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Additional resources for earning interest in gold

9 responses to “How to Maintain a Bull Market after Covid”

  1. Awesome exposè, Keith! You’ve demonstrated what is at stake in the premise that FRNs are money. And that seeing dollars as backed-credit instruments is a powerful tool for explaining and ultimately predicting monetary and financial events. Hang in there!

  2. “If you tried to explain to him that the bank takes the cash he deposited and buys a Treasury bond with it, he would object.”
    There may be a misconception here. Banks do not lend deposits or use deposits to buy securities. Banks create deposits when they lend. The classic model of fractional reserve banking is not correct. Don’t take my word for it. Read the article attached below, or consult the Bank of England, which acknowledges that the primary function of a modern bank is to create what is commonly called “money” by creating new credit. Seriously, please read this, it’s important that we all understand.
    https://www.sciencedirect.com/science/article/pii/S1057521915001477

  3. Hard Money Jim..I saw that article too but it just didn’t square with everything else I was learning. My best guess to try to explain your article is that that bank had EXTRA EQUITY above their required capital under say Basel 3 and so they could just write the loan and create the loan and their asset by drawing down their capital on the right side of the T account and converting it to a deposit on the same right side of the T account then go borrow the reserves if needed.

    That article bugged me too for years until I finally broke through

    Study the banking T account and Basel capital requirements …walk toward the light Jim lol ????????

  4. HMJ or maybe a different article I saw but only central banks can create money from nothing by buying bonds and assets…the theory that banks could do the same trick just didn’t square with EVERYTHING ELSE I was reading so I had to dig deep and got kicked around a bit over the issue but I think I’ve got it settled…more or less

  5. In Creature Book the author said the same thing and I bounced it off a an older friend / former employer who sits on a bank board and he basically said not really son.

    Not everything in that Creature from Jekyll Island book is 100% accurate.

    Keith helped me understand too…and I formed my own vision of the world financial system and it is so easy to get people to understand this metaphor.

    The whole financial system is a HOUSE OF CARDS. each card is a PROMISE TO REPAY. Each card is an asset on which OTHER cards depend on…pull too many defaulted cards out of the house and the whole thing collapses

  6. Lastly what I think is interesting is that the stimulus payments when they land in your account the bank books record it as a liability on the right side of the T and an asset on the left side of the T…but since banks don’t have to hold 100% of it as reserves they can move 90% of that reserve and convert it to an asset on the same left side of the T or write a loan which becomes an asset on the same side of the T …but everything has to go down with capital ratio requirement s being satisfied AND the assets ( left side of the T) have various RISK WEIGHTINGS that have to be worked out…again back to Basel.

  7. Great article Keith, we’ve got to be close to the end of FIAT soon with rates negative or close to we’ve done away with incentive to save it’s all spend borrow and spend now, but for this to work now savings are gone debt has to increase even more frantic pace to keep the Ponzi going it’s the only supply left plus capital consumption. Banks in general create money out of thin air it’s not even 10% fractional reserve as long as people want to borrow the banks can survive, when people stop borrowing that’s when the Ponzi ends and assets fall. When a borrower goes to a bank to buy a house the bank is actually buying the house via you the borrower, the bank deposits the cash in your account created from thin air you pay the seller the bank holds the mortgage and the new owner pays the interest. So banks are just buying assets in this case the purchasers mortgage with money created from nothing, not a bad game for the bank which pocket the interest.

  8. To the above discussion…if a private non central bank can just create money to buy an asset,slam the asset on the left side of the T and create the deposit on the right side of the T out of thin air…then why do we have THIS

    https://fhlbanks.com/

  9. Or to be precise…if a private non central bank can just create a loan from nothing , slam that loan as an asset on the left side of the T and create a deposit credit on the right side of the T then why does any bank need THIS

    https://fhlbanks.com/

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