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dom

Bill Still On The Keiser Report

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Unfortunately Bill Shill does not understand the monetary system so I take what he says with a pinch of salt.

Would you like to expand on that statement?

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What he doesn't realise is that the counterpart to the interest liability s indeed created at the same time, it just walks out the back door of the bank as profits, wages etc.

Can you expand on this point please, explain exactly where the interest comes from?

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When a loan is made, the customer is given money. A debt is created which for the bank is an asset.

At the same time, interest due on the loan is added to the loan account (this was typically done up front on bank computing systems but doesn't necesarily have to happen then of course - let's just assume it is)...meanwhile a 'counterpart' to this interest, rather than going into the customer's account as a credit which he then draws down as cash, actually heads towards the bank's accounts. This 'value' then leaks from the organisation in a myriad of ways...various costs such as wages, rents, equipment etc., taxes, and dividends are the main ones. i.e. it flows into the general economy. In order for the person who has borrowed the money, they need to acquire money to settle their original debt plus the interest.

In a very, very simple economy of just 2 entities ...a person and a bank, basically the person would have to trade with the bank in balance to be able to repay the money he borrowed. Clearly that does not happen. But in a complex economy, essentially that is what has to happen...or the other steps such as default, fiscal transfers, inflation have to be taken to rebalance things instead. Of course not all these options are available between countries.

EDIT: if you just think of 'credit' as the spontaneous splitting of nothing into a credit and a debit.. you will understand that it will always balance somewhere. That is why they talk about 'credit derivatives'...they don't really exist as such because they are created from nothing with two opposing counter parties....they are very dangerous because they also create counter parties to liabilities which put at risk the other party's ability to satisfy its coming back together again to disappear into the ether. The physics of the thing do require that they do come together again at some point...it is just that it may be by somepone further away in the chain physically and temporally may have to satisfy it.

OK. So what happens to those with existing loans when the banks restrict new lending?

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Just to clarify:

When interest is added to a loan, thus increasing the bank’s assets, the corresponding liability on the balance sheet, all else equal, is (schematically) an increase in the shareholders’ capital account. In practice this might take a while to manifest through the profit and loss account.

This is spendable money for the bank, or it may be retained to increase shareholder value.

Wen not Hu is therefore correct that in the system as a whole, money and debt balance.

However, from the money users’ perspective, looking from the outside at the banking system and regarding it as a black box utility, there is always less money in circulation than there is debt owed to the banks.

We must take care not to confuse these two perspectives.

BTW Wen, for whom do you consider Bill Still to be a shill? I have met Bill and IMHO this derogatory label doesn't apply to him at all.

http://en.wikipedia.org/wiki/Shill

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When a loan is made, the customer is given money. A debt is created which for the bank is an asset.

Nope.

When a loan is made, the bank is given money and lies about it.

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Sorry, I can't see you. You're like a fly attracted to sh*t aren't you. :lol:

I wouldn't have said your posts were quite that bad.

Inaccurate though, certainly.

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Sorry I should apologise - I don't know him at all. I suppose I wouldn't say so in so many words to his face, hiding as we do in anonymity.

It's just that he's American, he preaches about it, is wrong and it rhymes. I have no other cause to be so rude.

Fwiw he does have the system wrong.

he's just wrong in a different way than you are. :lol::lol:

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As demand falls due to lower credit, the ability to repay debts reduces.

You've contradicted your previous point there.

Essentially he witters on about there being more debts than money because of interest. He even created a video about it. What he doesn't realise is that the counterpart to the interest liability is indeed created at the same time, it just walks out the back door of the bank as profits, wages etc. The system always balances. Assets always equal liabilities. There are always more liabilities than base money. Money circulates to clear them. That is a fact of life. Money doesn't have to equal all the liabilities out there.

Interest rate appear to be cyclic, inflationary boom, deflationary bust. Therefore private banks control the quantity of money in the economy and that is the main point Bill makes.

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You've contradicted your previous point there.

Interest rate appear to be cyclic, inflationary boom, deflationary bust. Therefore private banks control the quantity of money in the economy and that is the main point Bill makes.

Private banks very seldom deal in money.

They deal in credit and accept gifts a lot though.

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When a loan is made, the customer is given money. A debt is created which for the bank is an asset.

At the same time, interest due on the loan is added to the loan account (this was typically done up front on bank computing systems but doesn't necesarily have to happen then of course - let's just assume it is)...meanwhile a 'counterpart' to this interest, rather than going into the customer's account as a credit which he then draws down as cash, actually heads towards the bank's accounts. This 'value' then leaks from the organisation in a myriad of ways...various costs such as wages, rents, equipment etc., taxes, and dividends are the main ones. i.e. it flows into the general economy. In order for the person who has borrowed the money, they need to acquire money to settle their original debt plus the interest.

In a very, very simple economy of just 2 entities ...a person and a bank, basically the person would have to trade with the bank in balance to be able to repay the money he borrowed. Clearly that does not happen. But in a complex economy, essentially that is what has to happen...or the other steps such as default, fiscal transfers, inflation have to be taken to rebalance things instead. Of course not all these options are available between countries.

