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Where Did The 'money' Come From ...... That Pushed House Prices Ever Higher

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Not the sort of question Sibley would ask, I know..... but where did the money come from exactly? .....or even approximately will do.

Banks depositors? China? thin air? .......

Also, what would the average house price today if the printing (creating) of 'money' had been a hanging offence?

ta.

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Thin air. It was borrowed into existence secured against the supposed new value of the property.

Injin goes into this at great length. In effect, the borrowing agreement gives the lender the asset it needs to create the money, so the borrower lends (gives) the lender the 'money'. The lender then lends the money to the borrower.

p-o-p

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I'll take a stab at this: Thin air!

Deregulation of lending meant prices began to rise through pure speculation, fuelling greed driven sentiment which led to a classic 'mania' phase. (a la dutch tulip bulbs)

Expect more accurate answers to follow :D

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On a deep level there has been a gradual slowdown in the velocity of money going on for several decades. So to keep consumer prices on pace for the 2% yearly gain as is the BoE target.. they have to expand the money supply.

Which during the last decade 90% of the expansion of the broad money supply was through the net increase in private loans outstanding.

If you look over the last 30 years and say inflation has truly been the 3% reported by the bank of england, and the real economic growth was 1% and the velocity slowed by 2% a year.. that is a 6% expansion needed in money each year. With 6% expansion that means the money supply would double every 12 years.

In many ways the monster asset bubble is just the mirror image of the slowdown in the velocity of money over the last 3 decades.

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Not the sort of question Sibley would ask, I know..... but where did the money come from exactly? .....or even approximately will do.

Banks depositors? China? thin air? .......

Also, what would the average house price today if the printing (creating) of 'money' had been a hanging offence?

ta.

Bubbles up and down since the late 60's. Super bubble cycle of 40 years is now ending. Prices are DOUBLE the 1970 price measured against wages. Govt policy could easily prevent this forever. Sorry I am not PM yet.

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I'll take a stab at this: Thin air!

Deregulation of lending meant prices began to rise through pure speculation, fuelling greed driven sentiment which led to a classic 'mania' phase. (a la dutch tulip bulbs)

Expect more accurate answers to follow :D

Yes, thin air. Most money is credit, created out of thin air. The banks can create more money if they obtain more capital or they lever the capital up that they have more. It was no surprise that banks with wafer thin capital ratios were the ones that fell over revealing more than a few rotten assets on their books.

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The next generation's future income.

Very simple actually:

LIAR LOANS.

And what happened was this:

Person A went to street/village/town A, and bought Property A using his/her LIAR LOANS. to "buy" that property:

Persons B, C, D, E came along to street/village/town A - where Person A had paid WELL OVER the odds for Property A having obtained his/her LIAR LOAN- THEREBY - thanks to the comparative pricing mechanism used by Surveyors/EA's - FRAUDULENTLY CAUSING ALL LOCAL PRICES TO HAVE GONE UP TO MATCH THE WELL OVER THE ODDS NEW "PRICE" WITHIN DAYS/WEEKS OF PERSON A BUYING PROPERTY A FOR A FRAUDULENTLY INFLATED PRICE.

THEREFORE - Persons B, C, D, E HAD TO MATCH THE "PRICE" PAID BY FRAUDSTER PERSON A --- AND EVERYONE ELSE WHO HAD TO BUY HAD TO MATCH THE PRICES ARTIFICIALLY AND FRAUDULENTLY HYPED UP BY LIAR LOANS.

IT WAS THE GREATEST PYRAMID/PONZI SCAM IN ALL HISTORY -- AND THE FINANCIAL CRISIS THE WESTERN WORLD IS NOW EXPERIENCING IS THE RESULT OF ALL THIS. DON'T FORGET -- THE LIAR LOANS WERE PUT INTO EFFECT BY THE BANKSTERS WITH THEIR "CDO'S", "SIV'S" etc etc.

THIS PONZI SCAM WENT ON EVERYWHERE ACROSS THE LAND - THEREBY CAUSING PRICES TO RISE 300-400% WITHIN 10-12 YEARS --- ALL DUE TO THE MASSIVE FRAUD BROUGHT ABOUT BY LIAR LOANS.

