the legitimate ones that are fully backed

The other commenter was trying to use that chart to tell us that cryptocurrencies are somehow better than fiat currencies as a store of value, despite their wild swings in value in the most stable one that isn’t backed by fiat currency.

But if I told you your money was going to be worth half tomorrow, then half again the next every day for the next 16 weeks… You would think shit… Maybe there is a better way to do this.

Doesn’t that happen to most cryptocurrencies?

I think Sundays is the day when many of his closest advisers take some or all of the day off, so he’s just wandering without the distractions that normally keep him busy.

I think it’s more accurate to say “You will die for Epstein so that the oil class stays wealthy.”

The Federal Reserve is the entity that can creates dollars out of thin air, bevause they control the interest rate of the dollar.

They control the base currency by physically printing dollars and lending money directly to banks. Then, more significantly, they influence the money supply by influencing how much commercial banks are lending, through interest rate operations, and sometimes through market operations that provide liquidity for certain types of securities (especially government bonds).

Taken together, it’s the power to create or destroy money in response to macroeconomic trends.

The Federal Reserve system is independant of the US federal government.

Kinda. The board of governors is chosen by the president to 14-year terms, theoretically making them independent of any specific President’s specific priorities. But there’s a Supreme Court case heading when the President can fire the governors, which might effectively end or limit Fed independence.

The individual federal reserve banks also operate in their regions with a lot of leeway to meet local needs, and those are public/private partnerships where nationally chartered banks also have a voice in their operations.

In my mind the concept was one of regulatory oversight.

No, the core concept is one of whether a bank has full reserves, sufficient to cover all of the deposit liability. If the bank keeps only a fraction of the total liability in reserves, then that’s a fractional reserve.

Do you think that when a bank loans money to another bank they are creating money out of thin air?

Yes, that creates money.

If they can do that then why do they need to borrow money?

They need to borrow money for liquidity, to cover the payments they owe to others. An IOU isn’t money, so having a bunch of IOUs in the asset column may require a bank to pledge those IOUs to borrow some money from someone else, maybe even another bank. Then, with money in hand, they can make payments to fund their own operations (pay employees, rent, vendors, taxes, etc.) and pay depositors on demand.

And as a financial institution borrows too much and pays that interest, or is overextended without enough assets to remain solvent/liquid to be able to make payments as they’re due, they may find themselves with insufficient creditworthiness to be able to borrow freely (as other banks are wary of lending to someone who might not pay back). And they might fail. So that general concern always provides a limit on how much they can borrow from other private entities.

They can borrow from the central bank as a lender of last resort, but that carries a cost (and can still only borrow as much as their assets can support). If they’re paying more interest to their creditors than they’re collecting from their borrowers, they’re gonna fail.

Do you believe that the US government must collect taxes before it can spend money? Or do you agree that government spending is self financed and money creation (in spending by the US government) is only limited by concerns of inflation?

No, the government can (and does) borrow money to finance its operations, as well. For the U.S., the sheer amount of government spending is such a high percentage of economic activity that it would be highly inflationary to combine the fiscal power of spending money with the monetary power of controlling the money supply (through creation of base currency, influencing private transactions and interest rates to control bank-created money, and buying/selling securities on the open market).

I think if we lived in a different system without an independent central bank, we’d see a lot of different things going on, including a temptation to elected officials to just create money without regard to inflationary effects. But in the current system, most of the money is created by banks.

Do you believe that Banks hold digital money in their reserves? I do.

Yes, that’s what we’ve been talking about the whole time. When a commercial bank creates a loan, that’s just a ledger that creates an asset in one column and a liability in another column. It could be paper, or it could be digitally stored. If the funds are transferred electronically to another bank, that’s often an electronic record with no physical movement of anything. So yes, those are effectively digital dollars that can be withdrawn as paper money on demand at any given time.

it’s true that banks can create money when they lend more than they have in reserves and assets

To be clear, the article is saying (and I’m saying) that the bank creates money every time it makes a loan, in the amount of the loan. Regardless of whatever its reserve and asset situation is. An asset and a liability are created in that moment that cancel out, and then each side can take their asset and do something with it: the borrower uses that cash to spend, and the lender uses that loan balance as an asset it can borrow against or otherwise count on income from.

