DiscussWorldIssues - Socio-Economic Religion and Political Uncensored Debate - View Single Post - Let's talk about the fractitional reserve banking system

**pumpineemob** · 01-05-2012, 12:26 PM

An asset is not limited to money. A note or a mortgage becomes an asset.

Think double entry bookkeeping. When an asset is expended one is received. Take out a $100k mortgage, the $100k comes off the asset side of the bank and is replaced by a $100k asset called a mortgage and a $100k asset called a note. Then the bank bundles these and sells them for 1-2% over the asset value.

The thing is, at the end of the day, every day, the banks books balance assets against debits, and neither has to be considered a negotiable instrument called a FRN. You are used to thinking "money of exchange" while they are dealing with "money of account".

01-05-2012, 12:26 PM	#23
pumpineemob Join Date Oct 2005 Posts 474 Senior Member	An asset is not limited to money. A note or a mortgage becomes an asset. Think double entry bookkeeping. When an asset is expended one is received. Take out a $100k mortgage, the $100k comes off the asset side of the bank and is replaced by a $100k asset called a mortgage and a $100k asset called a note. Then the bank bundles these and sells them for 1-2% over the asset value. The thing is, at the end of the day, every day, the banks books balance assets against debits, and neither has to be considered a negotiable instrument called a FRN. You are used to thinking "money of exchange" while they are dealing with "money of account".
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