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0 sats \ 7 replies \ @Scoresby 10h \ parent \ on: An ethical question? bitcoin_beginners
In the context of buying a house, the money from the loan is usually paid out to the person you're buying the property from -- often very shortly after you sign for the loan. So, the money of the loan does exist and does move.
Maybe you could argue that if the person you are buying the property from has an account at the same bank that issues the loan, no money has to move. But in most of the real estate transactions I have been involved with, they aren't at the same bank. So where does that money come from?
When I sold a house, the people who bought it used a loan. I received real dollars in my bank account which I then used to do other things. Did the buyers of my house create the money out of thin air with their signature? and if they did, how was I able to use that money to buy real things in the world?
2 min video explaining it
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If I owned a construction company and you bought a load of materials from me, I could send you an invoice for the materials. This invoice could likely be payable in something like 30 days.
What is the difference between the your signature that signs for the materials and your signature that signs for a mortgage?
They are both promises to pay. Now, we might say, the mortgage gets used as an asset on the bank's balance sheet. Maybe the bank even sells it. But the same is true for accounts receivable. My construction company counts your promissory note as an asset. Thinks makes good sense to me.
In the video, they talk about promissory notes as if they are not assets -- which I don't understand. A promise to pay clearly seems like an asset -- even if it's actual value is not the face value of the promise. If it's an asset, why shouldn't it be traded?
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If you accept my promissory note, why we have to involve anyways a 3rd party like a bank in our trade?
Do the same to a bank and let's see what they say.
Take a loan and then when is about to pay back, give them a piece of paper saying that you will promise to pay. Just a piece of paper that you give them over and over.
And talking about promissory notes, check this out
And more documentaries about these aspects in my guide:
https://darth-coin.github.io/beginner/5-stages-became-bitcoiner-en.html
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Probably because evaluating the value of a promissory note is a very hard thing to do -- it can be risky.
If I know you well, maybe a promissory note suffices. I once lent my brother some money with such an arrangement.
The whole complicated banking system thing also probably exists to diffuse the risk. One loan to one individual is highly vulnerable to bad luck -- if something goes wrong, you get 100% of the downside.
With a third party sitting in the middle, any particular loan going bad doesn't spell doom. It seems similar to how insurance works.
I agree that banks do shitty things and get fat sucking off the teat of gov't, but to me this is a problem of over regulation, too big to fail, fdic, and Cantillon effects rather than a root problem of fractional reserve banking.
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I gave you more than enough material to study. Please take some time and watch them (some of them are long videos) and think about. Worth it.
The bank doesn't have those money. You received money from other people that the bank took from them.
Very clear even on ECB site, it's a fucking scam and people just go with it, ignoring the consequences (then just complain because things are not going well... THEY ARE PART OF THE PROBLEM).
If you want a more detailed explanation, watch the excellent documentary named: The history of money
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