How much you have in the bank? - Page 4

Let me just say this riddle, Marlon Brando is worth $100M dollars; a stock market crash would reduce his wealth to a 1/100th due to unforeseen circumstances. A thief would come and split that remaining into quarters and run away. A friend of my would tell me the thief's rewards and I would hmm after realizing I have seen higher numbers. Then again, I trade silver. My best single trade was a profit of $18k!

Cool story bruh.

I don't really care about money though. It is just an invention by a certain group of people.

In XVIth century England people who had gold would deposit it with goldsmiths for safekeeping. In exchange they got a signed receipt guaranteeing that they could retrieve it. The value assigned to that note backed by the gold in the goldsmith’s vault made it possible for one to use it in payment.

That means if A deposited £10 worth of gold and had in his possession a receipt he could settle his debt with it. That receipt, actually a promissory note, became money. The person who took it in payment could either use it as is, or at some later point retrieve the gold in the goldsmith’s keeping.

At the same time B borrows £10 worth of gold from the goldsmith but receives a promissory note. He settles his debt to C with that note. Now there are two notes in circulation for one amount of gold. The goldsmith being smart realizes that these notes can actually be in circulation for quite some time, several years even. He issues further notes knowing that all claims would not have to be honored at the same time.

According to contemporary economical calculations he can safely lend at least ten times the amounts deposited. If there is a run of two or more people who suddenly wish to retrieve their gold he can also rely on the fact that he has debtors who owe him gold, although they originally received nothing but a piece of paper. They have to pay him in gold. And should they default he could seize whatever possessions they had, sell these, buy gold and settle the claims. I might add that the goldsmith of course lent out promissory notes for non-existent gold at interest.

Today’s banks do the same:

“Because of the ‘fractional’ reserve system, banks, as a whole, can expand our money supply several times, by making loans and investments”

(Federal Reserve Bank, New York: The Story of Banks, p.5).

$-3000

10k, going to invest 5k into my indie film soon though. A foolish move seeing as we might lose DACA. But if I don't do it now, who knows when I will have this amount of income.

24k in savings account
16k in checking account