Talk:Fractional-reserve banking/Archive 8

Top economists dismiss textbook explanations of our monetary system as garbage
I think the following needs to at least be on the talk page, even if it appears to be banned from the main page. Please note the calibre of the economists listed.


 * Standard & Poor's chief global economist describes the Money Multiplier Model as a "defunct idea": http://2joz611prdme3eogq61h5p3gr08.wpengine.netdna-cdn.com/wp-content/uploads/2013/08/SP-Banks-Cannot-And-Do-Not-Lend-Out-Reserves-aug-2013.pdf


 * Michael Kumhof, Deputy Division Chief, Modelling Unit, Research Department, International Monetary Fund said "the textbook treatment of money in the transmission mechanism can be rejected”.


 * Mervyn King, Governor of the Bank of England 2003 to 2013 said “Textbooks assume that money is exogenous.” … “In the United Kingdom, money is endogenous”.


 * Professor Charles Goodhart CBE, FBA, ex Monetary Policy Committee, Bank of England said of the money multiplier model: “It should be discarded immediately”.


 * Professor David Miles, Monetary Policy Committee, Bank of England said “The way monetary economics and banking is taught in many, maybe most, universities is very misleading”.


 * Senior Vice President of the Federal Reserve Bank of New York, 1969, said “In the real world, banks extend credit, creating deposits in the process, and look for reserves later”.


 * JP Morgan Chase, Global Data Watch: "In spite of being almost totally divorced from reality, the money multiplier is still taught in undergraduate economics textbooks, with much resulting confusion." http://www.stanford.edu/~johntayl/JPM_Global%20Data%20Watch_Money-Multiplier.pdf


 * James Tobin (served on the Council of Economic Advisors and the Board of Governors of the Federal Reserve System): "the textbook description of multiple expansions of credit and deposits on a given reserve base is misleading" (http://cowles.econ.yale.edu/P/cm/m21/m21-01.pdf)


 * Lord Adair Turner, ex chairman of the UK's financial services authority. "Banks do not, as too many textbooks still suggest, take deposits of existing money from savers and lend it out to borrowers". ref here.


 * Carpenter and Demiralp, Federal Reserve, "the textbook version of the money multiplier between the creation of loans and the creation of demand deposits is dubious"


 * Perry Mehrling said (in a lecture on coursera.org) "The reserve constraint is an ineffective constraint in modern financial markets. It probably wasn’t in 1950’s when it was invented and when all the textbooks were written, because there weren’t any alternatives and you could really control things pretty tightly with that, I just think its not really true any more."

Reissgo (talk) 19:02, 26 August 2013 (UTC)


 * So why does the main page present the textbook explanation as if it was uncontroversial? Reissgo (talk) 11:34, 1 September 2013 (UTC)


 * You're free to supplement or re-write the existing text with a coherent, on-topic presentation of the subject. Like all WP content, any text you contribute must conform to WP policy concerning reliable sources, verification and other content- and reference- related principles. For whatever reason, you are not doing that.  That's the answer to your question.  The article exists in its current form because neither you nor anybody else has chosen to improve it.  If you believe the article can be improved, you're free to read WP policy, do some research, and share better content. You haven't done that.  SPECIFICO  talk  14:52, 1 September 2013 (UTC)


 * You are mistaken. I have already attempted to get many of the ideas listed here on the main page over the past years, and they just get deleted. Given that you appear to currently be the main defender of the textbook model on the main page, would you accept the words of these economists (I'll dig out the exact references) as reliable sources? Would you undo my edits if I made it clear that the money multiplier model was not accepted as correct by many leading economists? Reissgo (talk) 16:12, 1 September 2013 (UTC)


 * By the way, if you don't answer, I will assume that the answer is that you will indeed undo my edits, but you just don't want to say that publicly. I know you're reading this. Reissgo (talk) 18:23, 1 September 2013 (UTC)


 * attempted to get many of the ideas listed here on the main page - You've done nothing of the sort. Your edits are just drive-by insertions of incoherent and poorly sourced complaints about your personal issues, largely undefined. If you care to replace the entire multiplier model with a coherent well-sourced treatment of the topic you will very likely receive serious collaboration from some of the many competent editors who work on WP articles related to these subjects.  Otherwise, you'll continue to have the current version to irk you and inspire your sporadic rants and unproductive tweaks.  This is my last talk post here until I see some new text which merits discussion.  I may continue to revert article additions which violate policy.   SPECIFICO  talk  18:28, 1 September 2013 (UTC)


 * "Poorly sourced?" When I'm quoting the governor of the bank of England? I give up. You f*****g t**t. Reissgo (talk) 20:56, 1 September 2013 (UTC)

I have to agree Reissgo, good evidence is being discarded in an act of censorship and this page is brought into disrepute if some student somewhere is relying on it. Editor Specifico, if you want to spend time reading the book "Where does money come from ?", and have a look at the banking 101 videos on the Positive Money site (which are for those with less time and knowledge and are a brief summary of the book),then you might be able to give a valid criticism, rather than just erasing well sourced material. brandsby (talk) 18:18, 2 September 2013 (UTC)


 * Ok, I've added what I'd suggest is an overly mild criticism on the main page... just to see how long that lasts. Reissgo (talk) 19:20, 4 September 2013 (UTC)


 * Well that answers that question! After a matter of a couple of minutes specifico watered down the already overly weak text. Reissgo (talk) 19:29, 4 September 2013 (UTC)

Galileo had trouble with the Catholic Church, as did Isaac Newton with John Flamsteed. John Harrison, who made the first accurate clock for use at sea in the 1700s to determine longitude (ultimately saving many lives) had a dispute with Nevil Maskelyne, the astronomer royal, who still believed that observing the stars was the best way to determine longitude. Harrison did not receive proper recognition until late in his life. It is well worth seeing his clocks at the Royal Observatory in Greenwich, and his work helped with the development of modern watches. The clocks are the equivalent of seeing early computers. Brandsby (talk) 08:35, 5 September 2013 (UTC)

I just wanted to say that I think that user Reissgo has provided some solid sources in the 'criticism' section. Also, I think it is wrong that Frederick Soddy's views were removed on 29 August by user SPECIFICO, who dismissed him as a "crank monetary theorist" and "noted physicist". Stuart mcmillen (talk) 02:19, 11 September 2013 (UTC)


 * Stuart, if you or others don't believe that textbook story about serial relending up to the reciprocal of the reserve requirement, nothing is stopping you from finding WP:RS sources for some different exposition which you feel better represents current thinking on the matter. Loading the article with bits and pieces of fringe statements as if they were "criticism of fractional reserve banking," including some dubious content written by various editors here, does not accomplish anything constructive.  If you think the exposition is incorrect, fix it according to WP policy. If you believe that "fractional reserve banking" has been criticized, please find a cogent well-sourced statement of that criticism.  And please discuss content, not editors.  Thanks.  SPECIFICO  talk  02:26, 11 September 2013 (UTC)
 * Well said. It seems to me that the criticism section contains two very different forms of criticism: criticism of traditional textbook explanations of how the money creation process works, and criticism of fractional reserve banking itself. The former should be moved to the section on the money creation process, which could be split into subsections named "conventional textbook description" and "modern criticism" or something similar. Both criticism sections need to be fleshed out considerably, and this Talk page contains some useful raw materials for that. It seems to me the objections are not so much to adding critical material, but to deletion of existing material and insertion of random quotes rather than a well-written summary. Martijn Meijering (talk) 19:23, 23 September 2013 (UTC)


 * If the words of Perry G Mehrling are considered a reliable source then I may consider doing the work of "modern criticism" as you suggest, but I wouldn't even begin unless SPECIFICO and perhaps a couple of others declared here that they agreed that he was reliable. Reissgo (talk) 14:23, 24 September 2013 (UTC)
 * Thinking about it a bit more, perhaps I'm putting myself in a straight jacket only considering Perry, I may need more. Perhaps SPECIFICO and others could suggest which out of the nine people listed at the top of this section could be considered reliable. IMHO they are ALL reliable, but from bitter experience it appears that many are very keen to dismiss them as fringe. Reissgo (talk) 14:34, 24 September 2013 (UTC)


 * I just made an edit to the main page which was removed by SPECIFICO with the comment "use talk and do not re-insert prior to consensus". SPECIFICO, I don't know if you've noticed, but I've been adding to the list of critics at the top of this section. There are now *eleven* quotes from highly respected economists at the start of this section, please look at the Mehrling on at the end. You have have shown an extreme desire to dismiss my sources as not not good enough, and have refused to inform me as to which ones you would consider to be reliable. I refute your assertion that there is a consensus here. If you wish to edit Wikipedia, please discuss your views of the talk pages. I note that you have been rebuked by other editors for lack of discussion on other pages when undoing people's edits. Reissgo (talk) 13:13, 11 October 2013 (UTC)

You read my edit summary, but you've only quoted part of it here. I removed your edit because it is WP:SYN which colors the text which follows in a way which is not intended by the authors cited for that text. Please read the linked policy. Regardless of whether you agree or understand, you are not entitled to edit-war by reinserting the text which I reverted. Please read WP:BRD. If you continue to edit war you may be blocked from editing WP. SPECIFICO talk  13:44, 11 October 2013 (UTC)


 * The section I placed my edit in, is the embodiment of the money multiplier model. Most of the 11 quotes I provided say pretty explicitly that the money multiplier model is junk. How is this WP:SYN? Reissgo (talk) 14:15, 11 October 2013 (UTC)


 * Lawrencekhoo reverted with the comment: "Actually, consensus from previous discussions is to keep this fringe stuff out.".. Lawrence, I presume you are talking about discussions from long time ago. Since then I have collected substantially more evidence. Have you actually read the 11 quotes, and noted who said them? Dismissing these 11 as fringe is becoming farcical. And where is the counter example? Where is the paper entitled "these attacks on the money multiplier model are mistaken"?? Reissgo (talk) 08:58, 12 October 2013 (UTC)


 * Lawrence, maybe when I could only muster four or five quotes, some from not so notable people, you could say this idea was fringe... but the collection is now vastly improved in size, clarity and notability... Just look at the latest Turner and Mehrling quotes! At what point would you say "ok, I see this is now the mainstream view amongst monetary experts"? If your argument is always going to be "we've discussed this before, its all settled" then you'd still be saying that even if 99% of all economists and textbooks came to agree with me. So what is your criteria for determining when this view is no longer fringe? Do you want 20 quotes? 50? 100? Reissgo (talk) 10:15, 13 October 2013 (UTC)


 * So the main page became blocked because too many edits were being made without discussion on the talk page. In preparation for the page becoming unblocked, I'm putting a suggested edit here for discussion. In the criticisms sections where it says "Some economists dispute the standard textbook description of fractional-reserve banking." I plan to add a second sentence: "For example, Lord Adair Turner, formally the UK's chief financial regulator, said 'Banks do not, as too many textbooks still suggest, take deposits of existing money from savers and lend it out to borrowers'".


 * If anyone has any problems with this edit please say so now. If there are no responses here, I will assume this edit is the accepted consensus. Reissgo (talk) 09:28, 16 October 2013 (UTC)


 * It's not a problem to make edits which add new text prior to discussion. Please read WP:BRD. The problem occurs when an editor (repeatedly) re-inserts content which has been reverted -- as you did, and as another editor did after you went on holiday.  Welcome back.  You're free to add or not add your proposed text above.  If you add it, without relating it to the topic and the context of the article, I will revert it.  Please understand that the topic of this article is Fractional Reserve Banking, not the description or pedagogy related thereto.  You could start a different article which discusses how FRB is taught and described in undergraduate textbooks, since you have never to my knowledge had anything to say about FRB per se.  Before adding any content to the article, please ensure that your text accurately paraphrases the meaning of the source you cite for it and that the reference otherwise qualifies as WP:RS.  SPECIFICO  talk  13:15, 16 October 2013 (UTC)
 * Who is this other editor you are referring to? Is it me? If so, you have Reverted my Bold change, and we need to discuss. If you don't discuss, you have no right to revert a further Bold insertion.
 * I disagree with your point about criticism of textbook explanations. The description on this page of the money creation process as a result of FRB has been challenged by notable sources and needs to be mentioned *on this page*, not on a separate page. Martijn Meijering (talk) 17:47, 16 October 2013 (UTC)


 * SPECIFICO, I'm puzzled... you write as if I'd just given some vague hint as to my intentions. But Actually I've said exactly word for word the edit I propose making and where it will go. Also the words of Adair Turner are not my paraphrasing, but a verbatim quote. We're supposed to be reaching a consensus on this page... If you are minded to revert my proposed edit then tell us why. Reissgo (talk) 13:37, 16 October 2013 (UTC)


 * Criticism of textbook explanations:

How is my edit a case of SYNTH? Also, I never said the criticism in question was criticism of FRB, but criticism of textbook explanations. In my earlier comments on the talk page I drew explicit attention to this. Martijn Meijering (talk) 13:12, 13 October 2013 (UTC)


 * This section, as a section about economics textbooks, is UNDUE and off-topic. Adair Turner is simply saying money is created when loans are made, and we have articles about money creation, money multiplication, money supply, etc. His comment about the textbooks is a side comment. This article is about the F-R system, not about how F-R is described in textbooks. Turner's particular paper (and perhaps the others) can be used as a footnote to clarify that F-R banking does not mean that money is "taken out of" A's savings/deposit account and loaned to borrower B. – S. Rich (talk) 15:09, 20 October 2013 (UTC)
 * The criticism of textbooks isn't something that interests me, I was looking for a good source for criticism of descriptions of FRB in general. Are you saying that the criticism in question does not apply to the description of FRB and the money creation process as it is given on this page? Martijn Meijering (talk) 15:20, 20 October 2013 (UTC)
 * As that section is presented – criticisms of the textbook descriptions – it goes off topic. Are we talking about: 1. criticisms of the textbooks, or 2. criticisms of the descriptions, or 3. criticisms of the descriptions in the textbooks, or 4. criticisms of FRB? – S. Rich (talk) 15:30, 20 October 2013 (UTC)


 * We're talking about 3. Previously there was some of both 3 and 4 together, but I put them in separate sections to avoid confusion.
 * With regard "footnote to clarify that F-R banking does not mean that money is 'taken out of' A's savings/deposit account and loaned to borrower B." - unfortunately this "clarification" would contradict the whole money multiplier, deposits-enable-lending story. Reissgo (talk) 16:52, 21 October 2013 (UTC)

What would the alternative be?
Fractional reserve banking hasn't always existed, and some people think it shouldn't exist. This isn't the place for debating whether it should be done away with, but would this be the place for briefly discussing (or a link to an article that discusses) what the alternative would be? Would abolishing FRB mean a return to banking meaning giving the bank a sack of coins and paying them to keep it in a safe for you, and loans only being made using the physical coins that banks have recieved in payment for this and other services? Or something else? Iapetus (talk) 13:34, 16 October 2013 (UTC)
 * Basically, yes, but without the coins. The alternative would be for a bank that has, say, US$100B to loan out no more than US$100B. Does the article need to be changed to clarify what fractional reserve banking is defined on contrast to? MilesMoney (talk) 18:01, 16 October 2013 (UTC)
 * Actually, I think I'm completely wrong. The alternative appears to be for banks to loan only their own money, not what the deposits they hold. So, yes, pretty much like a piggy bank. MilesMoney (talk) 18:05, 16 October 2013 (UTC)


 * look up full reserve banking. Its not just a piggy bank. Time deposits can get lent out. Peer-to-peer lending is essentially a full reserve bank. Reissgo (talk) 20:46, 16 October 2013 (UTC)


 * Aside from being irrelevant to this article, it is incorrect to state that a p2p lender is a full reserve bank. It would be easy for you to do the research required to improve the article in any of a number of ways. On the other hand, if you wish to discuss off-topic material or pet theories or to promote your own views, WP isn't a very good place for that.  Try a different venue which will less frustrating for you.   SPECIFICO  talk  17:57, 17 October 2013 (UTC)


 * Peer to peer lending is a form of full reserve banking, but you're right, this is not the place to discuss that.


