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Mr Fuzzington
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Posted - 2008.09.30 20:50:00 -
[1]
can somebody explain, without using too many technical terms(alternatively you could use technical terms if theyre explained in leymans terms), how the net dollar amount increases? i know the federal reserve(and other central banks depending on what country you are in) are responsible for creating new money to introduce to the system.
the way i have been lead to believe it works, but nobody has actually said, is: federal reserve or some other central bank decides more money needs to be introduce into the system. so it "creates out of nothing" new money to be introduced into a computer and types it into a computer. then they pump out the money in several forums. one of these forms i have read about is buying back treasury bonds(thus injecting more money into the system), but it would only be injecting more money into the system if the value of the treasuries went up since they last sold them(they always go up maybe?)
can somebody explain how else they get this money into the system?
also can somebody tell me if my main assumption is false?
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Mr Fuzzington
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Posted - 2008.09.30 20:50:00 -
[2]
can somebody explain, without using too many technical terms(alternatively you could use technical terms if theyre explained in leymans terms), how the net dollar amount increases? i know the federal reserve(and other central banks depending on what country you are in) are responsible for creating new money to introduce to the system.
the way i have been lead to believe it works, but nobody has actually said, is: federal reserve or some other central bank decides more money needs to be introduce into the system. so it "creates out of nothing" new money to be introduced into a computer and types it into a computer. then they pump out the money in several forums. one of these forms i have read about is buying back treasury bonds(thus injecting more money into the system), but it would only be injecting more money into the system if the value of the treasuries went up since they last sold them(they always go up maybe?)
can somebody explain how else they get this money into the system?
also can somebody tell me if my main assumption is false?
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Atomos Darksun
Infortunatus Eventus Obsidian Empire
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Posted - 2008.09.30 20:53:00 -
[3]
They print it.
The catch is it's only an EXTREMELY temporary solution, as it feeds inflation.
Originally by: Amoxin My vent is talking to me in a devil voice...
Atomos' Guide to Forum Flaming |
Atomos Darksun
Infortunatus Eventus Obsidian Empire
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Posted - 2008.09.30 20:53:00 -
[4]
They print it.
The catch is it's only an EXTREMELY temporary solution, as it feeds inflation.
Originally by: Amoxin My vent is talking to me in a devil voice...
Atomos' Guide to Forum Flaming |
c4 t
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Posted - 2008.09.30 21:00:00 -
[5]
Originally by: Atomos Darksun They print it.
The catch is it's only an EXTREMELY temporary solution, as it feeds inflation.
they dont actually print the majority though. ive been lead to believe that the majority of it are digital dollars.
mostly harmless |
Last Wolf
Umbra Wing
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Posted - 2008.09.30 21:02:00 -
[6]
Originally by: Atomos Darksun They print it.
The catch is it's only an EXTREMELY temporary solution, as it feeds inflation.
I doubt that is the only way they introduce money. I seriously doubt that if everyone who has any amount of money in a bank somewhere tried to get it all out in cash there would be enough. I bet there is at least 50%(<---- yes that is a random number pulled out of my ass on the spot) more money in "The System" then there is actually available in printed cash. __________________________________________________________
Originally by: Liang Nuren wrong forum isroy i am vjery drunm
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Atomos Darksun
Infortunatus Eventus Obsidian Empire
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Posted - 2008.09.30 21:09:00 -
[7]
Originally by: Last Wolf
Originally by: Atomos Darksun They print it.
The catch is it's only an EXTREMELY temporary solution, as it feeds inflation.
I doubt that is the only way they introduce money. I seriously doubt that if everyone who has any amount of money in a bank somewhere tried to get it all out in cash there would be enough. I bet there is at least 50%(<---- yes that is a random number pulled out of my ass on the spot) more money in "The System" then there is actually available in printed cash.
That's exactly it, technically. They only print the money when they need to, but they can inject "virtual money" whenever they want to. It's money-on-paper vs. paper-money.
Originally by: Amoxin My vent is talking to me in a devil voice...
Atomos' Guide to Forum Flaming |
Mr Fuzzington
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Posted - 2008.09.30 21:11:00 -
[8]
Originally by: Atomos Darksun
Originally by: Last Wolf
Originally by: Atomos Darksun They print it.
The catch is it's only an EXTREMELY temporary solution, as it feeds inflation.
I doubt that is the only way they introduce money. I seriously doubt that if everyone who has any amount of money in a bank somewhere tried to get it all out in cash there would be enough. I bet there is at least 50%(<---- yes that is a random number pulled out of my ass on the spot) more money in "The System" then there is actually available in printed cash.
That's exactly it, technically. They only print the money when they need to, but they can inject "virtual money" whenever they want to. It's money-on-paper vs. paper-money.
this part i know, but i want to know how they inject it into th e system. they dont just give people the money. its more masked.
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Marie Duvolle
United Sentients
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Posted - 2008.09.30 21:14:00 -
[9]
Edited by: Marie Duvolle on 30/09/2008 21:15:56 Banks who give out loans only have to 'cover' for a percentage of their 'digital' cash loans with actual assets/money. That percentage gets lower and lower reaching rediculous amounts. This is where the excess money comes from, it's also why banks get into trouble, if a small percentage of the loans they give out goes wrong it can easily get to the point where it gets more than the amount of actual cash they have.
