Bob wrote:
>
> David Hillary wrote:
>
> <snip>
>
> > Banks are not and do not pretend to be warehouses for stacks of paper
> > notes or bullion or whatever. Banks are liquidity institutions which
> > accept DEPOSITS hold LIQUID RESERVES and INVEST in DEBTS of various
> > kinds.
>
> <snip>
>
> > Money is created by banks and currency institutions as well as gold
> > producers.
>
> You're right in saying banks are not warehouses for bullion, but wrong
> when you say money is created by banks, except maybe a long long time
> ago. I'd include currency institutions, but I don't know your definition
> of that phrase. Money and currency are two different things.
Money is means of exchange, a transactional medium, means of payment, it
is created by banks whose balances can be used and are in fact used to
make payments.
>
> For an explanation, buy 'Money - Ye shall have honest weights and
> measures':
> http://www.bearerinstruments.com/search.php3?Cat1=Publications
>
> If a bank isn't a currency institution, then what is the difference
> between a bank and a currency institution? And, where does your
> definition of currency institution come from? Or is that another one of
> those phrases that gets thrown around a lot but never defined?
A currency institutions is just an institutions that issues currency,
such as a currency board, for example the Hong Kong Monetary Austhority.
The HKMA issues HK dollars against a reserve of USD in US banks and US
bonds (i.e. a liquid reserve and an earning reserve). This currency is
the monetary base or high powered money for Hong Kong, banks use it to
create balances (using fractional reserve banking) in HKD. This is a
good illustration of how the value of currency is not diminished by
fractional reserve banking. The HKMA exchanges HKD for USD at a fixed
rate of 7.80 HKD=1 USD. It maintains reserve assets equal to the entire
monetary base. the reserve is made up of liquid reserves (USD bank
account balances) and USD bonds. The banks then take this currency
backed up by debt and use it as the basis for the creation of further
money in the form of their balances in fractional reserve banking. Thus
the actual USD bills held to back up the entire HK monetary system is
close to zero, but since 1983 the HKMA has sucessfully maintained the
HKD at or close to the target rate. Digigold and Standard Gold are
currency institutions of the e-gold economy, which do or could use debt
to back up their currencies.
>
> >Banking is not fraud and its not warehousing.
>
> You're right on the warehousing part. Wrong on the fraud part.
>
> 'Money - Ye ... ' might be expensive relative to other books, but
> it's "Just this side of stealing" relative to the value of the
> knowledge in it.
>
> It usually pays to nail down the most basic stuff first. Then more
> advanced future thinking (time and energy being non-renewable
> resources let alone scarce) on the stuff tends not to be wasteful.
>
> Bob
where is the fruad or trickery? who is hiding what from whom? Who is
misleading who? fractional reserve banking is not fraud. There are no
contracts being broken and no misleading or deceptive actions.
David Hillary
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