 * When you say "pet theories or to promote your own views" I hope you're not talking about my efforts do discredit the money multiplier model... because those are the views of the (ex) UK chief financial regulator and many other monetary specialists. Reissgo (talk) 22:33, 17 October 2013 (UTC)

Bottom line is you haven't improved this article in all the time you've been visiting here. When I lend my nephew $100 for his prom date, am I a bank? Am I still a bank today now that he's paid me back, or did you revoke my charter? SPECIFICO talk  22:44, 17 October 2013 (UTC)


 * When I say peer to peer lending, I'm talking about companies like zopa. Reissgo (talk) 07:53, 18 October 2013 (UTC)

Alternative needs to have a separate section.Tsar Bomba (talk) 22:42, 26 October 2013 (UTC)

Hulsmann text
In accordance with WP:PRESERVE the following material is presented for discussion:


 * I'm gonna point out that User:AmourReflection is a pure single-purpose account.MilesMoney (talk) 02:17, 20 October 2013 (UTC)

Ok, and the point of that is MilesMoney, can you explain how that improves this article?AmourReflection (talk) 17:18, 25 October 2013 (UTC)

Economist Dr. Murray Rothbard needs to be included.AmourReflection (talk) 18:35, 25 October 2013 (UTC)

What is the reason for excluding the economist, Dr. Murray Rothbard?Tsar Bomba (talk) 22:44, 26 October 2013 (UTC)

Hulsmann & Rothbard (PhD. Economists)
"(part ducks)", explain what this means?AmourReflection (talk) 22:21, 26 October 2013 (UTC)

(name calling)Tsar Bomba (talk) 21:48, 28 October 2013 (UTC)

In accordance with WP:PRESERVE the following material is presented for discussion:

What is the reason for stripping "Dr." and "economist" from Murray and Hulsmann?AmourReflection (talk) 18:37, 25 October 2013 (UTC)


 * Concerning Specifico's edit summary when removing the section above (e.g.: "That is simply not what they say. What they actually say, moreover is a fringe view held by a tiny minority of analysts -- fringe of the fringe -- and would be undue if correctly cited and paraphrased"), I should like to know exactly what they say. That's why I tagged the citations with "page needed". Please, Specifico, tell us what they say so that other editors can review and contribute their thoughts as to whether it is undue, "fringe", etc. (I gather you have read the material so you should be able to provide pages.)  Moreover, if Rothbard's and Hulsmann's thoughts are catching on in segments of the population, that factor should be included in our editing analysis. (E.g., I gather/surmise that Ron Paul and others have made critical comments about the F-R system.) If this is the case, and if they are using Rothbard and Hulsmann to bolster their arguments, we as WP editors should not be censoring their thoughts.) Thank you.  – S. Rich (talk) 04:51, 20 October 2013 (UTC)
 * I'm of mixed minds about this. As an economic idea, the LmVI opposition to fractional-reserve banking is probably fringe, not minority. As a political idea, however, it's been popularized enough by Ron Paul to count as minority. MilesMoney (talk) 05:02, 20 October 2013 (UTC)
 * Rothbard isn't fringe. You cannot reasonably accept libertarianism as notable and dismiss Rothbard as fringe. But by all means let's make sure we quote him correctly. Martijn Meijering (talk) 08:42, 20 October 2013 (UTC)
 * I made a very careful distinction, which you subsequently missed. In economics, the LmVI flavor of Austrian economics would at best be a generally-dismissed minority, except that it goes one step further by itself dismissing the evidence-based "positivist" mainstream methodology in favor of "praxeology", rendering itself fringe. It's parallel to hypothetical Peruvian Astronomers who reject all of modern astronomy, refuse to use telescopes at all, and instead practice a form of astrology that uses the zodiac to pick winning lottery tickets.
 * Politically, American-style right-libertarianism includes an important, if extremist, faction that is enamored of various fringe views, from Creationism to global warming denial to LmVI's economic theories. This makes it a significant minority political view, while still economically fringe.
 * Thanks for helping me work through my thinking, though. I now conclude that, since this is an article on economics, not American politics, Rothbard's view is fringe and should either be labeled as such or (better) omitted entirely. MilesMoney (talk) 14:49, 20 October 2013 (UTC)
 * We still don't actually know what is being discussed in terms of editing. The section boxed above was removed with an edit summary that said "That is simply not what they say". The two citations were tagged for page needed so that other editors can see what they say, but we still don't know because we do not have the particulars. Instead we see a general discussion about the topic as a whole and not about the content that should or should not be in the article. (This article is not about creationism or astrology or global warming, and so these are side-issues.) Reminder, the WP:BURDEN is on the editor who want to remove material. In this case the burden can be or may be met by telling us what they say about FRB. At that point we can more discuss the influence their thoughts may have had in current politics. – S. Rich (talk) 05:14, 21 October 2013 (UTC)
 * Three points. First of all, WP:BURDEN does not say what you want it to. Instead, it says that the editor who inserted the LmVI viewpoint had the burden of showing a reliable source. Secondly, WP:FRINGE says that the primary sources offered are insufficient; we need independent reliable sources. Finally, WP:FRINGE forbids unwarranted promotion of fringe beliefs, so we must omit the whole thing.
 * In the future, I strongly recommend that you read what each of these WP:LINKS you use actually links to, because you can be certain that I already have so I will not be misled. MilesMoney (talk) 06:04, 21 October 2013 (UTC)

Please explain, MilesMoney, how two authors with doctoral degrees in economics are considered "fringe"?Tsar Bomba (talk) 21:15, 28 October 2013 (UTC)

There is no substantial reason not to include the German economists Dr. Hulsman, and Dr. Rothbard, because 1) they are not fringe 2) they are highly educated in economics, both have Ph.D's in Economics from prestigious universities, 3) they have numerous accepted peer-reviewed publications, 4) they are clearly illustrating the mathematical fact that fractional reserve banking is, and of itself with R=0, or near zero, legalized counterfeiting. If you can not stand this blatant fact, then you are clearly illustrating your POV bias and blatant intolerance for not only mathematical facts, but also you are failing to comprehend having a balanced entry in Wikipedia. But who else would not want to defend the legal power to print their own currency and defend such an idea if they themselves were not the beneficiary of such a system?Tsar Bomba (talk) 21:38, 28 October 2013 (UTC)

In regards to "Fringe" as "an idea that is not broadly supported by scholarship in its field", the mathematics is broadly supported by scholarship, and there is no denial that when R=0 or is near zero, it is blatant legalized private counterfeiting whether you like it or not, Dr. Hulsmann & Rothbard both recognized this mathematical fact, and they are applying mathematics to prove their point, and if you do not wish to include their objective mathematics then you have clearly demonstrated a complete NPOV failure Don't drink the consensus Kool-Aid.Tsar Bomba (talk) 21:47, 28 October 2013 (UTC)

Reader feedback: looking for other means thro...
197.251.193.106 posted this comment on 20 July 2012 (view all feedback).

looking for other means through which money can be supplied without the determination of the central bank?

Any thoughts?

Use bitcoin. http://www.youtube.com/watch?feature=player_embedded&v=j7opj5-32hw Tsar Bomba (talk) 05:18, 31 October 2013 (UTC)

By the people.Tsar Bomba (talk) 18:17, 27 October 2013 (UTC)

Need secondary sources for criticism sections
All the content in the criticism sections is sourced to primary content. There should be secondary RS discussion of these criticisms to establish their importance and qualify them for inclusion in WP. SPECIFICO talk  12:47, 20 October 2013 (UTC)
 * That's not a good reason for deleting such material until such sources have been offered. Also, I don't think opinions by notable people need such sources. Martijn Meijering (talk) 13:09, 20 October 2013 (UTC)
 * I'm talking about the current content, not what's been deleted. You're wrong about the policy, please read up on policy and find those secondary sources. Otherwise, eventually, the content will be removed. Thanks.  SPECIFICO  talk  13:52, 20 October 2013 (UTC)
 * It is more productive to add the text and a tag that better sources are needed. Currently the article suffers more from not having a good criticism section than from not having secondary sources for it. Martijn Meijering (talk) 13:54, 20 October 2013 (UTC)
 * You're free to tag the Friedman and Fisher "primary source" if you wish. SPECIFICO  talk  14:05, 20 October 2013 (UTC)

Please explain how a doctoral and economics is insufficient qualification as inclusion.IvyMike (talk) 22:36, 26 October 2013 (UTC)
 * I don't think a doctoral thesis by itself is enough to warrant inclusion. But I think people are far too busy trying to exclude views they don't agree with. It would be more productive to ensure the views in question are described from a neutral point of view. Martijn Meijering (talk) 23:30, 26 October 2013 (UTC)

What are the requirements for inclusion then, Martijn Meijering? I have thus far seen no substantial argument for exlusions on this page.Tsar Bomba (talk) 00:23, 27 October 2013 (UTC)
 * Notability and verifiability are the most important criteria. Martijn Meijering (talk) 00:47, 27 October 2013 (UTC)

Ok, can you define "Notability", "verifiability", and where in Wikipedia does it say that these are requirements for inclusion?Tsar Bomba (talk) 09:04, 27 October 2013 (UTC)
 * Sure, see WP:NOTABLE and WP:VERIFY. Martijn Meijering (talk) 10:24, 27 October 2013 (UTC)

Can you explain, Martijn Meijering, how notability determines the content of the article?Tsar Bomba (talk) 17:41, 27 October 2013 (UTC)

Perhaps if you can read the nutshell of WP:NOTABLE you will understand my point.Tsar Bomba (talk) 02:39, 30 October 2013 (UTC)

"The notability guideline does ***not*** determine the content of articles" Tsar Bomba (talk) 22:51, 31 October 2013 (UTC)

My goal is to improve the criticism of fractional reserve banking in here to educate the public on this subject from a NPOV. Considering the other editors are using extreme tactics such as blocking (continually removing constructive work by credentialed economists), name calling ("ducks"), threatening (to invalidly use Wikipedia rules against constructive work), edit warring (Drinking consensus cool-aide), and making non-substantial counter arguments of rational constructive inclusions, and are in denial of basic mathematical facts (e.g. R=0), if I have to, I shall Ignore all rules to get these economists work in here to improve the article, the more non-factual editors fight, the more I will Ignore all rules to get it done, if it ultimately comes to this. I have already justifiably claimed 3RR exemption due to the page blanking, even if this means page blanking only a section. I would not be surprised if the POV editors in here have a Conflict of interestTsar Bomba (talk) 20:37, 4 November 2013 (UTC)

What is controversial here? The section is supposed to be critical of F-R, and there are many top-notch, famous economists and politicians (like Friedman and Fisher), who have been critical, even calling it theft. Keynes alone should be enough: By this means (fractional reserve banking) government may secretly and unobserved, confiscate the wealth of the people, and not one man in a million will detect the theft. — Preceding unsigned comment added by 108.49.156.87 (talk) 08:17, 30 November 2013 (UTC)


 * Dear user at IP 108.49.156.87: There is already a separate article for the kind of material you are talking about: Criticism of Fractional Reserve Banking. Famspear (talk) 01:50, 1 December 2013 (UTC)


 * Oops. Well, there USED to be a separate article..... Famspear (talk) 01:52, 1 December 2013 (UTC)

Used to be a separate article, Famspear, because editors were avoiding NPOV by creating a POV WP:Content forking.TsarBomba2 0 (talk) 09:35, 28 December 2013 (UTC)

Protected again
Okay. Everyone really needs to take a step back and remember how consensus and BRD work, and stop edit warring. The article has been fully protected 1 week to enforce discussion of the issue instead of continuing the two edit wars that have occurred in as many days. &mdash;Darkwind (talk) 23:52, 9 November 2013 (UTC)

There has been no discussions, because those with opposing views have been blocked and censored, and this includes the views of German economist, Dr. Jörg Guido Hülsmann, and American economist, Dr. Murray Rothbard, along with information provided from a government accounting audit of fractional reserve banks, all censored.TsarBomba2 0 (talk) 20:27, 27 December 2013 (UTC)


 * Drive-by tagging is generally not allowed. And yes, there have been discussions in the past on this talk page, and no, those with "opposing views" have not been blocked and censored. The purpose of the NPOV tag is to show that a discussion on the talk page is currently under way. If you want to start another discussion about neutrality, then please do so. The purpose of the NPOV tag is NOT to substitute for an actual discussion -- an actual dispute -- about the Hülsmann and Rothbard materials. NPOV tags should be used as something closer to a last resort, not a first resort. An NPOV tag is not to be used as a way to express your feeling that the article is not neutral. Famspear (talk) 23:43, 27 December 2013 (UTC)

Famspear, the neutrality of the article is clearly being disputed, it is not personal, it is factual, and it is also factual that people have been blocked, I have been blocked. I had to make a new account, to avoid the censorship, to even be allowed to talk in talk, so now I am back here. Can you please provide information where Wikipedia explicitly says "Drive-by NPOV tagging is not allowed" when neutrality is being disputed? There is clearly active discussion in talk now because I am allowed to talk, as I now have a new account.TsarBomba2 0 (talk) 03:19, 28 December 2013 (UTC)


 * Dear TsarBomba2: Here is the verbatim text:


 * "Drive-by tagging is discouraged. The editor who adds the tag should address the issues on the talk page, pointing to specific issues that are actionable within the content policies, namely Neutral point of view, Verifiability, No original research and Biographies of living persons. Simply being of the opinion that a page is not neutral is not sufficient to justify the addition of the tag. Tags should be added as a last resort."