THE BANKS KNEW WHAT WAS GOING ON - THEY ENCOURAGED PEOPLE TO LIE ON THEIR MORTAGAE APPLICATIONS!! [see all the links below] - BUT HEY!! -- FOR MANY YEARS THEY MADE BILLIONS/TRILLIONS - ALONG WITH ALL THEIR PROPERTY VI FRIENDS --- AND ORDINARY PEOPLE PAID HAND OVER FIST -- AND NOW THEY'RE PAYING AGAIN HAND OVER FIST WITH THEIR TAXES TO BAIL OUT THE BANKS THAT WOULD OTHERWISE HAVE GONE BUST THANKS TO THEIR MASSIVE FRAUD.

Edited by eric pebble

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what would the average house price today if the printing (creating) of 'money' had been a hanging offence?

If the printing of money was illegal, then "money" would have to consist of something that's not printed.

The price iof the average house would therefore be 40 gold soverigns.

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quote:

Low interest rates

The first two factors aren't new. Without the third factor – the legacy of the “central banker of the century” – the crisis probably would have never occurred. The monetary policy of low interest rates – introduced by Alan Greenspan in response to the post-9/11 recession and the collapse of the new economy “bubble” – injected an enormous amount of liquidity into the global monetary system. This reduced short-term interest rates to 1% – their lowest level in 50 years. What’s more, Greenspan spent the next two years maintaining interest rates at levels significantly below equilibrium.<!--[endif]-->2 Interest rates were kept at low levels for a long time, and were often negative in inflation-adjusted terms. The result was no surprise. Low returns on traditional investments pushed investors and lenders to take bigger risks to get better returns. Financial intermediaries, in search of profits, extended credit to families and companies with limited financial strength. Investors with varying degrees of expertise duly reallocated their portfolios towards more lucrative but riskier assets in an attempt to increase their wealth and preserve its purchasing power. The low borrowing rates for both short and long-term maturity attracted throngs of borrowers – families above all who were seduced by the possibility of acquiring assets that for had always been beyond their means. At the same time, house prices soared, ultimately encouraging the additional extension of credit; the value of real estate seemed almost guaranteed.

/quote

My understanding is that when this twit above said we pay you 1%, investors went away to try find better returns elsewhere...and found it in the mortgage market (or "created" it there, by offering subprime etc)

so the initial money was existing money which normally went to buy US bonds, but when they said "1%" this money went somewhere else in an effort to beat inflation. From there onwards, the fairy tale is almost self fulfilling, with the banks able to lend money they created out of nothing and sell the rubbish onto the people who didnt want a 1% return they were now offered by the US.

9/11, Greenspan, Hedge funds = my son not ever having a garden, or a pet, and us living in a rented piece of sh1t all because I refused to lie on a mortgage application form. And all I see now is little 2up2down pieces of cr@p in London for QUARTER OF A MILLION QUID. Realistically worth 10% of that in my eyes.(60k by london pricing, but compared to what you get in other countries for 60k these sh1tholes should be selling for 25k max.)

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It was created as debt by that group of ultimate meritocrats known as bankers.

Yup....... Debt created in the form of LIAR LOANS - hoisted onto many people who thought they were "profiting" by taking the fraudster loans out..... It was fine until the music stopped -- just like all Pyramid/Ponzi scams.....

The Banksters had a MASSIVE FRAUD MACHINE operating -- Watch the film "INSIDE JOB" -- WELL WORTH WATCHING.

http://www.guardian.co.uk/film/2011/feb/17/inside-job-financial-crisis-bankers-verdicts

http://en.wikipedia.org/wiki/Inside_Job_(film)

Type "Inside Job" into Google -- and LEARN.......

Edited by eric pebble

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Not the sort of question Sibley would ask, I know..... but where did the money come from exactly? .....or even approximately will do.

Banks depositors? China? thin air? .......

Also, what would the average house price today if the printing (creating) of 'money' had been a hanging offence?

ta.

Fractional reserve banking. Every time a bank lends money out, that amount of money appears on the banks balance sheet as well as the balance sheet of whoever the money is being lent to. So on paper twice that amount of money is now in existence.

