FTC Shuts Down "Debt Elimination Lite" Scammers

[Pantekhnikon]

You might also study the following:

http://www.suijurisclub.net/banks-colle ... ney-i.html

(HINT: don't forget to watch the Dr. Edwin Vieira video embedded at the end of the thread)

[Arthur Rubin]

Ahem. As Daly was eventually evicted, the Credit River decision was overturned in some sense, wasn't it? (And it appears from the history at the MN state law library that Mohoney's contempt citations were ignored by all courts and by law enforcement, so it's probably correct to say that those decisions are null.)

[BBFlatt]

You have absolutely no idea what "fractional reserve" banking is, do you?

Even the Social Credit and Austrian School economists understand what the definition is, and these are people you claim to have read.

I certainly have... have YOU?

I knew I shouldn't attempt to respond to any of your clap-trap.

You really shouldn't attempt to respond to me, since YOU don't seem to understand:

http://www.federalreserveeducation.org/ ... eation.pdf

Let's just deal with facts, now, shall we?

Notice the TITLE of that webpage:

"The Principle of Multiple Deposit Creation"

And how is this different from what a credit union does?

I've done most of my banking at a credit union for over 30 years now. In all of that time I've never been put on notice by them that any portion of my deposits, either in my savings or share draft accounts, were unavailable to me because they had been loaned to someone else. So just like in the example you linked to, if I have the money in my account, ready and available for me to withdraw and spend, and that same money (less the reserve requirement) has been lent to someone else, and presumably spent and deposited in the recipient's financial institution, does this not increase the money supply just the same as when a bank does it?

[notorial dissent]

CORRECTION: Credit Unions do NOT participate in fractional reserve lending. I do wish you people would at least read Rothbard and listen to Vieira before you misinform the public like this.
Utter nonsense!!! Of course they do, otherwise they would be called depositories. A credit union operates in exactly the same way a bank does, the only difference is that the shareholders are the depositors. Otherwise, it is exactly the same principal. They put at loan a certain percentage of the deposits they receive in order to make money to pay their bills and pay dividends to their shareholders. Don’t blame the rest of the world because you don’t know how a CU operates.

I have to believe that the only reason you would write an ignorant statement like the above would be just that... simple ignorance of the actual process of fractional reserve lending.
Nothing ignorant about it, except you, it happens to be the simple and plain fact of the matter.

Years ago, Demosthenes posted the link to a Federal Reserve chart which clearly demonstrated the creation of new 'money' via the fractional reserve process.
And you didn’t understand it any better then than you do now.

Fractional reserve lending is NOT the process of lending out a portion of depositors' ACTUAL pooled funds.
My banking instructors will be shocked to learn that, and since they’ve actually worked in the financial industry I think I will pay more attention to them than you.

Fractional reserve lending is the process of using an initial deposit (the so-called 'reserve') as the BASIS for loaning 90% of that deposit out in NEWLY CREATED funds. Once those NEW funds are deposited someplace else, those deposits then become the basis for loaning out 90% of THAT amount, and so on until NINE TIMES as much 'money' as existed in that first deposit has been created. The entire amount of the initial reserve deposit REMAINS on deposit. NONE of it has been removed from that account and lent out. NEW money has been created during the lending process... thus causing an INCREASE in the money supply and what we call 'inflation'.
You can’t even get the numbers right, and your scenario is total nonsense. Fractional Reserve, means keeping a fraction of your deposits and assets on hand as a reserve for the course of every day business. Depending on the institution, the reserve is generally closer to 20% than 10%, and can be considerably more. There is nothing new about the funds lent out, they are funds that were on deposit, and rather than say $100 sitting in a vault, it is loaned out as a short term loan to someone for some reason. The bank gets their money back in short order with an interest charge and they have made a little money on money that otherwise would have been sitting idle. There was a short term increase in the money supply since $100 that would have been sitting in a vault was out running around, but it is hardly “new” money, since it had been there all along. When the loan is repaid, the money supply is decreased by the amount of the loan, plus the amount of interest. So nothing created out of thin air, nothing “new” at all, just money that was on deposit being loaned out and then recovered.

That process would be the OPPOSITE of lending OUT a percentage of actual pre-existing deposits. Lending out pre-existing deposits puts actual pre-existing capital at RISK instead of creating NEW money based upon some 'reserve' capital which still remains INTACT.
Which is exactly what happens, and why banks and yes, even credit unions fail when too many loans they have made don’t get repaid. I know this just ruins your precious theory, but life is rough.

ONLY the Federal Reserve Banking system is legally permitted to do that.
More nonsense, this is exactly the same way banks have been carrying on business since the dawn of banking, and considerably longer than there has been a Federal Reserve Bank.

For example: My father invested a large portion of his life savings in second mortgages -- meaning he lent borrowers a portion of his actual capital.

In the 1980's we had a real estate value slump almost as serious as the one we have now. My father LOST a significant portion of his pre-existing capital investment when the borrowers defaulted and the holders of the first mortgages barely got paid at foreclosure sales. A third of his life savings evaporated.
Unfortunate, but which is exactly what happens to a bank when their loans go bad. I was around to watch the implosion in the 80's of the various banks who went under because of bad real estate loans, so I saw it first hand, and saw it from both sides well enough to know you haven’t got a clue.