 * See:.


 * You added the tag FIRST, and THEN you began complaining about neutrality on the talk page AFTER I removed the tag and pointed out your error. You incorrectly used the tag as a FIRST resort, rather than as a LAST resort. Famspear (talk) 16:04, 28 December 2013 (UTC)

Yes, yes, and no, it was a last resort. If you look at the whole history of talk on criticism of fractional reserve banking, eventually, I was censored (blocked) completely and permanently, and unable to even talk on the talk page. How else do you expect the talk page to be active when the NPOV tag is already there, and the opposing view is permanently blocked from even talking in the talk page. Explain to me how that is a NPOV when you completely block other points of view from even talking in the talk page? Does this make sense? When I saw the NPOV tag removed for the reason of no talk activity on talk, did anyone consider the view of editors that have been completely censored and blocked? When neutrality is still clearly an issue, and I could not even talk on the talk page, it was time for me to make a new account, and so I am back here in talk, defending the view of at least 2 authors, and the U.S. GAO audit of fractional reserve banks. How many opposing views do I need to find before at least one is allowed, thousands, how many? Do you understand why I see this page as ONE sided?TsarBomba2 0 (talk) 21:00, 28 December 2013 (UTC)

"Editing from a neutral point of view (NPOV) means representing fairly, proportionately, and, as far as possible, without bias, all of the significant views that have been published by reliable sources on a topic. All Wikipedia articles and other encyclopedic content must be written from a neutral point of view. NPOV is a fundamental principle of Wikipedia and of other Wikimedia projects. This policy is nonnegotiable and all editors and articles must follow it." TsarBomba2 0 (talk) 03:32, 28 December 2013 (UTC)

Persistently removing the significant views of German economist, Dr. Jörg Guido Hülsmann, and American economist, Dr. Murray Rothbard, along with information provided from the U.S. Government Accounting Office (GAO) audit of fractional reserve banks is in direct conflict with NPOV policy, and is ***nonnegotiable*** AND and ***all editors and articles must follow it***, tell me how this is not applicable? Just because other editors, including you, Famspear, do not like these views, does not mean that you can censor their views.TsarBomba2 0 (talk) 03:50, 28 December 2013 (UTC)
 * Read the talk archive. It's been explained. Hulsmann is not a notable economist.  SPECIFICO  talk  03:53, 28 December 2013 (UTC)

Specifico,WP:NOTABILITY is ONLY relevant if criticism of fractional reserve banking has it's OWN article, this is not of it's own article, it is a section under fractional reserve banking. Read Wikipedia::NOTABILITY ->"The notability guideline does **not** determine the content of articles, but only whether the topic should have its own article."TsarBomba2 0 (talk) 03:57, 28 December 2013 (UTC)
 * We don't print the opinion of every fool and patsy who gives voice to his views. There's nothing significant about Hulsmann or his views, and for that matter you have no basis to label him an economist.  Haven't you been banned recently?  Time to step aside. Thanks.  SPECIFICO  talk  04:10, 28 December 2013 (UTC)

No, I will not step aside, that is your POV that there is nothing significant about Hulsmann, thank you for further illustrating to everyone here that there is clearly only ONE POV view that you wish to have on this page, and aside from that, it is irrelevant whether or not he is notable or not, as notability does not determine the content of the article, if you read WP:NOTABILITY it is clear, but it is also evident that you wish to ignore this fact.TsarBomba2 0 (talk) 04:22, 28 December 2013 (UTC)
 * It's WP's view that Hulsmann is not notable. His article was deleted.   Ready for a sockpuppet investigation?  SPECIFICO  talk  04:40, 28 December 2013 (UTC)

It does not matter whether Hulsmann's view is notable or not, can you explain why you wish to ignore WP:NOTABILITY, have you read the in a nutshell? I don't care about any sockpuppet investigation, but that is your choice to be Ad hominem about this. I am focusing on improving this article, and now you wish to change the topic.TsarBomba2 0 (talk) 04:52, 28 December 2013 (UTC)


 * Dear TsarBomba2 0: It appears to me that you want to re-argue the merits, or lack thereof, of the Hulsmann materials which I believe were being promoted by now-blocked user "AmourReflection" or "Tsar Bomba". The merits of the Hulsmann materials have already been discussed. It appears that the consensus was that the material would not be used in the article. Your use of the name "Tsar Bomba2 0" makes it appear to a reasonable person that you might be the same person as "AmourReflection/Tsar Bomba" -- attempting to evade the block and coming back to rehash the issues. I want to assume good faith on your part, so please drop this and move on to some other issue that might be of concern to you about the article. Famspear (talk) 16:15, 28 December 2013 (UTC)

Famspear, yes, I am the same person, and no, I will not drop this, because I believe in Wikipedia's policy on a NPOV, and I am patiently waiting for all of you, and all the other editors to demonstrate a NPOV. Thus far, none of you have substantially demonstrated a NPOV to me, are you capable of this? Or are you simply frustrated that some economists have a completely different view of the subject than you? I will persist here, as long as Wikipedia is to hold any credibility of a NPOV, thus far, this article on fractional reserve banking does not demonstrate a NPOV, as clearly you, and the other editors are NOT allowing a balanced view, can you explain why? I am open to discussing in a courteous and constructive manner, any evidence you wish to present. As we already know, notability does not define the content of the article, so that argument presented valiantly many times is clearly pointless, so what is the exact reasons for excluding Hulsmann, Rothbard, and the GAO audit of fractional reserve banks?TsarBomba2 0 (talk) 16:39, 28 December 2013 (UTC)
 * Thank you, that makes the SPI report so much easier. Ravensfire ( talk ) 16:41, 28 December 2013 (UTC)

You are welcome, so tell me then, what do you plan to do with that, censor my speech again?TsarBomba2 0 (talk) 16:45, 28 December 2013 (UTC)

F-R-I-N-G-E
People are not fringe, theories, judgments, and viewpoints may be fringe. The assertion that government-chartered and duly regulated banks are authorized counterfeiters is an example of a fringe view. SPECIFICO talk  18:43, 9 November 2013 (UTC)


 * I tentatively agree with SPECIFICO that the viewpoint that government-chartered banks are "authorized counterfeiters" appears to be an example of a fringe viewpoint.


 * Whether, under the rules of Wikipedia, such a fringe view should or should not be shown in the article as an example of a critique of fractional reserve banking is a separate issue. Without taking sides on that right now, I would say that even fringe positions can properly be shown in Wikipedia articles under certain circumstances, provided that Wikipedia editors do not strain in misguided attempts to give undue weight to such positions. Now, let's look at some definitions:


 * [to] counterfeit [verb]: "To forge; to copy or imitate, without authority or right, and with a view to deceive or defraud, by passing the copy or thing for that which is original or genuine." --Black's Law Dictionary, p. 315 (5th ed. 1979).


 * [to] counterfeit [verb]: "to imitate or copy closely, esp. with intent to deceive...to try to deceive by pretense or dissembling...." --Webster's New Collegiate Dictionary, p. 260, G. & C. Merriam Co. (8th ed. 1976).


 * counterfeit [adjective]: "made in imitation of something else with intent to deceive...." --Webster's New Collegiate Dictionary, p. 260, G. & C. Merriam Co. (8th ed. 1976).


 * counterfeit [noun]: "something likely to be mistaken for something of higher value....." --Webster's New Collegiate Dictionary, p. 260, G. & C. Merriam Co. (8th ed. 1976).


 * When viewed in the context of these definitions of "counterfeit", the phrase "authorized counterfeiters" is, facially, an oxymoron. If something is authorized, it cannot, in the context in which it is authorized, possibly be "counterfeit" in an ordinary denotative sense. Obviously, fractional reserve banking is authorized.


 * Without having read the underlying source materials for the article text which my fellow editors find objectionable, I would tend to assume (giving the authors the benefit of the doubt) that the authors, in taking a fringe position, may be using the term "counterfeit" in a broader and more connotative sense, as a way of describing their disapproval of fractional reserve banking by evoking, in the reader, an emotional reaction. Perhaps calling something "counterfeit" tends to draw a reaction that the thing deemed to be "counterfeit" is somehow morally wrong (whatever that means).


 * In evaluating whether the position should be treated as "fringe" and, in separately evaluating whether the position (even if fringe) should nevertheless be reflected in the critique section of the article, one might ask the question: Exactly what is it that the authors of the material find to be an example of "copying" or "imitating" something with an "intent to deceive"? What is it that is supposedly being "copied"? And what is the evidence of the intent to "deceive"? Who exactly is doing the deceiving? Famspear (talk) 19:56, 9 November 2013 (UTC)

Money is being copied/imitated via a recursion of deposits, loans, re-deposits, and re-loans, the intent to deceive is to claim such recursion is of "equal" value of the original farther down the chain of re-deposits, and re-loans. "Money" is being copied via the fractional reserve banking system. The evidence is in the accounting balance sheet of the fractional reserve bank, and the banks are doing the deceiving by claiming at the end of a chain of re-deposit's, and re-loans, that such money is considered equivalent to the original deposit, when it is factually not equivalent in value.TsarBomba2 0 (talk) 09:42, 28 December 2013 (UTC)
 * This is a perfect explanation. I don't know why people don't understand it, have they lost any common sense? — Preceding unsigned comment added by 188.252.3.13 (talk) 05:41, 31 December 2013 (UTC)

Protection requested again
Labeling edits as vandalism is not proper – WP has specific definitions for vandalism. Labeling edits as removing unsourced material is not proper – if there is a dispute about the source being removed, it should be brought up on the talk page or RSN. I've requested page protection. – S. Rich (talk) 18:45, 3 January 2014 (UTC)


 * I called the edit vandalism because the idea of reverting an edit which essentially just added a reference and claiming that the reversion was "removing unsourced material" just appeared to defy logic. Reissgo (talk) 19:07, 3 January 2014 (UTC)
 * Irregardless. – S. Rich (talk) 19:17, 3 January 2014 (UTC)

Is the former governor of the Bank of England a RS for this claim:
Mervyn King said: "One of the most contentious issues in assessing the role of money is the direction of causation between money and demand. Textbooks assume that money is exogenous."... "In the United Kingdom, money is endogenous"

I added it as a reference in the section on criticisms of textbook descriptions of fractional reserve banking, but SPECIFICO removed the reference with the comment: "Mervyn is not an expert on pedagogy nor is he plural".

IMHO, you could scarcely get a more reliable source on this issue than Mervyn King. Can we have the opinion of some other editors please. Reissgo (talk) 09:08, 1 January 2014 (UTC)


 * Two points: 1. Mervyn was a professor of economics at the LSE before joining the Bank of England, so I think that should qualify him to make statements about textbooks. 2. SPECIFICO, could you explain in more detail what you mean when you say he is not "plural". Reissgo (talk) 13:02, 2 January 2014 (UTC)


 * I think he's a fine source. SPECIFICO, do you have a problem with the quality of the source, or are you saying the opinion is fringe? Martijn Meijering (talk) 13:37, 2 January 2014 (UTC)

People, let's not edit-war, we all know how that ends. Martijn Meijering (talk) 12:14, 3 January 2014 (UTC)


 * If SPECIFICO refuses to debate on the talk page (and he's been told off for not discussing things on talk pages before by other editors) then what other option do I have? And without any more input from him, its two against one, so a re-insertion of this reference is justified. Reissgo (talk) 13:01, 3 January 2014 (UTC)
 * The comment wasn't directed at you specifically, but let's give him some time to respond. Martijn Meijering (talk) 13:07, 3 January 2014 (UTC)

Gentlemen, I see you both have time for reverting each other's edits, let's invest some time on Talk too. Martijn Meijering (talk) 16:39, 4 January 2014 (UTC)


 * I'm talking... but where's SPECIFICO? Reissgo (talk) 18:36, 4 January 2014 (UTC)


 * By the way, I'd also like to re-insert this reference from Paul Sheard, Standard an Poor's Chief Global Economist and Head of Global Economics and Research, New York. SPECIFICO removed it claiming Paul Sheard was not notable enough. I'd say that the Chief Global Economist and Head of Global Economics and Research at one of the most powerful economic institutions on the planet should qualify as notable. Please advise... Reissgo (talk) 10:55, 5 January 2014 (UTC)


 * FYI: Paul Sheard was named Chief Global Economist and Head of Global Economics and Research for Standard & Poor’s Ratings Services in June 2012. Paul leads a team of over 50 economists, researchers and quantitative analysts responsible for the macroeconomic forecasts used by Standard & Poor’s analysts during the ratings process, critical cross-sector research projects and ratings performance reporting. He is a member of the Standard & Poor’s Executive Committee.


 * Previously, Paul had been Global Chief Economist and Head of Economic Research at Nomura Securities since December 2008. There, he led a team of 35 economists in seven countries and was responsible for the firm’s global economic forecasts, outlooks and analyses.


 * Earlier in his career, Paul spent eight years at Lehman Brothers where he held a similar position and also served as Asia Chief Economist. Before that, Paul was Head of Japan Equity Investments at Baring Asset Management.


 * Paul is the author of several books and articles on corporate governance and the Japanese economy. His book, The Crisis of Main Bank Capitalism (Toyo Keisai Shinposha), earned him the Suntory-Gakugei Prize in the Economics – Politics Division. He has held faculty positions at Osaka University and the Australian National University, and visiting positions at Stanford University and the Bank of Japan.


 * Paul received his Bachelor’s degree from Monash University in Australia and a Masters of Economics and PhD from the Australian National University. He was a member of the World Economic Forum Global Agenda Council on the International Monetary System in 2010-12.

