>>>Question: Where does the interest paid by commercial banks to their investment depositors come from? <<<
Their own pockets, their profit-loss account. It is paid from the bank account they keep with themselves. -- >>>Please explain! Most of the nation's money supply is credit existing in the form of bank deposits. And bank loans to individuals usually entail the creation by the lending banks of new deposits within their borrowers' accounts, each of which is normally set up by a lending bank at the time of making a loan. In such cases, how does money creation involve financial institutions other than the lending bank? <<< Simply because an individual bank does not create credit and cannot create credit unless it is a monopoly, which the totality of the financial sector is--and then only in cooperation with the financial sectors' customers. It is by its nature a monopoly even though individual banks may be individually owned--because their product must be fungible and acceptable at every other bank for deposit. That means that every individual bank must conform to the same rules and standards of every other bank, or it will not stay in business. If it charges too much for loans, business will be driven to other banks. If it charges too little, its capital will become depleted. It is by its nature centralized regardless of the putative ownership management of its individual components. Douglas's theorem in this regard was this: The flow of deposits equals the flow of loans. The flow that he was referring to was the composite net flow of the system as a whole into or out of the pool of deposits in the aggregate. I realize this is not a full or complete answer to your question, but we are early into our discussion. ____________________________________________________________ Get advanced SPAM filtering on Webmail or POP Mail ... Get Lycos Mail! http://login.mail.lycos.com/r/referral?aid=27005 ==^================================================================ This email was sent to: [EMAIL PROTECTED] EASY UNSUBSCRIBE click here: http://topica.com/u/?a84IaC.bcVIgP.YXJjaGl2 Or send an email to: [EMAIL PROTECTED] TOPICA - Start your own email discussion group. FREE! http://www.topica.com/partner/tag02/create/index2.html ==^================================================================
