Scenario B:
I earn my $100, I keep $50.00 of it for my home expenses, then with the extra $50.00 rather than figuring out who to lend it to... I deposit to a bank... and the banks lends out $45.00 to company X (Req. to keep 10% reserve).
PLEASE EXPLAIN TO ME EXACTLY WHY do you think Scenario B uses made up counterfeit money And PRETEND its happening in the 1800’s BEFORE we went off the gold standard.
The counterfeit money is not in that transaction. It's in the next one. once the bank loans out the $45 to company X - company x puts it back into the economy and it winds up at another bank who will now view that as REAL money that THEY have even though the first bank is still viewing YOUR $45 as real money too. of course they'll charge interest on both loans even though one of them wasn't backed by anything.
bank #2 who gets the deposit from company x can lend out about 40 bucks.
So we started with only $50 in circulation. we wound up with 90 right? 40 was created "out of thin air".
Good... Im glad you said that.... And you are absolutely right... this is basic money exansion.
Now lets look back at your scenario 'A' where banks cant lend other people's money!!! I want you to focus before you read the following paragraph... so clear your mind a bit.
I take the 50 and lend it to Company 'X'... Now Company 'X' TAKES that money and it puts into the economy (In the EXACT SAME way that you stated (Lets say Comapny X uses that 50 to buy Equipment from Company Z.) Now Company 'Z' Has the money. Now... under Your scenario 'A', Company Z cannot use a bank to deposit that $50.00 so what does it do?
It Lends it by itself using no intermediary to Company Q. (Again.. .the same exact scenario could potentially happen with a bank as an intermediary, but since this is not allowed... Company Z had to to it by itself... just like in the first example
THe important thing to understand is that The EXACT SAME THING IS HAPPENING>>> the expansion is still happening withOUT the intermediary of the bank.
Now, there is no question that the banks are adding liquidity, speeding up the process..and making the lenders LESS involved. BUT expansion (Or what you call.... creating counterfeit money from thin air) STILL HAPPENS!!!!!
the only way to stop this expansion... or (counterfeiting), is for Company Z, or whoever has that $50... to take it and put in under their mattress or a cookie jar, or burn it. If this is done, it will typically cause a depression.
So I will ask you again... do you still believe that this process of expansion (counterfeiting) can ONLY happen with banks being used as the intermediary?
Also... Who told you this in the first place?
I know a LOT of Gold Standard supporters, there are some in this forum... and I have NEVER heard ONE of them suggest that Banks shouldnt be allowed to lend on other people's behalf. They just believe that money should be backed by Gold... like before 1933.