This stale notion of fractional reserve just creates confusion
A look at Asset liability management and Basel III shows that the old notion of fractional reserve has nothing to do with current international banking rules and practices. Liquidity coverage and capital requirement, as well as other bank risk management practices, took over. This article should be either written in the past tense, as just a curiosity or piece of museum, or be deleted, so as not to create confusion for readers who want to know what banking and money are about. --Pgreenfinch (talk) 22:02, 5 January 2014 (UTC)


 * The phrase fractional reserve banking is still used by central bankers, because whatever the regulations, it is still true that the amount of central bank money in the system is a fraction of the amount of broad money in the system. Even if it is not a fixed and prescribed fraction - it is still a fraction as opposed to 100% (as is the case with full reserve banking). Reissgo (talk) 09:00, 10 January 2014 (UTC)

The Chicago Plan as Criticisms of fractional reserve banking
I believe the proposal described in the section "Criticisms of fractional reserve banking" is know as the Chicago plan. If this can be verified then it would be good to mention that explicitly in the section and link to the Chicago plan article. Thanks! --Lbeaumont (talk) 20:11, 24 January 2014 (UTC)

Real data
It would be nice when there would be the status quo of the FED as real world example included. 87.78.26.207 (talk) 02:37, 26 January 2014 (UTC)

Recent changes to the lede
Please compare these two. There are many problems with recent edits. Trying to keep it as respectful as I can:
 * 1. Ungrammatical. "Remainder" is the subject but "are" is the verb in one sentence.  Someone (I don't know who) simply does not understand basic grammar.
 * 2. History is put in way too early in the lede. It is totally out of context.
 * 3. Some of the wording doesn't even make sense. Remainder is used to fund other bank liabilities?  The sentence is so convoluted it turns in on itself.

Could I implore all editors to realize that the existing page has undergone thousands of edits and shouldn't be messed with lightly. People with little experience in editing should edit lightly at first, as they don't know what they don't know and are editing in ignorance of grammar and clear expression. Please discuss edits on the talk page first, because some recent edits have been train wrecks. If you want to put Menger's stuff in the article there is a history section. It's not very detailed so please feel free to add all the references you want to that section. — Preceding unsigned comment added by 124.176.79.201 (talk • contribs) 13:57, 5 November 2012 (UTC)

Materials on how commercial banks usually make loans (not by doling out paper currency, etc.)
OK, I'm creating this new section to hold some materials I have found in my old textbooks.

From the Federal Reserve Bank of Chicago, making it clear that the general rule is that banks usually issue loan proceeds simply by crediting deposit accounts -- not by doling out the paper currency or coin that the bank has already received as "deposits".


 * Of course, they [commercial banks] do not really make loans out of the money they receive as deposits. If they did this, they would be acting just like financial intermediaries and no additional money would be created. What they do when they make loans is to accept promissory notes in exchange for credits they make to the borrowers' deposit accounts. Loans (assets) and deposits (liabilities) both rise....

--Federal Reserve Bank of Chicago, Modern Money Mechanics, pp. 3-13 (May 1961), reprinted in Money and Banking: Theory, Analysis, and Policy, p. 59, ed. by S. Mittra (Random House, New York 1970) (bolding added).

From a text published by the American Bankers Association, making it clear that most bank loans are made not by doling out paper currency and coin, but instead by creating or increasing deposit liabilities owed by the bank:


 * Typically, bank loans are made to existing customers, or the proceeds of a loan are used to open an account; thus, most bank loans increase total deposits. In the typical credit situation, two balance sheet items --loans and deposits -- are simultaneously increased.

--Eric N. Compton, Principles of Banking, p. 150, American Bankers Ass'n (1979) (Eric N. Compton was a Vice President at The Chase Manhattan Bank, N.A.)

From Professor Paul Horvitz:


 * Since demand deposits are money, this means that commercial banks can create money. The process of deposit creation is deceptively simple -- so much so that even the bankers themselves have frequently been deceived. There are several reasons for this confusion and we shall try to clarify them.


 * One cause of confusion centers around the meaning of "deposit." Deposits are, of course, a liability of the bank. If we have a $300 deposit in a commercial bank, the bank owes us $300. The deposit itself, however, can arise in various ways. We may have brought $300 in paper money to the bank to deposit in our account. On the balance sheet of the bank this transaction will simply be reflected as a $300 increase in the bank's holdings of cash, and a $300 increase in the bank's deposit liabilities. This transaction is what may be called a primary deposit. It should be noted that this transaction does not result in any change in the money supply. The depositor has $300 less in currency and $300 more in the form of a demand deposit; his total holdings of money are unchanged.


 * Deposits may arise in a different way, however. Let us suppose a businessman comes into the bank and wants to borrow $1000 to cover the cost of some additional inventory he wants to purchase. The bank may approve the loan, and the businessman will tell the bank to credit the $1000 to his deposit account.


 * Bank Assets
 * debit Loans $1000


 * Bank Liabilities
 * credit Deposits $1000


 * The businessman now has an additional $1000 demand deposit. No one else's demand deposits have been reduced. This is clearly an increase in the money supply, and it is apparent that the bank created the $1000.


 * These derivative deposits are very important both quantitatively and theoretically -- it is in terms of derivative deposits that banks can be thought of as creators of money. If all deposits arose from primary deposits, banks could not be said to create money.

-- Paul M. Horvitz, Monetary Policy and the Financial System, pp. 56-57, Prentice-Hall, 3rd ed. (1974) (bolding added). (Horvitz received his Ph.D. from Massachusetts Institute of Technology, and was Director of Research at the Federal Deposit Insurance Corporation. He was an assistant professor of finance at Boston University. He also served as Associate Director of Research for the Office of Comptroller of the Currency, U.S. Department of the Treasury, and as Financial Economist at the Federal Reserve Bank of Boston.)

Allowing the issuance of loan proceeds in the form of cash (that is, in the form of paper currency and current coins) is considered to be a weakness in internal control in a bank. See, generally, Industry Audit Guide: Audits of Banks, p. 56, Banking Committee, American Institute of Certified Public Accountants (1983).

These are old materials because I was in college, and was then a bank auditor, a long time ago. Famspear (talk) 03:09, 14 March 2014 (UTC)

New important document from the Bank of England
I believe the document has profound implications for how the main page is written. I am posting it here first to get some feedback on the weight that is should be given. http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q1prereleasemoneycreation.pdf


 * Why do you think this is important, and how do you suggest the article be edited to include what you feel is important? Thanks.  SPECIFICO  talk  17:54, 12 March 2014 (UTC)


 * I think it should be given great weight because its from the Bank of England and it not just a teaching-aid. I think its important because it says: "...nor is central bank money ‘multiplied up’ into more loans and deposits." as this wiki page suggests at length. Reissgo (talk) 18:01, 12 March 2014 (UTC)
 * At this point the main page should really be re-written from scratch. But I am not prepared to do this all in one go. It would be a substantial amount of work and, from experience, would very likely be undone immediately. So I shall make some small changes to test the water and take it from there. Reissgo (talk) 10:28, 13 March 2014 (UTC)

Riessgo, you have other editors here who are reading and responding to your messages. The most fruitful way to contribute here is for you to do likewise. Please re-read and respond to what I asked above. Once you put forth specific proposals, others can respond and collaborate on editing the article. You appear to be repeating that you've found what you believe is an important new source, but you are not telling the community what WP content you believe should be added or amended to reflect your new source. Please don't make changes to the article without mooting them here first. The reason your edits are often reverted is that most of them have been contrary to WP policy or practice. You can avoid this by discussing them here first. Thanks. SPECIFICO talk  12:55, 13 March 2014 (UTC)


 * My proposal is that the article be modified to de-emphasise (or eliminate) the money multiplier theory. It should also make it clear that banks do not lend out other people's deposits, instead loans create deposits. Reissgo (talk) 13:06, 13 March 2014 (UTC)


 * Part of the problem with the article -- and on this point Reissgo is correct -- is that the article goes into some detail in the "money multiplier" part of the article without making clear that this form of lending -- when the loan proceeds are actually in the form of currency (in the United States, this would be Federal Reserve notes or current coins, or both) is relatively rare. (See my explanations in this talk page back in August 2013.) As we have said, over and over in these talk pages, the main way that banks make loans is by debiting "loans receivable" (or some such asset account on the books of the bank) and crediting "demand deposits" (in other words, the checking account of the borrower, which is a liability account on the bank's books) or perhaps "cashier's checks outstanding" (again, a liability on the bank's books), etc., etc.


 * The article probably does not go into enough detail about how the vast majority of loans are actually made in a fractional reserve system. The vast majority of loans are not made by having the borrower walk out of the bank lobby with a bag of currency. The vast majority of loans are made by having the bank issue debt -- in the form of credits to a checking account or in the form of credits to bank checks outstanding (cashier's checks -- checks where the bank itself is both drawer and drawee). Note: Another way a bank could make a loan is not by creating a liability owed by that bank, but by reducing its own assets -- for example, by the bank issuing a check drawn on a checking account that the bank has with some other bank (whether the "other bank" be the central bank or just another commerical bank), etc., etc. That sort of thing. The banks I used to audit had checking accounts with many other commercial banks.


 * This is why Reissgo is correct when he says that the article should de-emphasize the money multiplier theory -- at least to the extent that the description under the heading of the money multiplier effect gives a misleading impression of how the vast majority of loans are made. I would not say eliminate it completely, but I would say that we need to find reliable, previously published third party sources that explain more specifically how bank lending actually works (which is the way I have just described).


 * I am a former bank auditor; I audited commercial banks (and savings and loan associations -- remember those?) for over five years; I know how banking works. But as a Wikipedia editor I cannot just insert this description myself, without citations to previously published third party sources. I will go back and look at my college textbook on money and banking (which was written by a former heavyweight at the FDIC) when I get the chance, and see what I can find. This may not happen soon, as I am in the middle of the heavy work load of tax season. Famspear (talk) 18:10, 13 March 2014 (UTC)

Note: I haven't read the Paul Sheard material (cited in the article), but Sheard is technically incorrect when he says that banks cannot lend reserves. The paper currency and current coin held by the bank -- which are part of reserves -- most certainly can be used to fund loans. In other words, it is entirely possible for the borrower to walk out of the bank lobby with a bag of Federal Reserve notes and current coins. It's just that this form of lending is rare. Not impossible; just rare. Perhaps Sheard explains this somewhere in his material. Famspear (talk) 18:18, 13 March 2014 (UTC)


 * I would think that 40 years into the post-"Nixon Surprise" era it would be easy to find a mainstream money and banking text which presents a view more to Riessgo's liking and without the medieval re-lending tale. On the other hand, as nearly a dozen editors have patiently explained to him, his current approach is not going to end up improving the article.   SPECIFICO  talk  18:40, 13 March 2014 (UTC)


 * Wiki policy is BRD. Reissgo (talk) 12:48, 14 March 2014 (UTC)

Suggested new lede
In the light of the seven references in the section "Criticisms of standard textbook descriptions of fractional reserve banking" - especially the new document from the BOE...

How about this?

Fractional reserve banking is a monetary system in which there are two types of money with one type constituting a fraction of the total, hence the name. The first type is known as central bank money or base money which is created by the central bank. The second type, known as broad money or demand deposits, is both created and destroyed by private banks as they make loans, or their loans are repaid. Broad money is essentially an IOU, from the private bank, of central bank money.

Central bank money can be further subdivided into two components, reserves and cash. Reserves are electronic and do not circulate outside of the banking sector, whilst cash takes the form of notes and coins which may be used by the public.

Banks typically loan out IOUs totalling more central bank money than they posses. This makes them vulnerable to a phenomena known as a bank run. Governments often have guarantees and or other policies to protect bank's customers in such circumstances.

There are regulations that require that a bank holds a minimum amount of capital and or reserves for any given amount of IOUs it has loaned out. The exact nature of these regulations may be different between different countries and at different times.

Fractional-reserve banking is the current form of banking in all countries worldwide.

Reissgo (talk) 08:27, 14 March 2014 (UTC)


 * I see Lawrencekhoo has undone my edit with a request for references. That's fine. I note that the previous lede (of similar length to mine) had references in a total of four places. Lawrence, please could you tell me in which places you think my version needs references. You could perhaps just cut and paste my lede below marking an asterisk where you think references are needed. Reissgo (talk) 15:06, 14 March 2014 (UTC)


 * Dear Reissgo: I'll have to look at this material in more detail later, as I'm working on U.S. corporate Federal tax matters having deadlines for Monday, March 17th. Just a few comments for now, though:


 * I realize that the United Kingdom, the United States, and other advanced nations may use certain technical terms, the meanings of which vary from one country to another. In the United States (for example) the term "reserves" (in terms of the reserve requirements imposed on commercial banks) does not have the meaning you are describing in your proposed text. Assuming that a consensus develops to the effect that the introduction should be re-written, I think the change needs to be done in a way so that the revised text does not cause confusion about technical terms that may have one meaning in one banking system and a different meaning in another system. More on this later..... Famspear (talk) 15:18, 14 March 2014 (UTC)


 * In the United States, under the Federal Reserve System, the reserve requirements are imposed by or under Regulation D, Reserve Requirement of Depository Institutions. Under Regulation D, the term "reserves" essentially means:


 * 1. "vault cash" (a technical term, but basically meaning the actual, physical paper currency and current coin owned by the commercial bank and shown as an asset on its balance sheet), plus


 * 2. the commercial bank's account at the Federal Reserve Bank in the Federal Reserve District in which the bank is located (or, in some cases, the bank's account at a designated "pass-through correspondent" institution).


 * In other words, if I go to Wells Fargo Bank and open a checking account with one hundred dollars in actual, physical Federal Reserve notes, those actual physical Federal Reserve notes become part of "vault cash" of Wells Fargo Bank. I cease to own those objects, but I receive an asset called a "demand deposit account" (a checking account). Those actual physical bills are now assets of Wells Fargo, and are also part of Wells Fargo's "reserves" (for purposes of the reserve requirements of Regulation D.


 * Note: "Vault cash" is a technical term in Regulation D, and includes more than just the stuff physically located in the bank's vaults at any given moment.


