$15 Trillion in 5 Days

So you've finally admitted that everything you've posted up to now is wrong. The measure includes travellers checks from non bank issuers. And this was the point all along that you have denied -- that something other than FRNs can be used as money. Whether or not it eventually is converted from FRNs or to FRNs is irrelevant, just as it is when Treasuries or coins are used as money.

And M2 includes money market mutual funds that are outside of the Federal Reserve System and consist principally of short term bills issued by corporations and treasuries. It's good to see you admit that treasuries and other items are also US dollars, i.e. money.

Thanks for playing and pay your losses at the door. LOL You're totally busted!!!!

 

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Can I just ask a "stupid" question? With outstanding US notes in circulation, along with coinage, just WHY are all dollars in your world FRN's now Fatima? Even using your own logic, there are billions upon billions of US Dollars in coins and US notes that are still legal tender. WTF do you then conclude, (using your own logic and ignoring other's), that therefor by definition all US dollars are FRN's? Somehow you magically waived a wand and by your decree they are no longer US dollars but FRN note dollars only?

If Chris issued notes and people passed them around and used them for money, denominated in US Dollars, are those FRN dollars as well? ON ITS FACE, ACCEPTING YOUR LOGIC, (whihc I do not), your statement that all US Dollars are FRN dollars is false. Billions upon billions in US dollars is minted every year and put into circulation by the US mint.

Again, all US dollars are dollars, just a fraction of them are FRN's. On the face of that statement is its truth, a Federal Reserve NOTE is ONLY A NOTE. The physical note is the only amount of FRN in existence. There IS no FRN without the NOTE!

Ok, going away now, screaming at the internet so time to walk away.

Chris

 

Do you guys ever agree? Reminds me of my brothers..

 

This is an opinion (a pretty juvenile one at that) and is irrelevant.

In regards to what I said, you didn't say anything that disputes what I posted. I suggest you read it again. Traveler's checks are created from federal reserve dollars and are redeemed in federal reserve dollars. I never said it had to be a bank that issued it and this isn't a requirement. You are simply wrong on the Money Market Mutual Funds. There is no other way to say it. You further make the mistake in assuming that I don't count these as federal reserve dollars. In never addressed this. I only pointed out that you got it wrong in that it was not part of the number I supplied.

Furthermore. You consistently ignore the most damning item on your arguments about there being more than one type of USD. That is this direct quote from multiple websites of the the Federal Reserve.

As the banker for the Federal government, the Fed clears checks drawn on the Treasury's account. Acting as fiscal agents for the government, the Reserve Banks sell, service and redeem Treasury securities. Further, currency and coin are placed into or are withdrawn from circulation in response to seasonal and cyclical shifts in the public's need for cash. Almost all U.S. currency now consists of Federal Reserve notes, which were first issued in 1914.​

Remember we are talking about USD Currency and here we have the Federal Reserve stating that almost all U.S currency in use are Federal Reserve Notes. Your insults towards me and chest thumping don't change that.

 

And once again you twist in the wind. You try AGAIN to use a quote that all US currency consists of FRNs [obvious] to bail you out of your plainly wrong claim that FRNs are the only form of US dollar. But the Fed's own definition of M2 prove you wrong by including money market mutual funds, travellers checks and other items in their measurment. Next time spend a little time learning from Cointalk before you presume to be able to teach.

Nobody falls for your intentionally deceptive arguments anymore.

 

You are completely correct, of course, and Fatima's own admission that M2 is the USD money supply is an admission of error. But don't expect a thank you or admission. All you will get is another confusing post to try to twist the error into a line of discussion that will confuse many people. But all the readers of this forum have to understand is that Fatima has a very superficial understanding of money.

 

Boys will be boys, right?

 

I suppose I could ask you that why do you insist that US Treasuries are USD when they fail the legal tender test for USD? None the less, on the issue of coinage, I already admitted my mistake on this. The coins are a liability of the US Treasury and not the Federal Reserve even though it's the Federal Reserve that monetizes them and becomes responsible for them. It's begs the question. If the Federal Reserve pays full face value to the US Treasury for the coins, then what do they pay with? Federal Reserve dollars? If so, then were are those $s counted? No doubt, it's the reason the Federal Reserve states on it's website that

"Almost all U.S. currency now consists of Federal Reserve notes." Emphasis on the almost.

On the issue of pre-1971 US Bank notes, silver certificates, etc. The average expected lifespan of a note is ~18 months. So one can safely assume there are none of these left in circulation, they are all being held by collectors and thus are no longer counted. If someone deposits one of these bills at a bank, the bank sends them to the FR to be destroyed.

Why continue to ignore the Federal Reserve's statement that almost all USD are Federal Reserve notes? Seems to me they would know.

 

You first point here is nonsense. That would be counterfeiting if I understand it correctly. You can do better than the party you are referencing than making such an argument. I have never said that "all dollars are FRNs". I have said that all USD created since 1971 (except coinage) are Federal Reserve dollars. There is a huge difference. My logic is sound.

