 + $0.88 + $0.79 + $0.71 + $0.64 + $0.58 + $0.52 + $0.47 + $0.42 + $0.38 + $0.34 + $0.31 + $0.28 + $0.25 + $0.23 + $0.21 + $0.19 + $0.17 + $0.15 + $0.14 + $0.13 + $0.12 + $0.11 + $0.10 + $0.09 + $0.08 + $0.07 + $0.06 = $999.99

That single deposit of $100 cash has the potential to expand into a total of 72 deposits with a sum equal to $999.99. It can all be at one bank, held in 72 customer accounts, or it can be at 72 different banks.

So you can see that the existance of 1 single hundred dollar Federal Reserve Note can expand into $899.99 worth of ''fake'' deposit receipts through the action of a lot of borrowing. Let's hope we don't all rush to withdraw our cash at once! Relax. Read How Currency Gets into Circulation

Is this the 72 virgins we hear about, or is it just 1 big nasty whore of Babylon?
Either way I like it.



[edit on 22-2-2010 by Cabaret Voltaire]

The motel owner DID lose something - he lost a customer!

He was so busy worrying about his debts that nothing was getting done and the qualityof his establishment (life....the infrastructure....) was suffering so bad that the guy WITH the money to spend - he didn't want to be there anymore!

Originally posted by Cabaret Voltaire
That single deposit of $100 cash has the potential to expand into a total of 72 deposits with a sum equal to $999.99.

Yes, BUT! All of the money does not have to come into a deposit account, which means that the money may expand less or not expand at all. In many cases, the money is circulated, kept in guarantees or in other ways that are not part of reservable liabilities.

So you can see that the existance of 1 single hundred dollar Federal Reserve Note can expand into $899.99 worth of ''fake'' deposit receipts through the action of a lot of borrowing.

The deposit receipts are not fake. If the bank cannot honour its commitments the central bank will.

Originally posted by hadriana
The motel owner DID lose something - he lost a customer!

He was so busy worrying about his debts that nothing was getting done and the qualityof his establishment (life....the infrastructure....) was suffering so bad that the guy WITH the money to spend - he didn't want to be there anymore!

Bravo!

That is so right. What a beautiful post.

Originally posted by aaa2500

Originally posted by Cabaret Voltaire
That single deposit of $100 cash has the potential to expand into a total of 72 deposits with a sum equal to $999.99.

Yes, BUT! All of the money does not have to come into a deposit account, which means that the money may expand less or not expand at all. In many cases, the money is circulated, kept in guarantees or in other ways that are not part of reservable liabilities.

''money circulated''... I understand that. They money is outside the banking system in the people's hands or mattresses.

''kept in guarantees''... what do you mean by that?

''or in other ways that are not part of reservable liabilities''.... and again can you explain that further?

Originally posted by aaa2500

Originally posted by Cabaret Voltaire
So you can see that the existance of 1 single hundred dollar Federal Reserve Note can expand into $899.99 worth of ''fake'' deposit receipts through the action of a lot of borrowing.

The deposit receipts are not fake. If the bank cannot honour its commitments the central bank will.

Right. That is why I put it in quotes. I should have used ~fake~ instead. I know the deposits are real. This game we play of expanding the money at will is interesting. The central bank is always ready to pump out more and the government is always ready to commit to more. We promise to pay with a promise to pay, correct?

Originally posted by Cabaret Voltaire
''kept in guarantees''... what do you mean by that?

Guarantees are a way for banks to raise capital. A bank will offer investors eg. 5 percent interest on guarantee capital. The capital is used to guarantee lending and has a higher risk as they are not deposits(no FDIC insurance). If the bank folds, the guarantee is usually lost. All banks use them, but usually the one investing is another bank. Many banks actively offer them to the public if they need liquidity due to expansion or merging.

''or in other ways that are not part of reservable liabilities''.... and again can you explain that further?

Pretty much anything that funds the bank but is not a deposit.

Right. That is why I put it in quotes. I should have used ~fake~ instead. I know the deposits are real. This game we play of expanding the money at will is interesting. The central bank is always ready to pump out more and the government is always ready to commit to more. We promise to pay with a promise to pay, correct?

In a sense.

reply to post by aaa2500

The deposits are not fake?
The "central banks" will make good?

I don't know your motivations. You are either pathetically misinformed (junior banker), or ....?
You tell me.

While you are "schooling" me, tell me why the American government is in debt. Cut to the chase, I won't be around for a pissing match.

Is it because we are amused by keeping track of how much debt we have.
It makes a lot of jobs for the people.

Originally posted by Stewie
The deposits are not fake?

If you borrow $100 from your neighbour A and then lend $90 to your other neighbour B. That is similar. No bank involved.

The "central banks" will make good?

Yes, by either calling in loans or printing more money.

I don't know your motivations. You are either pathetically misinformed (junior banker), or ....?

You tell me.

My motivation is simply to correct misunderstandings if I see them. I don't care if people dislike fractional reserve banking, but before they disparage it using nonsensical examples they should atleast understand how it works.

While you are "schooling" me, tell me why the American government is in debt.

The US is in debt because congress wants to maintain an empire while not having the income to do so.

Cut to the chase, I won't be around for a pissing match.

I am not your monkey

reply to post by Cabaret Voltaire


The hotel owner has the hookers client list. What were not seeing is this perv thats running the whole operation. He can use this info as colateral when strongarming more people to come up with hotel building capital.

Originally posted by Crito

Originally posted by Rigel Kent
And that, ladies and gentlemen, is how the United States government is conducting business today.

PEACE,
RK

Assuming an income tax rate of 25%:

~ The butcher now owes the government $25 in income tax.

