Crime Against Humanity: the Holy GAAP, 21

And since we’re talking about confronting the Holy Gaap, let’s not forget to confront its capability to project itself into eternity as well, founded upon the clearing houses and banking reflux we’ve seen before. In doing so, let’s help ourselves with putting some more ducks in the row; obvious as they can be, it’s their existence that is relevant.
These ducks are some definitions in IAS 7, which once put in a row tell us a few things: For a financial institution, cash flows arising from cash receipts and payments for the acceptance and repayment of deposits may be reported in a given way, and we’re not much interested in how they are reported as much as we’re interested in the implicit statement that cash receipts and payments for the acceptance and repayment of deposits ARE cash flows. And cash flows are inflows and outflows of cash and cash equivalents, where by cash equivalents is meant those ways to invest cash from which cash is immediately and entirely recoverable, and where – more important – by inflows and outflows is meant those cash flows entering as such the financial statement.
So? If we connect one more time the first and the last dot, we have that cash from repayments is a cash flow entering the financial statement. Obvious as it can be, we are looking here at the banking reflux: the commercial bank scriptural money, the promise of the thing pretending to be the promised thing, does not cease to exist when repaid by the first borrower at all, but quite to the contrary continues to exist indefinitely, as proved by its never ending journey through the financial statements.
It goes like this: the banker loaned some quids, and the related credit was entered in his balance sheet’s assets under credits; when the borrower repays some quids, that credit in the balance sheet is obviously reduced of those quids, and if that scriptural money were destroyed that would be all; instead, and quite differently, ANOTHER book entry takes place, too: in parallel to reducing that credit of those quids, the banker increases his balance sheet’s assets of those same quids under cash. In short: those repaid quids taken off of credits are not destroyed, but transferred to cash. Banking reflux.