Olebrum Posted March 7, 2011 Share Posted March 7, 2011 Link? You believe that a commercial bank is allowed to lend more money than the sum of the deposits it has received. Banks DO NOT lend out money they have on reserve. You go to the bank, and borrow £1000. The bank inputs that £1000 on its computer. You work for as long as it takes to pay back that £1000. Congrats, you have just created £1000. This is how the banks get rich. Quote Link to comment Share on other sites More sharing options...
R K Posted March 7, 2011 Share Posted March 7, 2011 Come off it Injin. The Tories left this country in pretty good shape in 97, the debts that did exist could easily have been paid down by Blair et al but they decided to go on the mother of all credit binges instead. This wasn't an inevitable consequence of debt-money fiat bankster system, it was actively chosen because it made New Labour look good, and because the public believed they deserved it. What's quite astonishing in these 'discussions' is the absolute denial of the so-called 'free market' advocates to spot the 'free market' in action when they trip over it. Take a look at the dollar peak in June '00, consider where all the freshly printed (that's a favourite word after all) liquidity came from and flowed to and then think about securitisation and money flows around the globe. Then come back and tell me a deeply dysfunctional one-eyed Jock was responsible for it all. It's beyond imbecilic - especially coming from all you professional bleedin' economystics! We don't have capital controls remember. To say it's contradictory for free marketeers to blame the global credit bubble on a lack of regulation is simply astonishing. I can understand you getting upset that the banks' depositors were all bailed out using tax dollars after the event but I rarely hear that argument. Shouldn't you be calling for all deposits (including savers) to have been wiped out as per Austrian theory? It's all rather ar5e about face chaps. Quote Link to comment Share on other sites More sharing options...
Authoritarian Posted March 7, 2011 Share Posted March 7, 2011 (edited) What's quite astonishing in these 'discussions' is the absolute denial of the so-called 'free market' advocates to spot the 'free market' in action when they trip over it. Take a look at the dollar peak in June '00, consider where all the freshly printed (that's a favourite word after all) liquidity came from and flowed to and then think about securitisation and money flows around the globe. Then come back and tell me a deeply dysfunctional one-eyed Jock was responsible for it all. It's beyond imbecilic - especially coming from all you professional bleedin' economystics! We don't have capital controls remember. To say it's contradictory for free marketeers to blame the global credit bubble on a lack of regulation is simply astonishing. I can understand you getting upset that the banks' depositors were all bailed out using tax dollars after the event but I rarely hear that argument. Shouldn't you be calling for all deposits (including savers) to have been wiped out as per Austrian theory? It's all rather ar5e about face chaps. You sound deeply confused, Gordon Brown was responsible for ruining our the state's finances as well as creating the perfect conditions for a gigantic housing bubble, the markets simply worked within the framework that was laid down by parliament. Much as Gordo might have convinced you otherwise there were no malign international forces at work seeking to bring down the UK, every-single-one of our problems was home grown and supported by the vast majority of the house price loving public. Edited March 7, 2011 by Chef Quote Link to comment Share on other sites More sharing options...
Tired of Waiting Posted March 7, 2011 Share Posted March 7, 2011 If a bank has more deposits then it does loans it would be technically bankrupt, so I would say yes, they are allowed to lend out more money then they have. Banks only need to keep a certain % of their assets in cash (about 7-8% iirc), the rest can be bonds, mortgages and gilts etc etc. You believe that a commercial bank is allowed to lend more money than the sum of the deposits it has received. Quote Link to comment Share on other sites More sharing options...
