Extradry Martini Posted February 5, 2009 Share Posted February 5, 2009 the fall in credit is due to the fall in demand for credit.they could give it away, and probably will, but if you dont need or want it, there will be few takers. Huh? The problem is the banks not lending - it's not about people and businesses not needing credit.... We must be talking at cross-purposes for you to say something like that, I'm sure, but I'm baffled by it... Quote Link to comment Share on other sites More sharing options...
russ Posted February 5, 2009 Share Posted February 5, 2009 Who is not going to turn down free money ? How are they going to get it into the system ? Give it to the banks to lend it back to you plus interest ( thought this had already happened with the bail outs)? Give every taxpayer a cheque for lets say £5k ? ( this option would then have a limit on how much to print, no ?) What would you do with the money ? pay off a debt ( CC, Mortgage, unsecured loans)? buy an asset ( gold, new car)? Quote Link to comment Share on other sites More sharing options...
Bloo Loo Posted February 5, 2009 Share Posted February 5, 2009 Huh? The problem is the banks not lending - it's not about people and businesses not needing credit....We must be talking at cross-purposes for you to say something like that, I'm sure, but I'm baffled by it... Banks are lending. Billions. last time I looked, debt was UP. Its decent profitable, likely to pay it back customers that are lacking for the banks. Quote Link to comment Share on other sites More sharing options...
Bloo Loo Posted February 5, 2009 Share Posted February 5, 2009 Who is not going to turn down free money ?How are they going to get it into the system ? Give it to the banks to lend it back to you plus interest ( thought this had already happened with the bail outs)? Give every taxpayer a cheque for lets say £5k ? ( this option would then have a limit on how much to print, no ?) What would you do with the money ? pay off a debt ( CC, Mortgage, unsecured loans)? buy an asset ( gold, new car)? its not free money...its still, regardless of the interest rate, a chunk out of every month of salary you take for whatever the term is. and If you are already borrowed out, then even interest free is too dear. This is the reason they are dropping rates.... its a shortage of takers...if there was a huge demand, then rates would rise. Quote Link to comment Share on other sites More sharing options...
Flatdog Posted February 5, 2009 Share Posted February 5, 2009 its not free money...its still, regardless of the interest rate, a chunk out of every month of salary you take for whatever the term is.and If you are already borrowed out, then even interest free is too dear. This is the reason they are dropping rates.... its a shortage of takers...if there was a huge demand, then rates would rise. Such brilliantly clear thinking again BL...how do you do it? Quote Link to comment Share on other sites More sharing options...
russ Posted February 5, 2009 Share Posted February 5, 2009 (edited) Without having to read the whole post again, what is the the point of printing money then, if somebody is only going to have to pay it back ? That is borrowing. I was thinking that when the presses were started up we would be somehow given money to use as we wished? Thats what i meant with buy an asset, so that when inflation does come, you still have your asset and not money which is worth less. The cheap credit has gone i know, people have over spent, give them money to pay off debts, will this repair balance sheets of banks? or give them money to buy things ie luxury goods, this would kickstart the economy albeit at a diluted pound value? Edited February 5, 2009 by russ Quote Link to comment Share on other sites More sharing options...
Extradry Martini Posted February 5, 2009 Share Posted February 5, 2009 Who is not going to turn down free money ?How are they going to get it into the system ? Give it to the banks to lend it back to you plus interest ( thought this had already happened with the bail outs)? Give every taxpayer a cheque for lets say £5k ? ( this option would then have a limit on how much to print, no ?) What would you do with the money ? pay off a debt ( CC, Mortgage, unsecured loans)? buy an asset ( gold, new car)? The way it works is that the government prints money to buy assets such as government bonds, but it could be anything, in the market place. Quote Link to comment Share on other sites More sharing options...
Bloo Loo Posted February 5, 2009 Share Posted February 5, 2009 (edited) Without having to read the whole post again, what is the the point of printing money then, if somebody is only going to have to pay it back ? That is borrowing.I was thinking that when the presses were started up we would be somehow given money to use as we wished? Thats what i meant with buy an asset, so that when inflation does come, you still have your asset and not money which is worth less. the logic to printing money is to counter a perceived shortage of the stuff. At this time banks are awash with money, but they are also awash with impaired financial assets and crippled balance sheets. so, the fresh money swapped for impaired assets by the BoE in the last 9 months mainly stays in the banks. they are finding it hard to find suitable candidate to lend to, as companies are going bust and individuals want to borrow much more than is sensible. This means the powers that be, and they keep harping on about it, see a lack of lending. what they mean is there appears to be a shortage of money, and this is, they think the reason for the recession. so the solution is simple, to break a shortage, issue more. They will find after having done it, that yes, its had an effect, but not much....they jave learned now from their mistakes...clearly, they didnt print ENOUGH... so they will do it again. trouble with printing, money supply and inflation is that there is NEVER enough. the end result, if they dont stop doing it soon, is hyperinflation and starvation...literally. Edited February 5, 2009 by Bloo Loo Quote Link to comment Share on other sites More sharing options...
