Comments by "k98killer" (@k98killer) on "" video.

Banks can enter into correspondent credit arrangements whereby they grant credit to each other, tracked with nostro (receivable) and vostro (payable) accounts, and this would allow them to "transfer" between themselves on behalf of their customers without having recourse to vault cash or central bank reserve/deposit balances. In other words, in reality, it is not strictly required for banks to have reserves -- banks are often perfectly happy having IOUs from other banks. Fractional reserve banking is only a special case that does not always hold. However, following the breakdown of trust after the 2008 GFC, such arrangements have been decreasing in use in favor of frequent settlement via reserve balances. So while it is a special case, it is one of greater importance than it had been historically.
1
@moilers That does not explain the tightening though. Imo it is best understood through marginal analysis comparing the prices of future goods to present goods under conditions of excess capital goods investment: as the supply of goods increases, the prices of those goods fall, reducing profit margins until they fall below the cost of capital investment; without banks, the increase in capital investment would lead to an increased ratio of future goods to present goods, which means that the future goods would have a lower price than the present goods, which is in other words a rising discount rate; with banks, the money rate of interest is not sensitive to this signal, so an inappropriately low interest rate can persist until businesses become unprofitable, capital is consumed, and borrowers default.
1
@Peter.F.C YouTube deletes or loses track of tons of legitimate comments. I have found comments I make on one video somehow teleport into the comment sections of other videos. The platform is a mess. But it is worth noting that Ludwig von Mises himself supported the credit creation theory of banking in his Theory of Money and Credit -- no fractional reserve anything involved there, just an analysis of fiduciary media and circulation credit.
1
@Peter.F.C it is ThemTube deleting comments. For example, I responded to this one several hours ago and just now checked to find that it had been censored. There is rarely any rhyme or reason.
1
The Federal Reserve Banks are hybrid entities: on the one hand, they have shareholders; on the other hand, the shareholders do not have voting rights. Member banks have to subscribe to their regional FRB's stock at a set ratio of their own equity capital, and they get a 6% dividend on those shares. If a regular private bank realizes losses 5 times in excess of their capital, they go bankrupt; but the Fed has already surpassed this loss threshold, and nobody bats an eye.
1
Money is the common medium of exchange. To say that "money doesn't exist" because you are ideologically possessed by your precious metals investments is just retardation.
1
@razzberry1262 people exchanged on credit long before any recognizable form of commodity money existed. In ancient Mesopotamia, temple complexes kept many records of credit transactions and settlement of credits; they used a hybrid silver-barley unit of account, but credit could be settled by whatever the debtor had on hand. Very little trade was conducted in exchange for actual silver or barley -- the Misesian regression theorem, founded on the myth of barter and the solving of the double coincidence of wants with the most marketable commodity, is refuted by historical evidence. Credit came first, and then governments began coining money -- there was no intermediate step in which indirect exchange via precious metals was normative.
1