Cyprus-Forum.com

[erolz66]

But that's the whole point! They don't enter it as liability. Have a look at the link which explains it in diagrams. They make it look as if the borrower had pre-deposited the money he is taking as loan.
I already mentioned that I am not sure if this is what the Banks in Cyprus do, (the obviously do it in the US) ...

I have not had a chance to read the article yet - I will do when I get a chance.

When a bank grants a loan and creates say 100 euros of new money, then that 100 euros that it lends will become part of the companies balance sheet as an asset. It is the bank the 'owns' this new money and thus it is an asset to the bank. As the person pays off the capital sum, then that asset on the banks balance sheet reduces accordingly (the money is destroyed effectively). If the person given the loan stops paying that loan, at some point the bank has to 'write down' that loan and at that point any remaining capital sum left unpaid goes onto the banks balance sheet as a liability. This is how I understand banks balance sheet accounting works.

Such balance sheet accounting, is as much as anything a matter of convention. There are many ways that you could account for and define what is or is not an asset or a liability. What matters is not so much which one is chosen but rather that everyone uses the same convention or set of conventions and we all can understand which have been used.

[Lordo]

Pyrpolizer:
I am not sure I understand what you are saying. It is not that you are wrong, more that I am thick! You seem to be talking book keeping and balancing the account using double entry book keeping practice?

Although it is not money we are talking about let’s use that for simplicity.

Very simply how I see it is:

• The Customer ask for a loan. But in practice it is not a loan it is extended bank credit i.e. they let the borrower spend something he does not have ..... money..... but neither do they!

• When he spends this agreed loan amount by transferring it to A.N.Other it creates new money in A.N.Others account when he deposits €XXX into that account.

• The transfer medium, say a cheque, is referred back to the issuing bank i.e.the borrower’s bank, for clearance. The problem is that account has nothing in it so your cheque should in all honesty, bounce.

• No problem for the bank, they just fail to bounce the cheque and write next to the entry in your credit account €XXX DR. (Drawn) You now owe the bank €XXX, plus interest.

• Every time you make a payment off the loan the figure in the account decreases until it reaches zero ..... i.e. debt repaid and the new money created by the bank extending credit, has been removed from circulation ...... destroyed!

• But bankingwise ....... between the borrower asking for the loan, to the point he repays it ....... not a cent has changed hands! It is all book keeping ..... smoke and mirrors.

All parties are happy. The borrower has, with his loan, bought something he wanted from the recipient and the recipient has the ‘money’ safely deposited in his account. The bank just gave the borrower a debt for which the bank has no liability, and they are making interest on something they loaned but never had! When the borrower repays the loan, the bank covers their fraud by just writing the account down to zero and pockets the interest.

So, I say yes ............ it is fraud or at the least deception. Banks were fraudulent from the beginning. When the first Banker issued a Promissory Note against gold he did not have in reserve .... he committed the first fraud in banking ........... and that process has never stopped!

So in this fashion they have no need to deduct the money they gave him from the deposits of other people that they have at the Central Bank!

They don’t (can’t) use deposits at the central bank to loan out. (Except loans between banks LIBOR) What you are suggesting is the normal perception but incorrect concept of banking, i.e. the bank acts as an intermediary between the depositor and the borrower. Werner and the BOE etc. have proved this is not the case. If it were so, loans could never exceed deposits! They all say that the only perception of banking that fits all the evidence is the concept of the creation of ‘money’ out of thin air.

Especially when the loans are not performing, what the heck do they do with those mortgages (virtual money that the borrower had presumably deposited)?? It seems the just keep them unchanged, and nobody intends to force them to change anything.

Therein lays another deception! The credit/loan account realistically never has a positive value, it will either be a negative figure or zero (when the loan is repaid) . Because the bank has not had to borrow this amount from anyone else, as they created it out of nothing, they have no liability to repay it. But it can’t stay on their books as an asset, so they swap columns and call it a ‘LOSS’ because it is now a liability. Another FRAUD ........ how can it be a loss if they have no liability to repay the sum ......... it never existed until they created it!

Then the ECB creates some more money (QE) and buys all the commercial banks NPL’s at rock bottom prices (at least an amount equal to or greater than the outstanding interest, where this is possible) and the ECB acquires all the collateral for these loans. The commercial banks will get its owed interest paid and anything left goes into reserves ...... then the commercial bank write off the ‘loss’ i.e. the original debt amount, from the books. The ECB sells the collateral off to private investors, maybe even at a profit, and the investor goes after the original owner of the collateral to make his profits.

LORDO:

You can’t print your own money it’s illegal ...... unless you are a bank! If you have the odd five million available ...... start your own bank in Cyprus and ‘print’ all the money you like!

i will have you know i have a bank. i have several banks. several banks of olive trees. and they do say olive oil is black gold. so there you have it. we shall print lordo dollars and guarantee it with black gold. as good as done.