[Cryptography] Bitcoin theft and the future of cryptocurrencies

[Zenaan Harkness]

On Tue, Dec 19, 2017 at 01:48:36AM -0500, grarpamp wrote:
> The Biggest Scam In The History Of Mankind - Hidden Secrets of Money Part 4
> https://www.youtube.com/watch?v=iFDe5kUUyT0

Excellent series by the way. Episode 4 has a basic technical error
(which doesn't really matter for the common understanding of the
massive fraud which is the Federal Reserve system of course...) and
that is a (intentional or otherwise) misunderstanding of fractional
reserve banking:

When person A deposits say $100 of salary, yes, the bank is free to
"loan it out" - but the bank never actually loans it out.

The "fraction reserve" is the actually the ratio of reserves
(deposits made by you and I) that the bank must keep on hand,
proportional to the amount of loans it --creates-- - the Federal
Reserve is quoted a couple times, and the quotes are correct, but the
dialog is probably dummed down (even as amazing as it sounds) so that
it's not so scary, or more likely just so it's easier to understand.

In other words, the bank does not loan out $90 of your $100 deposit
so as to maintain its fractional reserve - it keeps the full $100 on
deposit, and loans out $900 - meaning that your $100 is the fraction
"on reserve", and out of $1000 ($100 deposit + $900 loaned), your
deposit is the 10% figure.

What follows from this is that your deposit money is never loaned
out, it's just "at risk" so to speak. Which means that the moneys
loaned are quite literally created on the spot - or technically,
created when the bank writes out your bank cheque for your new car/
house etc for which you have taken out the loan (and promised to
repay that loan, which is the true security for that loan, which is
what the banks use to justify creation of those loan monies).

Fractional reserve requirements were widely reduced from 10% to 3% in
America (in the 1980s?) and I think nowadays down to something more
like 1%.  $100 deposit, with a 3% fractional reserve, of course means
that $3,233.33 "can" be loaned out, based on your $100 deposit.

(BTW, loan money is not quite "created", in the sense that it's
 only temporarily created, as in, as you repay the capital amounts,
 those original loan amounts are literally wiped from the computer -
 sort of analogous to DC coin destruction to build in some sort of
 depreciation; BUT, interest payments of course are the PROFITS of
 the bank, and those interest payments were not also created - they
 are extracted out of the economy, from other peoples/govt's loans,
 so without ever expanding loans, the entire ponzy economy will quite
 literally collapse...
 Really puts the comedic lie to the banks "writing off" "bad debts"
 and claiming tax credits for doing so... total, utter deception!
)

As it is…