Don't stir the hornet's nest |
Kaeten
Hybrid Syndicate
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Posted - 2008.09.30 21:15:00 -
[10]
it's given to banks by the goverment in exchange for digital dollars. Banks get their money from.. well wherever banks get their money.
when the goverment does with the digital dollars i dunno, I'd like to think they just erase it as the cash is hardcopy and not digital. ________________________ I'M POOR
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c4 t
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Posted - 2008.09.30 21:37:00 -
[11]
i dont believe anybody has answered the question yet. need an economist ITT please.
how is money created and injected into the system(that is HOW does our total supply of MONEY go up?)
yes they "print" more in the form of digital dollars but how do they inject these digital dollars into the system.
mostly harmless |
Alice'Dee
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Posted - 2008.09.30 22:01:00 -
[12]
For us economy noobs |
Dmian
Gallente Starline Engineering Corporation
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Posted - 2008.09.30 22:40:00 -
[13]
Edited by: Dmian on 30/09/2008 22:41:59
One way to introduce money into the system is a "Money Auction". The European Central Bank (as do the US Federal Reserve or the Bank of England) do this whenever they think the market needs more liquidity (cash.) You have a good explanation here (oh BBC, I love you .) The private banks are the ones that auction for the money, and then they have more cash available for their businesses. But they must pay back the "new" money to the Central Bank on a scheduled date. Hope that helped. ----
Eve Alpha - The font of Eve - Get it here |
Sharupak
Minmatar Brutor tribe
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Posted - 2008.09.30 22:52:00 -
[14]
Originally by: c4 t i dont believe anybody has answered the question yet. need an economist ITT please.
how is money created and injected into the system(that is HOW does our total supply of MONEY go up?)
yes they "print" more in the form of digital dollars but how do they inject these digital dollars into the system.
They make a purchase order for government bonds and print the money which feeds the system. If they need to take it out, they sell the bonds. However, all money is debt. So the need to put more currency into the system derives from newly generated loans. Then the debt is monetized by purchasing the bonds and printing it.
With this system, we are all just waiting around until we cant pay the interest. _______________________________________________ RuntimeError: ChainEvent is blocking by design, but you're block trapped. You have'll have to find some alternative means to do Your Thing, dude. |
Akita T
Caldari Navy Volunteer Task Force
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Posted - 2008.10.01 02:19:00 -
[15]
http://www.chrismartenson.com/the_fed He explains it rather well.
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SHOPS || Mission rewards revamp || better nanofix
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Ridley Tree
The Black Rabbits The Gurlstas Associates
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Posted - 2008.10.01 06:13:00 -
[16]
Edited by: Ridley Tree on 01/10/2008 06:13:49 Most nations use a fractional reserve system. Read this article. Wiki pretty much gets it right. Vast majority of the new money injected into the economy does not come from the FED or the government but from normal banks.
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Pirating 101: A Basic Course |
mamolian
Madhatters Inc.
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Posted - 2008.10.01 20:18:00 -
[17]
http://video.google.com/videoplay?docid=-515319560256183936&ei=mtrjSJ7LHoHCjgL1kJCcBg&q=fractional+banking
Enjoyed this documentary..
Way I understand it.. The federal reserve reaches up and plucks dollah from the money tree! Great scam they have going.. -----------
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Pwett
Minmatar QUANT Corp. QUANT Hegemony
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Posted - 2008.10.02 16:07:00 -
[18]
Simplest Definition Possible:
Federal reserve tells banks that they must keep x% of every dollar loaned.
Thus, for every dollar deposited banks can loan out 1/x% dollars.
So, assuming the reserve rate is 20%, then banks can loan out 1/20% or $5 for every dollar on hand.
Money isn't printed, it's just in the books. _______________ Pwett CEO, Founder, & Executor <Q> QUANT Hegemony
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Viktor Fyretracker
Caldari Caldari Provisions
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Posted - 2008.10.02 22:08:00 -
[19]
Originally by: Pwett Simplest Definition Possible:
Federal reserve tells banks that they must keep x% of every dollar loaned.
Thus, for every dollar deposited banks can loan out 1/x% dollars.
So, assuming the reserve rate is 20%, then banks can loan out 1/20% or $5 for every dollar on hand.
Money isn't printed, it's just in the books.
this must also be why banks like to maintain "minimum balance" rules. because they want to know they have so much of OPM(Other People's Money) to loan out. but i can see where problems like now come from, the market tumbling and since so much money is tied up into loans the bank couldnt handle 100,000 customers closing their accounts at once.
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Roxanna Kell
Caldari Provisions
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Posted - 2008.10.02 22:12:00 -
[20]
they do print plaques for one million ...etc but they have to print every single cent. even if they want to sue a special 1 billion dollar plaque
Quote: There is no Dishonor in winning fools, so do it any way you can.
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Vabjekf
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Posted - 2008.10.02 23:26:00 -
[21]
Debt = money.
