why does (-5)*(-4)=20 ?, eom

[Aractus]

That's exactly what they do and it provides a clue as to part of what the GFC was.

You're an idiot.

You do not know what you're talking about.

The G.F.C. had to do with banks in the USA shorting on bad loans. More to the point it had to do with collateral and the fact that banks didn't get that upfront and passed on the risks to other investors, and yes i do believe that 90% of them should be gaoled (after a trial by peers, of course).

[pocaracas]

Oh... how about we compound the banking system with... the insurance system?

[davidMC1982]

That's exactly what they do and it provides a clue as to part of what the GFC was.

You're an idiot.

You do not know what you're talking about.

The G.F.C. had to do with banks in the USA shorting on bad loans. More to the point it had to do with collateral and the fact that banks didn't get that upfront and passed on the risks to other investors, and yes i do believe that 90% of them should be gaoled (after a trial by peers, of course).

Hmmmmm. So, I'm an idiot because you didn't realise that banks do create money from nothing when giving out loans? Because you actually thought they only lent money that had been deposited with them? But instead of taking the time and thinking, "hey, maybe he's right", then researching some more (and explaining how I'm wrong if that were the case), you stick your fingers in your ears and throw insults.

Why exactly do you think the problems US banks had, ended up causing such problems throughout the world? Why do you think governments had to "print" money (more generating money out of thin air there) to prop up failed banks? Why do you think Cyprus (one of the worst hit Eurozone countries) had to restrict bank withdrawals (they actually stopped people withdrawing their own money)? Why do think UK banks had to increase their debt cover (cash reserves vs debt) from 5% to 10%?

And irrespective of this small aside, it still comes back to the fact that money is as abstract a thing as debt and negativity is a tangible physical quantity.

[Anomalocaris]

Wow! All this convoluted mathsy stuff.

It's really simple.

Two wrongs make a right.

Right?

Wrong * 2 = -wrong.

Where did you study math?

---

That's exactly what they do and it provides a clue as to part of what the GFC was.

You're an idiot.

You do not know what you're talking about.

The G.F.C. had to do with banks in the USA shorting on bad loans. More to the point it had to do with collateral and the fact that banks didn't get that upfront and passed on the risks to other investors, and yes i do believe that 90% of them should be gaoled (after a trial by peers, of course).

You realize even healthy banks can have load to deposit ratios greater than 1, right?

[Aractus]

Hmmmmm. So, I'm an idiot because you didn't realise that banks do create money from nothing when giving out loans?

Um, how about because: banks can not create money.

Why exactly do you think the problems US banks had, ended up causing such problems throughout the world? Why do you think governments had to "print" money (more generating money out of thin air there) to prop up failed banks? Why do you think Cyprus (one of the worst hit Eurozone countries) had to restrict bank withdrawals (they actually stopped people withdrawing their own money)? Why do think UK banks had to increase their debt cover (cash reserves vs debt) from 5% to 10%?

Firstly, the RBA (in Australia) or the Federal Reserve in the USA determines the legal amount of "reserves" that banks have to hold, and as you well know much of their customers money is used for investments.

Secondly, the money is upfront, what was happening in the USA is that certain banks were accepting bad loans, and shorting on the loans - that's it, that's what caused the GFC. If you want a more detailed description of how it works generally, it works like this: a bank accepts a loan, for arguments sake we'll say that they've put their own money up for the loan (you seem to think this is creating money from nothing, it isn't). Then the mortgage is split into short term, medium term and long term. I'm not exactly sure what the exact details are on it, but let's say for argument's sake "short term" is year 1-5, medium 6-15 and long 16-30 or something like that. The original bank that has now sold off the loan, has made their profit already, and has no downfall if a default happens. If a default happens during the "short term" phase, than all three investors will loose their money, if it's during the medium then two of them loose money.

Basically that's it, and that's how the GFC happened was because you had a number of greedy banks shorting on loans and then passing on the "risk" to other investors (other banks, etc).

And irrespective of this small aside, it still comes back to the fact that money is as abstract a thing as debt and negativity is a tangible physical quantity.

Again, you are wrong. Bonds and Money are not the same thing.

[Polaris]

Because we have been told so. One of those many things in life where you're just given an answer without actually being told the real reason why.

[Tiberius]

Because we have been told so. One of those many things in life where you're just given an answer without actually being told the real reason why.

Quite a few people now have given a real reason why this is.

[Polaris]

Because we have been told so. One of those many things in life where you're just given an answer without actually being told the real reason why.

Quite a few people now have given a real reason why this is.

Yes, but how many knew of it before they posted their initial responses?

I also remember the first poster to mention why also indicated it may not always be true 100% of the time.

[Norfolk And Chance]

The easier "proof" of 4 * -5 = -20 is:

4 * -5 = -5 + -5 + -5 + -5 = -20 (it follows from the axiom a + -a = 0)

From that, you can prove that -5 * -4 = -20 by using the following (stolen) proof:

Let a and b be any two real numbers. Consider the number x defined by

x = ab + (-a)(b) + (-a)(-b).


We can write

x = ab + (-a)[ (b) + (-b) ] (factor out -a)
= ab + (-a)(0)
= ab + 0
= ab.

Also,

x = [ a + (-a) ]b + (-a)(-b) (factor out b)
= 0 * b + (-a)(-b)
= 0 + (-a)(-b)
= (-a)(-b).

So we have

x = ab
and
x = (-a)(-b)

Therefore

ab = (-a)(-b).

Fucking hell.

It's easy to understand that 5 * -4 = -20, because it's just 5 lots of -4, so for simpletons like me -5 * -4 must give an opposite answer of 20.

[Neo-Scholastic]

Because the negative sign expresses the direction of a vector.