2016: The Year of Bond Defaults

#178
#178
bamawriter said:
A dollar is a unit of US currency.

A Federal Reserve note is a financial instrument representing a dollar, backed by the full faith and credit of the United States (whatever you may consider that to be worth).

I think "semantic" is another word you haven't totally grasped.
Click to expand...

How can the dollar be considered a "unit" of US currency?

Unit=Definitive or determinate quantity adopted as a standard of measurement and exchange.

Read more: What is unit? definition and meaning

Since the dollar floats vs other currency and isn't tied to a measurable quantity, how can it be a unit? Denomination, maybe; but not a unit since our currency isn't fixed in value. This is what happens when you allow economists to treat currency as a commodity rather than a fixed unit of exchange.

See a value of x whatevers per dollar doesn't mean particularly much (especially in foreign trade) if the value of the dollar vs what x is valued in depends on what France did yesterday, or if somebody died in Britain last night, or some sheikh sneezed, or Kim had a fit and a missile.

Not one damn thing of note other than hand wringing has happened since the Brexit vote but financial institutions immediately seized the opportunity to significantly devalue the pound, and there were a lot of losers and some really big winners somewhere. That doesn't happen when money is rightfully considered a medium of exchange and valued consistently rather than considered a commodity to be traded around the world like steel or wheat.
 
#179
#179
Rasputin_Vol said:
At least a microwave is worth more than "the full faith and credit of the United States".
Click to expand...

And what does "full faith and credit of the United States" mean exactly anyway? That if you can trade a $5 bill for five ones?
 
#181
#181
red butler said:
See this is a perfect example of how banks use sleight of hand with language to confuse us. We're talking about the money multiplier effect and you use this ratio that makes it look like this system is completely reasonable. In fact I didn't believe it at first, so I looked it up. When I realized it's accurate my whole banking paradigm began to shift.... Until I remembered this statement from an economist "deposits don't create loans - loans create deposits."

That's when I realized the ratio you threw out measures deposit liabilities and not the reserves we had been discussing. Of course that ratio is going to be high, when a loan is issued to purchase something, the seller will eventually deposit the money into their bank. If the buyer and seller use the same bank the LTD ratio for that transaction is 100%. That ratio has nothing to do with what we were discussing.

Then I started wondering what kind of loans aren't eventually deposited into a bank. I'd appreciate any examples you guys can give. The only type I can think of are maybe foreign purchases, that get deposited in a foreign bank, and loans to hedge funds that are gambled in the stock market. If 30% of the loans banks make are going to the stock market, I'm actually pretty terrified.
Click to expand...

Which explains why Wells-Fargo did this...
Wells Fargo Fined $185 Million for Fraudulently Opening Accounts

OK, now who in here wants to still make the erroneous claim that banks are not printing money out of thin air?

Oh, and where are the police at when you need them?
 
#184
#184
GAVol said:
A trimmed excerpt and a 5 year old thread later and it’s the same exact argument.
Click to expand...
You say "trimmed excerpt" as if you think Powell was taken out of context... or that you still believe that we don't print money out of thin air.
 
New posts
You must log in or register to reply here.

VN Store



Back
Top