Extradry Martini Posted February 5, 2009 Share Posted February 5, 2009 Banks are lending. Billions. last time I looked, debt was UP.Its decent profitable, likely to pay it back customers that are lacking for the banks. Banks are lending less, not more. As we discussed earlier, the M4 measure of money supply while rising is distorted massively by something that shouldn't be in it. Once you take that out, you see money supply falling quite sharply. Also, have you not seen that the number of mortgages on offer is a fraction of what it was and that credit card lending has fallen dramatically? It has been all over the news for about 15 months or so. Quote Link to comment Share on other sites More sharing options...
russ Posted February 5, 2009 Share Posted February 5, 2009 I totally get hyper-inflation, and not very keen on the idea either, we all know it ends in disaster. On channel 4 news tonight, printing money was mentioned as a last option, but if this money is not distributed at base level then its not going to be of any use. Quote Link to comment Share on other sites More sharing options...
uncle rogi Posted February 5, 2009 Share Posted February 5, 2009 (edited) then unconventional measures such as QE are needed. ok fine, QE is being done and the gilts are being sold to fund it etc, however what happens when the gilts do not sell ? do the assets being bought with the proceeds of the gilt sales not get bought in which case are institutions vunerable to default/collapse etc then does the force majeur aspect of goverment kick in and result in getting the BOE to print money to buy the gilts on the assumption that the little bit of true inflation just created will be justified due to the systemic risks of not keeping the asset buying program in operation ? and so forth you follow me here...the systemic risk in one direction is deflationary spiral domino effect etc but the other is hyperinfaltion/a collpase in confidence of sterling....is it not.. this is the path we are concerned with as some of us belive that this is the plan to default via inflation not deflation because either way the system will collapse see the mises quote in injins signature for details.....only the inflation option buys more time and is seen to be "doing something" to the general uninformed masses who dont know QE from QI (or even what QI is lol) the thing is here at this point the historical similarities are getting a little unsettling do you not think ? On channel 4 news tonight, printing money was mentioned as a last option, but if this money is not distributed at base level then its not going to be of any use. yeah it will be of use in the sense that the printing of blatent money to prop up boom asset values and failed, only viable during the boom banks etc will destroy the exchange value of sterling (like iceland) and result in massive import driven inflation while assets bought on admittedly restricted credit drop like stones...(like iceland) Edited February 5, 2009 by uncle rogi Quote Link to comment Share on other sites More sharing options...
russ Posted February 5, 2009 Share Posted February 5, 2009 So basically then, QE or the lowering of base rates has nothing to do with what you, me or joe public has in the bank or in my pocket to spend or save as i see fit, its all about UKPLC? Quote Link to comment Share on other sites More sharing options...
Injin Posted February 5, 2009 Share Posted February 5, 2009 One more thing. Those of you who see a lot of inflation coming - some of you describe yourselves as real estate bears. Why? Because real estate requirea a functioning state (which I think is going to collpase) and if it doesn't collapse is an immobile, easilytaxable liability. Besides, I don't pay for shelter anyway. it's the principle of the thing. Quote Link to comment Share on other sites More sharing options...
InternationalRockSuperstar Posted February 5, 2009 Share Posted February 5, 2009 Banks are lending less, not more. As we discussed earlier, the M4 measure of money supply while rising is distorted massively by something that shouldn't be in it. Once you take that out, you see money supply falling quite sharply. no it's not. all credit the related losses of banks have been replenished with gov't bailouts so that not a single large UK bank has failed - even though they have lost 100s of billions between them. essentially the gov't is replacing the non-M1 component of M4 with M1. this is why M4 is not falling. the gov't isn't allowing it to fall. if there really was a big drop in M4 you'd sure know about it, because most of the familiar high st banks would disappear overnight. Quote Link to comment Share on other sites More sharing options...
Winston Wolf Posted February 5, 2009 Share Posted February 5, 2009 Someone please explain to me why they just didnt say "feck it" and let the banks fail? Quote Link to comment Share on other sites More sharing options...
