Jct: I'm adding this to my blog.

--- On Fri, 1/30/09, Chris Regehr <cjr@...> wrote:

> From: Chris Regehr <cjr@...>
> Subject: Re: Turmel: Re: banks #2
> To: johnturmel@...
> Date: Friday, January 30, 2009, 4:03 AM
> Hi John,
>
> I saw your "How banks create money" video.
> Excellent! I like your style. You are a good teacher.
> A couple questions:
>
> Regarding your watch analogy; doesn't it leave out the
> fact that the
> banks keep making new loans thus the money that is not
> available to pay
> the interest will be present as new loans come into
> existence.

Jct: And if they choose not to, what is the effect?
This power of life and death is unacceptable.
I've never said that the bankers couldn't spend all the
interest back as fast as possible but the point is, once
you are in the mort-gage trap, there's no payment schedule
that lets you pay the last piece of interest off.
Yes, the bankers can decide to let new loans come into existence
pay the last cycle's interest, to leave you alive.
But they also have the power to make you mort. Foreclose.
Lend new money to the other guy to buy your stuff at auction.

Naturally
> this doesn't do away with the problem but couldn't
> it be indefinitely
> pushed off into the future as the money keeps inflating?

Jct: As I said, yes the death in the death-gamble mort-gage can
be pushed off indefinitely if tbe banker chooses to let you live.
But without foreclosure, there is no Shift B inflation.

> Second question: do you see the fact that there is no
> longer a reserve
> requirement changing things?

Jct: Easier to reprogram it to come to the rescue than having to reprogram a
malfunctioning 10% reserve requirement since the issuance of chips at a wise
cage isn't a function of the old chips saved but of the new collateral pledged,
0% connection to the reserve tank. So, since LETS poker chips have a 0% reserve
requirement before issuing new chip s, it's obvbiously easier to get to LETS
than with a 10% reserve to explain away.

>Is there anything to constrain a bank from
> lending in Canada even if they have low reserves. In fact
> what prevents
> them from lending the reserves as opposed to new credits
> given that there
> is no reserve requirement?

Jct: They've been put in charge of the tap for loans. Not the reservoir for
loans. When should loans come from the tap and when should they come from the
piggy bank? The point is they come from the tap and "banks, of course, do not
lend out their depositors' funds."

> And now I have a big question for you but I think I might
> be pushing it.
> I read an article that I don't understand but I want to
> and I figure you
> have the mind to wrap around it. What follows is an excerpt
> from an
> article I found here:
> http://www.financialsense.com/editorials/fekete/2008/1201.html
>
> Serial rate-cuts destroy the wage fund
>
> Suppose you are a worker taking home $50,000 a year in
> wages. When your
> income-flow is capitalized at the current rate of interest
> of, say, 5
> percent, you arrive at the figure of $1,000,000.

Jct: In just one year?

> The sum of one million
> dollars or its equivalent in physical capital must exist
> somewhere, in
> some form, the yield of which will continue paying your
> wages.

Jct: I'm not finishing this right now. I'm right in the middle of trying to get
the two world fora to save our planet so lessons in basic poker chips will have
to wait. See my index of videos at http://johnturmel.com/kotp.htm for my Youtube
Channel with over 100 related lessons at http://youtube.com/kingofthepaupers

But you came to the million in money with no reference to how long later you
should get it, how much principal you actually put into the savings account to
get your million later, and now the claim that if you expect a million in chips
at the end of the game, you also expect a million in value in the cage at the
end of the game.

Buy yourself a set of poker chips, play the mortgage game with friends a few
times, create Shift B inflation in your chips, stop inflation in your chips by
doing it at 0% too, and stop thinking in terms of money, Mammon, or you'll stay
fooled forever. Then inflate and deflate toothpicks or marbles to show that the
medium isn't the problem, it's the positive feedback.
You read my bankmath and you're still not using the ideal model? You must make
the paradigm shift to poker chips.

Later:

> Capital has
> been accumulated and turned into plant and equipment to
> support you at
> work. Part of your employer's capital is the wage fund
> that backs your
> employment. Assuming, of course, that no one is allowed to
> tamper with the
> rate of interest.
>
> Suppose for the sake of argument that the rate of interest
> is cut in half
> to 2½ percent. Nothing could be clearer than the fact that
> the $1,000,000
> wage fund is no longer adequate to support your payroll, as
> its annual
> yield has been reduced to $25,000. This can be described by
> saying that
> every time the rate of interest is cut by half, capital is
> being
> destroyed, wiping out half of the wage fund. Unless
> compensation is made
> by adding more capital, your employment is no longer
> supported by a full
> slate of capital as before. Since productivity is nothing
> but the result
> of combining labor and capital, the productivity of your
> job has been
> impaired. You are in danger of being laid off &#8213;
> or forced to take a
> wage cut of $25,000.
>
> Do you know what this is saying?
>
> I feel a bit rude asking you all these questions - it is
> just that I have
> a NEED to understand this information and a NEED for help
> to grasp it.
>
> Have a good one,
> Chris Regehr

Jct If you want this dealt with right away, all I ask is that you paraphrase it
in poker chips. But by doing so, you'll have the overview to see any error in
thinking and will probably no longer have to ask.
Switch from thinking in terms of Mammon to Chips and it all becomes simple and
clear.

> > -- On Thu, 1/29/09, Chris Regehr <cjr@...>
> wrote:
> >
> >> From: Chris Regehr <cjr@...>
> >> Subject: Re: banks
> >> To: johnturmel@...
> >> Date: Thursday, January 29, 2009, 7:15 PM
> >> Hi John.
> >>
> >> I| have been trying to find the source of this
> quote:
> >>
> >> "the banks, of course, do not lend out their
> >> depositors'
> >> funds. Each and every time a bank makes a loan,
> new bank
> >> credit is created, brand new money."
> &#8722;Graham
> >> Towers, Gov of
> >> the Bank of Canada 1939
> >> Can you tell me where I could find it?
> >> Thanks a heap, Chris
> >
> > Jct: Hansard in the Parliamentary library. While I
> lived in Ottawa, I
> > looked it up and it's there in his testimony
> before the committee.
> >
> > With the plumbing blueprint in hand, how can he not
> see?