/biz/ - Business & Finance

>>53390164
They create it

>>53390164
>how can banks lend out money that they don't have? wtf?
https://www.investopedia.com/articles/investing/022416/why-banks-dont-need-your-money-make-loans.asp
You have your answer so this thread can die now.

the idea is that the deposits they have will not be drawn on all at once, giving them a free hand to invest.

dont worry about that goy, pay your taxes and interest.

>>53390188
what if they run out of deposits?
why do they need to invest if they make the money?

bring back the tally sticks is my opinion
https://www.youtube.com/watch?v=Rmc8GDlyAQg

>>53390211
i'm not well informed on banking, but, as far as i know, they receive loans from the central bank (the ones who print the money and give it out as loans to banks to 'stimulate' the economy; however, it's worth noting that they don't typically get the currency to do this by printing it, they sell bonds to private investors). if they do not have the liquidity to fulfill the withdrawal requests of their customers (a bankrun) they would have to sell their assets to fulfill it. this may cause delay in the fulfillment of their obligations to their depositors, and may cause unrest.

>>53390176
How does one, create money's?

>>53390164
money is an IOU and nothing more. why do they need to invest? because for this system to work they need people to owe them a return. therefore it makes little sense to keep more cash on hand than is necessary. because the real monetary supply is infinite

Not your stash, not your cash.

>>53390332
money is a commodity--you produce it. you can dig it up as gold or reform something of lesser value into something of greater value (for example, making silicon from sand). the thing that makes it money is that it's used as a standard of exchange.

currency, however, is made by government fiat. fiat just means decree; the government literally creates 'money' (not money in the proper sense of the word) by saying it is so.

>>53390392
I don't agree, there is no special quality that differentiates money from currency. there is no special quality of gold that allows it to enforce notions of relative value and its usage as a currency hinges on perception and manipulation just like government scrip

>>53390298
>>53390356
so you're telling me if everyone asks for their money they will tell people to fuck off and starve?
something about this doesn't add up, what if the system collapses?
sounds very evil, most people don't even think about this
>>53390392
so you're telling me I should not hold fiat? is this why people hoard gold?

>>53390422
you have to mine gold which takes time & effort, fiat can be created out of thin air, paper printed & digits on a screen added that dilutes the purchasing power of the currency

>>53390422
it's the domain of praxiology which determines a commodity's value as a standard of exchange. the main thing which makes money 'money' is that it's (a) a commodity and (b) used as a standard of exchange. this makes it different form currency, since it's decreed to be of value by the government. it may be used as a standard of exchange, but its commodity status is not established. it's basically a floating commodity; something physical but whose worth is arbitrarily contrived by an authority. (a group of people who decide something is valuable is not arbitrary for the reasons mentioned in my first sentence.)

>>53390447
>so you're telling me I should not hold fiat? is this why people hoard gold?
this is why people hold gold, yes. your savings can be evaporated by government whim.

>>53390447
LMAO. Some banks tell you to fuck off if you ask to withdraw more then a coupe thousand dollars these days. They claim they don't have that kind of cash on hand and need notice ahead of time for "large" amounts of cash. It's a scam the banks are just trying lock you out of using cash so they maintain control.

>>53390164
Where do you think new money comes from? It is lent into existence by commercial banks. The purpose of banking is money creation.

this thread is anti-Semitic, take it down

>>53390188
>>53390298
Wrong, wrong, wrong.

>>53390332
Every time a bank makes a loan, it is creating new money.

>>53390504
>>53390550
fuck, is there any way to break free from this system? what's the best way to store value so it doesn't get evaporated overnight?
do I need to learn to live self sufficiently if shit hits the fan?