UNLIKE Federal Reserve Banking institutions, my father was NOT permitted by the Federal Reserve Act of 1913 to leave all of his existing capital safely in the bank while lending out newly created money (counterfeiting) and increasing the money supply (inflation).
Which of course is more nonsense, and is exactly why so many banks went under in the 80's, for the simple reason that they had their capital out at loan, and not safely in the vault, as you would like to believe.

I believe the information which is provided by the Credit Union National Assn (above). They do not have shareholders. They do have members.
You obviously didn’t read it very well then, and FYI, I have been a CU member off and on for more years than I care to admit, and the members have always been called shareholders, and our deposits represented shares in the CU, and were counted as such at election time, so much for one more of you delusions.

...and are "mutual" insitutions, meaining that all profits go to members in the form of reduced interest rates, etc. Since the only capital in a credit union is the member deposits...
At the very least you are attempting to be disingenuous, and failing miserably.

WRONG. In order to loan one thin dime, (or any other amount of their members' pre-existing capital), a portion of the CU members' actual deposits has to LEAVE those accounts and be placed into the hands of the other member(s) who are borrowing the funds... EXACTLY the way my father's actual pre-existing capital left his bank account and was lent to the people he granted second mortgages. That means actual RISK -- NOT creation of new money and inflation of the money supply.
Which, golly gee is exactly how both a bank and a CU operate.

You apparently fail to realize that prior to the advent of fractional reserve lending, peoples' actual capital left their bank accounts when it was loaned OUT to someone.
Just like it still does to this day.

Since credit unions can be observed to make loans, and since none really has any separate shareholder capital as such, they must be lending some fraction of their deposits and not holding 100% in reserve.
Well, almost right.

That is correct. But that is NOT fractional reserve lending. That is the type of actual lending that was practiced prior to the advent of fractional reserve lending.
If they are not maintaining 100% of their deposits in reserve, then they are doing fractional reserve, can’t have it both ways.

AGAIN -- there is a difference between literal nullification and figurative nullification. The case was never literally, legally nullified because it was never appealed and was not included in the later decisions of the Minn Supreme Court which nullified other cases presided by Mahoney several months later.
Null, is null, I don’t know how much more nullified a case can be when the state Supreme Court declares it and all subsequent actions of a case a nullity, there is no further appeal, except to that court. The court declared everything having to do with that case null and void. They don’t get much deader than that. The fact that Mahoney exceeded his authority so incredibly far also points out that the decisions were a nullity. He could have made any other order he wanted to and if it wasn’t within his jurisdiction, then it was without force or affect.

The Credit River Decision has ONLY been nullified figuratively, because it cannot be cited as stare decisis or considered 'law'. Hopefully you can now comprehend my meaning.

There is no figuratively about it, it was declared a nullity, no force, no effect, nothing. JP decisions cannot be cited period, they are not courts of record.

LOL.... a decision which is not stare decisis is not law, period. It can be neither good law nor bad law when it does not yet constitute any law at all. It is purely and simply a jury decision. You already know that wserra... heh heh... talk about SPIN.....
It is stare decis, for the simple fact that it has stood. A JP cannot empanel a jury, and there fore nothing they did or said would have any standing.

Notice that none of the cases that were nullified, and none of the cases that wserra cited above, ever included the sworn testimony of a Bank President as to the creation of new money via a bookkeeping entry.
I suggest you read the files that actually do exist and it was declared a nullity. There is no evidence of any such testimony, other than the cobbled together and illegal nonsense of two frauds.

Again, you continue to deal in self delusion, the problem is that you think the rest of the world is going to swallow your nonsense, the problem is that it doesn’t and won’t.

[Demosthenes]

Again, you continue to deal in self delusion,

She has to. Otherwise, she'd have to face being a cheat.

[Pantekhnikon]

Ahem. As Daly was eventually evicted, the Credit River decision was overturned in some sense, wasn't it? (And it appears from the history at the MN state law library that Mohoney's contempt citations were ignored by all courts and by law enforcement, so it's probably correct to say that those decisions are null.)

Since our Congress saw fit to legalize the creation of money out of nothing in 1913 (but ONLY by the Federal Reserve... the rest of us would be criminals for doing exactly the same thing), it became possible for our Justice system to allow and approve legalized counterfeiting by the Federal Reserve.

And knowing, as I do, that prevailing in court is a matter of superior STRATEGY rather than of honor, or of truth, none of the above surprises me.

What still surprises me is your callous disregard for truth. But I think I'm getting used to it.

Remember... a Bank President testified under oath... that his bank... in cooperation with the Federal Reserve Bank of Minn... created new money via a bookkeeping entry when it made loans.

That testimony was never contradicted by cross-examination, or by appeal.

All that this 'nullification' boils down to is the use of superior power and strategy by those who wanted to squelch, bury, and 'nullify' (in the figurative sense) this Bank President's testimony and the jury verdict which resulted.
.

[Pantekhnikon]

ME: Let's just deal with facts, now, shall we?

Notice the TITLE of that webpage:

"The Principle of Multiple Deposit Creation"

And how is this different from what a credit union does?

It is different from what a Credit Union does because, as the CU Assn itself states, a CU lends out a portion of it's members/depositors' funds to other members. Its lending practices are conservative, as well... considering the fact that their depositors' actual savings are at risk.

I've done most of my banking at a credit union for over 30 years now. In all of that time I've never been put on notice by them that any portion of my deposits, either in my savings or share draft accounts, were unavailable to me because they had been loaned to someone else.

