Originally Posted by rickholio

"Illegal currency creation" my ass.

What this guy doesn't get is that, yes, when a bank lends you money it promises to deliver a certain amount of money at a certain time. This isn't 'currency creation'. When you get your money, you're getting it direct from the vault.

Where does the bank get that money from? Why, from YOU. And every other person that borrows at interest. THAT'S where the currency comes from: from interest being paid on loans made by the bank. The bank doesn't create that wealth... YOU DO. The bank just accumulates it for providing the service of lending you money, and it can (and will) lend out money based on what it expects to collect in the future.

What this guy is pissing and moaning about is GAAP (generally accepted accounting practices), the banks writing down future paybacks as present assets, and the fact that many loans don't actually involve people walking out of a bank with briefcases full of money. Seems like one of those guys who wants everyone to return to a commodity-backed currency system (gold, silver, oil, whatever).

To whit:

Bullshit. I can enter my company into a binding contract with damn near anyone to promise damn near anything. If my company doesn't FULFILL the terms of contract, then I'm in breach and problems start. This guy is trying to claim that a corporate entity can't enter into a contract because it can't meet all its requirements immediately. Perhaps he thinks companies with temporary cashflow problems shouldn't be allowed to hire subcontractors then, as they may not have all the cash necessary to pay for the work up front. :rolleyes:


There is a glimmer of hope for him on this point, but I believe that any financial institution worth its salt explicitly takes the right to use the money you deposited at their bank to make investments and loans. I can't honestly say I've read the fine print to that level of detail when opening an account... I've always just presumed that the banks would use my deposit money to make loans, cuz THAT'S WHAT BANKS DO.


Also bullshit. Those 'paper assets' are promises from bank's loan customers to repay their loans with interest. The money may not be in a bank's vault, but it surely does belong to the bank, plus interest. That's like saying that, although I paid into a retirement fund, it's not really money because I'm not going to get it until I'm 65 or whatever.

There's plenty of scams being run in this world. The banking system undoubtably houses a great many of them... but to my eyes, the only way this is a scam is if you invalidate the entire fiat currency system and have us all back to gold and silver coins on a string.