Money as Debt (How we got here?)

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grant
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Money as Debt (How we got here?)

Postby grant » Fri Sep 26, 2008 12:59 pm

So, I just watched this little online video (all 47 minutes of it):

http://xrl.us/or9q5

I'm a little put out that no one really explained this to me before. I mean, I kind of had a vague knowledge that money was created as credit by banks, but didn't really know how it worked.

After watching this, I forwarded the link to a few friends, one of whom nearly immediately replied thusly:

It's funny you should mention that video.

My boss has a math degree, was a securities broker
for years, has done $2 billion worth of corporate
acquisitions and is generally a sharp guy who
understands Wall Street. Three days ago, he asked me
to download that video and pop it on a DVD and give
it to his college-age daughters.


So. Not hooey. This is how things work.

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Moni
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Postby Moni » Mon Sep 29, 2008 1:10 am

For those with bandwidth-limit and/or short attention span, here is a condensed version of the story.

Fascinating stuff. "Bad assumption my frigid Norwegian ass!" indeed.

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grant
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Postby grant » Mon Sep 29, 2008 8:50 am

Well, that's specifically the subprime mess... the Money as Debt thing is really about the system of fractional-reserve banking.

A friend of mine who didn't buy the scary-scary stuff about fractional-reserve banking sent this clip by way of rebuttal:

http://www.youtube.com/watch?v=MJJN9qwhkkE&NR=1

I'm not sure it's exactly the same thing, though. (That's the bank run from It's a Wonderful Life, with Jimmy Stewart explaining that people can't withdraw all their money because it's building people's houses.)

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Squid
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Postby Squid » Mon Sep 29, 2008 10:25 am

Yeah, I wasn't buying that video entirely, either. I think I need to rewatch.

This American Life has been doing great work covering the crisis from various and sundry viewpoints. While I believe the balance of pieces are about the mortage chaos, there was one that specifically dealt with lending and debt. If If I have a second later today I'll take a look for it...

ps: and at the risk of outing myself as a total public radio dorque, you should also check out my favorite show, Marketplace.

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Liesbeth
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Postby Liesbeth » Tue Sep 30, 2008 2:59 am

just the word dorque was enough to out you as nerdesque to the core.


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