Perhaps they find that unnecessary... considering the fact that most people (especially people who've watched "It's A Wonderful Life" -- which is probably most of us) ALREADY comprehend the fact that a run on the CU would be destructive, and that maintaining faith and trust in the CU to make more wise loans than foolish loans, we WILL receive interest as a result of trusting a portion of our deposits to the CU to be lend out for loan funds.

So just like in the example you linked to, if I have the money in my account, ready and available for me to withdraw and spend, and that same money (less the reserve requirement) has been lent to someone else, and presumably spent and deposited in the recipient's financial institution, does this not increase the money supply just the same as when a bank does it?

No it does not, because in the (hopefully unlikely) event that every depositor decided to withdraw 100% of their deposits ALL AT THE SAME TIME (a so-called "run on the bank"), there would be insufficient funds to return to the depositors. Watch "It's a Wonderful Life" again, and concentrate on the Bailey Building and Loan sequence... and listen carefully to "George Bailey's" speech to his depositors. You MIGHT (finally...) be able to figure it out... and you MIGHT (finally...) be able to comprehend the difference between THAT kind of lending and the "Multiple Deposit Creation" depicted on that Fed Res link.

[/quote]

[Pantekhnikon]

[quote="notorial dissent"][quote="Heidi"]CORRECTION: Credit Unions do NOT participate in fractional reserve lending. I do wish you people would at least read Rothbard and listen to Vieira before you misinform the public like this.

Utter nonsense!!! Of course they do, otherwise they would be called depositories. A credit union operates in exactly the same way a bank does, the only difference is that the shareholders are the depositors. Otherwise, it is exactly the same principal. They put at loan a certain percentage of the deposits they receive in order to make money to pay their bills and pay dividends to their shareholders. Don’t blame the rest of the world because you don’t know how a CU operates.

Don't blame me for the fact that you either FAIL or REFUSE to comprehend the difference between lending out a percentage of depositors' actual deposits (the way a CU does) and "Multiple Deposit Creation" via fractional reserve lending.

Years ago, Demosthenes posted the link to a Federal Reserve chart which clearly demonstrated the creation of new 'money' via the fractional reserve process.

And you didn’t understand it any better then than you do now.

You must be descending into madness... you're talking to yourself now...

As demonstrated in that Fed Res chart:
Fractional reserve lending is the process of using an initial deposit (the so-called 'reserve') as the BASIS for loaning 90% of that deposit out in NEWLY CREATED funds. Once those NEW funds are deposited someplace else, those deposits then become the basis for loaning out 90% of THAT amount, and so on until NINE TIMES as much 'money' as existed in that first deposit has been created. The entire amount of the initial reserve deposit REMAINS on deposit.

NONE of it has been removed from that account and lent out. NEW money has been created during the lending process... thus causing an INCREASE in the money supply and what we call 'inflation'.

If you were REALLY sharp, you'd notice that the initial deposit used as the "reserve" is nothing but another debt instrument -- securities purchased by the Fed: "Federal Reserve purchases $10,000 in U.S. Government Securities..."

You can’t even get the numbers right, and your scenario is total nonsense.

Sez you... talking to yourself, again, LOL.
Speaking of getting the numbers right... did you bother to tally up the right-hand column of that Fed Res chart by any chance? If so... did you notice the INCREASE in deposits? Did you bother to look at the totals at the bottom of the columns?

That process would be the OPPOSITE of lending OUT a percentage of actual pre-existing deposits. Lending out pre-existing deposits puts actual pre-existing capital at RISK instead of creating NEW money based upon some 'reserve' capital which still remains INTACT.

ONLY the Federal Reserve Banking system is legally permitted to do that.

More nonsense, this is exactly the same way banks have been carrying on business since the dawn of banking, and considerably longer than there has been a Federal Reserve Bank.

Baloney -- either pure ignorance or deliberate obfuscation.
As Rothbard so eloquently describes, banking changed drastically when fiat currency became law, and fractional reserve lending began.

I hope that our readers will investigate this quandary themselves, and make up their own minds based upon the information that is still available.

Read "What Has Government Done to Our Money", and "The Case Against the Fed" by Murray N. Rothbard. Then listen to Dr. Edwin Vieira, Jr., Phd (available on youtube). After that, you might find Ron Paul making sense to you when he talks about our economic crisis. He predicted it rather accurately, btw:

http://www.youtube.com/watch?v=PoxlzPGIPt4

..........

[BBFlatt]

No it does not, because in the (hopefully unlikely) event that every depositor decided to withdraw 100% of their deposits ALL AT THE SAME TIME (a so-called "run on the bank"), there would be insufficient funds to return to the depositors. Watch "It's a Wonderful Life" again, and concentrate on the Bailey Building and Loan sequence... and listen carefully to "George Bailey's" speech to his depositors. You MIGHT (finally...) be able to figure it out... and you MIGHT (finally...) be able to comprehend the difference between THAT kind of lending and the "Multiple Deposit Creation" depicted on that Fed Res link. [/b]

If your understanding of the nature of banking comes from watching "It's a wonderful Life" I can see where you might be confused. Let me try to clue you in.

In this country the money supply, as measured by the Federal Reserve Board, is composed not only of the currency in circulation (sometimes referred to as M0) but also the funds on deposit in financial institutions, including Credit Unions (see definitions of M1 and M2 below, courtesy of the FRB's website).