 * More later..... Famspear (talk) 15:41, 14 March 2014 (UTC)


 * You're right. I should have said something more like this:

Central bank money can be further subdivided into two components, electronic and physical. Electronically in the form of an account that private banks have with the central bank. Whilst cash takes the form of notes and coins. Taken together, they comprise the private bank's "reserves". Reissgo (talk) 16:02, 14 March 2014 (UTC)


 * Better? Reissgo (talk) 16:02, 14 March 2014 (UTC)
 * It has nothing to do with electicity. Please find a manistream RS textbook which treats the subject in a way you feel is clear and true and use that source to propose alternative text.  SPECIFICO  talk  16:51, 14 March 2014 (UTC)

I don't know of such a source. With regard "electronic" - well that's a shorthand for saying its just a record, some bytes on a hard disk, some numbers of a piece of paper. I think people will know what it means. I just think the wording could become very cumbersome (and-confusing) for an introductory section if every syllable was required to satisfy the most pedantic of readers. Reissgo (talk) 18:00, 14 March 2014 (UTC)
 * If you have been unable to locate a source which presents the views you wish to insert in this article, it sounds as if you consider them to be your personal opinions. As WP editors we do not put our own views or our personal "original research" in WP articles.   SPECIFICO  talk  18:17, 14 March 2014 (UTC)


 * It is absolutely not my OR. But wiki does paraphrase sources. Its not just cut and paste. Besides, I am happy to provide sources for any individual claim you think is controversial.


 * BTW, how about this:

Central bank money can be further subdivided into two components. The first is in the form of accounts that private banks have with the central bank. The second being cash i.e. notes and coins. The sum of the two held by any individual bank, comprise that bank's "reserves". Reissgo (talk) 18:22, 14 March 2014 (UTC)

Reference "Where Does Money Come From"
I want to use the book "Where Does Money Come From" as a reference, but I remember that it was once rejected as a RS for not being notable enough. But now I see that it was actually used as a reference by the Bank of England in this document. Surely if its good enough for the BOE, its good enough for Wikipedia? Please confirm. Reissgo (talk) 10:44, 18 March 2014 (UTC)
 * ✅ It gets my vote. An academic source can be reliable without being notable in my opinion.  Jonpatterns (talk) 11:27, 18 March 2014 (UTC)
 * It is not, however, an "academic source." Academic writings are peer reviewed, not published by advocacy organizations such as the one which produced this piece.  SPECIFICO  talk  12:19, 18 March 2014 (UTC)
 * It would help to know what the book is being used as a reference for?Jonpatterns (talk) 14:42, 18 March 2014 (UTC)
 * I don't even know exactly which parts I may use - but as I know its correct then it would be generally useful as a reference. But from experience, if SPECIFICO says he doesn't like it, then I will have no chance of using it. Reissgo (talk) 16:49, 18 March 2014 (UTC)
 * What advocacy organization is being referred to? Jonpatterns (talk) 16:54, 18 March 2014 (UTC)

PositiveMoney.org. Actually, there were four authors. One, Richard Werner, is an economics professor from Southampton university, two researchers from the NEF think tank and one researcher from PositiveMoney. I think there's also a forward from Prof. Charles Goodhart. Reissgo (talk) 17:12, 18 March 2014 (UTC)

FYI, Prof. Goodhart says "This book is an excellent guide and will be suitable for a wide range of audiences, including not only those new to the field, but also to policy-makers and academics.". Reissgo (talk) 17:22, 18 March 2014 (UTC)


 * I'd like to hear more why SPECIFICO objects to this as a source. This review may be informative.  The parts of the book explaining the way the banking system works seem balanced.  But where they talk of the nature of money they veer into opinion. review.  Maybe it is possible to use sources that the book uses? Jonpatterns (talk) 17:25, 18 March 2014 (UTC)


 * I'd like to hear more too, but that's not SPECIFICO's style. His normal behaviour is to do just enough to give me the message that my edits won't be allowed and then refuses to engage further. With regards using the documents the the book references, well that my be possible, but the effort involved is too great for me. There are not enough hours in the day. Reissgo (talk) 12:05, 19 March 2014 (UTC)
 * One option is to use a Request for Comments on an issue. This is then advertised on the relevant Wiki projects  - with the intention of get more editors opinions.  For example, the issue could be 'Is "Where does money come from?" a suitable reference for the "Fractional reserve banking" article?'. Jonpatterns (talk) 14:00, 19 March 2014 (UTC)
 * You may be right. But first I think I'll wait a few more days and see if we get any more comments. If enough other editors support this reference then maybe it won't matter that SPECIFICO has objected. Reissgo (talk) 17:24, 19 March 2014 (UTC)
 * The appropriate venue for feedback on your source is the WP:RSN. If you wish to post there, you should first study the relevant policies concerning WP:RS and WP:V. SPECIFICO  talk  19:10, 19 March 2014 (UTC)

My inclination is to give up at this point. WP:RSN requires detail about exact statements that I wish to support with the reference, but I haven't established those yet. I just wanted to get the all clear on the reliability of the book in general. If SPECIFICO is against, then he can easily may it virtually impossible to proceed. So I will now give up on that idea. The reference may be good enough for the Bank of England and Prof. Goodhart, but not good enough for SPECIFICO. A pity. Reissgo (talk) 19:55, 19 March 2014 (UTC)

Ok, plan B: How about "The New Lombard Street: How the Fed Became the Dealer of Last Resort" by Perry Mehrling? Is that a reliable source? BTW I haven't read it yet, but I have watched some of Perry's lectures, so I know he supports the loans-create-deposits view. This book serves as "a kind of overall text" for his coursera course "Economics of Money and Banking", which he explains, relies upon primary sources rather than textbooks. Reissgo (talk) 20:28, 19 March 2014 (UTC)

Discuss and ask for wider opinion before controversial edits and reverting
looking at the edit history of page there seems to be a lot of edits followed by a reversion. To improve the article discuss changes before editing and reverting. Also if there is a disagreement call for more editors to get a wider opinion. Jonpatterns (talk) 12:01, 25 March 2014 (UTC)


 * First of all, I am always keen to discuss issues relating to the main page. But IMHO the edits I am making are not controversial. If the Bank of England publishes a document saying "the monetary system works according to method A and, for the avoidance of doubt, does not work via method B", then saying so on the main page is not controversial. If SPECIFICO or anyone else wishes to discuss specific issues relating to my edits, I am ready to discuss. Also, anyone is free to add the "citation needed" tag wherever they feel necessary.Reissgo (talk) 12:12, 25 March 2014 (UTC)


 * This story of an IOU to be repaid in central bank money is rather virtual and obsolete don't you think? The Basel agreements do not say a word about that to my knowledge. --Pgreenfinch (talk) 17:07, 25 March 2014 (UTC)


 * If it were an obsolete idea then the BOE would not be labelling broad money as an IOU of base money in a document published only a few days ago. BTW, I have read it elsewhere too. BASEL not mentioning it is of no consequence because their documents are technical ones and would never use such public-friendly language. Reissgo (talk) 17:49, 25 March 2014 (UTC)
 * Just shows that good old nostalgic BOE speaks for her own parish in "public-friendly" metaphoric language. Should be more "technical", just for credibility, or at least, as you admit that it is figure of style for the public, you should keep the word "consider" --Pgreenfinch (talk) 22:29, 25 March 2014 (UTC)

Ok, I can live with that. Reissgo (talk) 23:28, 25 March 2014 (UTC)


 * We've been over this many times. Ressigo, you always claim many Reliable Sources that state that this page is wrong and that something else is so. But when it comes down to it, I have not seen a clear statement of i) what it is you think should be on this page, ii) RS that back that view. My suggestion, if you want something on this page changed, rather than complaining about this this page is wrong, state clearly what you want to remove, what you want to replace it with, and what RS back that change. LK (talk) 06:26, 27 March 2014 (UTC)


 * It appears you missed the recent document from the Bank of England. Read "New important document from the Bank of England" in this talk page. I may have had too little evidence 18 months ago - but new information is being published all the time which supports my case. You should also look at the seven references on the main page in the section "Criticisms of standard textbook descriptions of fractional reserve banking". Reissgo (talk) 10:37, 27 March 2014 (UTC)


 * I'd also like your input in the talk page section - Reference "Where Does Money Come From". Reissgo (talk) 10:52, 27 March 2014 (UTC)


 * I notice in your reversion you said my edits were "1) uncited, 2 removed material was cited and long standing, 3) language is not encyclopedic.". Well 1 is simply false. I did make citations - if there are not enough, feel free to add "citation needed" wherever you think its required. With regard "long standing" - well that's not a defence for keeping text that is blatantly and provably false. With regard 3, well feel free to tweak it - I haven't added that many words in total so it should not be too onerous. Reissgo (talk) 15:35, 27 March 2014 (UTC)


 * Since most of the material that you added contained no citations, and there are citation to RS in the version that you removed, I don't see how a person can reasonably disagree with the statement that your edit removed cited information for uncited material. (The exception is the Turner 2013 citation added for: "It should be noted that many textbooks contain incorrect descriptions of the money creation/destruction process" - which is not a published paper, and hence not RS.) Second, I don't believe many people will disagree that it is unencyclopedic to state in the lead that textbooks are wrong - when this is not backed up in the article itself. LK (talk) 09:21, 28 March 2014 (UTC)


 * Lets consider your points one at a time:


 * most of the material that you added contained no citations: First of all the amount of material added is quite small, so you would not expect that many citations. But I did have some, also the links within the text (of which there were many) are essentially citations. I.e. following the links leads to text that backs up what is being said. I have pleaded multiple times for you to tell me exactly which claims in the small amount of text I have written you feel need citations (wiki allows obvious things to go without citations).


 * there are citation to RS in the version that you removed: In science, theories come and go. They occasionally get disproved. You may remember long ago there were many books which claimed that there were certain separate regions on the human tongue that contained detectors for sweet, sour salty etc. A corresponding diagram was published in a great many books. Years later this was shown to be junk. If that occurred today, then wiki text with RS citations would have to be removed. This is what's happening right now. The money multiplier / lending & re-lending explanation has been revealed as nonsense. Its time to remove it. By the way, you say I have removed RS material, but you also say that my Turner citation is not reliable because it is not a "published paper". I have to say this made me quite angry because a while back I started up a talk section requesting that the citations should be published papers rather than textbooks - but got shot down. It sounds to me that you want a low quality threshold for what qualifies as a RS for stuff you believe and a much higher threshold for me. This shows your bias. Though I have to say I'm not to worried because the sources I've been using recently are of a higher quality that the average for the main page anyway. Indeed my main reference article is from the Bank of England Quarterly Bulletin - it doesn't get any more authoritative than that.


 * not backed up in the article itself: The claim that the textbooks are wrong is backed up by seven super-high-quality references in the section "Criticisms of standard textbook descriptions of fractional reserve banking". If you think that section needs to be expanded then I'd be delighted to do it. Reissgo (talk) 10:59, 28 March 2014 (UTC)

My recent revert of the lead
I just reverted the lead to an older version and wish to explain why. I am not - in principle - opposed to the material that was recently inserted in to the lead. However, I am in principle opposed to changing the lead without first changing the body of the article. The difference between the two seems to me to be largely one of presentation. However, the older lead is much more accessible, also, the newer version uses unencyclopedic language ("It should be noted that ..."), and contains a couple of incorrect statements (e.g. "with one type constituting a fraction of the total, hence the name"). Finally, it contains a statement that the textbooks are wrong on money creation, but this is not backed up at all in the body of the article. LK (talk) 06:44, 27 March 2014 (UTC)


 * I put my answer in "Discuss and ask for wider opinion before controversial edits and reverting". Reissgo (talk) 10:50, 27 March 2014 (UTC)


 * That's not how it works. You gain consensus first, before changing something back, if the change has been objected to. Also, change the body of the article first, before changing the lead. Doing otherwise makes a mess of the article and is bad practice. LK (talk) 09:08, 28 March 2014 (UTC)


 * For months now SPECIFICO has been the only one reverting my edits - but he often refuses to take part in discussion or takes part for a short while and then stops prematurely. This breaks the BRD model of how wiki works. If we have 'B' then 'R' then refusal to discuss, then the refuser has the power to block changes forever. Your behaviour in refusing to list the claims I make that you think need citations is a form of refusing to discuss. Personally I like BRD, but if neither you or specifico cooperate then what choice do I have? As another example, note that the talk section Reference "Where Does Money Come From" is in need of further comments from both you and SPECIFICO. Reissgo (talk) 11:17, 28 March 2014 (UTC)
 * I'm disappointed by the decision to reinsert problematic content, without consensus, whilst using WP:BRD as an excuse. That's not how it works. It's not WP:BRRRRRRRwhateverIwantD. If people don't agree with you, the onus is on you to find a better solution or accept the status quo. bobrayner (talk) 12:03, 28 March 2014 (UTC)


 * Both SPECIFICO and LK are displaying extreme reluctance to do the 'D' part. How about some discussion of the actual content and sources instead of all this wiki-lawyering. I'll give you a starter: the BOE (and others) have stated that the lending-relending / money multiplier story described at length on the wiki main page is BS. What should we do about it? Reissgo (talk) 12:13, 28 March 2014 (UTC)

What are the specific points to mention in the lead
BRD_misuse What points should be mentioned in the lead, what is incorrect or should be left out? Jonpatterns (talk) 13:23, 28 March 2014 (UTC)


 * For reference, here's my suggestion..


 * Fractional-reserve banking is a monetary system in which there are two types of money with one type constituting a fraction of the total. The first type is known as central bank money or base money which is created by the central bank. The second type, known as broad money or demand deposits or simply credit, is both created and destroyed by private banks as they make loans, or their loans are repaid. Broad money is essentially an IOU, from the private bank, of central bank money.[1]


 * Central bank money can be further subdivided into two components. The first is in the form of accounts that private banks have with the central bank. The second being cash i.e. notes and coins. The sum of the two held by any individual bank, comprise that bank's "reserves"


 * Banks typically loan out IOUs totalling more central bank money than they possess. This makes them vulnerable to a phenomena known as a bank run. Governments often have guarantees to protect bank's customers in such circumstances.


 * There are regulations that require that a bank holds a minimum amount of capital and or reserves for any given amount of IOUs it has loaned out. The exact nature of these regulations may be different between different countries and at different times.


 * Fractional-reserve banking is the current form of banking in all countries worldwide.[2]


 * It should be noted that many textbooks contain incorrect descriptions of the money creation/destruction process.[1][3] Reissgo (talk) 14:22, 28 March 2014 (UTC)

Various editors have been over this issue countless times, as the talk page archives demonstrate. For starters, the lede must summarize the content of the article. The article must satisfy WP policies with respect to RS, V, and UNDUE. Riessgo, if you wish to know why the community has rejected your preferred text, please review the archives where many patient editors have explained the issues to you. Thanks. SPECIFICO talk  17:19, 28 March 2014 (UTC)


 * There has been a steady stream of papers and articles supporting my case, with ZERO counter-papers. Surely the latest BOE paper has to be the straw that breaks the camels back. Surely there is no higher authority... is there?


