I thought their loan asset had to be backed by a corresponding bank reserve on fed balance sheet?
After reading nostr:npub1a2cww4kn9wqte4ry70vyfwqyqvpswksna27rtxd8vty6c74era8sdcw83a 's Book I had the following surprising insight:
**If you have money on a bank account, you owe it to yourself, it is not your wealth!**
How that? Let's look on the assets and liabilties in a fiat system where Central Bank assets are mainly treasuries:
If you have $1000 deposit on a bank account, this is your asset and your bank's liability.
The bank has these $1000 as a reserve asset at the Central Bank account, where it is a liabilty for the Central Bank.
This liabiltity is covered by a bond issued by the government.
This bond is a liability for the government. And now: What is the asset to cover the liability of the government?
**It's YOU, the taxpayer!** You have to pay to the government the $1000 you have in your bank account. Full circle YOU -> Government -> Central bank -> Bank -> You.
O.k. It's heavily simplified. In reality:
* There is a time lapse between bond issuance and tax payments.
* Government nominal debt never diminishes over time, so the liability is covered by more debt.
* Tax burden is not evenly distributed among taxpayers.
* Central bank has also other assets (Deutsche Bundesbank mainly 80% bonds from other countries and liabilities from other national central banks in the Euro System). So taxpayers of other countries owe me most of the $1000.
* and probably many more other details.
But nonetheless a nice thought experiment for gettings suspicious of money in a bank account.
If I recall correctly- when I deposit the $1000 the bank technically creates a new loan in their ledger in the amount I deposited, and credits my account the $1000.
But in terms of my bank account balance being backed by tax payers- only up to $250k. If I go abide that, it’s backed by nothing lol
Oh you in Germany ? Don’t know what the banking system particulars there is like
Yeah fdic insurance- up to $250k but above ?
After reading nostr:npub1a2cww4kn9wqte4ry70vyfwqyqvpswksna27rtxd8vty6c74era8sdcw83a 's Book I had the following surprising insight:
**If you have money on a bank account, you owe it to yourself, it is not your wealth!**
How that? Let's look on the assets and liabilties in a fiat system where Central Bank assets are mainly treasuries:
If you have $1000 deposit on a bank account, this is your asset and your bank's liability.
The bank has these $1000 as a reserve asset at the Central Bank account, where it is a liabilty for the Central Bank.
This liabiltity is covered by a bond issued by the government.
This bond is a liability for the government. And now: What is the asset to cover the liability of the government?
**It's YOU, the taxpayer!** You have to pay to the government the $1000 you have in your bank account. Full circle YOU -> Government -> Central bank -> Bank -> You.
O.k. It's heavily simplified. In reality:
* There is a time lapse between bond issuance and tax payments.
* Government nominal debt never diminishes over time, so the liability is covered by more debt.
* Tax burden is not evenly distributed among taxpayers.
* Central bank has also other assets (Deutsche Bundesbank mainly 80% bonds from other countries and liabilities from other national central banks in the Euro System). So taxpayers of other countries owe me most of the $1000.
* and probably many more other details.
But nonetheless a nice thought experiment for gettings suspicious of money in a bank account.
What’s to be suspicious about ? You put money in a bank account you become creditor to the bank, at interest.
Travel the world. People want to be paid in doge in certain places.
I bought bitcoin at 49k right before crypto winter lol
You’re not wrong. Privacy will be very out of vogue until about 2030. And even then..
So if the gov drums up all those dollars (liabilities), someone has to have an asset to match those dollars on a balance sheet.
Q for you nostr:npub1a2cww4kn9wqte4ry70vyfwqyqvpswksna27rtxd8vty6c74era8sdcw83a if I may.
Reading your excellent book, Broken Money.
Central Banks hold their own country's debt as their assets. Why can't a government just issue more currency without the charade of a separate entity holding debt everyone know they will never repay?
Plus there’s the role that USTs play in the global money system post-2008. They’re the safest and most liquid vehicles for global players like dealer banks to have and hold. Yellen keeps issuing USTs and there’s a market still for them because of the utility USTs have globally.
Q for you nostr:npub1a2cww4kn9wqte4ry70vyfwqyqvpswksna27rtxd8vty6c74era8sdcw83a if I may.
Reading your excellent book, Broken Money.
Central Banks hold their own country's debt as their assets. Why can't a government just issue more currency without the charade of a separate entity holding debt everyone know they will never repay?
Plus I don’t think we pay off the national debt with currency.. ? Assuming you’re referring to paper dollars ? Those are commercial bank liabilities. They’re tied to an asset in the bank balance sheet.
Gov debt would be “paid off” via a digital ledger, a digital dollar.
Q for you nostr:npub1a2cww4kn9wqte4ry70vyfwqyqvpswksna27rtxd8vty6c74era8sdcw83a if I may.
Reading your excellent book, Broken Money.
Central Banks hold their own country's debt as their assets. Why can't a government just issue more currency without the charade of a separate entity holding debt everyone know they will never repay?
Because the system is one of “debt monetization”. The money *is* debt. I think lol. Every transaction has two sides. For every asset there has to be a liability.
Life insurance is a scam
Not focus on adding “immense value” and just talk to people and be authentic lol