Well, it is important to realise that the method banks use to create money by lending - which does not "lend" actually existing money, but which creates money into existence - is explained in detail by the Bank of England, in their 2014 Q1 Quarterly Bulletin.
This is the source of my "theory" as you call it. Although I cannot think of a theory that comes more directly from the horse's mouth.
Of course, it IS ridiculous, but it also IS a principle means for the third economy to spur/encourage the second economy to extract all possible value from the 1st economy, and to the third economy it is not ridiculous, so much as profitable. Takiing the short term view. (Gamblers do not tend to take long term views).
On page 16 - in the box labelled "overview" - it says:
"In the modern economy, most money takes the form of bank deposits. But how those bank deposits are created is often misunderstood: the principal way is through commercial banks making loans. Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money. The reality of how money is created today differs from the description found in some economics textbooks: • Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits."
As to your other points, I agree that bankers are good at gambling - at least, they are keen gamblers. Whether I like their turning of me, my farm, my family, my community, and all of our livelihoods, into their gambling chips, is a value judgment upon which we may disagree. ;) Do gamblers *really* care where the chips fall?
no subject
This is the source of my "theory" as you call it. Although I cannot think of a theory that comes more directly from the horse's mouth.
Of course, it IS ridiculous, but it also IS a principle means for the third economy to spur/encourage the second economy to extract all possible value from the 1st economy, and to the third economy it is not ridiculous, so much as profitable. Takiing the short term view. (Gamblers do not tend to take long term views).
https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/quarterly-bulletin-2014-q1.pdf
On page 16 - in the box labelled "overview" - it says:
"In the modern economy, most money takes the form of bank
deposits. But how those bank deposits are created is often
misunderstood: the principal way is through commercial
banks making loans. Whenever a bank makes a loan, it
simultaneously creates a matching deposit in the
borrower’s bank account, thereby creating new money.
The reality of how money is created today differs from the
description found in some economics textbooks:
• Rather than banks receiving deposits when households
save and then lending them out, bank lending creates
deposits."
As to your other points, I agree that bankers are good at gambling - at least, they are keen gamblers. Whether I like their turning of me, my farm, my family, my community, and all of our livelihoods, into their gambling chips, is a value judgment upon which we may disagree. ;) Do gamblers *really* care where the chips fall?