Injin Posted March 7, 2011 Share Posted March 7, 2011 Link? You believe that a commercial bank is allowed to lend more money than the sum of the deposits it has received. I know it is. I've already given you 4 different evidence procedures. Go and use at least 1 of them. Link? Since I'm getting tired of this, you are confusing creation of money by individual banks (a myth), with the velocity of circulation of money in the entire system - a variable. See here: http://en.wikipedia.org/wiki/Quantity_theory_of_money I'm sorry Injin, really, but you have no idea what you've been talking about for a fecking long time. I just could not stand so much rubbish anymore, particularly because you may be confusing other forum readers. I know you are well intended, but you have been doing a public disservice. Please stop. You are completely wrong. You've barking up the wrong tree. It was a collective, national failure of political economy. Sorry. Can you show me that law that stops us making money yet? Quote Link to comment Share on other sites More sharing options...
ken_ichikawa Posted March 7, 2011 Share Posted March 7, 2011 I know it is. I've already given you 4 different evidence procedures. Go and use at least 1 of them. Can you show me that law that stops us making money yet? Thug come round breakie legs if you print your own money law? All of course dressed up in something euphemised as the rule of law Quote Link to comment Share on other sites More sharing options...
Tired of Waiting Posted March 7, 2011 Share Posted March 7, 2011 I know it is. I've already given you 4 different evidence procedures. Go and use at least 1 of them. Can you show me that law that stops us making money yet? In this universe: http://en.wikipedia.org/wiki/Quantity_theory_of_money Quote Link to comment Share on other sites More sharing options...
Authoritarian Posted March 7, 2011 Share Posted March 7, 2011 You believe that a commercial bank is allowed to lend more money than the sum of the deposits it has received. Yes, it's called leverage. The bank lends out the same money over and over creating a pyramid of credit upon a base of notes and coins; hence the term base money. They don't keep it stored under the counter, there's no profit in that! Quote Link to comment Share on other sites More sharing options...
Injin Posted March 7, 2011 Share Posted March 7, 2011 In this universe: http://en.wikipedia.org/wiki/Quantity_theory_of_money I've given you 4 evidence procedures, all of which will show you how it works. If you could go and use any of them that would be great. While I am on, can I have that law that says no one can make money (not legal tender) apart from the BoE? Quote Link to comment Share on other sites More sharing options...
South Lorne Posted March 7, 2011 Share Posted March 7, 2011 .... They chose to ride the bubble. Which is dickish, but not causal. ...the cause was securitisation of poor lending which was then packaged blended and sold on fraudulently as "triple A" investment assets .... Quote Link to comment Share on other sites More sharing options...
Tired of Waiting Posted March 7, 2011 Share Posted March 7, 2011 (edited) Come off it Injin. The Tories left this country in pretty good shape in 97, the debts that did exist could easily have been paid down by Blair et al but they decided to go on the mother of all credit binges instead. This wasn't an inevitable consequence of debt-money fiat bankster system, it was actively chosen because it made New Labour look good, and because the public believed they deserved it. Exactly. You sound deeply confused, Gordon Brown was responsible for ruining our the state's finances as well as creating the perfect conditions for a gigantic housing bubble, the markets simply worked within the framework that was laid down by parliament. Much as Gordo might have convinced you otherwise there were no malign international forces at work seeking to bring down the UK, every-single-one of our problems was home grown and supported by the vast majority of the house price loving public. Exactly ! Good regulation is essential! Britain behaved like a banana republic, collectively, from voters to government, from the opposition to the press, unions to the CBI, collective manic bubble behaviour! Of course it could have been curbed. But everybody was just loooving the paaarty! Yes, it's called leverage. The bank lends out the same money over and over creating a pyramid of credit upon a base of notes and coins; hence the term base money. They don't keep it stored under the counter, there's no profit in that! Actually banks can only lend money they have received as deposits earlier. They can lend most of it, 90% or more, depending on regulation. They only have to keep 10% or less. Going with this 90% limit: Banks can lend 9 times more money than what they have to hold in accounts. But that does NOT mean that they can lend 9 times the total deposits they have received. They can lend only 90% of this total. THAT is the confusion a lot of people make. Edited March 7, 2011 by Tired of Waiting Quote Link to comment Share on other sites More sharing options...
