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House Price Crash Forum


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Everything posted by babesagainstmachines

  1. Funny that when you spend money, it doesn't mean the same thing as when anything else is spent. Money just transfers between people/businesses/government. Unless you are paying off a debt to a money creating institution, at which time it really is spent.
  2. I don't see many people being confused by this. What I see people being confused by is that when they "borrow" from a bank, they naturally assume that they are borrowing some else's money, rather than having new money created for their use. The bank need only borrow enough "real" money to satisfy it's reserve requirements. Most people have no idea about M0, M4 etc, they just know that if they go to the ATM, the digits go down and the wallet swells - to the man on the street there is no difference. Until a bank run... The man in the street also has no idea that the fate of the economy rests so heavily on wether a bank feels like creating some credit for you or not.
  3. STR in September 07. Reasonably happy with decision. Have a nice savings pot. My rent is dearer than my mortgage was, but I moved from what had become "Little Krakow" to a Chiquesville. IO mortgage in the flat I rent, at recent "market valuation" for similar flats would be 30% more than current rental. Why am I only reasonably happy? Worried about runaway inflation and interest rates not keeping up. My landlord has put my flat on the market last week. Haven't managed to find out the asking price yet as it's not in the EA window and I can't be bothered to speak to the landlord. Considering spending 10k on a year out in Thailand.
  4. I never once said that banks can print money. However, they can create M4 money, which everybody, including the government, will accept as payment, except maybe a few old fashioned pubs and market stall holders. You can turn this M4 money into "real" money at the ATM. Ergo, banks create money. Which is why they are listed as money creators here http://www.bankofengland.co.uk/publication...etin/qb0703.pdf (page 406).
  5. The whole point is that banks can and do magically create "money" out of nothing. That's why they are listed as money creators by the BoE. All they need someone who wants to "borrow" the money who willl sign a credit agreement, and voila, additional deposits are created. I am not saying that all banks can create money, or that they can do it "willy nilly". There are strict regulations in place governing this. I do however believe this is a decption to the common man. It ought to made clear on credit application forms that the money is not being loaned to them, it is being created for their use, and the interest paid is to cover the banks service charges for their money creation/destruction process.
  6. This is fascinating... page 406 contains the definitions of money creators used in Uk, Europe, US and Japan. http://www.bankofengland.co.uk/publication...etin/qb0703.pdf Is anyone still in denial that banks create money?
  7. Hmm, it must be something other than just cash, or the supply of legal tender would be constantly shrinking due to loss/damage/hoarding etc. It's all a bit suspicious if you ask me
  8. So what do they use to pay into the account with the BoE?
  9. My ex. Every bloody day. Can't she see that I'm a sh1t.
  10. The bank can't create new bank notes. But they can create an additional deposit, thus increasing the supply of "broad money". Which begs the question, when the bank buys it's legal tender from the BoE (or is it the Treasury?) what do they pay for it with?
  11. That's pretty much how I figured it, but without the distinction between M0 and M4. So, I'm aware that Banks have to buy banknotes from the BoE. What do they pay for them with?
  12. Yes, the bank "lends" and the borrower borrows. But the amount "lent" is created as an additional deposit. Read the link.
  13. If this were the case, wouldn't the money supply would be stable? We'd all have the same amount of money we had yesterday, but it would just move around from person to person. This is quite clearly not the case. The money suppply grows and grows. If you just read the bit on the link from the BoE it explains it. M4 lending is bank deposits created by issuing credit.
  14. Probably just getting their pound of flesh before the BTL declare themselves bankrupt
  15. This is what I fail to grasp. This fits in with the model of "zero-sum" money, ie NR borrowed Peter to lend to Paul. Are their different sorts of banks then? Can only some of them create money?
  16. It is, however, good enough for the BoE to measure as part of the money supply, and the government to give 90% guarantees on. So it's practically legal tender. Northern Rock customer's didn't start rolling up asking for their cash until something else was wrong though. And from what I can see, they weren't especially overstretched in their deposits to loans ratio. So why did they need to finance their loans using dodgy securitization?
  17. Just read the BoE document. It's quite clear in what is happening. Except for, it doesn't explain Northern Rock.... anyone?? Please try not to send the thread off into a debate on the basic point. It's in black and white. I'm interested in the complexities, in particulary with a view to Northern Rock, who appeared to have adequate deposits for their lending yet still got into trouble.
  18. I refer you to the Bank of England document posted above... in particular the sentence which reads "When banks make loans they create additional deposits for those that have borrowed the money".
  19. I've also had this recommended from other sources, so I will check it out. Thanks
  20. Seen all those as well... thanks for taking the time to post though It still doesn't explain Northern Rock though. If anyone can shed more light on that, I'll be most interested.
  21. Thanks beefheart, I've read all those, seen the videos etc. in the past. Like I said, I was sceptical until I dug out that report from the BoE, which states in black and white that banks create loans as new deposits. What it doesn't explain to me is how Northern Rock got into trouble with it's finances, which obviously started to happen BEFORE savers started withdrawing their money en masse, thus causing a crisis. Everything I've read about fractional reserve systems suggests to me that Northen Rock would not have had any problems with it's lending ratios at the levels they were at. Hence I'm keen to see a balanced viewpoint as I think all these sources must be missing some vital piece of the jigsaw.
  22. A little bit off topic, but I have read lots of threads on this board in the last few months referring to how banks create money. I personally have been a bit sceptical about what I have read. If banks can just create money, why are interest charges so high? Why does Northern Rock get in trouble, surely if it has "borrowers" then it will have ample cash coming in as interest payments? Anyway, this is the first time I've actually found a fully credible reference to private banks issuance of money (maybe I haven't looked hard enough). From the Bank Of England. http://www.bankofengland.co.uk/publication...in/qb070302.pdf I'm sure not everything I've read about fractional reserve banking is true, but I'm alot more open to believing it and all the conpiracy theries going with it now. If anyone can point me to some really good book or online resource which explains the modern day money creation system in a bit more details, then I'd love to know more.
  23. It doesn't matter a jot where it's value comes from. If you can't afford the mortgage, you can't have it. Prices will fall by enough for people to afford a home. 30-40%. Probably
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