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To: RaceBannon

Buying a house or land does not decrease the amount of money in circulation. It decreases the buyer’s bank balance and increases the seller’s bank balance (and the balance of the real estate agents, etc.)

The money supply can be decreased by reducing banking system reserves or by reducing the ratio of loans to reserves.

The only “commercial” transaction that destroys money is (I think) bankruptcy. The amount of money lost by the lender is, in effect, destroyed.


100 posted on 06/15/2022 6:40:32 AM PDT by FarCenter
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To: FarCenter

“The only “commercial” transaction that destroys money is (I think) bankruptcy. The amount of money lost by the lender is, in effect, destroyed.”

And that is missed by many. After 2008, a lot of money was going off to money heaven. When the FED was replacing that money, it was not new, “added’ money.


101 posted on 06/15/2022 6:44:03 AM PDT by BiglyCommentary
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To: FarCenter

The Fed can decrease the money supply by increasing interest on the loans it gives to the banks.

When the bank gets the interest, it would make it cease to exist instead of recirculating it.

In the debt free money theory, interest would only be charged by the fed to “mop up” excess cash in circulation. The goal being to keep the money supply in a stable realtionship to goods and services being produced.


107 posted on 06/15/2022 6:53:47 AM PDT by FreshPrince
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