Injin Posted March 7, 2011 Share Posted March 7, 2011 Come off it Injin. The Tories left this country in pretty good shape in 97, the debts that did exist could easily have been paid down by Blair et al but they decided to go on the mother of all credit binges instead. This wasn't an inevitable consequence of debt-money fiat bankster system, it was actively chosen because it made New Labour look good, and because the public believed they deserved it. Debt can't be paid down in this system. It can only be added to. Quote Link to comment Share on other sites More sharing options...
Injin Posted March 7, 2011 Share Posted March 7, 2011 ...the cause was securitisation of poor lending which was then packaged blended and sold on fraudulently as "triple A" investment assets .... Securitisation was invented because more debt has to be added or collapse occurs. Quote Link to comment Share on other sites More sharing options...
needsleep Posted March 7, 2011 Share Posted March 7, 2011 (edited) Exactly. Exactly ! Good regulation is essential! Britain behaved like a banana republic, collectively, from voters to government, from the opposition to the press, unions to the CBI, collective manic bubble behaviour! Of course it could have been curbed. But everybody was just loooving the paaarty! Actually banks can only lend money they have received as deposits earlier. They can lend most of it, 90% or more, depending on regulation. They only have to keep 10% or less. Going with this 90% limit: Banks can lend 9 times more money than what they have to hold in accounts. But that does NOT mean that they can lend 9 times the total deposits they have received. They can lend only 90% of this total. THAT is the confusion a lot of people make. Your confusion is a blind faith in what you believe to be the 'system'. Banks have been creating credit off the balance sheet using SIVs and this allowed them to step around the required capital ratios. If you look at commercial banks it's bad enough but if you begin to consider the level of leverage of the some shadow banking institutions then it gets really scary. Edited March 7, 2011 by needsleep Quote Link to comment Share on other sites More sharing options...
Authoritarian Posted March 7, 2011 Share Posted March 7, 2011 Actually banks can only lend money they have received as deposits earlier. They can lend most of it, 90% or more, depending on regulation. They only have to keep 10% or less. Going with this 90% limit: Banks can lend 9 times more money than what they have to hold in accounts. But that does NOT mean that they can lend 9 times the total deposits they have received. They can lend only 90% of this total. THAT is the confusion a lot of people make. Yes, I agree. Quote Link to comment Share on other sites More sharing options...
Authoritarian Posted March 7, 2011 Share Posted March 7, 2011 (edited) Debt can't be paid down in this system. It can only be added to. It only appears this way because when we get on top of things (i.e 1997) it creates stabilty required for another bout of frenzied land speculation. Take away the land element and debt levels would be controllable. Edited March 7, 2011 by Chef Quote Link to comment Share on other sites More sharing options...
Injin Posted March 7, 2011 Share Posted March 7, 2011 Your confusion is a blind faith in what you believe to be the 'system'. Banks have been creating credit off the balance sheet using SIVs and this allowed them to step around the required capital ratios. If you look at commercial banks it's bad enough but if you begin to consider the level of leverage of the some shadow banking institutions then it gets really scary. Guy won't even use google to find out the facts. he's on about FRB systems when we don't have one, capital ratios of 10% when there are zero reserve banks everywhere and deposits being used to fund loans when actually loans create the deposits. Oh and no one is allowed to create money but the BoE< but most banks have M4 and broad money. Almost like a religous belief, impervious to thought, to reason, to evidence. Quote Link to comment Share on other sites More sharing options...
