I've gotten a lot from the last few times you've been on Jimmy's show. I wanted to ask you about inflation/dollar devaluation. I understand that the Fed prints money and this creates inflation. Do the banks also play a role in money printing? I was listening to some old talks given by Professor Warner on the topic and from what I gathered banks reclassify debt from a loan/mortgage issuance as a deposit (for the bank itself). Banks in the UK do not have to follow normal accounting practices, I'm wondering if the same applies to US banks? If it does, would this also "create" money?
I say again, what I know is straight from everything I can read and study, so not an economist or financial advisor. When Bill Clinton was President a new practice was started where banks could lend more money than they actually possessed or held. Look up and read on fractional lending, since then the experts explain banks can lend out ten times the amount of money theyre overseeing for example if you have $100,000 in checking account the bank can lend $1,000,000. This 'money expansion' permits transactions to happen, that cannot happen, if banks are restricted and so it fuels car prices and home prices to rise to obscene levels. And to me that is where the weakness is, assets that are valued well higher than their actual value.
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The information contained on this website and the resources available for download through this website is not intended as, and shall not be understood or construed as, financial advice. I am not an attorney, accountant or financial advisor, nor am I holding myself out to be, the information contained on this website is not a substitute for financial advice from a professional who is aware of the facts and circumstances of your individual situation. We have done our best to ensure that the information provided on this website and the resources
available for download are accurate and provide valuable information. Regardless of anything to the contrary, nothing available on or through this website should be understood as a recommendation that you should not consult with a financial professional to address your particular information. The company expressly recommends that you seek advice from a professional. Neither the company nor any of its employees or owners shall be held liable or responsible for any errors or omissions on this website or for any damage you may suffer as a result of failing to seek competent financial advice from a professional who is familiar with your situation.
Thank you for the response Sir. The banks are lending out more money than they actually have. That tells me that they must be engaged in money "creation", if only via ones an zeros on a computer somewhere. Which would mean they absolutely are contributing to inflation. Those same institutions being wrapped up in the purchase, sale, and rental of hard assets like homes, commercial property and vehicles is a conflict of interest. And the amount of inflation contributed by commercial banks is likely several orders of magnitude greater than what the federal government is printing. In that case, it is likely that the market prices of property and vehicles are not inflated - but the only items on the market who's real value is asked for. All other markets pounded to austerity level.
Greetings Paul,
I've gotten a lot from the last few times you've been on Jimmy's show. I wanted to ask you about inflation/dollar devaluation. I understand that the Fed prints money and this creates inflation. Do the banks also play a role in money printing? I was listening to some old talks given by Professor Warner on the topic and from what I gathered banks reclassify debt from a loan/mortgage issuance as a deposit (for the bank itself). Banks in the UK do not have to follow normal accounting practices, I'm wondering if the same applies to US banks? If it does, would this also "create" money?
Hi Mike,
I say again, what I know is straight from everything I can read and study, so not an economist or financial advisor. When Bill Clinton was President a new practice was started where banks could lend more money than they actually possessed or held. Look up and read on fractional lending, since then the experts explain banks can lend out ten times the amount of money theyre overseeing for example if you have $100,000 in checking account the bank can lend $1,000,000. This 'money expansion' permits transactions to happen, that cannot happen, if banks are restricted and so it fuels car prices and home prices to rise to obscene levels. And to me that is where the weakness is, assets that are valued well higher than their actual value.
N O T F I N A N C I A L A D V I C E
The information contained on this website and the resources available for download through this website is not intended as, and shall not be understood or construed as, financial advice. I am not an attorney, accountant or financial advisor, nor am I holding myself out to be, the information contained on this website is not a substitute for financial advice from a professional who is aware of the facts and circumstances of your individual situation. We have done our best to ensure that the information provided on this website and the resources
available for download are accurate and provide valuable information. Regardless of anything to the contrary, nothing available on or through this website should be understood as a recommendation that you should not consult with a financial professional to address your particular information. The company expressly recommends that you seek advice from a professional. Neither the company nor any of its employees or owners shall be held liable or responsible for any errors or omissions on this website or for any damage you may suffer as a result of failing to seek competent financial advice from a professional who is familiar with your situation.
Thank you for the response Sir. The banks are lending out more money than they actually have. That tells me that they must be engaged in money "creation", if only via ones an zeros on a computer somewhere. Which would mean they absolutely are contributing to inflation. Those same institutions being wrapped up in the purchase, sale, and rental of hard assets like homes, commercial property and vehicles is a conflict of interest. And the amount of inflation contributed by commercial banks is likely several orders of magnitude greater than what the federal government is printing. In that case, it is likely that the market prices of property and vehicles are not inflated - but the only items on the market who's real value is asked for. All other markets pounded to austerity level.