IMO bank loans are credit but the bank loans are repaid with actual money.

It’s repaid with actual money, but it’s all actual money. When the loan is created the balance in the deposit account can be withdrawn or transferred from there and it’s real money that can buy real goods and real services. The money is created, and then it’s real money in the economy. Then the loan is repaid with real money, and then destroyed in the act of repayment and reducing the balance owed on the loan.

Also, you mentioned fractional reserve banking but that no longer exists. It ended around 2020 when the government changed regulations and no longer requires banks to hold any ratio of reserves to debt.

No, that had the opposite effect of what you think. The minimum reserve requirement was abolished, so banks could then do fractional reserve banking in any fraction they pleased, including even smaller ratios than what was previously allowed. The change in regulation didn’t eliminate fractional reserve banking; it eliminated limits on fractional reserve banking, and every bank continued to hold a reserve that is much, much smaller than 100% of the amount of their deposit liabilities. So the fractions still exist. And can continue to exist in any number, with other practical limits on their ability to loan (creditworthiness and solvency).

Your own link from the Bank of England starts off with the thesis that agrees with me:

This article explains how the majority of money in the modern economy is created by commercial banks making loans

And you might as well link to the canonical URL of the PDF or the Bank of England website landing page for that article instead of Google Drive acting as a middleman.

The money in the bank’s reserves started its life by being created by the federal government.

No, you’re misunderstanding how the money supply works. The creation of physical printed money might happen by the government, but those physical dollars represent such a small portion of the overall money supply.

First of all, through fractional reserve banking, one physical dollar can get multiplied many times over to represent many dollars in circulation. Especially because most transactions happen on paper, through a ledger that transfers funds from one account to another.

Everything you’re saying still relates to the practical limits of money creation by commercial banks, in terms of creditworthiness (banks don’t want to lend money they can’t get back) and liquidity/regulation (banks don’t want to be left vulnerable without sufficient reserves to satisfy account holders demanding their deposits).

Realistically, the bank takes one of their own assets, such as the balance on the loan, and uses that as collateral to borrow liquid cash as needed for its own reserves (which are only a fraction of the total deposits in its accounts). And every dollar in a circle in a closed loop that doesn’t touch the Fed is a dollar that doesn’t actually trace back to a governmental entity. The Fed is a lender of last resort, but they’re a last resort because they generally charge higher interest than bank to bank loans.

So of the entire money supply, the vast majority of it is dollars created by banks, not dollars created by the government.

Money begins its life by being spent by the federal government.

No, in the modern system, money is created by commercial banks when they give a loan.

At the moment a loan for $1 million is created, a bank takes $0 and then turns it into two accounts: a loan with a balance of negative $1 million owed, and a deposit account with a balance of $1 million that can be withdrawn. From the bank’s perspective, and the borrower’s perspective, they went from having $0 to suddenly each having $1 million in assets and $1 million in liabilities, for a net value of zero. Obviously there are going to be fees and stuff paid out, and interest charged over the life of the loan, but you can think of that as fees for services rendered.

The money in that deposit account, created out of thin air, can then be spent elsewhere and enter the economy.

The limits on the ability of banks to do that indefinitely is default risk (the bank is left holding the bag if the borrower doesn’t repay) and liquidity (the bank needs to be able to use the loan balances as an asset on its balance sheets to go and borrow cash for its own operations so that its accountholders always have the ability to withdraw money on demand) and government regulation (the Federal Reserve and the FDIC have various regulations requiring their balance sheets to be able to survive stress tests and other adverse economic events).

So even though the government, through Federal Reserve policy, controls how private market participants might choose to create money, the actual act of money creation happens in the banks, not in the government (except when the government is acting as a bank by lending money through its loan programs).

There are about 500 NBA roster spots. Total basketball related income across the league is $10.25 billion, and the CBA requires that player income make up half of that. So there’s $5.13 billion to split between 500 players, an average/mean of $10.25 million per full time player (some players get called up or put on reserve when injuries or something like that happen).

There are about 3.8 million public school teachers in K-12. If you took literally every dollar paid to NBA players and gave it to public school teachers, that’d be about $1350 per teacher.

