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The Trillions Of £ And $ Lent Into Existence Is Still Out There

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Guest Daddy Bear
Why can no-one state the truth that the money, lent into existence via mortgages (and a multitude of other loans), is still out there somewhere in the banking system.

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Depends on whether money creation is circular. If it is then it can go into reverse and disappear into a big blackhole.

Are losses making the supposed imaginary money disappear?

People are paying off their mortgages. Debt is being written off as losses. Little new lending.

I'd say the money supply is contracting.

The newly created money is being used to pay down debt, at which point it disappears from the system.

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Under normal circumstances the money would be inflationary, but in the current instance it is merely giving value to illiquid near valueless market assets. The fact that so many firms are complaining they aren't seeing any money backs up this point. It really is helping to avoid financial catastrophy. I agree at some point, if not turned off soon enough or interest rates raised, it could be highly inflationary.

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People are paying off their mortgages. Debt is being written off as losses. Little new lending.

I'd say the money supply is contracting.

The newly created money is being used to pay down debt, at which point it disappears from the system.

Nope.

No clue where you get this idea from.

I borrow £10 from Dave and spend it in your shop.

You put it in the bank.

I pay the £10 back.

You are now fully financed, rather than have an elaborate system of ious between you and your cash.

All paying down debt does is increase the bankers liabilities and decreease their assets. Doesn't change the money supply at all.

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Nope.

No clue where you get this idea from.

I borrow £10 from Dave and spend it in your shop.

You put it in the bank.

I pay the £10 back.

You are now fully financed, rather than have an elaborate system of ious between you and your cash.

All paying down debt does is increase the bankers liabilities and decreease their assets. Doesn't change the money supply at all.

How did you pay it back? From your wages? From someone else in the system? Who is Dave? Whaaaat?

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Guest Skinty

The inflation deflation debate bores me terribly so.

Prepare a man and have him brought to my quarters. I am off to bathe in cows milk.

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Guest DissipatedYouthIsValuable
Nope.

No clue where you get this idea from.

I borrow £10 from Dave and spend it in your shop.

You put it in the bank.

I pay the £10 back.

You are now fully financed, rather than have an elaborate system of ious between you and your cash.

All paying down debt does is increase the bankers liabilities and decreease their assets. Doesn't change the money supply at all.

On the level of ordinary humans, paying down debt does affect their money supply.

As does taking on massive amounts of debt.

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The inflation deflation debate bores me terribly so.

Prepare a man and have him brought to my quarters. I am off to bathe in cows milk.

be right there, just shaving me chest hair off.

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bank credit is the source of the credit crunch.

not money, which appears to be being hoarded, by banks, who issued too many invoices to borrowers, many of whom cant pay them.

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For those in a rush:

Excessive Lending -> Rediculous Asset Prices -> Liar Loans -> No Such Thing as Free Lunch -> Credit Crunch -> Less Lending -> Same ol' paying back -> A bit of defaulting -> Net debt being repaid -> Fewer Bank Deposits -> Less money in system -> Deflation -> Goverment shits itself -> Lets print money -> Inflation -> High Interest Rates -> Lets buy some gold -> Quick spend that worthless cash -> Hyper Inflation -> Lets buy a bombproof shelter

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Why can no-one state the truth that the money, lent into existence via mortgages (and a multitude of other loans), is still out there somewhere in the banking system.

Because it's not.

You are seeing money where only liabilities exist.

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dady bear come on you know its deflation for a good while yet!!

you bought your house too soon but you got a lot off, time to enjoy it!!

edit-typo

Edited by getdoon_weebobby

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Bank lends £100,000 to person A and person A does not repay.

Bank lends £250,000 to person B and person B does not repay. Bank sells asset for £150,000 = loss of £100,000

Bank invests £500,000 and loses the lot.

Bank down £750,000

Money lent into existence plugs the £750,000 gap.

When balance sheets are back to safe levels bank repays £750,000

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Nope.

No clue where you get this idea from.

I borrow £10 from Dave and spend it in your shop.

You put it in the bank.

I pay the £10 back.

You are now fully financed, rather than have an elaborate system of ious between you and your cash.

All paying down debt does is increase the bankers liabilities and decreease their assets. Doesn't change the money supply at all.

So Dave had £10. So did someone else. Total: £20.

You borrow £10 from Dave. Now you and Dave both think you have £10. So does someone else. Total: £30.

Now I have £10. You got £10 from someone else and gave it to Dave, who has £10. Total: £20.

Where is the extra money?

EDIT: Injin, why are you posting this? You don't even believe it. What happened to one teddybear promised to 10 people is still one teddy bear?

Edited by Timm

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So Dave had £10. So did someone else. Total: £20.

No - total £10, and the recording of where it was.

You borrow £10 from Dave. Now you and Dave both think you have £10. So does someone else. Total: £30.

No, total £10, and the recording of where it was and where it should go to next.

Now I have £10. You got £10 from someone else and gave it to Dave, who has £10. Total: £20.

Where is the extra money?

Never there.

Just an excuse to p[rint for the bankers to pay the people THEY owe. If I owe the bank £10 and don't pay, the bank STILL owes whoever I spent the money with originally.

Banking = securitisation = banking.

Edited by Injin

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So Dave had £10. So did someone else. Total: £20.

You borrow £10 from Dave. Now you and Dave both think you have £10. So does someone else. Total: £30.

Now I have £10. You got £10 from someone else and gave it to Dave, who has £10. Total: £20.

Where is the extra money?

EDIT: Injin, why are you posting this? You don't even believe it. What happened to one teddybear promised to 10 people is still one teddy bear?

The liars are getting the teddy bear manufacturer to flood the world with teddy bears so they don't get found out.

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No - total £10, and the recording of where it was.

No, total £10, and the recording of where it was and where it should go to next.

Never there.

Just an excuse to p[rint for the bankers to pay the people THEY owe. If I owe the bank £10 and don't pay, the bank STILL owes whoever I spent the money with originally.

Banking = securitisation = banking.

As we seem to agree on the answer to Daddybear's question (bolded), shall we ignore the fact we disagree on the working?

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The liars are getting the teddy bear manufacturer to flood the world with teddy bears so they don't get found out.

That makes sense (if one expects wholesale monetization of banking liabilities).

But I still don't see why you appeared to be agreeing with DB's original post.

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As we seem to agree on the answer to Daddybear's question (bolded), shall we ignore the fact we disagree on the working?

Probably the way to go.

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That makes sense (if one expects wholesale monetization of banking liabilities).

But I still don't see why you appeared to be agreeing with DB's original post.

The books must always balance.

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