FairEconomics | re: Loans create deposit-digits @FairEconomics | Uploaded April 2014 | Updated October 2024, 13 hours ago.
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Loans create deposit-digits.

Loans [collateralized vs. uncollateralized] create deposit-digits.

Banks buy stuff with the deposit-digits (bonds, equities, securities, stuff).

Banks buy stuff (bonds, equities, securities, stuff) with the deposit-digits including loan contracts that will create more deposit-digits

All money (forget cash) is deposit-digits ... and all deposit-digits have bought securities.

All money (forget cash) is an IOU to, or claim to, stuff. Deposit-digits can have their value insured... and Deposit-digits can be used/converted to buy real stuff, deeds, or other forms of money IOUs.

The entire money-supply is invested in stuff.

The entire money-supply is monetized stuff. ... Including future stuff


Is this a problem~?

Not really ... in a world of constant growth, the `value` of stuff will generally rise (which is a good job because of the deposit-digit connection, but more because the entire world's pension-pots are so invested).

Is this a problem~?
Yes, debt requiring the payment of interest/rent is bad m-kay. Interest is paying stuff (mostly surplus stuff) a workingman's wage for doing no work which dilutes the value of earned wages. Surplus should retain its value, without making claims to more value.


In a kind-of `group-thinking-logic` real people sense that this is all a bit dodgy ... so have turned more to investing their hard-earned-digits into property. The same dynamics still apply as to other stuff though -- If not enough loans are given out, then there will not be enough digits to hold up the price of any investment-stuff.