Do People Understand Banking?

[Bloo Loo]

There aren't enough funds to guarantee all deposits to £50k, nothing like, so it must be a Government promise, beyond the FSCS.

you assume much.

they havent had to pay out....yet....there is only 4.2 ish bn in the fund...see the FSCS site.

and what makes you think the government can guarantee anything?? they can SAY they can, but can they?

Edited June 16, 2010 by Bloo Loo

[the_austrian]

So say a person sold a house, where would they put the money if not another house....and we wonder why house prices are so high.

Yes.

[the_austrian]

you assume much.

they havent had to pay out....yet....there is only 4.2 ish in in the fund...see the FSCS site.

and what makes you think the government can guarantee anything?? they can SAY they can, but can they?

They can make the deposits whole by printing money, it's a paper currency so of course they can carry out this threat. I'm not saying whether they will or they won't, there's no way to know, they could even change their mind if they intend to make good on the promise now, or they could be lying and later decide to print the money anyway.

[Bloo Loo]

They can make the deposits whole by printing money, it's a paper currency so of course they can carry out this threat. I'm not saying whether they will or they won't, there's no way to know, they could even change their mind if they intend to make good on the promise now, or they could be lying and later decide to print the money anyway.

no, they cant

print and the return in not what you deposited.

and our government doesnt print directly, it sells bonds to banks who sell them back to the BoE. The BoE merely monetises the tax promise of the Government, so printing has two effects...one, improves liquidity, for banks, and adds to the interest on government spending.

If they printed and distributed directly the money would be worth even less, as would the "guaranteed" deposits.

you see, there is no way to guarantee the totality of deposits...as the guarantee comes from the depositors themselves!

[winkie]

They can make the deposits whole by printing money, it's a paper currency so of course they can carry out this threat. I'm not saying whether they will or they won't, there's no way to know, they could even change their mind if they intend to make good on the promise now, or they could be lying and later decide to print the money anyway.

Printing money causes inflation, loss of spending value, loss of currency value, world credibility and high interest rates....not an option.

[the_austrian]

no, they cant

print and the return in not what you deposited.

and our government doesnt print directly, it sells bonds to banks who sell them back to the BoE. The BoE merely monetises the tax promise of the Government, so printing has two effects...one, improves liquidity, for banks, and adds to the interest on government spending.

If they printed and distributed directly the money would be worth even less, as would the "guaranteed" deposits.

you see, there is no way to guarantee the totality of deposits...as the guarantee comes from the depositors themselves!

We don't seem to be getting anywhere.

[erranta]

<br />A big problem with understanding banking is that we don't know to what extent we can trust the deposit guarantee. We don't know for certain what would happen if the population tested the threat to print up the bank credit into cash.<br /><br />Since we can't know this, only speculate, we must break it down into the following scenarios:<br /><br />i) The Government is reliable and they will turn the credit into cash, printing billions of new notes and coins in the process. In this case depositors are right to trust their banks and to leave the money on deposit. In this case banking is a form of THEFT because this inflation of the money supply amounts to counterfeiting which is transferring wealth by reproduction.<br /><br />ii) The Government is not reliable and they will eventually renege on their promise to print up the required notes to make good on the bank credit. If there is a bank run, the banks will default and it makes sense to keep your money out of the banks. In this case banking is a FRAUD because their credit is not good and they know their promises are not backed by actual notes. We could say the fraud is perpetrated by the Government in this situation, because the bank could be unaware of their plan to default.<br /><br />Banking is either theft or a fraud and because we cannot know the mind of the Government and Bank of England, we can never know for sure which one of these is actually the case.<br />

<br /><br /><br />

Gold Sovereigns were the currency, along with STERLING SILVER coins (Trusted and used throughout Europe!) and REAL copper change!

They replaced the whole lot with paper and de_based alloys (your coins have thin plates of copper welded on to them) - where did all the monetary wealth from the tangible metals disappear over the decades = FRAUD 1.

(great book for someone to write, if there isn't one already!)

The way they 'reinforced' the illusion that banks are stuFFed full of coins/bars of silver and gold - is brainwashing us with Cowboy(& injin) & other films etc as a kid.

The banks in THOSE/ye olde days DID contain the real stuff (for the most part) - nowadays they are kiDDing you!

[Bloo Loo]

We don't seem to be getting anywhere.

you arent supposed to understand banking.

[Maddog21]

the main reason small savers think they own their money is because of FSCS.

people with a modicum of IQ know that their money gets lent out but don't care because it is insured.

After all the business with NR, icesave etc the british people are quite well aware of how banks operate, but the vast majority trust the government to bail their savings out if their banks goes tits up.

The blind spot of british savers is not with how banks work, but how FSCS is funded and what the limits of its capabilities are.

The average person does not know what "money" is , they think that when they pay in "money"

to a bank it is kept in a little draw with their name on.

The reason there was a run on NR is because the media told them they were in trouble.

Governments answer to this, don't tell anyone again a bank is in trouble.