Felix? Are you really happy to have intellectual lightweights like Danny commenting (and apparently agreeing with what you write) regularly? Lord knows it would put me off.

Fantastic!!

Foppe, I read exactly three things that Graeber has said and all were clearly and obviously incorrect – being the origin of the word for debt in the various different languages in which the world’s major religions were originally written in, that Apple was founded by some ex-IBMers guys working in a garage on their laptops and how the Fed works. So if by “fantastic”, you mean can’t get the indisuptable stuff even vaguely correct then you are spot on.

The sentence is logical. But it loses all meaning when viewed with even 1 minute of common sense. Ideas that are simply nonsense need to be called out. Respect.

Say I have money M, which I deposit in a bank. The bank lends out M-r (where r is some small reserve). Now a lender has M-r to spend, and I still have M to spend with my debit card, so the money supply has gone from M to (2M-r). This is fairly simple econ.

I doubt that the derivatives can so cleanly be canceled, but that’s the real problem with derivatives. We now have more than enough fiddly derivative contracts to keep every lawyer in the world arguing until the sun burns out, and the volumes are so huge (hundreds of trillions to quadrillions of dollars) that even in 99% of it nets to zero, the remainder is still enormous.