Banks create money, but it's less impressive than it sounds • Hacker News Board

Re: Banks create money, but it's less impressive than it sounds

#231

Post by rusk » Tue, Sep 01, 2020, 5:20 PM UTC

golergka wrote: post #230

rusk wrote: post #150

Earlier quoted context omitted.

I think you’re receiving a strange response because people think you’re advocating some sore of crypto-anarchist freeman position, and HN as a community is very much weighted against that point of view ... I can identify with what you’re saying and there are some very well known examples of local currency being subverted. You can see Bolivia in the news recently, or Argentina or everybody’s favourite trillion dollar…

Strange. I think I made no value judgements or what-ought-to-be statements, just what-is observations.

That’s what I thought but HN can be a strange church. Often just phrasing can get people’s backs up. Your comment was going grey so I guess you were on your way to getting flagged!

Re: Banks create money, but it's less impressive than it sounds

#232

Post by anticristi » Tue, Sep 01, 2020, 5:48 PM UTC

yxhuvud wrote: post #198

anticristi wrote: post #154

Earlier quoted context omitted.

I love the IOU vs WeOU differentiation. Banks need to have licenses and adhere to strict regulations, which are checked at least yearly by auditors. (Joke: Unless you are a German bank, in which case you get checked only once-a-decade.) That is what makes banks special: They have legal backing, but also legal responsibility. Side note regarding non-bank IOU: I found the idea of having a payment card from my grocery s…

> The grocery entity and the banking entity need to be separated Quite a few of the grocery chain cards here in Sweden have accounts backed by chain-owned banks. So at least here, the separation is not all that great.

They share branding and sometimes ownership, but the entities are separated. ICA Gruppen has ICA Banken as a bank subsidiary. COOP outsourced banking to EnterCard, etc.

Re: Banks create money, but it's less impressive than it sounds

#233

Post by jacobush » Tue, Sep 01, 2020, 7:09 PM UTC

clownworld wrote: post #214

jacobush wrote: post #158

Earlier quoted context omitted.

What empirical evidence is supposed to sway me in favour of genocide?

https://www.un.org/en/development/desa/population/publicatio...

So low birth rates in developed countries is genocide now?

Re: Banks create money, but it's less impressive than it sounds

#234

Post by jonplackett » Wed, Sep 02, 2020, 8:18 AM UTC

rags2riches wrote: post #229

jonplackett wrote: post #225

Earlier quoted context omitted.

Well I, like many people. was very surprised money is created that way. And your fictional town doesn’t seem to work much like anywhere else. All the banks seem to be doing fine just fine. Houses usually go up in value not down so when someone defaults on a loan the bank makes money rather than loses it. With the exception of the credit crunch (where we all just gave the banks our hard earned money instead)

Yes, it's quite strange at first when you come to this topic with the understanding of money as something more tangible. I really struggled with the concept at first, but there are good resources to help with this. It clicked for me with the help of Khan Academy unit on Money, banking and central banks. The Bank of England paper linked elsewhere in this thread is also good. I had to draw up balance sheets and make ex…

Hey thanks for the extra reading.

I understand the example, but surely these are outliers? Banks won’t give you a mortgage without insurance, and most people do pay their insurance. So banks can’t be taking that much of a hit except under extreme circumstances. Most of the time they do pretty well out of defaults. They just take the house and sell it. They’ll only lend to you in the first place if you have reasonable collateral (again 2008 housing crisis is a lesson they learned on that) but they still ultimately got the asset + all the money paid in interest up to that point. Am I missing something?

Re: Banks create money, but it's less impressive than it sounds

#235

Post by rags2riches » Thu, Sep 03, 2020, 9:47 PM UTC

jonplackett wrote: post #234

rags2riches wrote: post #229

Earlier quoted context omitted.

Yes, it's quite strange at first when you come to this topic with the understanding of money as something more tangible. I really struggled with the concept at first, but there are good resources to help with this. It clicked for me with the help of Khan Academy unit on Money, banking and central banks. The Bank of England paper linked elsewhere in this thread is also good. I had to draw up balance sheets and make ex…

Hey thanks for the extra reading. I understand the example, but surely these are outliers? Banks won’t give you a mortgage without insurance, and most people do pay their insurance. So banks can’t be taking that much of a hit except under extreme circumstances. Most of the time they do pretty well out of defaults. They just take the house and sell it. They’ll only lend to you in the first place if you have reasonable…

No, you're not missing anything. The point is just that it's not a vice of mathematically assured doom because of the fact that money is debt. Banking can be a really good business and bankers have been really good at lobbying, but that is not what the Money as Debt scare is about.

In the end, debt is a type of relation between people. And banking is a business with its own costs and risks.