RandomBlog2011 | wealthymatters

Money Created by Banks

September 4, 2011 2 Comments

wealthymatters.com

For all of you who have been watching the Paul Grignon videos here is a little something about money created by banks.

The basic text book view is that commercial banks create money through fractional-reserve banking,i.e. the banking practice where banks keep only a fraction of their deposits in reserve (as cash and other highly liquid assets) and lend out the remainder, while maintaining the simultaneous obligation to redeem all these deposits upon demand.Commercial bank money is non-physical, as its existence is only reflected in the account ledgers of banks and other financial institutions.Also there is some element of risk that the claim will not be fulfilled if the financial institution becomes insolvent.So central banks make deposit insurance mandatory for banks. Read more of this post

Filed under Theory Tagged with banks, base money, broad money, credit creation, fractional reserve banking, money creation, postaday2011, Prof. Richard Werner, RandomBlog2011

All About Money

September 4, 2011 3 Comments

wealthymatters.com

The last couple of days I’ve been watching the sort of movies that challenged me to think about money theoretically.So to brush up on stuff I last had to deal with some 15 years ago I’ve been surfing the net for the sort of stuff found in basic economics books.In case you too need a small revision or you are totally new to economics here’s a chance to catch up.

BTW I’ve tried to make the whole experience as un lecture like as I can.Enjoy!

Definition : What is Money?

Money is any object or record that is generally accepted as payment for goods and services and repayment of debts in a given country or socio-economic context.

Examples of Money:Cowrie shells,beads,metal coins,paper money,electronic money etc.

Since money involves so many things it is identified by the functions it performs.Any kind of object or secure verifiable record that fulfills these functions can serve as money. Read more of this post

Filed under Theory Tagged with commodity money, currency, fiat money, functions of money, Money, money supply, postaday2011, RandomBlog2011, representative money

Money as Debt – Promises Unleashed

September 4, 2011 1 Comment

‘Money as Debt-Promises Unleashed’ – I watched this documentary last night.It is made by the same person who made ‘Money as Debt’.Here is more about it :https://wealthymatters.com/2011/09/03/money-as-debt-paul-grignon/

This documentary too is worth watching.Personally I found that it challenged my mind to stretch just a bit more to understand the supply of money. Honestly,I think I’d have to watch the movie a couple more times to take in all the implications of the arguments that Paul Grignon makes.The documentary did change my way about thinking about my bank deposits and it managed to convince me that indiscriminate money creation by banks and other financial institutions leads to many systemic problems.But at the same time I’m not able to buy the argument of the earth being unable to support infinite growth.It’s too Malthusian for my tastes.And I believe too much in the ingenuity of man and the abilities of science to accept that the world’s resources are so limited.Admittedly,man may devastate the earth in the short run and pay the price for it but mankind will also learn its lessons well and come up with the right solutions.I also find it hard to see compound interest,investing and modern financial transactions as an unmitigated evil.I believe that every financier is not a gambler. Read more of this post

Filed under Theory Tagged with cap credit creation, credit, deposits, loans, Money, Money as Debt II - Promises Unleashed, Paul Grignon, postaday2011, RandomBlog2011, sub-prime

Money As Debt – Paul Grignon

September 3, 2011 1 Comment

wealthymatters.com

I watched this documentary ‘Money as Debt’ by Paul Grignon today.It uses attractive animation to explain fractional reserve banking.And I can say that for the first time in my life I got to appreciate how humanity has managed to create the mountain of debt we have piled up.I always sensed that banks created money but only now I have a grasp of just how much.

I rate this video as pretty good .It’s a bit theoretical but not too off putting all the same.I can’t say I was able to understand all the implications of everything I watched but I do know my brain will keep revisiting the ideas I could not grasp at the first go.So this movie will have managed to expand my mind a bit.

I can’t say I agree with the film maker’s idea of a world which will run out of resources to sustain growth because I believe that human ingenuity will just find new uses for materials and waste materials we do not consider resources today. Read more of this post

Filed under Theory Tagged with debt, fractional reserve banking, Money as Debt - Paul Grignon, postaday2011, RandomBlog2011

3 Major Investments of the Wealthy

September 2, 2011 1 Comment

The wealthy are wealthy because they have superior skills in making and keeping wealth.All of them make it a priority in life to invest in the following 3 things.They cultivate habits that allow the to automatically invest in them.

1. Wealthy people invest in income producing assets.

It’s easier to grow your wealth if you have many sources of income.It easier still if you have many streams of passive income.Now all wealthy people quickly find asset classes that they are comfortable with and make it a point to acquire as many income producing assets in that class as possible-and the bigger the better. Read more of this post