1. M1 consists of (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of depository institutions; (2) traveler's checks of nonbank issuers; (3) demand deposits at commercial banks (excluding those amounts held by depository institutions, the U.S. government, and foreign banks and official institutions) less cash items in the process of collection and Federal Reserve float; and (4) other checkable deposits (OCDs), consisting of negotiable order of withdrawal (NOW) and automatic transfer service (ATS) accounts at depository institutions, credit union share draft accounts, and demand deposits at thrift institutions. Seasonally adjusted M1 is constructed by summing currency, traveler's checks, demand deposits, and OCDs, each seasonally adjusted separately.

2. M2 consists of M1 plus (1) savings deposits (including money market deposit accounts); (2) small-denomination time deposits (time deposits in amounts of less than $100,000), less individual retirement account (IRA) and Keogh balances at depository institutions; and (3) balances in retail money market mutual funds, less IRA and Keogh balances at money market mutual funds. Seasonally adjusted M2 is constructed by summing savings deposits, small-denomination time deposits, and retail money funds, each seasonally adjusted separately, and adding this result to seasonally adjusted M1.
[emphasis added]

When I make a deposit to my credit union share draft account, that money is part of M1, and by extension M2. If the CU then lends out a portion of the funds I deposited (whether 50% or 90%, whether prudently or recklessly) those funds still appear on my account statement as part of my account balance, and thus are included in M1. The borrower will either deposit the proceeds of the loan in his or her account at the CU or elsewhere, or use those fund in a transaction, e.g. to buy a used car, and the other party to the transaction will in all liklihood deposit the funds in his or her financial institution. So now the borrowed funds are on deposit and included in the money supply (M1 and M2). But since that money was already a part of the money supply when it was counted in my account, the effect of this chain of events is to increase the money supply, i.e. money has been created. This happens whether the financial institutions involved are banks, credit unions or other depositary institution.

And this is true regardless of whether there is a run on George Bailey's bank, or whether Uncle Billy finds the money he left folded up in a newspaper.

I hope this clears it up for you (but somehow I doubt it).

[Arthur Rubin]

And knowing, as I do, that prevailing in court is a matter of superior STRATEGY rather than of honor, or of truth, none of the above surprises me.

Having none of those on your side....

[Judge Roy Bean]

....This happens whether the financial institutions involved are banks, credit unions or other depositary institution.

And this is true regardless of whether there is a run on George Bailey's bank, or whether Uncle Billy finds the money he left folded up in a newspaper.

I hope this clears it up for you (but somehow I doubt it).

Don't worry, it won't clear anything up. Until the surgeon hands the allegedly expert patient the scalpel and says "OK, start cutting here...." the acolytes of Heidi's tiny flock will continue in their make-believe world.

[notorial dissent]

Since our Congress saw fit to legalize the creation of money out of nothing in 1913 (but ONLY by the Federal Reserve... the rest of us would be criminals for doing exactly the same thing), it became possible for our Justice system to allow and approve legalized counterfeiting by the Federal Reserve.
Since there is nothing in the aforementioned legislation even remotely resembling your screed, just more inane rant. The Fed issues nothing unless it is based on assets at hand or upon government securities sold.

And knowing, as I do, that prevailing in court is a matter of superior STRATEGY rather than of honor, or of truth, none of the above surprises me.
Rather a matter of law and fact-which you do not like, but law and fact none the less.

What still surprises me is your callous disregard for truth. But I think I'm getting used to it.
Unlike your callous disregard for reality?

Remember... a Bank President testified under oath... that his bank... in cooperation with the Federal Reserve Bank of Minn... created new money via a bookkeeping entry when it made loans.
Sure he did, just like a JP had the authority to do what Mahoney did, which he didn’t. JP courts in MN barely had enough authority to blow their noses without permission from the upper courts. No authority for jury trials, no authority to prevent an appeal from one of his decisions being heard, and no authority to refuse legal tender. As also no authority to disregard an order from a superior court.

That testimony was never contradicted by cross-examination, or by appeal.
Most likely because it was fabricated by Daley. Since the bank did challenge the decision to a superior court they obviously weren’t going along with the nonsense.

All that this 'nullification' boils down to is the use of superior power and strategy by those who wanted to squelch, bury, and 'nullify' (in the figurative sense) this Bank President's testimony and the jury verdict which resulted.
The nullification amounts to a dog pound judge making rulings he had no authority to make and even less grounds to make, and the superior court pointing it out to him. No strategy, just the plain and simple law as it existed in MN at the time.

It is different from what a Credit Union does because, as the CU Assn itself states, a CU lends out a portion of it's members/depositors' funds to other members. Its lending practices are conservative, as well... considering the fact that their depositors' actual savings are at risk.
Which is exactly what a bank does in the ordinary course of business, they put their depositor’s deposits and their shareholder’s equity at risk by making loans.

Perhaps they find that unnecessary... considering the fact that most people (especially people who've watched "It's A Wonderful Life" -- which is probably most of us) ALREADY comprehend the fact that a run on the CU would be destructive, and that maintaining faith and trust in the CU to make more wise loans than foolish loans, we WILL receive interest as a result of trusting a portion of our deposits to the CU to be lend out for loan funds.
No more so than it would be to any financial institution.

No it does not, because in the (hopefully unlikely) event that every depositor decided to withdraw 100% of their deposits ALL AT THE SAME TIME (a so-called "run on the bank"), there would be insufficient funds to return to the depositors.
And why or how is this different than with any financial institution?

