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What Is The Point Of Lending To Businesses And Consumers

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Govt lent to banks last year, now they need more.

The govt says they need to ensure money gets into businesses to prevent job losses. Que?

Businesses keep going, they keep workers on....for how long? Those workers will have to go when the consumer stops spending. Why has the consumer stopped spending? Either because their job is in question or they're out of work, or they can't afford the huge inflation in energy prices and food prices and are cutting back their disposable/discretionary spend.

So the businesses the govt lends to fold anyway - just with a bit more a delay.

So the job losses come anyway - ditto.

OR the govt hopes to get everybody into yet more debt and that is supposed to keep the whole thing going, but then that comes to a grinding halt as the money from thin air is exposed for what it is. So it's a finite stay of execution for the economy, it just buys a little time.

What is the solution? Stop spending taxpayers' money on nonsense rescues that just buy time. The cycle can't be permanently halted. The slump has to die and become a seed again, then grow from there, hopefully minus the dodgy credit next time.

There was surely a time when we made our purchases based on saved money, not debt forever. The govts don't seem to want those days of sensible steady growth to return, they just want debt slavery.

Do we owe a trillion quid as a nation? Come on Brown, are you stark raving mad??!

BTW As posted by me Friday night, the toxic bank idea has been shelved.

Edited by The Last Bear

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I agree the bailouts need to stop, the problem is intrinsic to the system of money we currently use, it is not an aberation that can be fixed with a bit of tweaking. The banks need to collapse, the economic system probably needs to collapse if there is to be any hope for a long term solution to the problems such as the need for permagrowth based on limited real resources, there is a real limit to how long fantasy can avoid contact with reality and as bad as it will be now it will only be worse later should we try and dodge the bullet.

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I thyink the hopeful Keynsian idea is that they prevent the GOOD elements of the economy from being destroyed by the fallout.

Of course it's a dodgy area where you draw the line. Peter Schiff says let everything fail and capitalism will regrow.

Roger Bootle, is right wing but not as much so as Schiff, describes Keynsianism here and why the bailouts are occuring, it's interesting:

http://www.telegraph.co.uk/finance/comment...-solutions.html

I don't see how this points at forcing banks to lend tho - I think the govt are in the anger/denial stage tbh...

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the economic system probably needs to collapse if there is to be any hope for a long term solution to the problems such as the need for permagrowth based on limited real resources,

balls. the financial system itself is an example of leverage and intellectual capital, directly contravening your biased greeny assumptions.

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Thanks for the posts.

Si1, I agree with Schiff if that's what he says.

Just heard Bankers' Assoc on Sky News.

She said something like (bear in mind I was only half listening) ...

Some banks have kept hold of some of the 37 billion the govt gave them last year as they needed it to comply with new capital requirements (ie I assume that means levels of solvency or money of their 'own')

She said that their assets were falling simply due to house prices falling and other assets held in a declining/recessionary economy, she wasn't at all happy for them to be called 'toxic', labelling that as 'aggressive'

(note there's 200 UK banks, most didn't get any bailout money)

The Sky News business journo said that City people claim lending levels are in fact now normal - and that they in fact weren't normal during the 7 years of th easy credit binge that led to this bust. The unspoken implication being that banks are lending responsibly again - but that the election victory hungry PM/government wants them to reinflate the bubble and sub-prime lend again to take things back to the artificial utopia of the past 7 years.

Edited by The Last Bear

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balls. the financial system itself is an example of leverage and intellectual capital, directly contravening your biased greeny assumptions.

If you really think you can have the perpetual growth the current system demands with only limited resources then I doubt I can convince you otherwise but ad-hom is a pretty weak arguement. You might leverage intellectual capital for some real increase in productivity but ultimately this is in fact bounded by reality whether you like it or not.

Edited by HumanAction

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If you really think you can have the perpetual growth the current system demands with only limited resources then I doubt I can convince you otherwise but ad-hom is a pretty weak arguement. You might leverage intellectual capital for some real increase in productivity but ultimately this is in fact bounded by reality whether you like it or not.

I'd be interested to know how it is bounded by reality. I'm thinking TGV vs Dakota - go on, which uses less resources per capita??

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John McFall or whatever he's called, something to do with the Treasury and an MP? Anyway - he says that the govt has to get lending to businesses etc assured once it does this new bailout/stake in the banks, "else the country could face 1930s depression".

John matey, it's probably going to anyway, exacerbated by owing so much money.

The Bankers' Association seem to realise this whole ecomomy has been built on consumer debt, what makes you think business debt and then more consumer debt is the answer, John boy?

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I'd be interested to know how it is bounded by reality. I'm thinking TGV vs Dakota - go on, which uses less resources per capita??

I know TGV i train technology, what is Dakota and why are you comparing them? In general though it seems an irrelevence unless you can perpetually improve the technology.

Edited by HumanAction

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Don't laugh at this it is just a thought.

Could we have a mini boom and a cataclysmic crash,.

If the banks are forced to lend at such low |IR's and houses are seen as bargains, could a feeding frenzy begin.

