How much money can banks create? [Banking 101 Part 4] So what actually limits how much money the banks can create? Reserve Ratio? You’ve probably seen the standard multiplier explanation of fractional reserve banking that we discussed in an earlier video. In this model, the banks have to keep a percentage of their customers’ money in a ‘reserve’. The reserve ratio given is usually 10%, which means that for every £100 paid into a bank by customers, the bank must keep £10 in a reserve somewhere. This means that the banks can only expand the money supply up to 10 times the amount of real, government created money.
Hacking the Future of Money: Building Creative Commons: The Five Pillars of Open Source Finance This is an article about Open Source Finance. It's an idea I first sketched out at a talk I gave at the Open Data Institute in London. By 'Open Source Finance', I don't just mean open source software programmes. Rather, I'm referring to something much deeper and broader. It's a way of framing an overall change we might want to see in the financial system.
Realities Behind Prosecuting Big Banks Michael Reynolds/European Pressphoto AgencyEric Holder told senators last week that some banks are so large that prosecuting them could be economically destabilizing. Are banks too big to jail? If there was any doubt about the answer to that question, Eric H. Holder Jr., the nation’s attorney general, last week blurted out what we’ve all known to be true but few inside the Obama administration have said aloud: Yes, they are. Obama's Tax Threshold Concession Bodes Ill for Debt Ceiling Talks President Barack Obama speaks about the fiscal cliff during a news conference at the Eisenhower Executive Office Building in Washington, December 31, 2012. (Photo: Luke Sharrett / The New York Times)The president won re-election promising to raise taxes on those earning more than $250,000. Now he's already capitulating. There are three points that people should recognize about the fiscal cliff deal that appears to have been agreed by President Obama and the Republicans in Congress. The first is the simple and obvious point that we have gone over the cliff. There was no deal approved by Congress and signed by President Obama before the 1 January deadline.
Diagnosing the Republican Brain "Virtually no one who is taught and believes Relativity continues to read the Bible, a book that outsells New York Times bestsellers by a hundred-fold," Conservapedia continues. But even that's not the site's most staggering claim. In its list of "counterexamples" to relativity, Conservapedia provides 36 alleged cases, including: "The action-at-a-distance by Jesus, described in John 4:46–54, Matthew 15:28, and Matthew 27:51." If you are an American liberal or progressive and you just read the passage above, you are probably about to split your sides—or punch a wall. Sure enough, once liberal and science-focused bloggers caught wind of Conservapedia's anti-Einstein sallies, Schlafly was quickly called a "crackpot," "crazy," "dishonest," and so on. These being liberals and scientists, there were also ample factual refutations.
Do banks create money or just credit? [Banking 101 Part 5] Credit Risk? The key thing about ‘credit’ is that it has something called credit risk. Credit risk is the risk that a person, or company, that owes you money won’t pay you back. If you lend £50 to an unreliable friend who still owes you money from the last time you lent to him, then there’s a lot of credit risk attached to that loan, because it’s fairly likely that he won’t repay you on time. So if the numbers that banks add to your bank account are not money, but just credit, then there must be some credit risk attached to that money.
Seedbombing: applying the principles of permaculture to finance Brett Scott – campaigner and author of The Heretic’s Guide to Global Finance – makes the case for permaculture principles and guerrilla tactics in redesigning our financial system Finance, even in its most high-tech formulations, is rooted in ecological systems. A high-frequency trading hedge fund, for example, relies on electricity created by burning fossilised organic matter. It relies on employees, surviving via agricultural systems. Where banks really make money on IPOs Every time an IPO has a big pop on its opening day, the same tired debate gets reprised: did the investment banks leading the deal rip off the company raising equity capital? The arguments on both sides are well rehearsed — I covered them myself in no little detail, for instance, after LinkedIn went public, in 2011. Back then, I had sympathy with the bankers: If the large 7% fee does anything, it aligns the banks’ interests with the issuer’s.
Eight Corporate Subsidies in the Fiscal Cliff Bill, From Goldman Sachs to Disney to NASCAR President Barack Obama is flanked by Vice President Joe Biden as he speaks at a news conference following the House vote, at the White House, in Washington, January 1, 2013. (Photo: Luke Sharrett / The New York Times) Throughout the months of November and December, a steady stream of corporate CEOs flowed in and out of the White House to discuss the impending fiscal cliff. Many of them, such as Lloyd Blankfein of Goldman Sachs, would then publicly come out and talk about how modest increases of tax rates on the wealthy were reasonable in order to deal with the deficit problem. What wasn’t mentioned is what these leaders wanted, which is what’s known as “tax extenders”, or roughly $205B of tax breaks for corporations. With such a banal name, and boring and difficult to read line items in the bill, few political operatives have bothered to pay attention to this part of the bill. But it is critical to understanding what is going on.