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RE: The Mathematics of Fractional Reserve Banking
If all of the money is created by making bank loans then all the money in the economy is never enough to pay back all the loans plus interest, right? It's the interest that really kills it. The bank puts a milion into the economy but expects to be paid back 1.1 million. This can never be balanced out. Thus the banks are always foreclosing on property and growing richer (thriving on booms and busts) while individuals and small businesses go bankrupt.
Yes. The interest on loans makes it so that the total sum doesn't add up to 0 and as such is not a zero-sum game. Assuming everyone is honest and pays back the banks for any loans, they always have a net gain (minus losses paid to employees).
and interest paid on deposits.
Its deeply tragic, i know. In a perfect world, banks would just operate at a loss. then again, why just banks? grocery stores could operate the same way. they could sell food for exactly the amount of money that they bought it for, pay employees and rent and other expenses out of pocket and operate at a loss too.
oh to live in such a nirvana.
No, i mistake your statement that the banking industry is crooked as an indictment of the banking industry.
You have made no observation of fact. You created a hypothetical scenario where the money supply is multiplied by FR banking that was based on a misunderstanding of how banks lend money to consumers, businesses and oneanother.
And there's no talking you out of it, because you think accounting is a scam.
Its really a shame that posts like this end up on the front page (and will be pinned there for weeks now)...
I've never seen any academic claim that asking a question is the same as making a statement.
I reject your hypothesis that I made any blanket claim about the banking industry being corrupt.
All I did was ask if others are tired of it being corrupt.
That question does not necessarily preclude the assumption that I think the institution is corrupt, but rather anyone who answers the question in the affirmative, i.e. "Yes. I am tired of the corrupt banking institutions."
I never stated such a claim.
I think you mistake my observation of facts, and how they relate in an algebraic-geometric fashion to how reserve requirements operate, as an indictment on the banking industry.
It's a way to expect yourself or future generations to pay for things now. So long as the bill is passed down (with some interest, late payments, & fees tacked on) then it grows and grows. It makes people a little uneasy, because we (or some) think America is different. We hear stories about Greece, Venezuela, Weimar Republic Germany, and think those are small countries, they aren't the United States. They had (or are having in the case of Venezuela) a financial crisis, but that can't happen here because of how strong our economy is. I certainly don't hope for financial problems for us (or any other country you might be living in) but I would remain cautious. Maybe it will happen in 10 years or maybe 500 years, but a system that is trying to be controlled by the Fed (or other centralized powers) is prone to failure just like everything else.