11–20 of 20 posts
Is this an insiders take on what is actually happening or just some bloggers fever dream? Its always hard to tell with finance.
Definitely the latter.
Edit: Or maybe an insider’s fever dream: the writer/speaker/singer has an MBA, worked in banks and is currently writing "The Absolute Essentials of Banking". (!)
Earlier quoted context omitted.
As a fellow non bank expert, I feel like the problem with the article is more fundamental than that. Suppose JP does indeed buys stuff with and only with its reserves. Now JP starts new initiative under the slogan 'Buy the US', with the intention of buying all the building in the US, one after the other. The first building the one next to JP, and JP pays it from its reserves. According to the article, no change in JP…
I'm no expert, but I think the missing bit is that the money 'created' is still backed by some asset, whether it's a coffee machine, a building, or a promise of future repayment (as with loans). I think that might be assumed for the audience of the blog, but it's not an obvious thing for us non-experts. Compare with a loan. When loaning, the bank has a liability (balance in the receiver's account). That's the created…
Is this an insiders take on what is actually happening or just some bloggers fever dream? Its always hard to tell with finance.
Earlier quoted context omitted.
I'm no expert, but I think the missing bit is that the money 'created' is still backed by some asset, whether it's a coffee machine, a building, or a promise of future repayment (as with loans). I think that might be assumed for the audience of the blog, but it's not an obvious thing for us non-experts. Compare with a loan. When loaning, the bank has a liability (balance in the receiver's account). That's the created…
If what the author is stipulating is true, wouldn't banks have just written themselves a check during the 2008/9 crisis and never involved the President or Congress? Basically a bank could avoid all crises by having enough global customers to offset risk they insert into each market. Yet, even global banks suffered during this crisis.
but why do that when congress will create a specific mechanism of infinite money creation for you?
Author ignores the fact that the bank has revenue from operations and it funds the majority of business expenses from those funds
Not even close. >What exactly is this money, and how is it created? It's not created. While banks do have the capacity to "create" money by lending they are also are an actual business. i.e. it's not their only source of money They charge people a transaction fee and use said revenue to pay salaries and buy coffee machines. Just like any other biz. There are also strict client money rules to keep the business side an…
I believe the implication is that investment banks can not perform certain actions with their own money due to 2008-2010 reforms: for instance the Volker rule https://www.investopedia.com/terms/v/volcker-rule.asp
This looks like value creation to me, rather than money creation.