>>53390495
time and effort doesn't make something inherently valuable, it needs demand. demand for gold comes from belief in its value as money
>>53390504
gold's usage as an industrial commodity is vastly outstripped by its usage in jewelry which in turn is vastly outstripped by its usage as a legacy currency. I would believe this more if we saw actual commodities- things valued for their industrial demand - used as currency, but we do not, their value relative to other things fluctuates enormously based on their demand. gold has apparent stickiness for reasons just as arbitrary as those underpinning fiat
>>53390447
the system doesn't collapse because humans are usually resilient and usually don't kill themselves because imaginary number not real

>>53390164
The same way that you're able to spend money that you don't have. Instead of complaining, get leveraged and get rich. Worst case you go bankrupt and start again

>>53390664
i want to buy some land from you. what do you want to trade with, 70,000kg of industrial quality steel or a couple pounds of gold?

>>53390658
precious medals and land.
for emergency scenarios, nothing beats energy sources and weaponry. bic lighters are ideal for several reasons, but something more substantial, if practical, would be the best. just a way to keep warm and be productive with.

>>53390664
but as a measure against every other form that could be money cigarettes/pebbles/shells/fiat-notes it is the best most sought after in-demand money there is throughout history and in the world today. Why do central banks hoard gold? There is minimal counter party risk, not as bad as a government diluting the value of its fiat currency away

>>53390164
Because they hold 10% of it in deposits... I Think it's now something closer to 0-1%.

>>53390669
I never spend beyond my means, I've always avoided debt, what are some good investments?
>>53390809
Am I fucked if I live in a densely packed urban hellhole?
>>53390814
>Why do central banks hoard gold?
Didn't they stop doing this?

This video explains fractional reserve banking pretty well and it is entertaining:
https://youtu.be/ah2tbJg9_MI

>>53390164
it would be anti-semetic if they were not allowed to

>>53390877
Unless you're already a richfag, getting a home loan is a good start

>>53390877
I believe gold repatriation and buying is on the up tick especially among the brics nations to reduced their dependence on the dollar

>>53390164
Um goy, that's not something for you to think about.

>>53390877
>Am I fucked if I live in a densely packed urban hellhole?
owning land is an inherently valuable asset. it can be in a city, you don't need to go /innawoods/. it might even be preferable to own urban land. gold and silver don't lose their intrinsic properties, regardless the situation you find yourself in. someone might not want to trade survival goods for a 'useless rock' in an emergency situation, but that doesn't demerit it as a money. STACK THAT SHIT.

if you are concerned about social unrest and emergencies. have a plan and survival goods on hand. furthermore, group up. join your family and friends in hard times, get armed and have all that you need or have the means to trade. (bic lighters are a useful money; this is one of the uses i alluded to. it can be used to trade with.)

>>53390900
>implying the Fed supplies banks with money
Wrong again. Individual banks themselves create money whenever they make a loan.

>>53390934
Yeah I guess, but that's just a long term investment and something nice to have, not something that makes you rich.
>>53390952
So they store it as an asset right? Don't think the USD is tied to gold anymore
>>53390976
It's a concrete jungle that you can't grow anything on and will get run over by looters if shit hits the fan. Why would it matter if nobody wants to buy it anymore?

>>53390332
It's digital. They just type it into their system and wallah.

>>53390658
bitcoin, don't listen to gold schizos, they didn't processed yet that the digital is there and there's no return

>>53391061
>It's a concrete jungle that you can't grow anything on and will get run over by looters if shit hits the fan. Why would it matter if nobody wants to buy it anymore?
you're presuming that we are and will always be in an emergency situation. i wouldn't advise using urban land for farming. build a house and rent it out. if you're in an urban area, you are in a desirable area and can command a higher rent. likewise, with precious metals, an emergency makes its use as a trading commodity near worthless; the means to keep warm and protected is far more important.

stability/long-range planning are the preconditions for these assets. trade and production; gold and land. stability is necessary to establish these things, and, thankfully, stability is the norm in human civilization.

>>53390164
this post has been reported to the JDL

>>53391178
to add to this:
high time preference gives way to prosperity. the man who cultivates his means of survival, trading short-term plunder for long-term benefit, is the one who ultimately prospers. consider agriculture: you might scavenge your means to live from out the forests or fields but devoting effort over the course of weeks and months to collect a harvest for later in the year reaps a greater bounty.

