RE: A deposit is not “money in the bank.” It doesn’t point to a sum of money that belongs to the depositor and can be reclaimed at any time.

You've lost me on this point. Are you saying the money I have in a checking account, for example, doesn't belong to me? I really fail to see how this can be. That money in that account is a demand deposit is it not? I can request this money at any time without prior notice--at least in the US.

Could you further explain this, please?

At this moment I'm lost and having a big headache, because I thougt that I started to understand the system. But now I am lost.
My only hope is that Draghi as the biggest moneymaker and illusionist ever wil be dismissed, why he never should have been placed in the position of ECB as former GoldmanSachs-man, speaking of that it is very quiet around and about the Carlylegroup. Are they temporarelly dismissed or hidden under an alias?

The mechanism for the accelerated growth of indebtedness and corresponding monetary assets – a veritable infernal machine – is described in full detail in “The Money Syndrome” by Helmut Creutz.

http://www.themoneysyndrome...

The following graph is taken from the book “The Money Syndrome“. It shows the market participants divided into 10 groups according to their disposable income and the amount they are using for consumption per year (the green columns). The orange columns indicate the interest payments hidden in consumer prices and the blue columns show average interest returns that the members of the respective groups receive from owning an interest bearing asset.

redistribution mechanism
The following graph is an extraction of the above figure and shows the balance of interest payments and interest yields. The balance of group 9 is almost even. The members of this group own interest bearing assets worth at least 450,000 euros, which yield as much interest returns as they pay while annually spending 50,000 euros for consumption. All lower groups have smaller assets the returns from which don’t suffice to compensate for the losses in consumption. Therefore, their balance is negative. Only group 10 has a positive balance and collects what the majority of market participants (groups 1 to 9) lose in this game. The growing gap between rich and poor is often referred to in the public discussion, but no one ever asks how it is caused. At any rate, primarily the creditors in group 10 should be asked to contribute to the emergency parachute for Greece, because they are the winners in the game.
interest balance
This system of compound interest is the basic mechanism for redistributing wealth from the poor to the rich. Mathematically, compound interest is an exponential function, which inexorably leads to a crash of the financial system. Nothing can be done to prevent this crash.

The whole premise of the article seems wracked with the same sophistry that we see in Jeremy Benthams , A defense of Usury. Why is PM bothering itself as an apologisdt and sophist for Usury?
Benthamns Defense of usury is flawed in that it misunderstands the Debt aspects of Money creation, which was not as bad then as it is now but was still a system being pedalled by the infamous John Law in France.http://en.wikipedia.org/wiki/John_...

http://en.wikipedia.org/wik...

http://en.wikipedia.org/wik...
http://socserv2.socsci.mcma...

ll3/bentham/usury
Where is the Debate about reforming money for England Wales and Ireland freeing people from the yoke of Debt!
http://letthemconfectsweete...

An old PM blog from 2012 that attempts to illustrate the pernicious nature of our commercially issued, debt-based money system, using the maligned "desert island economy" thought experiment. There is no mention of the "is there enough money to pay all the interest" red herring. The real danger is shown to be the accumulation of power and control by the banker who takes over from the people the function of money creation.

http://positivemoney.org/20...

First of all I'd like to point out that a Positive Money-system probably would not have these problems at all. This discussion and criticism is only about the current system. Still I'm worried that PM would put itself at the same side as Steve Keen in this matter!

The way I heard it (by talking to bank employees), private banks do NOT let their income disappear in some theoretical increase of their equity caused only by decreasing liabilities. What happens in reality is that banks buy government bonds for the money they receive, as fast as they could, simply to get someone else to pay interest on their earned money. This seems to me quite logically. In the past, banks deposited their surplus in a competing bank, nowadays they buy bonds.

So the money paid in as interest is treated as an asset after all. An asset which requires compound interest.

I've often wondered what people mean by "interest per se". In a private banking system there is only compound interest. Interest is just a name, or a number showing the growth of the exponential function after a year. Compound interest is what really exists, it is the process that is actually working, day after day. So in order to find the root of the imperative we have the look at the compound interest from all aspects, and specially the compound interest on the hoarder's deposits, and we have to keep in mind that there is almost no way for money to be interest- free in the current system.

Example: 10 people and 1000 silver coins on a desert island. They have 100 coins each. Someone comes up with the great idea that they should start a bank, because then everyone would be promised 2% interest on their deposits, and they will all get richer...

What will happen?
My answer: The system might seem to work for a short while, as long as borrowers work hard to pay everybody's interest on deposits, including their own. But not in the long run. You can't race against an exponential function and expect to win.The group will soon face a lack of ideas, new branches and borrowers. The circulation velocity slows down again, and they will end up with a zero interest rate on deposits, or close to zero, and now with less available money because of those greedy mr A, mr B and mrs C, who have been hoarding all their interest money all the time.

As we (hopefully) can see from this example, hoarding isn't the only reason for the imperative to emerge. Hoarding make the situation worse, but the primary crazyness is the bank's promise to make every single deposit grow exponentially over time and simultaneously pretending that such a system could actually work with a constant (non-growing) money supply.

Remember, interest is paid out of deposits but it arises because of the level of outstanding loans. If banks allow deposits to dwindle to nothing by not returning the interest back into the economy through spending on current goods and services, so that their source of interest income dries up, they can indeed restore things by creating new deposits. In the absence of current spending by banks, this can be done through extending new loans or buying existing securities, but that does not involve spending the hoarded interest: the level of equity does not fall, as it would with current spending. Interest received is not an asset for banks since it does not accumulate as cash on the asset side of the balance sheet as for all other institutions.

Cash isn't the only item on the asset side of the bank's balance sheet.