Don't blame me for the fact that you either FAIL or REFUSE to comprehend the difference between lending out a percentage of depositors' actual deposits (the way a CU does) and "Multiple Deposit Creation" via fractional reserve lending.
Don’t blame me if you can’t read a simple chart, what you refuse to grasp, is that it is the same $9,000 dollars being recycled through banking transactions. In each of those transactions there is a matching debit and credit offset.

The original bank only loaned $9,000 and then kept $1,000 in reserve, it did not "create" $90,000 dollars and then put it in its pocket. It is at risk for the full $9,000 it loaned.

In the normal course of business, it will get back the $9,000 and the interest it charged on the loan, say 10% for convenience-$900, which means in the end it will get $9,900 for the risk of making the loan in the first place. $9,000 will go back in to cash on hand, and $900 will go into interest income or whatever they call it as profit, which will go towards paying shareholders, staff, and expenses.

While the money supply is temporarily increased because the $9,000 isn’t sitting in a vault somewhere, it is also eventually decreased when it goes back into a bank as a deposit or repayment.

The best comparison I can make is a library that loans out books, and since they don’t have a reserve requirement, so they can lend out all the books they want, or they can lend out the same book a hundred times. When the auditors come through, they want to know three things, how many books did you start with, how many did you lend out, and how many do you have left. They started with 10,000 books, they lent them out to the public. Rental count shows that they rented 100,000 books over the course of the year. They had 9,995 books at the end of the year as five of their borrowers “defaulted” and didn’t return their books. So tell me then where are the other 90,000 books the library is supposed to have, since they rented 100,000 over the course of the year? You can’t of course, since there is a difference between inventory count, and rental count.

You must be descending into madness... you're talking to yourself now...
I am admittedly talking to a doorpost, but then you’re an easy target.


As demonstrated in that Fed Res chart:
Fractional reserve lending is the process of using an initial deposit (the so-called 'reserve') as the BASIS for loaning 90% of that deposit out in NEWLY CREATED funds. Once those NEW funds are deposited someplace else, those deposits then become the basis for loaning out 90% of THAT amount, and so on until NINE TIMES as much 'money' as existed in that first deposit has been created. The entire amount of the initial reserve deposit REMAINS on deposit.
Oh, so very very wrong. The reserve is, and always has been the portion of deposits and assets kept on hand by institution to handle day to day business. Again, they have created nothing, they are loaning 9/10ths of what they have on hand, if they were creating anything they would have assets of 190% from where they started, doesn’t, never did work that way. And again, nothing has been created, they have loaned out part of what they had on hand, and now they don’t have it on hand.

NONE of it has been removed from that account and lent out. NEW money has been created during the lending process... thus causing an INCREASE in the money supply and what we call 'inflation'.
Your math continues to fail you. The cash on hand acct has been depleted by the amount of the loan, and it is no longer in the bank, and liabilities have increased by the amount of the loan. The money supply has increased, temporarily by the amount of the loan, but that is hardly inflation.


If you were REALLY sharp, you'd notice that the initial deposit used as the "reserve" is nothing but another debt instrument -- securities purchased by the Fed: "Federal Reserve purchases $10,000 in U.S. Government Securities..."
If you were really sharp, or literate, you would have seen that the initial deposit was $10,000 in cash that the depositor got from SELLING a T-bill and that he deposited the CASH in the bank. But then you don’t understand the chart either, so why should I be surprised.

Sez you... talking to yourself, again, LOL.
Speaking of getting the numbers right... did you bother to tally up the right-hand column of that Fed Res chart by any chance? If so... did you notice the INCREASE in deposits? Did you bother to look at the totals at the bottom of the columns?
Yes, it is summing up deposits. I can do the same trick by taking $100 and depositing it in my bank and then withdrawing it and then redepositing it until my monthly deposit total reaches any amount I want, but I would still only have $100 by the time I got done, same thing here, you just refuse to see it. Those deposits do not reflect matching withdrawals and repayments that eventually cancel the whole run out.

That process would be the OPPOSITE of lending OUT a percentage of actual pre-existing deposits. Lending out pre-existing deposits puts actual pre-existing capital at RISK instead of creating NEW money based upon some 'reserve' capital which still remains INTACT.
Gee, almost got it right finally, since the lending out of deposits is what banking is all about, but then you go off in the weeds again to fantasize.

ONLY the Federal Reserve Banking system is legally permitted to do that.
Two entirely different animals, but then you are as confused about that as you are about everything else.

Baloney -- either pure ignorance or deliberate obfuscation.
As Rothbard so eloquently describes, banking changed drastically when fiat currency became law, and fractional reserve lending began.
More nonsense, since banks have always operated on fractional reserve, that is why it is called banking, and I hate to break it to you, but they were doing it long before either the Fed or the US were a gleam in anyone’s eye.

I hope that our readers will investigate this quandary themselves, and make up their own minds based upon the information that is still available.

Read "What Has Government Done to Our Money", and "The Case Against the Fed" by Murray N. Rothbard. Then listen to Dr. Edwin Vieira, Jr., Phd (available on youtube). After that, you might find Ron Paul making sense to you when he talks about our economic crisis. He predicted it rather accurately, btw:
Why should anyone waste their time on an economist no one takes seriously, a lawyer who is just this side of being hospitalized for evaluation, and pandering gynecologist masquerading as a politician who is such a joke that he has never managed to get so much as one bill out of committee or considered as anything but a colossal embarrassment by his colleague’s. Oh right, they agree with your particularly warped view of reality, don’t think so. There’s a great deal better fiction out than what you and that collection are peddling.