I do not feel the majority of people and VI's see recent events as anything but a temporary blip on the road to wealth through HPI

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Umm ok, now I'm wondering how transport technology is capable of perpetual improvement? Improvements can undoubtedly be made but perpetually? Unless someone is going to come up with to a perpetual motion machine there is a hard limit. I have my hunch that the laws of thermodynamics will in fact hold up.

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the government needs to spend money on growing the economy not slowing the decline. the decline is inevitable.

once the recession has flattened out, and the time comes when we are able to re-grow, the government may have already spent our money when they need to invest it most.

as a result with no money kept back, the economy may just stagnate at the bottom for many years as there will be no money to boost it up again.

take an example last week when the government announced a £200 million scheme to keep people facing repossession, in their homes.

why? whats the point of this? technically speaking all that will happen is that they will go from having a mortgage to renting - not the worst thing in the world.

in fact in context of the economy it has pretty much no effect, its just a technicality of having to pay rent instead of a mortgage.

they should hold back this £200million and all the other billions of pounds so that they have the firepower to spend it in 12-18 months time to grow jobs when they can put it to good use and invest the money for growth.

Edited by mfp123

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Umm ok, now I'm wondering how transport technology is capable of perpetual improvement? Improvements can undoubtedly be made but perpetually? Unless someone is going to come up with to a perpetual motion machine there is a hard limit. I have my hunch that the laws of thermodynamics will in fact hold up.

wishy washy statement that fails to answer the question.

answer is in fact that on a per person basis the TGV uses less energy and gets you there faster cheaper and safer, given the infrastructure

and none of the laws of thermodynamics needed to be broken

but on one thing - I believe that, yes, we are able to perpetually improve technology year on year for ever. and economics and social policy and trade. I respect you if you disagree on this one point, and see little way of resolving it! bestest.

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Because money isn't backed by anything tangible and is created out of thin air when the home or business owner with their kamikaze debts goes to the wall the bankesr hoover up real assets. It makes perfect sense, hence the anyone-with-pulse lending, which Crash Gordon is trying to get started again with Northern Crock.

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They have paper and ink.

We have asssets, labour and resources.

They can't get the work done, assets and resources they want if they just get their paper back. The default rate is the profit rate of the banking system.

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wishy washy statement that fails to answer the question.

answer is in fact that on a per person basis the TGV uses less energy and gets you there faster cheaper and safer, given the infrastructure

and none of the laws of thermodynamics needed to be broken

There is nothing wishy washy about it. You are claiming it can improve perpetually not that improvements have occurred in the past and may even be possible in the future. The system needs this improvement perpetually and you arent close to demonstrating such a thing.

but on one thing - I believe that, yes, we are able to perpetually improve technology year on year for ever. and economics and social policy and trade. I respect you if you disagree on this one point, and see little way of resolving it! bestest.

We do indeed disagree here. I see no reason to believe improvement can be perpetual, indeed given finite fossil fuel supplies it seems virtually certain to me that they cannot and will not be.

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They have paper and ink.

We have asssets, labour and resources.

They can't get the work done, assets and resources they want if they just get their paper back. The default rate is the profit rate of the banking system.

Surely they profit whether there is a default or not, they either collect on the asset or they buy an asset later with the repayments and interest. A default doesnt hurt them but they do not actually require it to get something for practically nothing.

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OR the govt hopes to get everybody into yet more debt and that is supposed to keep the whole thing going, but then that comes to a grinding halt as the money from thin air is exposed for what it is. So it's a finite stay of execution for the economy, it just buys a little time.

i wouldnt mind the govt helping out a little, but the sums involved are unheard of.

these billions they are offering the banks amount to almost 100 years of NHS funding, or defence.

its a massive disaster.

only hyperinflation can follow this. its madness.

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Surely they profit whether there is a default or not, they either collect on the asset or they buy an asset later with the repayments and interest. A default doesnt hurt them but they do not actually require it to get something for practically nothing.

When you own the printing press paper money is always completely worthless.

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When you own the printing press paper money is always completely worthless.

If that were true they would not bother to print. If someone will give you something with intrinsic value in return for paper money then it isnt worthless even if you know where it came from.

Edited by HumanAction

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If that were true they would not bother to print. If someone will give you something with intrinsic value in return for paper money then it isnt worthless even if you know where it came from.

The value is in the game, not the paper.

It's all set up to be as real as can be, pay no attention to the man behind the curtain.

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The value is in the game, not the paper.

It's all set up to be as real as can be, pay no attention to the man behind the curtain.

I don't actually disagree but there is no game without the paper ( or electronic ) money to get people to place their trust in. So even if the value is in the game the money has value in maintaining the illusion.

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I don't actually disagree but there is no game without the paper ( or electronic ) money to get people to place their trust in. So even if the value is in the game the money has value in maintaining the illusion.

The game is to make sure that the general public value it because it has no real value.

Imagine for a moment you are the owner of the printing press - how much money do you want?

You don't want any, obviously. You want to turn the paper into real word goods.

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The game is to make sure that the general public value it because it has no real value.

Imagine for a moment you are the owner of the printing press - how much money do you want?

You don't want any, obviously. You want to turn the paper into real word goods.

Injin, I asked this in a post yesterday, maybe you missed it (or chose not to answer? :) )

You don't like printed currency and you don't like gold.

Tell me, how can we convert work done (or wealth) into something that is easily carried around?

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  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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