You avoid my question.
Also, I never claimed to have a beef or not have a beef with any system but rather prefer an informed populace when it comes to basic mathematics and how any system uses the ignorance of the majority of a population to benefit the minority who do understand it. Part of that is the educational system that we have and doesn't incentivize teachers to make students question everything.
ALso, as to the increase in money supply based on lending being based on a math phenonemon. It is, just not the one you think. Yes, absolutely, the money supply increases because banks lend out money. But that would be true even with a full 100% reserve. Lending creates money.
Take fractional reserve out of banking, and force banks to lend entirely on capital... do you know what you get? We do have a system like that in the US. 10 Steem to the first one that can figure out what it is.
missed your reply...
anyway infinite credit market.
Lets take your MM effect to its logical conclusion. The UK. No reserve required. The MM is infinite. Or nearly so. RIght. But they do not, in fact, have an infinite money supply. Why not? Because there are not an infinite number of qualified people looking to borrow in infinite amount of money. Because the amount of money lent vs the amount of money deposited is a function of the market for credit.
In the US, there are legal requirements for who banks can lend money to and how much they can lend to those borrowers. A bank will lend exactly the amount of money for which they can find qualified borrowers. Its a market equation that has nothing whatsoever to do with the required reserve.
So your bank zero, lets say it could find qualified borrowers to lend out exactly 90M. And lets say the RR is 10% and the bank has 100M on deposit. SO they lend out the 90M, just like in your example.
Now, lets say the RR is lowered to 5%. THat does not automatically create new borrowers. The fact is that theyll still lend out the exact same amount. 90M, the amount of money they can sell. The demand for credit has not changed... theyll lend out the same 90M.
Now, lets say that that the RR is raised to 50%. You know how much money theyll lend out? Still 90M. They'll borrow enough to make their reserve. If they have qualified borrowers looking to borrow 90M, its happening. Period. You could set a 150% reserve, and its still happening.
The required reserve rate simply has no effect on money supply. You think it does because youre not getting how moneylending works. You think the system is way less complicated than it really is.
TO put it another way, imagine that your first business,, the one that gets the $100M. Imagine that the CEO picks up the cash, is on the way to bank 0, when he gets overtaken and devoured by a pack of cannibals. They eat his flesh and burn his money with his bones.
SO the 100M deposit never happens. The loan officer in bank 0 is sitting at his desk. The next company ceo comes into bank zero. What do you think happens?
Do you think CEO B walks in, and the bank officer has a bottle of lube in one hand, a porno in the other, and he says "Well, im terribly sorry, but we didnt get enough deposits today. So, although youre perfectly qualified to borrow $90M, instead of lending it to you, which is the whole way my company makes money, im just going to spend the day masturbating?"
Of course not. Hes going to lend CEO B the goddamn money. Because thats his whole purpose. And this would be true regardless of the reserve or money on deposit. Because, say it with me, banks don't use deposits to fund loans.
Before someone points it out. Yes, those legal requirements are often poorly formed, laxly enforced and if they worked properly, the banks wouldnt have needed to get bailed out. I dont think the system is perfect, or even good. I just think its not as described in this post.
As I cannot reply directly to you, due to nesting comment limitations, let me say that the purpose of the headline was to be an attention grabber. Did I ever say that I (personally) had a problem with the system -- or was I relying on the marketing of the title to entice people who do have an issue with the current paradigm -- to take a peak. If the result is that I am able to teach some basic mathematics to people and how it applies in an area of society that affects them daily and let them draw their own conclusions ... then wonderful.
Regardless, if you can agree with that definition of money multiplication, as in any increase in the monetary supply beyond the initial amount borrowed, then, I can assure you that this increase in the monetary supply can be solely attributed to a mathematical phenomena.
I don't follow your claim that I assume an infinite credit supply -- or I am ignorant of the economic terms.
Please, enlighten me.
Also re beef with the banks. Fair enough but when youre calling them crooked, youre clearly trying to make a point... and clearly trying to inject a value judgement.
THat's fine, but using that language then retreating behind "oh im completely impartial. Im just doing math." is trying to have your cake and eat it too.
Tired of Jason having sex with beagles and molesting children?..
then read this completely unbiased article about math.
Yeah, im saying something about jason, even if im not saying it... and i think you know that.
Replying here due to nesting. No. Credit unions (at least ones in the US) fall under the same "depository institutions" category as banks... they have the same reserve requirements.
I gave up on getting an answer and answered elsewhere in the thread already. I would have accepted loansharks or payday loan places like the money store.
point being that if you want to get a loan thats not based on deposits, and comes directly out of the lenders pocket, its possible. But the terms are going to be way crappy.