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| Thread: So Mvass |  This thread is pages long: 1 2 3 4 5 6 7 8 9 · «PREV |
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mvassilev
Responsible
Undefeatable Hero
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posted November 22, 2009 03:08 AM |
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Quote:
For example: Guy takes a $100 loan ($1000 deposits), spends it on Bob, Bob deposits $100. There are now $1100 in deposits. Earl takes $100 from his deposit, and gives it to Guy. Guy then repays his debt. There are $1000 deposits, back to starting point, because Earl lost his deposit so Guy can repay his debt.
But Earl has to take more than $100 from his deposit to give to Guy, as Guy used the loan to make something more productive - something worth more than $100.
As for the T-bonds, if the Fed is holding them, then the government doesn't have to pay.
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Eccentric Opinion
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TheDeath
Responsible
Undefeatable Hero
with serious business
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posted November 23, 2009 02:08 AM |
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Quote:
But Earl has to take more than $100 from his deposit to give to Guy, as Guy used the loan to make something more productive - something worth more than $100.
Who cares? Any extra amount is just circulation. It's like Earl gives Guy some money, the amount is the same (because that money is not returned or anything). Guy, in turn, could later purchase something from Earl -- the money in circulation is the same.
I repeat, any extra amount is just "changing hands" which is irrelevant as far as 'total amount' is concerned.
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The above post is subject to SIRIOUSness.
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