Injin Posted March 7, 2011 Share Posted March 7, 2011 (edited) It only appears this way because when we get on top of things (i.e 1997) it creates stabilty required for another bout of frenzied land speculation. Take away the land element and debt levels would be controllable. Nope. Debt can only be paid back nby creating more debt. (Under this system.) The land market is a different issue entirely - if we imagine a fixed supply of money then no particular sector can bubble much without something else having a slump and then an equalisation will occur. The ability of the banks to create infinite credit with nothing behind it is why there was a housing boom. Edited March 7, 2011 by Injin Quote Link to comment Share on other sites More sharing options...
needsleep Posted March 7, 2011 Share Posted March 7, 2011 It only appears this way because when we get on top of things (i.e 1997) it creates stabilty required for another bout of frenzied land speculation. Take away the land element and debt levels would be controllable. Nope. The lust for yield would have created a bubbles in other assets. There is nothing unique about the fact it was housing this time. Ten years ago it was technology. The next one will be something different. Quote Link to comment Share on other sites More sharing options...
South Lorne Posted March 7, 2011 Share Posted March 7, 2011 The ability of the banks to create infinite credit with nothing behind it is why there was a housing boom. ...not true ...they had bad or fraudulent loans mixed into their securitisation ....and blended these into CDOs which were sold as top rated securities ...if we accept your definition they cannot be accused of fraud.... Quote Link to comment Share on other sites More sharing options...
Injin Posted March 7, 2011 Share Posted March 7, 2011 ...not true ...they had bad or fraudulent loans mixed into their securitisation ....and blended these into CDOs which were sold as top rated securities ...if we accept your definition they cannot be accused of fraud.... If you accept my definition, all of it is fraud. Every debt should be cancelled and every saver told they have nothing. Again, you don't adress the systems operation, nor the totality. it's just the rolleyes emoticon and guff, so I shall cease responding to you further unless you decide to be relevent. Quote Link to comment Share on other sites More sharing options...
Authoritarian Posted March 7, 2011 Share Posted March 7, 2011 Nope. Debt can only be paid back nby creating more debt. The land market is a different issue entirely - if we imagine a fixed supply of money then no particular sector can bubble much without something else having a slump and then an equalisation will occur. The ability of the banks to create infinite credit with nothing behind it is why there was a housing boom. Debts can be repaid over time with work, if you believe otherwise then it's best if we just agree to disagree. The bankers are endowed with the ability to count the injustices that are present in land market transactions, sure we can ask them to put their pens and paper down but it doesn't mean the abuse has gone away Quote Link to comment Share on other sites More sharing options...
Authoritarian Posted March 7, 2011 Share Posted March 7, 2011 (edited) Nope. The lust for yield would have created a bubbles in other assets. There is nothing unique about the fact it was housing this time. Ten years ago it was technology. The next one will be something different. Except that it doesn't matter when it's technology, or wine or tulips because the consequences aren't passed on to innocent bystanders. The same isn't true with real estate, the whole point is to encumber 3rd parties with costs that are ultimately unpayable. None of this is the fault of the bankers. Edited March 7, 2011 by Chef Quote Link to comment Share on other sites More sharing options...
Injin Posted March 7, 2011 Share Posted March 7, 2011 Debts can be repaid over time with work, if you believe otherwise then it's best if we just agree to disagree. No, it can't. Labour can be exchanged for new debt to pay off old debt, but this new debt will have to be larger than the previous one. Banks do not accept "an hour filling in potholes" as payment. They only accept debt notes and the only way for the system as whole to get enough is to go further into debt. The bankers are endowed with the ability to count the injustices that are present in land market transactions, sure we can ask them to put their pens and paper down but it doesn't mean the abuse has gone away The land market is injust and banking is fraud. Both can be (and are are) true at one and the same time. You know this, and your attempt to create an either/or is a bit pathetic. Quote Link to comment Share on other sites More sharing options...
Injin Posted March 7, 2011 Share Posted March 7, 2011 Except that it doesn't matter when it's technology, or wine or tulips because the consequences aren't passed on to innocent bystanders. The same isn't true with real estate, the whole point is to encumber 3rd parties with costs that are ultimately unpayable. None of this is the fault of the bankers. Which market got bubbled is secondary to the fact that without the bankers credit creation ponzi scheme, you can't have bubblea at all. Quote Link to comment Share on other sites More sharing options...
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