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AndrewT

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About AndrewT

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  1. No offence intended to anyone but working for an investment bank is not really a good reference for intellectual capacity or integrity. P.S. I bet your Ferrari-man will accept payment in broad money. So shout any amount required. Hopefully he will believe you.
  2. Your response really summarises the depth of your understanding of the financial system. Admittedly it was a pointless exchange. PS. With your £5 claim, talk to Injin: if you can shout around that you got £5 and others are daft to believe you, it will be your broad money £5.
  3. I doubt whether you are able to prove that 2+2=4 within the maths that we accept. But have a go... (If you were, you would have commented more extensively on Pytel's work.) It does not really add much weight to any argument to make comments without justification which are, albeit mildly, insulting (e.g. saying that someone is "confused"). btw. I have not bothered to ask you why you thought Pytel was wrong since it was your job to explain your position in the first instance. (I think it is a part of blog discussion manners to explain one's position and not to dish out bare judgements.) On another note: anyone can submit evidence to parliament. (Indeed it looks good on CV.) However there is no guarantee that it will be accepted by parliament for publication. (There are thousands of "confused" people writing their memoranda. I hope you understand that parliament is not going to print them. But have a go...)
  4. You just do not understand basic maths (going beyond finance). If you lend with loan to deposit ratio above 100% you have a diverging geometric series with a multiplier to an underlying base going to infinity at exponential pace. This is pretty trivial, isn't it? By definition of a pyramid, it is a pyramid (name comes from graphic representation). Pytel did not observe anything more than simply showing that if you perform deposit loan cycles with loan to deposit ratio above 100%, regardless of any other constraints, you end up with a pyramid scheme (having exponentially growing money multiplier). PS. Can you clarify whether how do you relate money multiplier to velocity of circulation? Without it you last sentence is pretty much meaningless.
  5. The problem is that arguments in your original post are not presented in a systematic way making a direct reference to Pytel's arguments. (Your changing of Pytel's example -"how does it work" - into something rather silly in order to dismiss it is rather telling. You basically did not dismiss Pytel's example but some rather ridiculous caricature of it.) Furthermore your argument about LTV ratio as some sort of constraint is flawed. If banks lend with LTD ratio above 100% they can create (as it happened in reality) high assets price inflation. This allows lending with LTD above 100% whilst maintaining healthy, low, LTV. As you cannot change the basics of maths, you can end up with a massive Money Multiplier and low LTV. Incidentally Pytel address it in http://gregpytel.blogspot.com/2009/04/turner-review.html
  6. Indeed, Carl Jung called such perception as yours "projection" (http://psychology.suite101.com/article.cfm/what_is_projection)
  7. Pytel does not use retail deposit definition in his article. It is your assumption. Anyway I think argument around it is irrelevant. A cash for loan advance must come from some kind of deposit (i.e. old money recirculated) or a new money printed by central bank (through open market operations or quantitative easing these days). Here is a shocker: if you perform lending cycles of even RETAIL deposits (as you try to get Pytel on it) to loans with a ratio above 100%, getting this top-up above 100%, as it must come from somewhere, from wholesale funding or WHEREVER, a trivial, below A-level maths tells you that it is a diverging geometric series with exponential growth to infinity and by definition of a pyramid, it is a pyramid scheme. Pytel's argument is as trivial as that and no clever arguments will change the basic fact: diverging geometric series go with exponential pace to infinity. Lending with loan to deposit cycle above 100% in ALL circumstances results in exponentially growing MONEY MULTIPLIER. Read this: http://gregpytel.blogspot.com/2009/09/loan-to-deposit-ratio-and-banks_02.html In Pytel example there is no other bank apart from Banks A and B (Banks A and B constitute a closed system). By induction you can easily extend this example to any number of banks (i.e. a real banking system). Please do not change Pytel's example. You should also read
  8. Well, it is a patronising way to say that you simply did not understand it. Never mind.
  9. With respect you do not appear to have read Pytel's blog with understanding: 1. You wrote: "The article makes clear that LTD ratios are Loans / Retail deposits by reference to the table in the link http://news.bbc.co.uk/today/hi/today/newsid_7648000/7648508.stm This excludes wholesale deposits and bond funding upon which many banks rely on for funds and many credit investors rely on as an asset class. (...) Unlike deposit financing there are no explicit reserve requirements for banks financing themselves through capital markets which reduces limitations on money multiplier expansion. However, it is a woefully inadequate and an absurdly simplistic academic exercise to look at the limiting case of an iterative process of monetary expansion without first considering the constraints on such a process. The overarching constraint on banks is capital and as lending expands leverage ratios (loans/ equity) increase until banks become capital constrained. Money cannot be multiplied to infinity due to the limitations on equity capital and acceptable leverage." In his response to a letter from John Varley (CEO of Barclays) Pytel explained how wholesale funding (or financing through capital markets), ends up as a part of deposit loan cycle: http://gregpytel.blogspot.com/2009/08/liquidity-risk.html 2. Then you wrote: "If we use a broader definition of LTD and class all forms of bank financing (wholesale unsecured etc) as deposits in the LTD ratio, then for a solvent bank it is impossible for the LTD ratio to be >100% since Loans + Equity = Deposits." You would have been correct if Equity was CASH. In response: read Pytel's: http://gregpytel.blogspot.com/2009/04/exampleexercise-how-does-it-work.html
  10. It is all correct but we have to more methodical. Indeed this crisis is a result of criminal activities. It is an ultimate Ponzi scam. British Parliament's Treasury Committee, published a very good evidence. Just read this. Maybe will take an effort but it is worth it. http://gregpytel.blogspot.com/2009/04/larg...in-history.html In fact check up the blog. There is a number of very interesting articles there. (Some them very technical and professional.)
  11. It’s all good to joke and be sarcastic. But seriously, maybe we will not be switching off the lights on Britain, but it will cost us absolute fortune and get generations to get out of this (liquidity) hole. READ this document published by the Treasury Committee. It is serious: analytical and detailed. But it is just scary. http://gregpytel.blogspot.com/2009/04/larg...in-history.html You should try also other excellent articles on this blog, like: http://gregpytel.blogspot.com/2009/08/why-...ot-lending.html
  12. First things first. First we should catch and prosecute criminal who caused this financial crisis. It is not an emotive call, but a result of dry analysis published by the House of Commons, Treasury Committe. READ this. It is unbelivable, and not for the faint-hearted. http://gregpytel.blogspot.com/2009/04/larg...in-history.html
  13. For all sad folk who struggle to get by, read below "how to make money": http://gregpytel.blogspot.com/2009/08/how-to-make-money.html it is real, but it is outrageous. And if you wish to check up why banks are not lending (and still make loads of money), this is the best article: http://gregpytel.blogspot.com/2009/08/why-...ot-lending.html
  14. ... but if you want to learn how to make quick money in these difficult times, read this: "How to make money?" http://gregpytel.blogspot.com/2009/08/how-to-make-money.html Good, innit?
  15. Inflation/deflation? It's a pyramid collapse, stupid. Like in Albania in 1996 - 1997. :angry: For those who do not get it, I suggest reading an analysis accepted as evidence and published by the House of Commons Treasury Committee. I just wonder why this is not discussed more by politicians and in the media. http://gregpytel.blogspot.com/2009/04/larg...in-history.html And generally try to follow this blog. A bit heavy duty stuff but really tells what's going on.
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