But how does the FRB-created money get from the FRB into circulation if not through commercial banks?

That's the thing that is so refreshing about LiMi as opposed to, say, FDR - the willingness to have civil discussions. I must say, Rad, your presence here has made this place a much less enjoyable venue for the discussion of ideas. It may be one of the reasons I no longer care to engage very much.

Just something to think about while you are considering other insults to throw out at those who have bent over backwards trying to explain - as clearly as they can figure out how - what they understand of the nature of the current fiat money system.

Ignorance is not a moral offense, you know. (bringing up the still up-for-grabs concept of morality...)

We've had this discussion in the past. ("We" meaning the participants of LiMi.) I think we ended up being able to disagree without all of the name calling. I sure wish you would either grow up or go away, as you are poisoning an otherwise interesting and amicable place to discuss interesting topics.

- NonE

I'm 6'2" 210 (well, 200 now, been losing weight) pounds and I study martial arts regularly. Full contact, no pads. We practice our falls on concrete, we do knuckle push ups on that same concrete floor, we work with sticks, chains and even knives. My training partner is a Marine. I'm not really worried about what RoR could do to me even if he wasn't engaged in a retarded flame war on the interwebs.

OK, but he has said that the Fed only increases the risk of monetary inflation through bailouts. When the increase in money supply over the last 50 yrs was pointed out, he said the Fed was lying about that. So I'm a little confused, it sounded a lot like he was saying that there was no growing money supply.

So, OK, the fed deposits new money into commercial banks, which increases the bank's reserves, which increases, by a factor of 9, the amount that the bank can legally loan out (assuming 10% reserve ratio). And this happens on an ongoing basis. Is that right?

And, yes, when I saw "FRB", I read "Federal Reserve Board", so there was some confusion there.

Because my name is associated with this forum, I deleted some remarks that went too far in my opinion. I'd also ask to try to be a bit less aggressive. For example, when you are angry and feel you really need to insult somebody then please try to do it in a creative way (e.g. 'paranoid wide-tailed otter') so that you do get the opportunity to vent, but at the same time undermine at least some of the nastiness.

The cartelization, the bailouts, and most importantly, the inflation of the money supply is a feature, not a bug, in any fractional reserve banking system. Early attempts to do it without such structures in place led to bank runs, wide-spread panic, and ultimately the collapse of any banks who got themselves highly leveraged without such institutional backstops. The Medici bank in Florence being perhaps the first example, had loans out worth several times their actual holdings, despite usury being technically illegal at the time. Inflation was their only means of profit!

That was the whole point of setting up the Fed, to allow the banks to practice fractional reserve banking without fear of being wiped out by defaults or large withdrawals while lending out far more money than they had, so they could seek massive short term profits at the expense of the currency's long term value. Credit, interest, monetized debt, these all add to the total supply of dollar denominated "monies," regardless of whether they were printed by the Treasury or created in a bank loan or credit line. That's what liquidity means, that great sloshing sound is new, digital cash coming out of the Fed's fire hose, which will ultimately flush the dollar down the tubes.

In Zimbabwe, (as in Argentina and Weimar Germany), they made so much new physical money, people had wheelbarrows full of zillion dollar notes that couldn't buy shit, but here in the U.S., they'll just keep adding zeros to the left of the decimal point into their computerized accounts, right there in the banks.

And RoR, if you can't see that those promissory notes/IOU's/credits, that "statement of debt" that you say just means the bank owes you something, that ticket to come back for some cash/gold/whatever at a later date when the bank has some more reserves, are in fact money, and will be treated as such in the marketplace, then you'll just never understand this correctly. That's how the banks create money, by doing just what you say they should do, but you stubbornly refuse to acknowledge that what they create is in fact money, even though it works just like money, is denominated in dollars and cannot be differentiated from actual reserves. One hundred dollars of promise buys the same groceries $100 cash does. It has happened that way a thousand times over the centuries, from the Medici's banks to today!

That's exactly what happened to the U.S. dollar, because that's what FRN's are! They got people so used to using paper notes, they never bothered to trade them in for the assets they supposedly represented, so when they printed more notes than there was gold, then eventually took away the gold altogether, no one really noticed or even cared.