>>53390900
Pls no bad week it won't let me repost same img

i'm just having fun now. i want to espouse some more shit. this is also related to what i've previously said.

>>53391267
in order for someone to loot there must be something to be looted. this implies that production (stability) is dominant, not scarcity. if we were to inhabit in the world neurotics believes we live in, we'd lack nearly everything we see in our modern life. high-rise building, sewers, vehicles, and telecommunications. these are made possible by our ability to raise from out our daily concerns of our immediate survival to long-term planning. we build houses because he have the effort to spare and make a better shelter for us to live in; we have vehicles for the same reason and more. our effort compounds and we benefit from the possibility to prosper long-term.

our civilization wasn’t established under a constant threat of an attila bearing down on us to crush all that we’ve constructed, though this does happen at times.

>>53391427
You speak well, but I think you're overlooking that most people still don't own anything and live paycheck to paycheck. Sure there's still more shit to consume, products, entertainment, but many people still want big houses, not cramped apartments, high quality food, less work and more leisure.
How long will this go on? Not everyone can just invest in properties and get that lifestyle, that's mathematically impossible.
But normies are also too stupid to do anything about it so maybe nothing changes.

>>53391508
that's overly fatalistic. you have the means to garner wealth--it's not handed to the man who 'has' in preference over the man who 'has not.' both have the means to acquire their means of survival.

an heir to a fortune didn't produce it, but having it doesn't protect him from losing it. economy is a dynamic system if left free. the old aristocrats have been replaced by every man who garners his means of survival by his effort. and, like i've stated, it is man's high-time-preference which garners the greatest results.

>>53390164
the instant the money is lent out it is created

>>53390298
You are a little off, but have the correct idea. Customer funds are held with in an account the bank has with the fed. They get paid a spread on the overnight fed funds rate. They do lend against those funds, but it doesn’t actually take away the deposits, it creates an IOU between the fed and the bank. The bank is allowed to borrower from the fed to make those loans based on several factors (assets, capitalization rate…). For the most part a bank rarely hits that cap because of competition. So a bank generates the loan which is funded indirectly from the federal reserve. The central bank creates the money through issuing bonds or otherwise increasing the money supply. So they control inflation by reducing the amount of money in circulation. This is done by making it more expensive to borrow (increase interest rate) in turn reducing loan demand and slowing development (cooling off the economy). The feds balance sheet then shrinks as bank loan balances are reduced.

>>53391572
Idk, it sounds like "Everyone can make it" which is repeated countless times but hoarding capital and resources is the best way to generate more capital and resources. Eventually urban areas and lifestyles will need to be reorganized because cannot be supported indefinitely.
I don't have an answer.

>>53391662
>Idk, it sounds like "Everyone can make it" which is repeated countless times but hoarding capital and resources is the best way to generate more capital and resources.
no. production is the means to generating more capital. what do you think the capital is doing to create more capital? it's invested in productive enterprise or redirecting the capital that already exists to itself (how was the preexisting capital acquired? production). producing goods also increases the value of capital to boot (the same amount of money chasing a greater amount of goods).

>>53391643
thank you. i intend to get a better grasp on these things in the future.

>>53391748
But there are also institutions which dump money on speculation and also sell bags to retail investor suckers. And let's not forget, ultimately it's the government that dictates the direction behind all of this. Bad actors can always influence the government to get what they want.
How will people 'produce' in the future when automation cuts jobs? Who gets control of what gets produced and consumed then?

>>53391829
bad investors in a free market only can harm themselves. and don't even get me started on government intervention in the economy, lol.

>How will people 'produce' in the future when automation cuts jobs?
we've faced similar situations in the past. one might as well shake their fist at the combine harvester for taking the jobs of what was traditionally 70% of a country's population.
ingenuity, it turns out, creates jobs. when we cull the labour needed in a given field some other ones may open up.