 * The weight of the arguments on both sides of the debate is now different to what its was in the "countless times" previously, so what may have been agreed in the past is no longer applicable.


 * I object to your suggestion that what I have put is O.R. without actually stating which particular claims you think are unsupported. Reissgo (talk) 18:33, 28 March 2014 (UTC)

The relending model
On the main page we have the words "an initial $100 deposit of central bank money is made into Bank A. Bank A takes 20 percent of it, or $20, and sets it aside as reserves, and then loans out the remaining 80 percent, or $80". Some editors (including SPECIFICO) have stated that they know this is nonsense and yet it still remains on the main page. Can it be removed please. Or at least come with some kind of note the it doesn't really work this way. Banks don't lend out other people's deposits. Reissgo (talk) 22:13, 5 April 2014 (UTC)

Criticisms of fractional reserve banking
On the disputed para:

'''Nobel Prize winner Frederick Soddy criticised a number of aspects of the economics systems of his time. With the notable exception of fractional-reserve banking, many of his criticisms have been accepted as valid. Eric Zencey: Mr. Soddy’s Ecological Economy. In: The New York Times. April 12, 2009'''

Soddy was eventually proven right about everything else economic that he railed against. He may well be proven right about fractional reserve banking. It's a valid criticism from someone in the public sphere. Books discussing Soddy include: Ecological Economics, Second Edition: Principles and Applications, Herman E. Daly, Joshua Farley.

See also, for context, rather than reference, http://monetaryrealism.com/frederick-soddy-on-endogenous-money-debt-deflation/ for some pointers to Soddy's noted economics thinking. http://billtotten.blogspot.com/2009/07/economic-thought-of-frederick-soddy.html - wow, economists really don't like Soddy.


 * The piece that you cite "Mr. Soddy’s Ecological Economy" in the New York Times, is an OP-ED piece by an outside contributor, which according to WP:IRS guidelines, is not in general a reliable source. LK (talk) 09:32, 28 March 2014 (UTC)


 * How is Soddy, Frederick. (1926). Virtual Wealth and Debt - the Solution of the Economic Paradox. London: George Allen & Unwin LTD. (318 pages).  as a source? — Preceding unsigned comment added by 203.158.58.246 (talk • contribs)
 * Timothy: Frederick Soddy was not recognized as an economist. He was a physical scientist. Let's move on.  SPECIFICO  talk  13:36, 3 April 2014 (UTC)


 * that's an ad hominem argument. Is 'not one of us' the best you can do? — Preceding unsigned comment added by 203.158.58.246 (talk • contribs)

Dear user at IP 203.158.58.246: No, that's not an ad hominem argument. You have it backwards. What SPECIFICO is saying is that Soddy is not recognized in the field relevant to the discussion, which is fractional reserve banking. If Soddy were recognized as an expert in this field and someone attacked him, for example, on the basis that he was a wife beater -- THAT would be an ad hominem argument. This is sometimes called "genetic fallacy." This fallacy is committed where the attacker goes after the personal character of the individual where that character is irrelevant to the truth or falsehood of what the individual is saying. see Irving M. Copi,  Introduction to Logic, p. 92, Macmillan Publishing Co. (7th ed. 1986). By contrast, pointing out that someone is not recognized in the field relevant to the discussion is exactly the opposite of an ad hominem argument. You are quite wrong. Famspear (talk) 11:52, 4 April 2014 (UTC)

Oh, another thing: Citing someone who might be an expert in one field (physical science) as being an authoritative source for a discussion in another field (fractional reserve banking) in which that individual has no expertise actually WOULD be a fallacy -- the fallacy of appeal to authority. The fact that someone is an authority in field A does not necessarily make him an authority in field B. Famspear (talk) 11:57, 4 April 2014 (UTC)

Here's some more background on how this works:


 * "...when an authority is appealed to for testimony in matters outside the province of that authority's special field, the appeal commits the fallacy of argumentum ad verecundiam. If in an argument about morality one of the disputants appeals to the opinions of Darwin, a great authority in biology, the appeal is fallacious."

--from Irving M. Copi, Introduction to Logic, p. 98, Macmillan Publishing Co. (7th ed. 1986).

Now, whether Frederick Soddy actually is an authority on fractional reserve banking is a separate issue. The point is: Wikipedia does not necessarily accept the writings of someone who is an authority in "Field of Knowledge A"" as a reliable source on matters in "Field of Knowledge B" where the person is not an authority in "Field of Knowledge B". To do so would probably violate the Wikipedia rules, AND would also be an example of committing the fallacy of argumentum ad verecundiam. Famspear (talk) 13:00, 4 April 2014 (UTC)


 * Soddy was on the mark on a number of then-contentious economic topics, such as the gold standard. On field A vs field B, I see lots of mention on e.g. the Apple Computer page of criticisms from Greenpeace. Greenpeace does not make computers. Greenpeace does not make data centers. They are therefore similarly not experts in the appropriate field, and shouldn't be cited. Similarly, criticisms of oil companies come from entities that are not oil companies - funnily enough, Greenpeace again. Never drilled a hole, not got a clue. Wikipedia gives space to beliefs and interests of actors, despite them not being experts in those fields. Einstein gets quoted on God, despite never being in the clergy. Whether Frederick Soddy actually is an authority on fractional reserve banking is hardly the issue; there's a note on the page saying the criticisms section is too small, and yet this criticism, well documented in the public sphere, is rejected. Essentially, you're appealing to the authority of economists and rejecting Soddy's criticism, not on its own merits, but because Soddy is not an economist. Dismal. — Preceding unsigned comment added by 203.158.58.246 (talk • contribs)


 * Dear user at IP 203.158.58.246: No, whether Soddy's critique is suitable for Wikipedia is a separate issue. An individual can be a critic of a subject without being a recognized expert in that subject. Your error was to characterize the other editor's comments as an ad hominem argument. I explained why the other editor's comments were not an ad hominem argument -- that that explanation necessarily brings in the concept of whether someone is recognized as an authority in the field under discussion. Whether Soddy actually is an authority on fractional reserve banking most certainly IS the issue -- because YOU'RE the one who made it an issue.


 * If you want to make the argument that Soddy's critique should be included in the article even though he is not an economist -- as you are now doing -- that's different. You may or may not have a valid point, on this separate argument. Famspear (talk) 12:23, 6 April 2014 (UTC)


 * Exactly, whether Soddy's critique is suitable for the article has always been the issue, and the argument I've been making with citations to supporting articles. An individual can indeed be a valid critic of a subject without being a recognized expert in that subject, if the arguments have merit - and most advances in fields come from outsiders who are not recognised as expert in the established canon that is later overturned. Now, can we move to discussing Soddy's arguments against FRB, as expressed in his books and writings, rather than simply dismissing him as not an economist? — Preceding unsigned comment added by 203.158.58.246 (talk • contribs)

The trouble with Reissgo
Given that the endogenous money battle seems to be heating up again and there may be some arbitration / third parties getting involved who may feel swamped by the amount of information involved in this multi-year battle, I decided to write a very compact cartoon history of events as I see them, as a reference, here. — Preceding unsigned comment added by Reissgo (talk • contribs)


 * You can put me on your shit -list too as I have just reverted your change. Above, Specifico asked why there are no economics textbooks that present the endogenous theory on a par with the money multiplier theory. As far as I can see, you failed to answer his question. &mdash; goethean 13:15, 29 March 2014 (UTC)


 * Ok, how about "Where does Money Come From" by NEF and "The New Lombard Street: How the Fed Became the Dealer of Last Resort" by Perry Mehrling. Also it doesn't matter if its not in any textbooks, so long as it is in even better sources, i.e. peer reviewed papers and or journals of central banks to name but a few. Reissgo (talk) 16:18, 29 March 2014 (UTC)


 * Additionally, I think that you've misrepresented the debate in your presentation of it on your page. Above, users have asked you pertinent questions about your addition which you have refused to answer. You omitted this aspect of the debate from your recounting of the debate. &mdash; goethean 13:22, 29 March 2014 (UTC)
 * I haven't followed the debate closely, but I think I have seen seemingly reasonable edits by Reissgo be reverted with no convincing arguments. At times it made me wonder if there was a hidden agenda at work, perhaps to suppress mention of some branch of libertarian thought. Martijn Meijering (talk) 13:38, 29 March 2014 (UTC)


 * With regard "pertinent questions about your addition which you have refused to answer" - it is not my intention to avoid answering any pertinent questions. If you think I have left something critical unanswered, feel free to prompt me and I will answer it right here in my next edit. Reissgo (talk) 16:25, 29 March 2014 (UTC)


 * I just noticed that there are currently SIX sections in this talk page where I am the last one to add a comment... This is evidence that its the other editors that are running away from arguments, leaving questions unanswered, not me. Reissgo (talk) 16:28, 29 March 2014 (UTC)


 * Those "last comments" in each case were condemnations rather than questions or comments so your inference is not supported. Please undo the last reinsertion of your text.  SPECIFICO  talk  16:59, 29 March 2014 (UTC)


 * My last comment in 'Reference "Where Does Money Come From"' is a question for which I have not gotten an answer. Reissgo (talk) 17:08, 29 March 2014 (UTC)


 * Ditto "Suggested new lede" Reissgo (talk) 17:10, 29 March 2014 (UTC)


 * So long as there is no prospect of discussing the actual edits themselves on their own merits, rather than wikilawyering, I have no intention of undoing my edits. Reissgo (talk) 17:13, 29 March 2014 (UTC)


 * The so-called "endogenous money" theory you "support" (ie.e., advocate) is a minority position at best. The very name "fractional reserve banking" makes it clear that the system is designed suv\ch that banks can only lend money based on the amount they have on reserve; that is to say, there is a ceiling on the amount they can lend which is a multiple of the amount on reserve. Ubikwit  連絡見学/迷惑 11:08, 30 March 2014 (UTC)


 * In practice, with compulsory reserves that are limited nowadays to 0% or 1% of deposits, depending on the central bank, this fractional rule is just obsolete or at best theoretical or symbolic. Modern banking regulations (Basel III) use a set of more varied and sophisticated criteria. To freeze a sizable portion of deposits in the central bank would not bring safety, but on the contrary bring a risk of illiquidity --Pgreenfinch (talk) 15:30, 30 March 2014 (UTC)
 * What's helps improve Wikipedia articles is to find and present WP:RS references and to discuss the article content such references might support. SPECIFICO  talk  16:04, 30 March 2014 (UTC)
 * Hard to find references on something that disappeared. Better admit that this article is about History, not actual practices, which are referenced by the way (Basel III and asset liability management. How come those articles do not even include the good old "fractional" word ? --Pgreenfinch (talk) 16:28, 30 March 2014 (UTC)
 * Hard to find references on something that disappeared. 
 * There's no logical reason why that would be the case. Unless you are implying some sort of Bermuda Triangle situation. &mdash; goethean 18:01, 30 March 2014 (UTC)
 * What has disappeared? Not fractional reserve banking.  There are many many WP articles on various topics which relate to banking practice, regulation and theory -- including a few cited above.  Banks don't lock up reserves equal to their deposits. That is how banks operate.  That operation is called fractional reserve banking, and this article is about that method and system.  With due respect to others who have posted here, I suggest you have a look at standard mainstream texts and other materials on the subject before spending too much time on what appears to be soapboxing and OR by a self-published author with a pet theory and a faulty understanding of both banking and WP policy.   SPECIFICO  talk  18:16, 30 March 2014 (UTC)
 * I just took a quick look at the Asset liability management article. Note the tag.  It's not clear what the context or subject of that article is intended to be. It's almost entirely without references.  SPECIFICO  talk  18:30, 30 March 2014 (UTC)
 * I dont see how you can define "how banks operate" on the basis of that ancient notion of reserves at the central bank, something that has largely disappeared in practice like steam engines did. It is not the only WP article that relies on old platidudes. OK, I will not fight windmills, but don't be surprised if some other contributors will go on raising controversies --Pgreenfinch (talk) 20:23, 30 March 2014 (UTC)
 * Fractional reserve banking is an ancient phenomenon. It does not entail central banks, regulation, etc. Last I checked, banks still had capital ratios, reserves and other steam engine stuff.  SPECIFICO  talk  20:53, 30 March 2014 (UTC)
 * Yes, various balance sheet criteria to ensure solvency and liquidity. Fractional reserves that would freeze a portion of the deposits are not such criteria (well, central banks used them for their own profitability, as usually they were interest-free deposits for them). As it is an ancient theory, why not say it instead of pretending that it is how banks work ? --Pgreenfinch (talk) 12:21, 31 March 2014 (UTC)

Let's cut to the bottom line. There's a well-defined topic and there are well-sourced references for this article. Like all WP articles it will be improved over time. The blocked editor Riessgo is a self-published author who is pushing his own fringe views at the expense of properly documented article text. He states on his talk page that he is promoting his own views rather than following WP policy with respect to WP:WEIGHT, WP:UNDUE, and WP:V. The topic and title of this article don't refer to "how to operate a bank," or "bank regulation." If you have well-sourced content you propose, please present it. There's been nothing constructive about the blocked user's participation here, so let's move on with whatever specific improvements you have in mind. SPECIFICO talk  14:05, 31 March 2014 (UTC)


 * My main issue with Riessgo's edits is their belief that finding some sources that say information in other sources is wrong means wholesale removal of that information. It doesn't.  When sources disagree, and the information is both is fairly notable then BOTH sides should be discussed in relation to their relative WP:WEIGHT.  Riessgo has a specific belief (that, to be honest, more closely reflects my views) that is pushed and pushed and uses sources to completely remove contrary views that are still prevalent in sources.  Ravensfire ( talk ) 15:10, 31 March 2014 (UTC)
 * Right. I don't see anyone here denying the way bank lending operates -- creation of deposits by issuance of credit.  Let's close this off-topic thread about the blocked editor and move on with any discussion of the article in a new section.   SPECIFICO  talk  16:11, 31 March 2014 (UTC)


 * Re: "I don't see anyone here denying the way bank lending operates" The main article itself denies the way banks operate. "creation of deposits by issuance of credit" - The main page has the words "an initial $100 deposit of central bank money is made into Bank A. Bank A takes 20 percent of it, or $20, and sets it aside as reserves, and then loans out the remaining 80 percent, or $80" - presumable you are not happy with that. Please go ahead and delete it. I've started a new topic (below) just for this issue. Reissgo (talk) 12:29, 6 April 2014 (UTC)

Technical discussion in history section?
I removed the following sentence from the history section...