[Pantekhnikon]

P whines and rails against the current banking system that is in place, but offers nothing to replace it that either (a) has not already been tried and found wanting, or (b) is significantly better.

That is beside the point. But, as I've said previously, becoming a member of a Credit Union and avoiding the use of all credit cards except the ONE offered by the CU, and keeping that ONE paid off every month is the most viable alternative to the usury of the Fed Res banking system and inflationary money expansion available at the moment.

Any one can grip about a perceived wrong P, but to do so an infinitum while offering no CREDIBLE, NEW solution makes that person nothing more than a crank. Shrill screeching alone gets bubkis and annoys people.

"Credibility is a matter more of opinion than of truth... but Rothbard clearly spelled out a viable alternative in: "What Has Government Done to Our Money". Read it.

[Pantekhnikon]

No it does not, because in the (hopefully unlikely) event that every depositor decided to withdraw 100% of their deposits ALL AT THE SAME TIME (a so-called "run on the bank"), there would be insufficient funds to return to the depositors. Watch "It's a Wonderful Life" again, and concentrate on the Bailey Building and Loan sequence... and listen carefully to "George Bailey's" speech to his depositors. You MIGHT (finally...) be able to figure it out... and you MIGHT (finally...) be able to comprehend the difference between THAT kind of lending and the "Multiple Deposit Creation" depicted on that Fed Res link. [/b]

If your understanding of the nature of banking comes from watching "It's a wonderful Life" I can see where you might be confused. Let me try to clue you in.

It's too bad that you have so little respect for a truly intelligent, insightful, and well-written screenplay depicting the way banking was actually practiced PRIOR to Congress' legalization of "money creation" (euphemism for legalized counterfeiting).

In this country the money supply, as measured by the Federal Reserve Board, is composed not only of the currency in circulation (sometimes referred to as M0) but also the funds on deposit in financial institutions, including Credit Unions (see definitions of M1 and M2 below, courtesy of the FRB's website).

Understood... but I must point out that including the deposits present in CUs among "M1" does not indicate that CUs practice Fractional Reserve lending.

1. M1 consists of (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of depository institutions; (2) traveler's checks of nonbank issuers; (3) demand deposits at commercial banks (excluding those amounts held by depository institutions, the U.S. government, and foreign banks and official institutions) less cash items in the process of collection and Federal Reserve float; and (4) other checkable deposits (OCDs), consisting of negotiable order of withdrawal (NOW) and automatic transfer service (ATS) accounts at depository institutions, credit union share draft accounts, and demand deposits at thrift institutions. Seasonally adjusted M1 is constructed by summing currency, traveler's checks, demand deposits, and OCDs, each seasonally adjusted separately.

2. M2 consists of M1 plus (1) savings deposits (including money market deposit accounts); (2) small-denomination time deposits (time deposits in amounts of less than $100,000), less individual retirement account (IRA) and Keogh balances at depository institutions; and (3) balances in retail money market mutual funds, less IRA and Keogh balances at money market mutual funds. Seasonally adjusted M2 is constructed by summing savings deposits, small-denomination time deposits, and retail money funds, each seasonally adjusted separately, and adding this result to seasonally adjusted M1.
[emphasis added]

When I make a deposit to my credit union share draft account, that money is part of M1, and by extension M2. If the CU then lends out a portion of the funds I deposited (whether 50% or 90%, whether prudently or recklessly) those funds still appear on my account statement as part of my account balance...

Yes; always have... which is why (prior to fractional reserve lending) in the unfortunate event that all (or even most) of the depositors of a pre-Fed Res or non-Fed Res banking institution turned up to withdraw their deposits at the same time (a "run on the bank"), the depositors COULD NOT and DID NOT receive 100% of their funds, the bank ran out of money on deposit, and the bank or S&L went bankrupt.

This is EXACTLY the scenario depicted in "It's a Wonderful Life"... and George Bailey's speech to the depositors is a brilliantly written explanation of exactly why depositors needed to maintain faith in their bank's loan officers and LEAVE a large percentage of their savings on deposit to earn interest from the lending process.

You should watch it again... since judging from your comments below, you did not comprehend it.

...and thus are included in M1. The borrower will either deposit the proceeds of the loan in his or her account at the CU or elsewhere, or use those fund in a transaction, e.g. to buy a used car, and the other party to the transaction will in all liklihood deposit the funds in his or her financial institution.

So far, so good......

.... So now the borrowed funds are on deposit and included in the money supply (M1 and M2). But since that money was already a part of the money supply when it was counted in my account, the effect of this chain of events is to increase the money supply, i.e. money has been created.

Meaning that money is in two places at the same time? NO.

This little act of prestidigitation is the Fed Res's magic money machine -- the supposed panacea to prevent all "run on the bank" scenarios and sold to the public as the great safety-valve to prevent the risk of loss which normally accompanies an honest, hard-money lending process with no legalized counterfeiting (AKA "money creation").

Here's where all the obfuscation comes into play.

Yes, indeed, money has been "created", because money cannot REALLY be in two places at the same time.

This happens whether the financial institutions involved are banks, credit unions or other depositary institution.

