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Quote: tb "Letting nutters from the Occupy movement take over CiF is probably one of the silliest things the Grauniad has ever done. The fact that the Gruadian chose to do it does not mean that 'mainstream media' have suddenly become converted to their idiot ideas.
There's a good repost to the whole nonsense rlhererl'"
The link you provided doesn't mention the article I linked so how can it be a 'repost to the whole nonsense'?
Now here is a link that discusses the issues addressed in the Guardian article, it's from the Financial Times. However they don't slate the Guardian article for being wrong about money creation, they instead lampoon the author for only just finding out how the system works!
Quote: tb "Congratulations to Ben Dyson, self-professed “money and banking specialist” for finally discovering, err, money. Or, how money works.
In a column in the Guardian on Tuesday, Dyson recounts in grand revelatory style how the solution to the system’s current ails is nothing other than recognition of the fact that “money has been privatised”. Shock, horror!'"
ftalphaville.ft.com/blog/2011/11 ... /#comments | |
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"If the American people knew tonight, exactly how the monetary and banking system worked, there would be a revolution before tomorrow morning."
-Abraham Lincoln:995.gif |
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[i:10za56ci]Hold on to me baby, his bony hands will do you no harm
It said in the cards, we lost our souls to the Nameless One[/i:10za56ci]:d7dc4b20b2c2dd7b76ac6eac29d5604e_6505.jpg |
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| Quote: LeighGionaire "Now here is a link that discusses the issues addressed in the Guardian article, it's from the Financial Times. However they don't slate the Guardian article for being wrong about money creation, they instead lampoon the author for only just finding out how the system works!
Oh dear. You've misunderstood the article you link to above.
Here - a simple explanation of why Dyson's article was 'bollox on stilts' lifted from the comments section...
Quote: LeighGionaire "No. No, no no no no, with cherries on top. This is the worst (mis)explanation of fractional reserve banking I have ever read.
When you borrow money from the bank, that money is not "created" by the bank. The bank has to fund it - either from deposits (the "prudent grandmother's life savings"icon_wink.gif or from borrowing it from someone else (the wholesale funding market).
The "creation of money" that everyone goes on about is quite different, very simple, and not at all sinister. It results from the fact that when a bank takes a deposit and lends it out again, both the depositor and the borrower treat themselves as having the money in question. Of course that's not actually true - the depositor does not have any money, just a debt owed to him or her by the bank - but because bank deposits are treated as equivalent to cash by almost everyone, the illusion is convincing.
Even then the banks cannot "create" an infinite amount of money, because the government does not allow them to lend out ever penny they receive in deposits. They have to keep a set percentage as reserves.
So for example, thrifty grandma Mrs Bloggs saves GBP100,000 with Megabank. The bank has to keep (say) 8% of this as reserves, but can lend out GBP92,000 to Mr Flatbuyer. Now Mr Flatbuyer thinks he has GBP92,000 and Mrs Bloggs thinks she has GBP100,000, so the total amount of money in the economy appears to have gone up by GBP192,000. But of course it hasn't really. You can see that because eventually Mr Flatbuyer has to pay back his GBP92K and Mrs Bloggs withdraws her GBP100K, which leaves you back to where you began (give or take a little interest). Further because the capital ratio is always positive, the total amount of money that can be "created" in this way is limited. For example, instead of buying a house Mr Flatbuyer could deposite his GBP92K back into a bank, which could then lend out 92% of that (GBP84,640), and so one. Which (for an 8% capital ratio) works out at a maximum of GBP4 being "created" for each GBP1 of "real" money.
How you gonna change the world if you don't understand it?'"
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"If the American people knew tonight, exactly how the monetary and banking system worked, there would be a revolution before tomorrow morning."
-Abraham Lincoln:995.gif |
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Kosh - the Financial Times could have ripped the Guardian article to pieces if the overall premise about how banks create money had been wrong. The fact that it doesn't and instead focuses on defending debt speaks volumes to me. Notice how you have to find a random reply in the comments section to try and debunk my reasoning. Three people have attacked my reasoning on this thread so far yet none have explained how the Martin Wolf quote mentioned a few posts up is wrong.
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"If the American people knew tonight, exactly how the monetary and banking system worked, there would be a revolution before tomorrow morning."
-Abraham Lincoln:995.gif |
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Why do banks make so much money?
No direct YouTube links please
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"If the American people knew tonight, exactly how the monetary and banking system worked, there would be a revolution before tomorrow morning."
-Abraham Lincoln:995.gif |
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"Steve Keen talks about the money creation process in the second half, and how the assumption of 99.9% of neoclassical economics that savings and debt cancel each other out in an economy is completely misguided as it is ignorant of the fact that nearly all new money is created as debt by private banks in modern economies."
www.positivemoney.org.uk/2011/12 ... er-report/ |
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"Steve Keen talks about the money creation process in the second half, and how the assumption of 99.9% of neoclassical economics that savings and debt cancel each other out in an economy is completely misguided as it is ignorant of the fact that nearly all new money is created as debt by private banks in modern economies."
www.positivemoney.org.uk/2011/12 ... er-report/ | |
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An important point to remember that the principle of fractional reserve banking (where, say, £10 is lent for every £1 that is deposited) is entirely dependent on people choosing to [isave [/imoney. Given that interest rates have been in a state of flatline for some years now it's hard to see how banks (excluding those based in Asia) can be in a position to lend money. Although there seems no shortage of offers from so-called "debt consolidation" companies to people struggling to pay the bills.
On a personal note, even though I was offered plenty of credit prior to the sub-prime debacle it simply doesn't compare to the mountain of credit card deals I've received since.
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| Quote: Mugwump "On a personal note, even though I was offered plenty of credit prior to the sub-prime debacle it simply doesn't compare to the mountain of credit card deals I've received since.'"
What is a credit card "deal"!? |
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| Quote: Dally "What is a credit card "deal"!?'"
Incentives. A matter of perspective, I suppose. But they seem to be falling over themselves lately to get my business. I guess the plan is instead of throwing credit at everyone and his dog (pre-subprime) they're all now competing to milk those remaining who they still think have a few pennies left under the mattress. |
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When my club didn't exist it was still bigger than yours:d7dc4b20b2c2dd7b76ac6eac29d5604e_8.jpg |
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| Quote: Dally "What is a credit card "deal"!?'"
Burn the top one, then one each clockwise round the table starting on your left.
They've been doing it this way for years now. Credit check is a test of willingness to toss the house keys in. |
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Last edited by Ferocious Aardvark on stardate Jun 26, 3013 11:27 am, edited 48,562,867,458,300,023 times in total:d7dc4b20b2c2dd7b76ac6eac29d5604e_973.gif |
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Capital One are a good example. they currently have this thing on Facebook and elsewhere, click on this and we'll tell you in 60 seconds if your credit card is approved. they bumf then says the interest rate is something like 39% which given that Bank rate is about a millionth of a percent seems like decent business if anyone falls for it.
I have no clue how many they issue, but it must surely be a right shedload, as else why would they spend all the dosh on advertising it?
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| Quote: Ferocious Aardvark "Capital One are a good example. they currently have this thing on Facebook and elsewhere, click on this and we'll tell you in 60 seconds if your credit card is approved. they bumf then says the interest rate is something like 39% which given that Bank rate is about a millionth of a percent seems like decent business if anyone falls for it.
I have no clue how many they issue, but it must surely be a right shedload, as else why would they spend all the dosh on advertising it?'"
Precisely! There seems a strong positive correlation between businesses who offer "deals" and rip off merchants. Mobile 'phone charges spring to mind too. |
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