"The reciprocal of the reserve requirement, called the money multiplier, limits the size to which the transactions in money supply may grow for a given level of reserves in the banking system."

A. Mathematical technicalities have no place in a "history" section. B. The whole issue of the money multiplier putting a cap on the money supply is strongly disputed, so should not really appear anywhere without being paired with a mention that no central bank controls the money supply in this way.

Note, the money multiplier can be, and is, discussed elsewhere in the main article.

SPECIFICO undid my edit - so can we please have another opinion. Reissgo (talk) 16:35, 29 April 2014 (UTC)


 * WP uses Reliably Sourced secondary citations for article content. In addition, your opinion concerning the efficacy of reserve requirements is incorrect.  If reserve requirements were 1% instead of 10% for example, the money supply would be larger.  If the reserve requirement were 50%, the money supply would be smaller.   SPECIFICO  talk  17:37, 29 April 2014 (UTC)


 * I have no idea why you said either of those two sentences. I agree with both and don't believe my latest edits have contradicted either of them. Reissgo (talk) 08:18, 30 April 2014 (UTC)

Money supplies around the world
The contents of this section appears to have little to do with its title. Also it refers to a "table" which appears absent. I propose the section should simply be removed and I will do so in due course unless someone wishes to have a go at making the section make more sense - either by changing its title or contents. Reissgo (talk) 09:01, 4 May 2014 (UTC)


 * Please leave the section as it is. SPECIFICO  talk  15:52, 4 May 2014 (UTC)


 * Can you please explain what the body of the section has to do with the title. I can see no relationship whatsoever. Reissgo (talk) 17:37, 4 May 2014 (UTC)


 * if you really want to keep the body of the section then it just can't be called "Money supplies around the world", so I'll rename it miscellaneous additional information for now - and you can rename it to whatever you feel is more appropriate later, or better still cut and paste the information into more suitable sections. Reissgo (talk) 22:20, 4 May 2014 (UTC)

SPECIFICO's big undo
Over a period of several days I made a variety of separate edits to the main page. Some were simply reordering of sections, some were merely adding links (to wikipedia) to existing text, some were changing content. Then SPECIFICO undid the lot with a comment "Undo blanking of well-referenced RS text central to the content of this article. Use talk. There is no consensus for these changes". It is my opinion that this crude undo is out of order and he should deal with each edit separately. I am going to undo his undo once (I won't do it again for fear of getting blocked for edit warring). SPECIFICO, if you want to undo any of my edits, please can you do so a little more thoughtfully. Reissgo (talk) 08:13, 5 May 2014 (UTC)


 * Lawrence Khoo just repeated SPECIFICO's change with a comment "Let's try this a bit at a time, and also with discussion on the talk page for disputed parts.". If either you or SPECIFICO are conceding that some of my edits are not disputed, then would you please either reinstate them, or tell me what they are so I can reinstate them. If you do neither then I will consider your actions as disruptive editing. Reissgo (talk) 09:56, 5 May 2014 (UTC)


 * Unfortunately, I don't believe that any of your recent edits have been constructive. They don't support the article's treatment of its subject and they do not represent accurate summaries of mainstream reliable source references.  You should seek consensus on talk.   SPECIFICO  talk  14:19, 5 May 2014 (UTC)


 * None? really? What about for example my edit to Mervyn King's quote, where I added a link for the word "endogenous", to the wikipedia article on endogenous money? Was that not constructive?


 * And what about my moving the location of the "economic function" section? It was previously, and oddly, sitting in the middle of a series of sections on the technicalities of how the system works. I was not intending to promote or demote that section - it just seemed that it didn't belong where it was. I wouldn't mind if it went before all the technical sections, or after, just not in the middle. Reissgo (talk) 16:24, 5 May 2014 (UTC)

The phrase "money multiplier" being used with two different meanings.
The main page at one point states "The reciprocal of the reserve requirement, called the money multiplier" then at another point states "In practice, the actual money multiplier varies over time, and may be substantially lower than the theoretical maximum". I know that the phrase "money multiplier" is used in more than one way in the literature, but the main page should make this clear rather than confusing the reader by switching meanings mid-document. Reissgo (talk) 11:53, 13 May 2014 (UTC)


 * I suggest that we change the article so that we always use the terms observed multiplier, and theoretical multiplier. This will clear up the ambiguity. LK (talk) 04:33, 14 May 2014 (UTC)


 * Sounds reasonable - I'll make the edits after other the other money multiplier issues have been resolved. Reissgo (talk) 13:23, 14 May 2014 (UTC)

Money multiplier acting as cap - stated twice - why?
In the "history" section we have the statement:

In the "money multiplier" section we have:

Should we really be saying the same thing twice? I think one of them has to go. Reissgo (talk) 13:19, 14 May 2014 (UTC)

Forgive me if I note the irony in your concern about "saying the same thing twice" -- in this case I think it helps the flow of the article for readers who may not be familiar with the concept. SPECIFICO talk  13:25, 14 May 2014 (UTC)


 * Several editors now agree that the statement requires a caveat, having the statement twice means that we need the caveat twice. It just makes things messy. Why do we need it in the "history" section anyway? Reissgo (talk) 13:30, 14 May 2014 (UTC)
 * The statement in your little boxy thingy is a tautology. It will be true after the last central bank fades into the vastness of time. You acknowledge in an earlier thread on this page that the reserve requirement does indeed limit the money supply for a given base.  I suggest you offer more substantive additions to the article.  Have you tried searching the literature beyond of the British Isles?  SPECIFICO  talk  14:03, 14 May 2014 (UTC)


 * With regard helping "the flow of the article" - I have to say that's nonsense. The history section flowed perfectly well without that sentence. Can we have a third opinion here? Reissgo (talk) 16:38, 14 May 2014 (UTC)

article needs ...work
I inserted MANY flags, :-) I am certain, too many for some. But I thought about each one of them, and I mean them.

I also noticed that the language deteriorates or deviates from encyclopedic style. esp towards the end.

I tagged peacock terms. Volunteer Marek undid these pretty immediately,before I could even finish this. Read WP:peacock, please. I do wonder if this is stalking after undoing all my edits on fiat money.

There is more of course.--Wuerzele (talk) 04:45, 15 May 2014 (UTC)

article has an inconsistent style of citation, uses bare urls
I put up these 2 infoboxes and numerous carefully inserted flags to help point and discuss- all reverted by volunteer Marek, this is disruptive ( besides being disrespectful and using inflammatory language in your edit summaries) and it does not help the cause.

Instead: He put the box for missing inline citations up- but that's not the main citation problem.

Volunteer Marek, I warn you : you are edit warring again.--Wuerzele (talk) 04:57, 15 May 2014 (UTC)


 * , I am sorry you are so angry... not good. please just try deleting the terms I flagged as peacock terms and you can see readability improves, tehy are unneeded. And again please read WP:Peacock.


 * Your recent edits show that you are engaged in an edit war. This can result in your being blocked from editing—especially if you violate the three-revert rule, which states that an editor must not perform more than three reverts on a single page within a 24-hour period. Undoing another editor's work—whether in whole or in part, whether involving the same or different material each time—counts as a revert. Also keep in mind that while violating the three-revert rule often leads to a block, you can still be blocked for edit warring. -For other editors: I am writing this here, because Volunteer Marek appears to routinely delete these on his user page.--Wuerzele (talk) 05:08, 15 May 2014 (UTC)

Strangely I couldnt post this due to edit conflict, even though I see nobody that replied to this section .--Wuerzele (talk) 05:08, 15 May 2014 (UTC)


 * See below. You are being disruptive.Volunteer Marek (talk) 05:10, 15 May 2014 (UTC)
 * calm down man, you lost face. --Wuerzele (talk) 05:13, 15 May 2014 (UTC)

NOTE TO ALL EDITORS--The talk page of an article is for discussion of content only. It is not the place for commentary about other editors perceived motivations or behavior. It is certainly not the place for accusations of edit warring. Such comments should be posted on the USER's talk page not here. Thanks for adhering to the WP guideline. -- — Keithbob • Talk  • 13:01, 17 May 2014 (UTC)

Disruptive spamming of tags by User:Wuerzele in violation of WP:POINT
Re:

Ok, this is either purposeful attempts at being disruptive in order to make a WP:POINT or a straightforward case of lack of WP:COMPETENCE. Either way, not good.

First, there is no "bare URLs" in the article so that tag is bogus.

Second, words like "important", or "key" are not peacock terms. See WP:PEACOCK.

Third, Wuerzele is spamming the tag to like every second sentence, in most cases where it is completely unnecessary and inappropriate. Same goes for spurious tags.

Fourth, words like "however" or "in particular" are not "".

Fifth, while the article could use inline citations, adding tags in middle of sentences or paragraphs when the infline citations are clearly provided at the end of the paragraph or sentence is disruptive.

I suggest you really stop this kind of behavior.Volunteer Marek (talk) 05:02, 15 May 2014 (UTC)


 * You are angry, and it is not a good time to write this.
 * think about what you wrote.
 * I thought about every edit I made. Peace be with you.--Wuerzele (talk) 05:11, 15 May 2014 (UTC)


 * I am not angry. As it happens I'm sitting on my couch and peacefully sipping some tea while watching a half-decent TV show. There's a cat next to me and it is sleeping. Nope, no anger here. A bit of annoyance and irritation at your attempts to disrupt this article but that's about it.
 * Now, how about instead of trying to read my mood you comment on the issue rather than the editor? Actually I don't think there's much to say there either, as your edits were clearly disruptive. Please read WP:POINT.Volunteer Marek (talk) 05:16, 15 May 2014 (UTC)


 * I can see arguments on both sides here. Wuerzele, I think most of the tags you added were completely valid, though considering the fact that it takes a long time to get enough consensus to change anything on this page, it may be better to choose just one section that you think could most benefit from tagging - get those issues resolved, then move on to the next and so on. It would achieve the same end result. Reissgo (talk) 07:55, 15 May 2014 (UTC)

, I already admitted that there were probably too many flags. reversal for anything but vandalism, esp if accompanied by talk page discussion is aggressive. I am not disruptive.--Wuerzele (talk) 02:51, 17 May 2014 (UTC)
 * It was not just the number of tags. They were not justified by policy and they were misplaced. Please discuss your concerns on talk.  If you think there are widespread problems, please consider using section tags, which will invite other editors to work on improving the article. Thanks.  SPECIFICO  talk  03:26, 17 May 2014 (UTC)
 * questions "not justified by policy"? examples please.--Wuerzele (talk) 03:35, 17 May 2014 (UTC)

Please discuss issues of article content and stop the personalized comments and accusations. Thank you.-- — Keithbob • Talk  • 13:03, 17 May 2014 (UTC)

Example of deposit multiplication
The entire example provided, as shown in the chart, but explained in the text of this entire section, is based on the false assumption that borrowed money is NEVER used to buy anything, that people and businesses borrow money to put it in a bank account.

It is a spurious claim, opposed to all common sense.

For example, there would be no mortgage problem if no mortgages were issued, but obviously people borrow money through a mortgage to actually buy a house. A business most often borrows money for some sort of capital expenditure, also known as investment. Unless that house and the things businesses buy have no monetary value, the silly concept of a vicious cycle on the level described in the article cannot exist.

In fact, almost no one borrows money to put it in a bank account for any significant amount of time. This would be in clear contradiction with invisible hand theory. Almost all borrowed money is rapidly used to purchase goods or services. — Preceding unsigned comment added by 82.224.103.123 (talk) 10:12, 24 April 2014 (UTC)


 * ... by being transferred to the supplier's bank account Sceptical-h (talk) 09:52, 24 May 2014 (UTC)

"From a depositor's perspective, commercial bank money is equivalent to central bank money – it is impossible to tell the two forms of money apart unless a bank run occurs." This is a very misleading statement. It implies that bank deposits and bank reserves are interchangeable, that somehow bank deposits are bank reserves. The depositor clearly knows the difference between a bank deposit and cash but will have no knowledge of, or ever possess, any of the other forms of central bank money listed earlier in the article. I suggest instead "From a depositor's perspective, commercial bank money is fully exchangeable for cash and the two can be treated as exact equivalents unless a bank run occurs." Sceptical-h (talk) 10:53, 24 May 2014 (UTC)

Removal of added detail to money multiplier.
In the section "Money multiplier", I added the words "The central bank simply supplies whatever amount of base money is demanded by the economy at the prevailing level of interest rates." which is a direct quote from perhaps the most reliable source on the monetary system that exists, i.e. the Bank of England Quarterly Review. My added sentence is merely extra detail for the preceding sentence: "However, rather than directly limiting the money supply, central banks typically pursue an interest rate target to control bank issuance of credit". Presumably you agree with the preceding sentence as you have not deleted it. I don't understand how this is either a POV edit or contrary to anything previously discussed on the talk page. SPECIFICO, please can you explain. — Preceding unsigned comment added by Reissgo (talk • contribs) 08:02, 1 July 2014 (UTC)


 * Looks fine to me too. Martijn Meijering (talk) 09:27, 1 July 2014 (UTC)

Banks as intermediaries
The Bank of England think its a bad idea to consider banks simply as intermediaries: "One common misconception is that banks act simply as intermediaries, lending out the deposits that savers place with them." Reissgo (talk) 15:12, 7 July 2014 (UTC)
 * In a Twitter discussion a while ago Lex Hoogduin, a professor of economics and a former board member of the Dutch central bank, insisted that banks acting as financial intermediaries was a highly misleading picture. It seems to me it would be an accurate picture under a full-reserve system. It's not that fractional reserve banking enables banks to act as an intermediary, if anything it allows them to lend money without acting as a financial intermediary! Martijn Meijering (talk) 15:52, 7 July 2014 (UTC)
 * Exactly right. Reissgo (talk) 16:33, 7 July 2014 (UTC)
 * Wait a minute, "intermediaries" between whom?-- Ubikwit  連絡見学/迷惑 16:37, 7 July 2014 (UTC)
 * Savers and borrowers. Reissgo (talk) 16:39, 7 July 2014 (UTC)

In answer to LK about his latest edit - sorry, but it doesn't really solve the problem. Wikipedia is putting forth as uncontroversial, a description that the BoE (amongst other top quality RS's) have stated is misleading. Clearly this is unsatisfactory. Reissgo (talk) 16:47, 8 July 2014 (UTC)
 * It's not helpful to repeatedly toss out the name "Bank of England" as if any statement by an individual affiliated with or published by BoE is the standard of truth concerning a worldwide set of institutions, practices, knowledge, and policies. For the purposes of WP, where we want to give prominence to established mainstream views according to their incidence and acceptance, your sources, including those connected to BoE have for the most part been tenuous, misinterpreted, and misapplied.  I believe that LK has stated he is a practicing college professor.  I am confident that he has an excellent overview of current sources and thinking on these matters.  SPECIFICO  talk  16:53, 8 July 2014 (UTC)
 * For me the latest edit does solve the problem. Previously it said that fractional reserve banking enabled banks to act as intermediaries in general. That wording is ambiguous, it could be construed as FRB doesn't preclude banks from acting as financial intermediaries (which is true), or as without FRB banks could not act as intermediaries (which is false). But after the latest edit it restricts itself to saying FRB makes possible something that previously wasn't, namely maturity transformation, which is correct. Martijn Meijering (talk) 21:20, 8 July 2014 (UTC)

As Mmeijeri has said, part of the problem is that the term "financial intermediary" is ambiguous. It may have different meanings, depending on context.