There are other sports, of course, but we’re also talking about nurses and doctors and EMTs and public librarians and other important underpaid jobs. Taking all money from sports isn’t going to make much of a dent in those other jobs’ pay.

Ridiculous pay for star athletes and celebrities is at least fair

Put another way, we as a society actually do spend wayyy more money on doctors, nurses, and teachers. It’s just that there are many millions of people who have to split that pot of money, whereas for pro athletes there are only a few dozen or a few hundred to split that comparably smaller pot of money with.

I might have the same favorite NBA player as literally millions of people in this country. I for sure don’t have the same favorite doctor or favorite teacher, though.

So if a genie showed up and said “give $1 to your favorite celebrity and give $100 to your favorite teacher,” we as a society would give way more money to the teachers, but each individual teacher would receive less than each individual celebrity who gets paid under this system.

Sure, but if they’re reducing new whiskey production at exactly the same time, I would think that they’d basically gain a bunch of space right at the time they’d need it. A rickhouse designed for barrels might not be a perfect fit for the big polyethylene tanks, but I’m sure a major shift in operations could result in a relatively low cost switchover as necessary.

Brick and mortar retail might be struggling, but it’ll take a larger set of data to try to tease out trends about whether that means a shift to online retail, a shift away from goods towards services, or an actual reduction in spending.

Too long in oak changes the flavours and at some point it won’t taste like your product.

They can and do dump them into non-reactive tanks. Or bottles.

The fundamental difference between Chinese commune policies and, say, American sharecropping or Cuban sugar plantations is that the workers had no title to their land, not that they couldn’t leave it.

I’m not talking about Chinese commune policies. I’m talking about the hukou system, and its effects on how children were raised in China between 1990 and 2010. As in, the lived experiences of Chinese people between the ages of 15 and 40 today.

It’s absolutely relevant to people today, not least of which was the original comment you were responding to, a firsthand experience of what happened to that commenter’s migrant family in Guangzhou as recently as 2010.

It’s weird to raise this as a concern relative to the history prior to the revolutionary era.

It’s different because this affected the people who are still alive today.

The reform being talked about started in 1980, and didn’t become available to the broader population until pretty recently. Even today, children aren’t allowed to attend public schools outside of their ancestral home town.

So if you were born in 2000 to parents who had moved to Shenzhen, they’d still have to send you back to whatever rural village your grandparents were from, and didn’t have access to schools or healthcare otherwise. Now, you’re 25 years old and lived most of your life seeing your parents once a year, and still have an internal passport-like document tying you to that ancestral village.

There are more reforms on the horizon, but trying to explain just how pervasive the hukou system still is (and how much it affected the people who are alive today) is really hard to grasp for people not familiar with the system.

The listeria outbreak also exposed Boar’s Head as a deeply mismanaged company. When the CFO, who had been at the company for over 20 years, was deposed under oath, he couldn’t answer the question of who the CEO was, or who his boss was. It came up in a lawsuit between family members of the family that owns and controls the company, and has their own competing factions in charge of different parts of the company.

From a pure corporate governance perspective, that type of dysfunction is a recipe for disaster.

Increasing productivity of workers is met with demand for more production-intensive products. It’s like how every time hardware improves, software becomes more complex to take advantage of that increased capability. It’s like Jevon’s Paradox, but applied to productivity of workers.

One prominent example: our farmers are more productive than ever. So we move up the value chain, and have farmers growing more luxury crops that aren’t actually necessary for sustenance. We overproduce grains and legumes, and then feed them to animals to raise meat. We were so productive with different types of produce that we decided to go on hard mode and create just-in-time supply chains for multiple cultivars so that supermarkets sell dozens of types of fresh apples, tomatoes, potatoes, onions, etc., and end up eating much more fresh produce of diverse varieties compared to our parents and grandparents, who may have relied more heavily on frozen or canned produce, with limited variety.

I don’t think it’s an insurmountable challenge. Just that the ratio is what matters, which means abrupt changes to birth rates might be more problematic than the magnitude of the change over time.

But I also don’t think that a stable population size solves the climate crisis or resource depletion. It might be the case that 8 billion people in 2075 end up consuming way more energy and natural resources in an even less sustainable way than the 8 billion people of 2025.