So the only way to beat this thing is If everyone stops creating money out of thin air?
In other word no more loans of any kind.
Not even close to that simple.
First all our currency is created with debt attached. The govt issues $1 billion in bonds and collects $1billion in cash, but down the line those bonds bear interest so when the time comes the govt owes wel over $1 billion to redeem them. Money created with debt attached is really the big killer to the economy, a huge ponzi scheme that has to collapse completely in the end. We are already seeing it in the US as their $ devalues and their credit rating declines they will soon not be able to borrow enough to fund the t-bills and bonds.
Full reserve lending is certainly the most stable environment but there are only a handful of nations that use it. Gurnsey is one. If you want a loan they have to have the money on hand to give you, and if they give you a oan for $10,000 there reserves drop by that amount. Of course they also have true fiat currency, they don't issue bonds they just print the money and therefore there is no govt debt.
If you got a few weeks while I'm on vacation to go through the intracacies of the big bank scam that is perpetrated on most of the globe let me know.;-)
What part of the BOC statement that details their lending practices to private institutions leads you to the conclusion that they don't lend money to the private institutions? Afterall, you were the guy that posted this little gem.
The BOC does not make loans to the banks in the way you seem to think. They will make a loan to allow balancing of the system each day but that is paid back usually in the next day or two as items clear. It's not like TD goes to BOC and says loan us a million bucks and a term and interest rate is set. The interest is mandatory derived from prime rate and the payback is ASAP. In other words it works like a big clearing house and all accounts must be settled at the end of each day.
Are you saying that the BOC website is wrong? Are they lying?
You are continually confusing the BOC act and the BOC charter with commercial banks. The website is quite correct regarding the BOC reserve requirements but that is where it ends. Until you get over this assumption that the BOC charter applies to commercial banks you won't get the idea.
That guarantee from the BOC to Canadians is useless unless it is secured in turn by the BOC's "clients".
It's guarantee is a combination of their reserves and the good faith credit of the govt.
.. And who does the BOC transact with?
If the BOC only transacted internally, they would have no need for a reserve requirement at all.
It transacts with banks, foreign govts, foreign banks, and through purchase and sale of govt bonds the stock market. It does not however dictate how much a bank can lend and what rate they have to charge. Its transactions with banks is also limited to settlement of the LVTS at EOD and the sale/purchase of currency.
I wonder why that isn't happening? Hell, it's not as if there aren't a lot of high quality projects out there that need financing.
Its called assessed risk. The banks will only finance a alrge project if there is minimal risk to the money. Most large projects have certain guarantees attached in the way of large assets or govt backing. Just because they can loan as much as they want doesn't mean they will finance everyone for everything.
Correct me if I am mistaken, but my understanding is that you work in the oil/gas sector; presumably in the area of finance/economics (as per your uni studies)... Perhaps you can go to the head of the department and ask why your company doesn't get your bank to "create some money out of thin air" to pursue some major developments/acquisitions?
We use OPM (other peoples money) to fund plenty of development and capital purchases. With interest rates the way they are it is better to borrow the money at 1-2% while investing our cash capital in ventures that will yield 5-6% or more. We maintain our assets while aquiring new ones and at month/year end we usually show a net gain through this method.
Why on Earth would they float bond issues, go public or seek cash infusions from the capital markets when their local banker is just itching and able to write trillions of dollars in loans through money they "create out of thin air"?
Answer this question and you'll likely settle this issue.
A lot of thought goes into what and when a corp does, as in the example above we can use bank money cheaper than our own and profit on the invesment without ever having to produce anything. If interest rates were a lot higher we would probably seek capital investment with a guaranteed ROI lower than what we borrow from the the banks thus minimizing the cost of borrowing, or just use our own cash capital and take the hit on our asset balance with amortized depriciation to help offset the purchase.
Whatever.. With your perpetual focus on nit-picking incidental and semi-related details, I sometimes make a mistake. But no matter how you cut it, as long as you hold a mortgage on a property, the lender has first charge on the asset regardless of the name on the title.
Whatever.. See above and if you don't believe me then stop paying the obligation on one of your many properties and see the results for yourself... You can even show the title document to the Sheriff when they come by to change the locks.
Just want to make sure you got the facts straight. It ain't nit-picking to the bank or the court or even the homeowner. I'll stop paying if you want to in my place, other than that I enjoy have 2 homes (not many). FYI: if the sherrifs show up to change the locks they better have a signed court order or they would be escorted off the property.
No I am not Nick. The BOC still provides money to the Charters at the bank rate (hmmm, sounds almost like a loan, eh?).
As already explained, they provide very short term loans to balance LVTS at the end of each day. This is one reason that most banks stop entering in the system at 2pm and tell you it will be done on next business day, because if a big transfer gets caught in the middle it can cost the bank a bundle.
You'd almost wonder why any Charter would take this money with an obligation to pay the rate when they can just "create money out of thin air" by virtue of a simple accounting entry?
They don't have a choice when it comes to LVTS balancing. they do have the option of borrowing from another institution if arrangements can be made and some banks with multiple subsidiaries will do this as they can have a zero interest agreement. What they can't do is loan themselves the money, big no-no and could cost them their charter as it is considered fraud and is contrary to the bank act.
Ever heard of a zero-down mortgage using the asset to self-collateralize? It wouldn't matter anyways, my local branch can just "create some money out of thin air".
Ever hear that those products were made illegal in 2008 due to their negative effect on the economy. They were considered too high risk and witha collapsing real estate market they were heavily downgraded in the US and Canada simply ended them. Worse than subprime lending.
The BOC (basically) controls the money supply, you'd better damn well hope that the BOC has something to say about my local branch just fabricating a few trillion dollars.
There are rules on lending surrounding DSR (debt service ratio), credit score, TDL (total debt load) etc that have to be enforced to qualify borrowers in any institution under the bank act but nothing regulates how many loans they can give to qualified borrowers. Private lenders with full reserve can circumvent these requirements but will of course charge outrageous interest rates to reflect the higher risk.
Now is the best time... Assets can be bought at a severe discount
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True, but I want my assets to show gains quicker than 100 years or more.;-)