In the very narrowest sense, financial intermediation occurs only where the mediator acts to facilitate a single transaction between two parties to that very same transaction -- such as the escrow agent (as the intermediary) for buyer and seller in a real estate transaction. I'll call this "Meaning # 1." A bank that takes a deposit of paper currency from Dave Depositor and later lends the very same paper currency to Bobby Borrower (a person completely unknown to Dave Depositor, with whom Dave has no relevant dealings) is NOT a financial intermediary in this very narrowest sense. Similarly, the grocery store that takes paper currency from me when I buy milk and later uses the same currency to make change for another customer is not a "financial intermediary."

However, banks sometimes do use the term in a different, broader sense -- even to describe the first transaction that I have just described as NOT being intermediation: Dave Depositor makes a deposit of paper currency, and the bank later lends the very same objects of paper currency to Bobby Borrower. This is what I'll call Meaning # 2, This is the sense in which the Federal Reserve Bank of Chicago has used the term:


 * Of course, they [commercial banks] do not really make loans out of the money they receive as deposits. If they did this, they would be acting just like financial intermediaries and no additional money would be created. What they do when they make loans is to accept promissory notes in exchange for credits they make to the borrowers' deposit accounts. Loans (assets) and deposits (liabilities) both rise [ . . . ]

--Federal Reserve Bank of Chicago, Modern Money Mechanics, pp. 3-13 (May 1961), reprinted in Money and Banking: Theory, Analysis, and Policy, p. 59, ed. by S. Mittra (Random House, New York 1970).

In that passage, the Federal Reserve Bank is using the term "financial intermediary" under the broader Meaning # 2, to describe an event that would NOT be considered financial intermediation under the narrower Meaning # 1.

Of course, as Reissgo and I have previously pointed out, that method of making loans --by actually loaning out physical paper currency and coin -- is relatively rare, at least in the United States. It's not impossible -- but it is rare. The vast majority of borrowers in the United States simply do not walk out of the bank with bags full of paper currency and coin. Instead, the vast majority of borrowers receive the loan proceeds by having the bank create a checking account, or increase the balance in an existing account, or having the bank issue a check to an escrow agent, etc., etc. What the Federal Reserve Bank is saying in the passage above is that the most common lending process is not really "financial intermediation" -- not financial intermediation in the sense of Meaning # 2. Famspear (talk) 22:02, 8 July 2014 (UTC)


 * Here are some things to think about: Regarding the Wikipedia article on Financial intermediary, is the article using that term incorrectly? Is the article using the term correctly, perhaps under some sort of third meaning? Is the article misleading about how most bank lending actually occurs (at least, in an advanced banking system such as is found in the United States)? Is the article simply wrong? (Not necessarily for discussion on this talk page, but perhaps on the talk page for that article.....) Famspear (talk) 22:09, 8 July 2014 (UTC)


 * Interesting that the Fed said "Of course, they [commercial banks] do not really make loans out of the money they receive as deposits. If they did this, they would be acting just like financial intermediaries and no additional money would be created" - lets modify this sentence without changing its meaning... we can change it to "Banks do not really make loans out of the money they receive as deposits. If they did this, they would be acting just like financial intermediaries"... or even more simply "Banks do not really act just like financial intermediaries". So its not just the BoE that say banks don't really act as financial intermediaries, its also the Fed. So the lede is going against the word of both central banks. That can't be allowed by Wikipedia can it? Reissgo (talk) 15:36, 9 July 2014 (UTC)


 * For the record, I believe full reserve banking does allow maturity transformation, but perhaps that's a separate issue. If someone wants to challenge me on that, then perhaps start a new section. Reissgo (talk) 15:42, 9 July 2014 (UTC)


 * How the introduction of the article should be worded depends in part on which meaning of "financial intermediary" you want to use. I suspect that you might find other reliable sources that say that banks do act as "financial intermediaries" -- so that it may not be a disagreement over the underlying facts, but rather a confusion caused by multiple meanings -- and correspondingly various uses -- of a technical term. Famspear (talk) 17:39, 9 July 2014 (UTC)

It may be that under some very specific definition, banks can be said to act as a financial intermediary, but unless the text spells out exactly what that specific definition is, we need to be careful. The BoE and The Fed and Adair Turner and many other ultra high quality RS's think that its misleading. Reissgo (talk) 17:54, 9 July 2014 (UTC)


 * OK, now I'm playing the role of the Grammar Nazi.


 * Regarding this material that Reissgo has inserted and SPECIFICO has removed:


 * "Though the idea of banks acting simply as intermediaries in a fractional reserve system is disputed by both the Bank of England and the Federal Reserve amongst others."


 * It appears to be a subordinate clause -- specifically, a kind of subordinate clause known as a "concessionary" adverb clause. (Ummm, I think that's right.) Whatever else is wrong with it, it is not an example of correct English grammar. As an adverb clause, I believe that it needs to modify something. Suggestion: If we're going to use it in the article, drop the word "Though". Then, we will have a grammatically correct sentence: "The idea of banks acting simply as intermediaries in a fractional reserve system is disputed by both the Bank of England and the Federal Reserve amongst others." Alternatively, keep the word "Though" but combine the clause with something else to make the clause part of an actual sentence. Famspear (talk) 01:24, 12 July 2014 (UTC)


 * Oh, by the way: I just noticed that something I wrote is also incorrect. It's this sentence: "As an adverb clause, I believe that it needs to modify something." Without meaning to do so, I basically just called myself an "adverb clause." Clearly, I am not an "adverb clause." What I should have written was something like: "I believe that because it is an adverb clause, it needs to modify something."


 * Hey, it's been a long time since I took English grammar. Famspear (talk) 01:29, 12 July 2014 (UTC)
 * Also, what's up with "amongst" -- it sounds like wild animals amongst the trees, physically situated therein. Anyway the "though" which should have been "although" is SYNthy and so it's been removed. SPECIFICO  talk  01:41, 12 July 2014 (UTC)


 * Come to think of it, as long as it's been since I took English grammar, and considering how old I am now, I could well be an adverb clause who has just forgotten that he is an adverb clause.


 * This is really bad. Especially bad, since I haven't even had any alcohol or other psychoactive substances that would explain my confusion.


 * At least, I don't remember having any alcohol or -- oh, forget it! :) Famspear (talk) 01:46, 12 July 2014 (UTC)
 * This is what's become of the language formerly known as "the queens english" -- today it's American English that is pure and clear, whilst amongst the British, things have gone murky. SPECIFICO  talk  02:05, 12 July 2014 (UTC)

How to progress
It seems to me that there are three things we could do, and it would help for us to decide the gist of what is to be said before we start arguing about the exact from of words (or grammar!):


 * 1. State that banks act as intermediaries, with no caveat or anything indicating the idea is controversial or potentially misleading.


 * (1b. State that banks act as intermediaries, but phrase it in such a way that it would not fall foul of the BoE's concerns).


 * 2. State that banks act as intermediaries but then state that the idea is controversial, or needs additional information to avoid confusion.


 * 3. Not state the banks act as intermediaries.

Please can we get some votes... please don't vote unless you have read this thread from the start. I'd like you to vote too because it is unclear to me from your latest edits whether you'd prefer 1 or 2. Reissgo (talk) 09:16, 12 July 2014 (UTC)

For the record, I'd be equally happy with 2 or 3. Reissgo (talk) 09:31, 12 July 2014 (UTC)
 * I'm not sure I see the problem. Right now the article merely states that FRB allows banks to act as intermediaries between borrowers and savers who still want to have immediate access to their money. That seems correct to me. It could be good to add some text that says this wouldn't be possible under full reserve banking. Martijn Meijering (talk) 11:15, 12 July 2014 (UTC)


 * Did you read the quote from the BoE at the top of this section? The BoE, amongst others, think that a casual description of banks as intermediaries is misleading. Reissgo (talk) 11:36, 12 July 2014 (UTC)
 * I did, and I agree. But the text as it is doesn't do that, does it? If necessary we could even add that quote to the text. Martijn Meijering (talk) 11:38, 12 July 2014 (UTC)
 * Ok, I've added a choice 1b above which (correct me if I'm wrong) I take to be your preferred option. By the way I don't agree that the current wording would satisfy the BoE. The problem is that if banks acted *purely* as intermediaries, then they could not possibly create money. So they must be doing something that's a little bit different. Reissgo (talk) 12:11, 12 July 2014 (UTC)
 * This may not be the best example, but off the top of my head, how about this scenario: A man asks to borrow $5000 in order to build a new kitchen - $4500 for the basic kitchen and $500 spare for any unexpected problems. It turned out that everything went smoothly and he only needed to spend $4500. Later on he pays back the $5000 plus interest. Ask yourself the question, where did that unspent $500 come from? Who was the bank intermediating between? The correct answer is that it did NOT come from any savers. The bank was in no way whatsoever intermediating between savers and borrowers to enable the borrower to have a spare $500 in his account for a period. Reissgo (talk) 12:42, 12 July 2014 (UTC)
 * If the bank had no deposits, it could not have made the loan. Ask the Bank of England. One must consider the system in its entirety to avoid a fallacy of composition. You've been posting your personal world-view here and used snippets from published sources to synthesize what appears to be a rationalization of a fundamentally incorrect understanding of contemporary "Money and Banking". Anyway, we don't edit by counting votes on WP, so this thread is a dead end.  If you wish to poll the community, read about how to formulate, post, and publish an RfC and we can all abide by the result.    SPECIFICO  talk  13:08, 12 July 2014 (UTC)

With regard a vote, I only did that to get some clarity as to what people wanted to happen.

With regard "If the bank had no deposits, it could not have made the loan.". I am very glad that you stated your opinion clearly, because now I understand why your are objecting to my edit. You are objecting to my edit because you don't understand how the monetary system works. Imagine that we have a pre-fractional reserve banking world (all transactions are carried out with actual notes and coins) and then the world's first (fractional reserve) bank starts up with an initial investment of (cash) capital from its owners. It opens its doors to new customers. Imagine the very first customer comes in and says "I'd like to open an account here and the first thing I want to do is borrow $5000", the bank *can* make that loan. It just adds $5000 to both the assets and liabilities side of its balance sheet, hands a cheque book to the customer and the loan has been made. The customer may then go and buy something by writing out a cheque for $5000 to the seller. The seller will go to the bank and say I'd like to open an account here and put this $5000 in it. The bank takes the cheque, and transfers the $5000 liabilities from the initial customer to the seller. The loan came *first* and resulted in the deposit. Reissgo (talk) 11:06, 13 July 2014 (UTC)


 * Just to summarise the state of play on this thread:
 * A) I have provided RS stating unambiguously that both the BoE and the Fed have made it clear that the idea that banks simply act as intermediaries between savers and borrowers is misleading. This is not just in minor documents written by rogue employees as SPECIFICO has suggested. In the BoE case it was a multi-author paper published in their quarterly review. They even made two videos to go with it! So even if it is the case that many textbooks (aimed at students) casually state that banks do act as intermediaries, it is at least controversial, and so should not be stated in the lede as if it was unarguable fact.
 * B) SPECIFICO attempted to refute my example of banks not acting as intermediaries, I provided details as to why he was mistaken in his analysis. He then chose not to respond, I can only assume that he is conceding.
 * I have no objection to suggesting the idea of banks acting as intermediaries, after all it is in many textbooks, but only so long as it is made clear that the idea is controversial.
 * Reissgo (talk) 09:13, 15 July 2014 (UTC)


 * I note that my latest edit has been undone by with a comment "no contradiction with what BoE says, this talks about intermediating between more specific groups". But with respect, the BoE's and Fed's problem with using the term financial intermediaries, is not so much about stating who exactly the two parties are that it is mediating between, so much as A) sometimes there is no second party, so they are not intermediating at all and B) concerns as to the direction of causality. The latest wording addresses neither of these issues so can not be left as is. Reissgo (talk) 12:15, 15 July 2014 (UTC)


 * I note that has reinstated the intermediary text, but this time added a "dubious-discuss" tag. Well in one way I'm all in favour, but unfortunately nobody appears willing to debate this issue. SPECIFICO has abandoned the debate and therefore must be presumed to have conceded. So it is Mmeijeri that is the only one objecting. So Mmeijeri, it is you that needs to do the "discuss" thing mentioned in the tag. This is my fourth edit in a row on the talk page without a reply! Reissgo (talk) 07:28, 16 July 2014 (UTC)
 * One quick fix could be to rephrase the existing text to avoid using the word intermediary without changing the meaning of the text. After that we could try to come up with a paragraph that explains in what sense banks act as intermediaries and in what sense they don't, and mention the fact that BoE has said seeing banks mainly as intermediaries is misleading. Martijn Meijering (talk) 10:24, 16 July 2014 (UTC)


 * In principle that would be a great solution, but in practice it may be tricky to find the right set of words suitable for the lede (though by all means make a suggestion). The lede should give a brief overview of the subject without getting too technical. The intermediary-or-not issue would IMHO be better placed in the main body of the article where there is room to discuss controversies and or details. Reissgo (talk) 10:58, 16 July 2014 (UTC)