>Who gets control of what gets produced and consumed then?
the person who produces it is who owns a produced good and the one who consumes it is the one who made it or the one who trades for it. this is the essence of capitalism.

>>53390164
Because there is no punishment for it.

>>53390164
Magic.

>>53390164
well, when you run a business and you're making money, you can afford to lend out money, especially if your whole business is making money off the interest. and then a whole bunch of risk calculation all goes into that

>>53391890
But those people benefit from those investments. Neither have wages risen despite increased productivity.
>don't even get me started on government intervention in the economy
Required or not?

>>53392687
>But those people benefit from those investments.
here i suspect you mean that people in general benefit from those investments if successful. the underlying belief here is that the indirect beneficiaries of an investment (society as a whole would have more commodities available to them) are entitled to the products made from a capitalist's investment. nobody is entitled to be sold something, nor have they a right to something which hasn't even come to exist yet (the failed investment). the investor who's shrewd and directs his money towards things which make him money is the primary and, rightfully, sole person to profit from it. those people whom he decides to trade with can acquire it for themselves, but are not owed his production.

>Neither have wages risen despite increased productivity.
this is an overly large topic to get into and the causes of this are debated. my own stance on it is that government intervention is the primary cause of this, but i will not delve into the issue here. as i've said, it's a large topic.

>>don't even get me started on government intervention in the economy
>Required or not?
not required. it appears to be an inhibition to growth, even.

>>53390164
cool it with the anti semetic remarks

>>53392842
I was more so referring to people with insider information on the market and make more money from speculation than risk losing it in case it goes wrong. Also industrial control and lobbying system to influence politics to get more favorable economic environment for themselves. (common in the energy sector)
>not required. it appears to be an inhibition to growth, even.
Private parties would just seek their own benefit.
There would be no checks to keep them in place.
Isn't the fed still overlooked for this same reason?

>>53393312
>Private parties would just seek their own benefit.
yes--this isn't a problem.

>There would be no checks to keep them in place.
there definitely are checks to keep them in their place. they cannot act against market interests and still succeed. there is a requirement that they do not stagnate or charge overly much for their product, lest a more able competitor comes to put them out of business.

it is state intervention which enables grifters. notice how the largest corperations seek further and more regulations. they are the ones able to bear the cost of it; it is the newcomer who isn't able to bear it.

>Isn't the fed still overlooked for this same reason?
i don't know what you mean by this.

>I was more so referring to people with insider information on the market and make more money from speculation than risk losing it in case it goes wrong.
everyone must act with the information they've got. neglecting to do so is irrational. 'insider information' seems ominous, but i don't understand exactly what you mean by it. we all have information which we're privy to. it's what we, rationally, decide to do with it that brings us profit or loss.

>>53390504
you really don't understand what money is
why do people go through great effort to dig commodities out of the ground and exchange them for money
why not just keep the commodities if they are 'money'

>>53393820
we do keep commodities, but we don't need everything we produce, so we trade it for other things. this gives way to bartering, but this is inefficient.

finding a commonly accepted commodity to trade is the next, more efficient, step. it can act as a stand-in for any other commodity. if i want bread from you and all i've got is a lump of lead, you don't want to trade. if, however, we use a common commodity which can be traded for either lead or bread, we can use it as a money.

>>53390164
No antisemitism

>>53393820
you’re confusing currency for money. gold for example is money.

>>53390900

>>53391764
You wont need to

>>53390164
Don’t make me say it

>>53393938
that's a pretty lie, but i don't think it's going away any time soon.

>>53390164
withdraw your money and stop accepting checks

https://www.britannica.com/topic/bank/Bank-money

>>53390164
https://youtu.be/ah2tbJg9_MI

>>53390283
Based. Yeah, fiat itself is not the problem. Its only controlled by the wrong guys.

>>53390164
Don't be antisemitic anon.