Comments on: The story of banking …. http://7million7years.com/2009/11/15/the-story-of-banking/ How to make 7 million in 7 years ... Thu, 24 May 2012 09:20:05 +0000 hourly 1 http://wordpress.org/?v=3.3.2 By: Adrian http://7million7years.com/2009/11/15/the-story-of-banking/comment-page-1/#comment-3835 Adrian Mon, 16 Nov 2009 06:15:46 +0000 http://7million7years.com/?p=3492#comment-3835 @ Steve - LOL. Good point. No, it's money that isn't backed by anything other than the “the full faith and credit of the United States government” ... but, as long as the US stands, the dollar is cash-able. Banks, on the other hand, are backed by only a certain % of dollars ... the rest of your money is backed by the hope that the bank doesn't fail + any FDIC insurance + any help that the government may (or, may not) deign to provide in the event of a disaster. BTW: in Australia, the gov't acted to GUARANTEE 100% all bank deposits during the global financial disaster ... counter-intuitively, it's only DURING such a disaster that we (us Aussies) can feel that our money is as secure as the nation :) @ Steve – LOL. Good point. No, it’s money that isn’t backed by anything other than the “the full faith and credit of the United States government” … but, as long as the US stands, the dollar is cash-able.

Banks, on the other hand, are backed by only a certain % of dollars … the rest of your money is backed by the hope that the bank doesn’t fail + any FDIC insurance + any help that the government may (or, may not) deign to provide in the event of a disaster.

BTW: in Australia, the gov’t acted to GUARANTEE 100% all bank deposits during the global financial disaster … counter-intuitively, it’s only DURING such a disaster that we (us Aussies) can feel that our money is as secure as the nation :)

]]> By: Steve http://7million7years.com/2009/11/15/the-story-of-banking/comment-page-1/#comment-3834 Steve Mon, 16 Nov 2009 05:04:25 +0000 http://7million7years.com/?p=3492#comment-3834 How can you say Banking is backed by money? what money? we don't use the gold standard anymore, so Paper Money is effectively fake(not backed by anything at all.Only the perception of its value,which fluctuates with the public's current views(which are affected by a mirad of factors). How can you say Banking is backed by money? what money? we don’t use the gold standard anymore, so Paper Money is effectively fake(not backed by anything at all.Only the perception of its value,which fluctuates with the public’s current views(which are affected by a mirad of factors).

]]> By: Adrian http://7million7years.com/2009/11/15/the-story-of-banking/comment-page-1/#comment-3832 Adrian Sun, 15 Nov 2009 21:03:16 +0000 http://7million7years.com/?p=3492#comment-3832 @ Trainee - Yes, banking IS backed by money, subject to leverage ... that same leverage (in principle, not in ratio) that saw a number of investment banks only recently bite the dust ;) @ Trainee – Yes, banking IS backed by money, subject to leverage … that same leverage (in principle, not in ratio) that saw a number of investment banks only recently bite the dust ;)

]]> By: traineeinvestor http://7million7years.com/2009/11/15/the-story-of-banking/comment-page-1/#comment-3828 traineeinvestor Sun, 15 Nov 2009 12:40:43 +0000 http://7million7years.com/?p=3492#comment-3828 Mildly entertaining but fundamentally wrong in this day and age. Today's banks do not have the ability to create money out of nothing - everything that they lend out is derived from a combination of shareholders'equity, deposits and money obtained from financial markets. (The multiplier effect is another matter.) The days when the likes of Andrew Dexter could quite literally use a bank charter to print money are long gone. In most countries only central banks can create money out of nothing today. Mildly entertaining but fundamentally wrong in this day and age. Today’s banks do not have the ability to create money out of nothing – everything that they lend out is derived from a combination of shareholders’equity, deposits and money obtained from financial markets. (The multiplier effect is another matter.)

The days when the likes of Andrew Dexter could quite literally use a bank charter to print money are long gone. In most countries only central banks can create money out of nothing today.

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