If a bank loans you $1. $2 now exist.
$1 that the bank loaned you, that you can buy something to drink with, and $1 that you now owe the bank.
The bank can 'sell' that $1 that you owe them to someone else. If the bank borrowed money from some other bank, it could include that $1 that you owe it as $1 that it is paying back to the other bank.
If you pay that $1 back, $1 vanishes. But the money being loaned out usual always exceeds the 'hard' money being payed back.
Effectively the system continues with more and more debt being made, more and more money 'existing' because of that, until suddenly people realize "hay, none of this money is real!!", panic, and the whole thing collapses.
Then you start over, with gold ingots =D
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Sharupak
Minmatar Brutor tribe
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Posted - 2008.10.02 23:49:00 -
[22]
Originally by: Vabjekf Debt = money.
If a bank loans you $1. $2 now exist.
$1 that the bank loaned you, that you can buy something to drink with, and $1 that you now owe the bank.
The bank can 'sell' that $1 that you owe them to someone else. If the bank borrowed money from some other bank, it could include that $1 that you owe it as $1 that it is paying back to the other bank.
If you pay that $1 back, $1 vanishes. But the money being loaned out usual always exceeds the 'hard' money being payed back.
Effectively the system continues with more and more debt being made, more and more money 'existing' because of that, until suddenly people realize "hay, none of this money is real!!", panic, and the whole thing collapses.
Then you start over, with gold ingots =D
We are all just waiting around until we cant pay the interest anymore. _______________________________________________ RuntimeError: ChainEvent is blocking by design, but you're block trapped. You have'll have to find some alternative means to do Your Thing, dude. |
Brock Nelson
Caldari Flux Technologies Inc
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Posted - 2008.10.03 00:59:00 -
[23]
Introducing brand new money into the economy is bad, just bad. There was a African country that did the same and guess what happened? Their economy collapsed and the value of their money was worthless. In fact, people would use that money as fire source.
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Aloriana Jacques
Amarr Royal Amarr Institute
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Posted - 2008.10.03 02:20:00 -
[24]
Fact - More then 80% of currency in today's society does not actualy exist in a physical form. It exists merely as numbers in a database or book. This is what we call, credit.
And now to quote my lovely econ book.
"Creating Money To create money, the New York Fed buys government securities from banks and brokerage houses. The money that pays for the securities hasn't existed before, but it has value, or worth, because the securities the Fed has bought with it are valuable. More new money is created when the banks and brokerages lend the money they receive from selling securities to clients who spend it on goods and services."
And as for hard currency, it's printed and minted and distributed at a regular rate to replace old worn out currency, and pumps out more when the higher ups request it. - - - Aloriana Jacques - Skill Sheet
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Akita T
Caldari Navy Volunteer Task Force
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Posted - 2008.10.03 02:51:00 -
[25]
Originally by: Aloriana Jacques Fact - More then 80% of currency in today's society does not actualy exist in a physical form.
More like 95% actually... _
Alternate resist display || Mission reward revamp || better nanofix
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Cosy Ceaon
Gallente Aliastra
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Posted - 2008.10.03 05:25:00 -
[26]
i already have some knowledge about this and the linked material help me to form a better opinion on this thx
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Pwett
Minmatar QUANT Corp. QUANT Hegemony
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Posted - 2008.10.03 15:58:00 -
[27]
Originally by: Aloriana Jacques Fact - More then 80% of currency in today's society does not actualy exist in a physical form. It exists merely as numbers in a database or book. This is what we call, credit.
Fact - Deflation is INFINITELY worse than inflation. _______________ Pwett CEO, Founder, & Executor <Q> QUANT Hegemony
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RFID
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Posted - 2008.10.03 18:00:00 -
[28]
Start here. Very good explanation.
In case the link doesn't work, search on 'money as debt'
http://www.youtube.com/watch?v=vVkFb26u9g8
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Dantes Revenge
Caldari
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Posted - 2008.10.03 18:01:00 -
[29]
Originally by: c4 t i dont believe anybody has answered the question yet. need an economist ITT please.
how is money created and injected into the system(that is HOW does our total supply of MONEY go up?)
yes they "print" more in the form of digital dollars but how do they inject these digital dollars into the system.
Some bank directors give themselves a massive pay rise which is paid for by the newly printed money. -- There's a simple difference between kinky and perverted. Kinky is using a feather to get her in the mood. Perverted is using the whole chicken. |
Mr Fuzzington
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Posted - 2008.10.03 22:48:00 -
[30]
Originally by: Aloriana Jacques Fact - More then 80% of currency in today's society does not actualy exist in a physical form. It exists merely as numbers in a database or book. This is what we call, credit.
And now to quote my lovely econ book.
"Creating Money To create money, the New York Fed buys government securities from banks and brokerage houses. The money that pays for the securities hasn't existed before, but it has value, or worth, because the securities the Fed has bought with it are valuable. More new money is created when the banks and brokerages lend the money they receive from selling securities to clients who spend it on goods and services."
And as for hard currency, it's printed and minted and distributed at a regular rate to replace old worn out currency, and pumps out more when the higher ups request it.
thanks this is well put =) |
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