Bloo Loo Posted February 5, 2009 Share Posted February 5, 2009 (edited) Banks are lending less, not more. As we discussed earlier, the M4 measure of money supply while rising is distorted massively by something that shouldn't be in it. Once you take that out, you see money supply falling quite sharply. Also, have you not seen that the number of mortgages on offer is a fraction of what it was and that credit card lending has fallen dramatically? It has been all over the news for about 15 months or so. maybe I am confusing private borrowing with total borrowing, or maybe its the UK where private borrowing is still on the rise and you are speaking globally. I dont seem to have trouble getting credit. bought a sofa on 0% over 10 months, business offered 10K by Barclays business banking last week. i dont need the credit for the business so I said no. Im sure that overall lending to consumers was still rising. And and if I am mistaken then Good, banks should be lending less....a lot less. Im not sure also that mortgage lending is any less, just because there are fewer "Products". If the removal of the bulk of the "products" is a reflection of tighter lending criteria, due to risk, then that would support my reasoning that there is a shortage of potential customers, hence these need to be enticed with low rates, while non qualifiers will be left to save and repair their ratings. Edited February 5, 2009 by Bloo Loo Quote Link to comment Share on other sites More sharing options...
InternationalRockSuperstar Posted February 5, 2009 Share Posted February 5, 2009 Someone please explain to me why they just didnt say "feck it" and let the banks fail? after he leaves office, Gordon Brown hopes he'll get a $1m a year advisory role at JP Morgan or similar - just like Blair got. Quote Link to comment Share on other sites More sharing options...
Winston Wolf Posted February 5, 2009 Share Posted February 5, 2009 after he leaves office, Gordon Brown hopes he'll get a $1m a year advisory role at JP Morgan or similar - just like Blair got. Ok, but what arguement would he put up as to why it was right to do it? Apart from saying it is the right thing to do. Quote Link to comment Share on other sites More sharing options...
uncle rogi Posted February 5, 2009 Share Posted February 5, 2009 So basically then, QE or the lowering of base rates has nothing to do with what you, me or joe public has in the bank or in my pocket to spend or save as i see fit, its all about UKPLC? basically yes, althought he savings rate for uk people is important and the general health of the economy etc.. Someone please explain to me why they just didnt say "feck it" and let the banks fail? deflationary death spiral and domino risk to entire banking system (worldwide) Quote Link to comment Share on other sites More sharing options...
Winston Wolf Posted February 5, 2009 Share Posted February 5, 2009 I just cant see why the government didnt pay out the savers and let the bank go bust, leaving the shareholders with nothing and the creditors who loaned them money with nothing either, as is the risk with owning shares or lending money. I dont want to believe the PM of this country is screwing us, it looks that way to me but surely... Quote Link to comment Share on other sites More sharing options...
Injin Posted February 5, 2009 Share Posted February 5, 2009 Ok, but what arguement would he put up as to why it was right to do it? Apart from saying it is the right thing to do. Oh could be anything. Blair killed thousands o fpeople using a spurious moral compairosn to hitler and lies about WMD. Gordon can say it's all for the savers and people will cheer him to the rafters. mind you, he could say it's for the fairy that lives in his tablelamp, it doesn't matter, the bankers run the country and will get what they want until the state collapses. Quote Link to comment Share on other sites More sharing options...
Injin Posted February 5, 2009 Share Posted February 5, 2009 I just cant see why the government didnt pay out the savers and let the bank go bust, leaving the shareholders with nothing and the creditors who loaned them money with nothing either, as is the risk with owning shares or lending money.I dont want to believe the PM of this country is screwing us, it looks that way to me but surely... Why do you think he wants to be PM? The state only exists to steal and bully. it's all it does. Why would the head of the state not be a thieiving bully? Quote Link to comment Share on other sites More sharing options...
Winston Wolf Posted February 5, 2009 Share Posted February 5, 2009 Why do you think he wants to be PM?The state only exists to steal and bully. it's all it does. Why would the head of the state not be a thieiving bully? Thanks, It is what I thought then. I cant help thinking he hasnt got long but then it wouldnt matter as another one would be wheeled out aka Cameron, why dont people see it! Quote Link to comment Share on other sites More sharing options...
the_austrian Posted February 5, 2009 Share Posted February 5, 2009 Why do you think he wants to be PM?The state only exists to steal and bully. it's all it does. Why would the head of the state not be a thieiving bully? Yes. Quote Link to comment Share on other sites More sharing options...
Injin Posted February 5, 2009 Share Posted February 5, 2009 (edited) Thanks, It is what I thought then. I cant help thinking he hasnt got long but then it wouldnt matter as another one would be wheeled out aka Cameron, why dont people see it! Because we have evolved to not see it. It's meant death for generations to call leaders on their obvious shit so most of us have an in built reticence to do it. there are also psychological issues to do with peoples relationships with their family - most people equate the state with their parents because that's the authority they are used to. Edited February 5, 2009 by Injin Quote Link to comment Share on other sites More sharing options...
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