~ The pig farmer now owes the government $25 in income tax.

~ The guy at the farmer's co-op owes the government $25 in income tax.

~ The hooker owes $25 in income tax.

And that's how the government steals 100% of a $100 bill.

That is what I was thinking, but you forgot the $100 from the Hooker to pay for her room at the hotel. So the Hotel owner pays income tax. So add $25 for a total of $125.00

THAT IS HOW THE IRS/GOV MAKES PROFIT ON YOUR $100.

Originally posted by kozmo
Loved your conundrum!!!

Not to derail or take away your thunder, but I have a much better example of how the current system works - it's like this:

3 business men are travelling together and decide to stop for the night at a hotel. Being on a tight budget, the 3 decide to share a single hotel room. The 3 men approach the clerk and book a room for the night. "That'll be $30", states the clerk. Each of the 3 men reach into their wallets and pull out a $10 bill and hand it to the clerk. They then retire to their room for the night.

A short while later the clerk realizes that he has over-charged the men as the room rate was actually only $25 for the night. Feeling guilty, the clerk pulls 5 $1 bills out of the register and hands them to the bell-hop instructing him to go refund the money to the 3 business men.

On his way up to their room, the bell-hop struggles with how to divide the $5 up 3 ways. So he decides to refund just $1 to each of the men and pocket the other $2 dollars himself. Problem solved!

Well, not quite... After refunding $1 to each of the men, that means that each paid $9 for the room. $9 times 3 equals $27 plus the $2 dollars that the bell-hop pocketed equals a total of $29... So, what happened to the last $1!?!?

Think about that for a few minutes... what DID happen to that last dollar???

Now THAT is how the federal government and the federal reserve works!!!

Thats simple, as the room only cost $25, not $27. $25+$2 = $27 = cost of the room.

Reading this thread clarifies why our country is in the shape it is in. po\eople get mystified with simple math.

Originally posted by Stewie
reply to post by aaa2500

 

The deposits are not fake?
The "central banks" will make good?

I don't know your motivations. You are either pathetically misinformed (junior banker), or ....?
You tell me.

While you are "schooling" me, tell me why the American government is in debt. Cut to the chase, I won't be around for a pissing match.

The government is in debt because they borrow money rather than print it. We need to borrow it because much of it is spent foolishly and under those circumstances would cause inflation if we simply printed it. If the money was actually spent productively we could simply print what we needed for government operations without fear of inflationary pressures. we could also eliminate taxes. But then the banking cartel would lose their hold over America.

reply to post by aaa2500

What prevents the U.S. from printing its own currency? Is it not clear to you Wilson sold this country out in a monumental scam?

I want this to be a productive exchange. I was in a bad mood the other night. I apologize. I respect your knowledge of banking.

Have your read this....

www.deepcapture.com...

It would appear that our institutions are absolutely corrupt. What do you think?

reply to post by aaa2500


AAA, are you talking about a bond that the bank sells, or a CD or something like that, in which the investors money is locked up for a known period of time? Or is Guarantee the name of another wholly different investment vehicle?

And the reason to do this....
because the money the bank receives for this is not a demand deposit and so has zero reserve requirement, so the bank can put all the money to work with little fear of the original investor coming back to withdraw ahead of the pre-determined time.

Originally posted by Stewie
What prevents the U.S. from printing its own currency?

Only creative inertia... Nothing else.

I want this to be a productive exchange. I was in a bad mood the other night. I apologize.

Don't worry about it!

I respect your knowledge of banking.

Don't. Verify anything and everything I write, but please bear in mind that english is my third language.

Have your read this....

www.deepcapture.com...

It would appear that our institutions are absolutely corrupt. What do you think?

I haven't read it and don't have the time for the next few days to read it, but it seems interesting. Don't have an opinion yet.

Originally posted by Cabaret Voltaire
AAA, are you talking about a bond that the bank sells, or a CD or something like that, in which the investors money is locked up for a known period of time? Or is Guarantee the name of another wholly different investment vehicle?

Guarantees are really a class of funding sources for businesses, rather than an investment vehicle.

You are refering to surety bonds, which is one way to do it. It could also be something similar to a CD, but with the principal used to guarantee various types of liabilities.

And the reason to do this....
because the money the bank receives for this is not a demand deposit and so has zero reserve requirement, so the bank can put all the money to work with little fear of the original investor coming back to withdraw ahead of the pre-determined time.

It could, but as guarantees are VERY expensive for the bank, it is much more likely they will use it to satisfy capital requirements.

[edit on 24-2-2010 by aaa2500]

reply to post by Rigel Kent

(i do realise this an older posting. but i did just join. so it is a new posting to me.)

if that were true, we would not have the current debt. what the govt does, has been doing, is borrow that 100 dollars to start the required movement of money that allows debt to be paid.

it is the lack of the movement of money that is the crux of the problem.

increasing unemployment and under employment. lower wages. lower tax revenue.

the rich tourist did produce something. he produced a 100 dollar bill. the fact that he got it back simply proves that movement of money is the solution.

you could have used a more complex example that would have shown the rich tourist paying for the room. then tracing the money being spent. eventually showing that money coming back to the rich tourist as a part of his wages, business income or a return on his investment(s).

the characters you portray as being in debt, are in debt due to their customers having a lack of disposable income.

the crux of your post, the crux of the failing economy, shows the detrimental affect of the lack of a customer.

it is the missing ingredient from all of the numerous economic experts and economic theory's.

the lack of a customer, what is required to be a customer, and why a customer is the one absolute essential to a successful vibrant prosperous economy.