Are you telling us that the CU Assn is lying when it claims to loan out a portion of it's members deposited funds to other members?

And this is true regardless of whether there is a run on George Bailey's bank, or whether Uncle Billy finds the money he left folded up in a newspaper.

Ahhh... but you've neglected to mention the fact that the Fed Res system was sold to the public and to Congress in 1913 as a fool-proof system designed to prevent the risk of loss occasioned by actual loans and runs on the banks. The Fed would simply create more money when it made loans, rather than loan out any percentage of depositors' actual funds... and guarantee everyone's deposits against loss (runs on the bank) up to a certain LIMIT.

What Rothbard and Vieira and Paul (and an increasing number of others) now realize is that the price to pay for this system is rather difficult to perceive and easily obfuscated...

Inflation caused by money creation is like sitting in a pot of tepid water while the heat is slowly turned up. One day you are boiled alive without realizing it.

I hope this clears it up for you (but somehow I doubt it).

Unfortunately YOU don't seem to realize that you and I and everyone else are being robbed by inflation while the institutions that are allowed to "create money" are enriching themselves by earning interest on something that cannot be in two places at the same time: newly created money.

[Pantekhnikon]

And knowing, as I do, that prevailing in court is a matter of superior STRATEGY rather than of honor, or of truth, none of the above surprises me.

Having none of those on your side....

REALLY??? Then why do you suppose I WON?

[Arthur Rubin]

And knowing, as I do, that prevailing in court is a matter of superior STRATEGY rather than of honor, or of truth, none of the above surprises me.

Having none of those on your side....

REALLY??? Then why do you suppose I WON?

Actually, I see no evidence that you "won" other than your postings.

[Pantekhnikon]

....This happens whether the financial institutions involved are banks, credit unions or other depositary institution.

And this is true regardless of whether there is a run on George Bailey's bank, or whether Uncle Billy finds the money he left folded up in a newspaper.

I hope this clears it up for you (but somehow I doubt it).

Don't worry, it won't clear anything up. Until the surgeon hands the allegedly expert patient the scalpel and says "OK, start cutting here...." the acolytes of Heidi's tiny flock will continue in their make-believe world.

Ahhh, yes... the old "he who practices medicine on himself has a fool for a patient" adage applied to practicing law Pro Se.

Granted, not everyone can defeat experienced legal strategists and seasoned Collection Attorneys... but some people are determined enough to learn how to avoid the leg-hold-trap of debt, bankruptcy and systemized fleecing by the money creators.

[Pantekhnikon]

REALLY??? Then why do you suppose I WON?

Actually, I see no evidence that you "won" other than your postings.

Well... then you haven't LOOKED. Demosthenes and her flying monkeys already searched my local court's website and found every case.

[Pantekhnikon]

Since our Congress saw fit to legalize the creation of money out of nothing in 1913 (but ONLY by the Federal Reserve... the rest of us would be criminals for doing exactly the same thing), it became possible for our Justice system to allow and approve legalized counterfeiting by the Federal Reserve.

Since there is nothing in the aforementioned legislation even remotely resembling your screed...

Of COURSE NOT. They wouldn't put it so boldly; so openly. NO. It was sold to the public and to Congress as a form of 'insurance' against losses incurred by runs on the bank. Nevermind mentioning that inflation gradually (and then, near the end, faster and faster - like NOW) robs everyone of a percentage of the value of every dollar in circulation until prices go up to the point that the money is nearly worthless.

... just more inane rant. The Fed issues nothing unless it is based on assets at hand or upon government securities sold.

YEAH.... BASED ON ... the same way that counterfeit bills scanned and printed are BASED ON existing money...

And knowing, as I do, that prevailing in court is a matter of superior STRATEGY rather than of honor, or of truth, none of the above surprises me.

Rather a matter of law and fact-which you do not like, but law and fact none the less.

Law is a matter of OPINION... as all stare decisis is established by the corroborating opinion of a higher court (or the lack of contradiction by a higher court).

LAW is NOT automatically synonymous with FACT. Re-read what wserra has posted about former "LAWS" which were later overturned by the review of a more enlightened judiciary in later decades.

What still surprises me is your callous disregard for truth. But I think I'm getting used to it.

Remember... a Bank President testified under oath... that his bank... in cooperation with the Federal Reserve Bank of Minn... created new money via a bookkeeping entry when it made loans.

Sure he did, just like a JP had the authority to do what Mahoney did, which he didn’t.

Hmmmm.... are you suggesting that Lawrence V. Morgan, President of the First National Bank of Montgomery, had no more authority to testify under oath as to the every day operations of his bank than Mahoney had to preside as a Justice of the Peace?

That testimony was never contradicted by cross-examination, or by appeal.

Most likely because it was fabricated by Daley. Since the bank did challenge the decision to a superior court they obviously weren’t going along with the nonsense.

Pure conjecture. No proof whatsoever that Daly fabricated anything.

But consider this... if Morgan the Bank Pres lied under oath, why wasn't he exposed and vilified by the First National Bank of Montgomery?

All that this 'nullification' boils down to is the use of superior power and strategy by those who wanted to squelch, bury, and 'nullify' (in the figurative sense) this Bank President's testimony and the jury verdict which resulted.

The nullification amounts to a dog pound judge making rulings he had no authority to make and even less grounds to make, and the superior court pointing it out to him. No strategy, just the plain and simple law as it existed in MN at the time.