EDIT: if you just think of 'credit' as the spontaneous splitting of nothing into a credit and a debit.. you will understand that it will always balance somewhere. That is why they talk about 'credit derivatives'...they don't really exist as such because they are created from nothing with two opposing counter parties....they are very dangerous because they also create counter parties to liabilities which put at risk the other party's ability to satisfy its coming back together again to disappear into the ether. The physics of the thing do require that they do come together again at some point...it is just that it may be by somepone further away in the chain physically and temporally may have to satisfy it.

OK, Where does the 'money' come from to repay the total amount of interest owed on all outstanding debt created money?

Bear in mind that the bank doesn't get the 'money' for the interest until it's repaid by the borrower. You seem to be assuming that the bank immediately has 'x' pounds of actual profit on the books (to spend into the economy) because of the interest that will be charged/repaid, this is not the case.

The system depends on constant growth and/or constant creation of credit in order to repay the interest on the existing money (i.e. Bank Credit) in circulation.

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Private banks very seldom deal in money.

They deal in credit and accept gifts a lot though.

Sure, if you want to discuss this on the "fabric of reality" level. I don't.

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Sure, if you want to discuss this on the "fabric of reality" level. I don't.

No, really.

banks don't have any money. They have debits and credits.

No madcap philosophy required.

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The system depends on constant growth and/or constant creation of credit in order to repay the interest on the existing money (i.e. Bank Credit) in circulation.

Yes, and this point made clear by the fate of existing "borrowers" when credit tightens.

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Yes, and this point made clear by the fate of existing "borrowers" when credit tightens.

The system relies on customers not asking simpel questions.

You can get most debt written off with the sort of questions a 4 year old would ask if you demanded stuff from them. Sadly most adults aren't that sophisticated.

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Which is what most of us call money.

It's what you don't ask about because secretly deep down you want to be in lots of debt because you think you owe just for drawing breath.

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It's what you don't ask about because secretly deep down you want to be in lots of debt because you think you owe just for drawing breath.

That's nice dear.

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That's nice dear.

Exactly.

A complete disregard for the truth and series of emotional reactions rather than curiosity can only mean you get something out of thinking about things in the wrong way.

In any event - Bill Still is great because at least he's getting public debate going about the whole thing. His solution is kinda wacko but it's a lot better than the current get up we have.

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Exactly.

A complete disregard for the truth and series of emotional reactions rather than curiosity can only mean you get something out of thinking about things in the wrong way.

In any event - Bill Still is great because at least he's getting public debate going about the whole thing. His solution is kinda wacko but it's a lot better than the current get up we have.

OK that's more like it.

I think many people think being in debt makes them a "valid" adult.

Edited by dom

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It's what you don't ask about because secretly deep down you want to be in lots of debt because you think you owe just for drawing breath.

Most people like the idea of currency because it means they don't have to spend their entire life scraping a living from the soil or hunting animals.

The only real issue is how this currency is implemented - having over 90% of it being created as interest-bearing debt to banks is totally unacceptable IMO and I'd expect that if the mechanism was more widely understood there would be a mass backlash against it.

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Most people like the idea of currency because it means they don't have to spend their entire life scraping a living from the soil or hunting animals.

The only real issue is how this currency is implemented - having over 90% of it being created as interest-bearing debt to banks is totally unacceptable IMO and I'd expect that if the mechanism was more widely understood there would be a mass backlash against it.

There doesn't need to be a mass backlash.

All each "borrower" has to do is ask where the money came from and that's about it, they are free, done.

But they won't because of wacky psychological reasons.

Edited by Injin

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Most people like the idea of currency because it means they don't have to spend their entire life scraping a living from the soil or hunting animals.

The only real issue is how this currency is implemented - having over 90% of it being created as interest-bearing debt to banks is totally unacceptable IMO and I'd expect that if the mechanism was more widely understood there would be a mass backlash against it.

"It is well enough that pople of the nation do not understand our banking system, for if they did, I believe there would be a revolution before tomorrow morning"

Henry Ford.

Seems nothing has changed. People still don't understand (and I'm not saying I do completely either).

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No I haven't.

Once in debt you have to find money to repay it...regardless of whether interest is payable or not. If an element of demand in the economy is due to credit then less credit equals less demand equals it is harder to earn the money to repay the money you borrowed. Interest merely makes this situation worse...and if compounding for too long, unpayable.

Interest rates are cyclical it appears. The economy is like the body. The body is NEVER HAPPY, it is always trying to adjust to the right temperature but never quite gets there. And if the temperature becomes too far divorced from the optimum, it can feel quite ill and will either die or somehow cure itself and get back to something resembling a normal range. We have managed our temperature badly and we now feel quite ill.

You don't have to pay debt if

1 ) it was fraudulently induced

2 ) the person you owe will accept another persons debts instead

Hope this helps.

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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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