The “truth bomb” that is about to explode: cash flaw accounting...

The “truth bomb” that is about to explode: cash flaw accounting...


One has to understand that money loaned out is not coming from "speculators" clients of the banks, but out from nothing. I.e. In their lending, banks create credit ‘ex nihilo’, and new money ‘ab initio’ with cash made ‘out of thin air’, because the loan amount is added onto the borrower’s account immediately after signing a loan contract. The loan is ADDED onto the borrower's account, not TRANSFERRED from any existing cash account ! And this is the point: when the bank creates this new money, she don't write it in existence directly to her cash flow account as a newly created asset, but on the borrower account ! So, the banks have always what appears as an impossible NEGATIVE CASH FLOW ACCOUNT, but it is just not a real loss !
It's all a make-believe game of mirrors... 

Further reading: Cash Flow Accounting in Banks— A study of practice, Ásgeir B. Torfason, 2014
https://www.scribd.com/doc/294880212/Cash-Flow-Accounting-in-Banks-A-study-of-practice 

And: Werner, R.A., A lost century in economics: Three theories of banking and the conclusive evidence, International Review of Financial Analysis (2015) http://www.sciencedirect.com/science/article/pii/S1057521915001477