You do like to dodge the fact that Mahoney did not hand down the decision - a jury did - based upon sworn testimony by a high-ranking officer of that bank -- Testimony which comports perfectly with other Fed Res materials like "Two Faces of Debt" and that chart which several people here still fail to comprehend...

.....

Don't blame me for the fact that you either FAIL or REFUSE to comprehend the difference between lending out a percentage of depositors' actual deposits (the way a CU does) and "Multiple Deposit Creation" via fractional reserve lending.

Don’t blame me if you can’t read a simple chart, what you refuse to grasp, is that it is the same $9,000 dollars being recycled through banking transactions. In each of those transactions there is a matching debit and credit offset.

Nope. Read that chart again. Look at the right-hand column. Notice that AFTER the + and - "offset" there is another + EVERY TIME. How do you think they arrive at a total of $100,000 after all the "etc, etc, etc's" have taken place?

The original bank only loaned $9,000 and then kept $1,000 in reserve, it did not "create" $90,000 dollars and then put it in its pocket. It is at risk for the full $9,000 it loaned.

It did not. It kept all $10,000 in "reserve". Then, after the newly created and lent $9,000 was deposited at another banking institution, THAT amount was treated as "reserves" and 90% of that amount was lent out... etc, etc, etc.

In the normal course of business, it will get back the $9,000 and the interest it charged on the loan, say 10% for convenience-$900, which means in the end it will get $9,900 for the risk of making the loan in the first place. $9,000 will go back in to cash on hand, and $900 will go into interest income or whatever they call it as profit, which will go towards paying shareholders, staff, and expenses.

Right... it WILL get back that $9,000 that it created ("Multiple Deposit Creation", remember?) and lent out. Isn't that a clever way of making lots and lots of new money that it didn't have previously?

While the money supply is temporarily increased because the $9,000 isn’t sitting in a vault somewhere, it is also eventually decreased when it goes back into a bank as a deposit or repayment.

The best comparison I can make is a library that loans out books, and since they don’t have a reserve requirement, so they can lend out all the books they want, or they can lend out the same book a hundred times. When the auditors come through, they want to know three things, how many books did you start with, how many did you lend out, and how many do you have left. They started with 10,000 books, they lent them out to the public. Rental count shows that they rented 100,000 books over the course of the year. They had 9,995 books at the end of the year as five of their borrowers “defaulted” and didn’t return their books. So tell me then where are the other 90,000 books the library is supposed to have, since they rented 100,000 over the course of the year? You can’t of course, since there is a difference between inventory count, and rental count.

What a clever obfuscation that is. You are one of the better Tools here.

Let's take your statement about lending out the same book 100 times. Can the same book be in 100 places at once? Not if there's only ONE book. So just exactly HOW can that book be lent out 100 times?

The HONEST and TRANSPARENT way for that book to be lent out 100 times would be for it to be REMOVED from the library shelf and handed OUT to the first borrower, who returns that same book later, and it is placed back on the shelf again. Borrower number 2 then takes it OUT (it is removed from the shelf), and returns it later, and so forth...

But let's say that this particular book is extremely popular, and that lots of borrowers want to read it at the very same time. The library realizes that it could make a lot more money if it could lend out the same book to many borrowers all at once. So it prints up 100 more copies of that original book and lends out all 100 copies, keeping the original back on the shelf.

If we want this metaphor to be even more apt, we would say that borrower number 1 takes his copy of the book and puts it in a second library for safe-keeping. Then library number 2 makes a copy of that copy and loans it out to borrower number three, who puts it in a third library for safe-keeping, where it is copied again, and lent out to borrower number 4... etc, etc, etc, until there are 100 copies of that book in circulation. But remember... ONLY the LIBRARIES are allowed to make copies of the books. The borrowers would be criminals if THEY made any copies.

[Judge Roy Bean]

I realize it won't matter to let a few facts get in the way of a long-held myth, but the library analogy is flawed.

What the money-mythology promoters refuse to see is only a small part of lending by any one institution is done from customer deposited funds on hand in that institution. If it were, there would be places in the country where no one could get a loan because the local institutions weren't getting sufficient deposits at any given point in time.

Banks, and yes, even credit unions, Heidi, have lines of credit with other financial entities - including the Fed in the case of banks. They make investments as well. They manage trust assets and get paid to do it. They sell securities to raise capital. They manage cash-in processing (drop boxes), they take in fees (more and more every day), interest, etc., etc. They do consulting and cash management. They do factoring and receivables. They also own real estate and lease not only office space but even storage facilities. They license credit card operations. They can and do borrow against assets. They also sell assets, including loans and leases. They can trade in currencies. They guarantee loans with letters of credit. They are huge in the leasing business. And guess what? A lot of that income has nothing to do with deposits you're so fixated on.

Any hopelessly-simplistic description of the correlation between cash deposits in vs. loaned out money is like trying to identify an individual tributary's water coming out of the Mississippi river delta. It's a nonsensical idea to anyone who understands banking and finance.

Hence, the over-simplification works so well in trying to make people think there is something secret and devious the banks won't admit to that if we all just would wake up to it, we'd put an end to it. Oh, and in the mean time, because the banks are allegedly getting away with it, they really didn't loan us real money, so if you know the secrets, you don't have to pay it back.

So give the "they created money out of thin air" thing a rest. You're only making yourself look more and more foolish.