Finally the Mint does not place coins (except a minuscule amount of direct sales) into circulation. They are sent to the Federal Reserve, which pays the Treasury for them, and then it's the Federal Reserves responsibility to release them into the federal reserve system of banks. I hope this clears it up.

 

If all the dollars I have deposited in my Bank are FRNs as you suggest then what is the purpose and necessity of FDIC insurance on my account? And why is coverage capped at $250,000.00? If all my money deposited in the bank were FRNs then the only risk of loss of my deposits if my bank failed would be if the Federal Reserve failed. Else replacing my deposits no matter the amount would be just a zero sum game to the Federal Reserve.

 

The primary purpose of the FDIC isn't to insure your deposits, but rather to be the independent government auditor that banks are being operated responsibly. As part of that, the deposits of these banks are insured by the government. If the bank isn't a TBTF bank, then it's the FDIC's responsibility to close insolvent banks and move the assets elsewhere. If that happens, then up to $250K of the depositors assets are insured. Officially.

Unofficially, you are correct. The system is now a farce given the amount of money the Federal Reserve has parked at the TBTF and other banks. During this long topic, I never said that fiat currency, and how it is now being handled by the Treasury, the Federal Reserve, Wall Street, the Politicians, and the lack of regulation was sound or even being operated as intended. Clearly it isn't. I've only contended, while having rotten tomatoes tossed at me by those unable to accept it, that all money in the banking system these days is fiat currency issued by the Federal Reserve, aka FRNs. Fiat money systems only work where there are no competing currencies.

BTW, in November 2010, FDIC coverage was changed to "unlimited" for checking accounts. It will remain this way until the end of 2012.

 

You missed the point of my post. It's my fault. I am not a very good writer and in many cases fail to get my message across clearly. Let's take this from a different direction.

Being that all of the dollars I have held as deposits in my bank are FRNs as YOU state. Then all of the dollars of every customer held as deposits in my bank must also be FRNs. Therefore if the above is true as You claim then my bank's reserve has to stand at 100%. That is the only amount my bank's reserve can be if what you claim is true. That is where my bank's reserve will always stand if what you claim is true. Making insurance on my deposits unnecessary. In fact risk of failure of my bank or any bank for that matter would not exist as the entire banking system's reserves would stand at 100%. The only risk of loss for depositors would be the failure of the Federal Reserve. Being that this is the entity underwriting deposit insurance what good does it do.

 

No. Because the individual banks are private companies and they have to "borrow" reserves not covered by their own deposits. They don't if they don't have to. The Fed/FDIC allows them to only hold a portion of their their accounts in reserve. i.e. Fractional Reserve Banking. I'm not sure what the number is these days, but I'd guess its somewhere between 10 and 20 percent.

 

Either all of my dollars held by my bank are FRNs (as you claim) or they are not. If all my dollars are FRNs then my bank must be holding a 100% reserve. It can't be any other way. There would be no such animal as fractional reserve banking as every dollar worth of deposits held by that bank would be FRNs.

 

The nature of fractional reserve banking is for a bank to use approx. 90% of its customers' money for other purposes such as loans which they get to collect interest on, even though it's not their money. My point being that the fractional nature is applied in a way such as that the money they have in their vaults (or in modern times, readily available funds) is only a fraction of the total money they've been provided with. Just because they only truly have 10% at their disposal doesn't mean the entire 100% isn't covered by the FDIC, notwithstanding that the $250,000 limit only applies to interest bearing accounts, where as non-interest bearing accounts have no limit through the end of 2012 due to a provision in the Dodd-Frank Act. So whether or not the deposits are FRNs or some other form of dollars doesn't impact how fractional reserve banking works.

 

If you deposit money in a bank I'm not sure why you would expect the bank to hold that money in reserve at the bank. They have to loan it out to make money in order to stay in business. Banking has always worked this way. It worked this way when people were depositing gold and silver coins, it works that way now with USD created by the Federal Reserve. In fact they will loan it out several times. i.e. Fractional Reserve Banking. It is only a problem if everyone withdraws their money from the bank at the same time. (or the debtors stop making payments like we have now in the housing crisis)

 

I know what fractional reserve banking is
But
If all my dollars held in deposit by a bank are FRNs and all your dollars held in deposit by a bank are FRNs and all dollars of all customers held in deposits by all banks are FRNs (as fatima claims) then there can't be any fractional derivative dollars because FRNs are not fractional they are 100% whole dollars. I mean come on - what is it that a bank's reserve consist of - FRNs?

 

Nope. A bank only has to have 10% of the money it can loan.

 

:thumb:

 

What? Fractional Reserve Banking has nothing to do with "whole dollars". I don't think you understand this at all.

A bank's reserves are in USD. And the only kind of USD they will deal with are those issued by the Federal Reserve. You can take your silver morgan dollar down to your bank, deposit it, and they will credit you with one USD. Aside from making an attentive teller very happy, you can now withdraw your dollar as a $1 Federal Reserve note.