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Not the sort of question Sibley would ask, I know..... but where did the money come from exactly? .....or even approximately will do.

Banks depositors? China? thin air? .......

Also, what would the average house price today if the printing (creating) of 'money' had been a hanging offence?

ta.

I promise to buy your house for £5 million next week (but don't actually have any money, I'm just really persuasive.)

How much will you sell it for now you have this promise in place?

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Business and pension funds = Securitisation

Not as much as you might imagine actually came from deposits. Whilst deposits are the cheapest form of borrowing, most came from flogging on the mortgages so that you then have the money to lend again, and again. Especially as this money is borrowed over such a long term.

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I despair.

Can a bank just lend money from nothing?

Yes, anyone can.

Why then do banks have funding or 'liquidity' problems.? Why would it matter if there is a 'run on a bank' if they could just magic it out of thin air. Why on earth do they take deposits or failing that, the money markets where surplus countries are recycling their surpluses....yes, we're getting closer to an answer aren't we.

Come on guys...utter b*llocks. Just concentrate and get your thinking caps on!

They have "liquidity problems" because they have loaned with nothing behind it.

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Much of it came from the lenders selling the assets (existing mortgages) into the securitisation markets.

Thus it came from those people wanting purchase securitised debt derivative products.

Surplus countries, banks, insurance companies investing savings and so on.

Edited by Red Knight

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Yes, anyone can.

They have "liquidity problems" because they have loaned with nothing behind it.

Yup....... They merely typed the figures into their keyboards - and "Hey Presto" - the money was magicked into existence - and all looked nice & jolly......... BUT -- of course--- it was all HIGHLY, HIGHLY inflationary -- But WAIT!! GORDON THE F*CKING MORON BROWN took house "prices" out of the calculation for the official inflation figures ...... Oh!!!! I WONDER why?!?!? :rolleyes::rolleyes:

What is so WEIRD -- is that NOBODY WANTED TO POINT TO THE ELEPHANT IN THE ROOM -- THAT HOUSE "PRICES" WERE GOING UP AND UP AND UP -- WELL AHEAD OF EARNINGS........

But of course -- the Banksters, MP's - with their multiple Buy-to-Let Empires - and MORON THICKO BROWN [along with that W*NKER piece of PUKE ED B0LL0CKS [balls]] were doing very nicely thankyou, cosing up to the Banksters.... raking in all sorts of juicy property taxes -- telling us all that the economy was rosy rosy - when in fact it was F*CKING COLLAPSING..... :angry: :angry: :angry:

God I HATE THAT C* NT ED BALLS --- TOTAL C* NT. :angry:

Edited by eric pebble

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I despair.

Can a bank just lend money from nothing?

Why then do banks have funding or 'liquidity' problems.? Why would it matter if there is a 'run on a bank' if they could just magic it out of thin air. Why on earth do they take deposits or failing that, the money markets where surplus countries are recycling their surpluses....yes, we're getting closer to an answer aren't we.

Come on guys...utter b*llocks. Just concentrate and get your thinking caps on!

Didn't we just have a thread about this? :lol:

http://www.housepricecrash.co.uk/forum/index.php?showtopic=169509

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GORDON THE F*CKING MORON BROWN took house "prices" out of the calculation for the official inflation figures ......

Actually, he didn't. What he did do was reprehensible - but it was a lot cleverer than you give credit. He inherited an RPIX target - and that excluded housing already. He adopted CPI because that matched HCIP - which stabilised Sterling relative to the Euro - which, in turn, provided a ready market for short-term debt in mainland Europe.

To answer the original question in this thread: "Thin air" is very close to the right answer... but there are two other essential ingredients.

1. You need to have people willing to go into debt. (Which, given the widespread belief that house prices only ever go up - was satisfied.)

2. You need to have people who are willing to accept the risk of default on those debts. You need gullible investors (though they don't need to commit comparable levels of capital.)

What's critical is that the capital required to accept the risk of default is only a minuscule proportion of the maximum possible nominal loss. Furthermore, especially following the repeal of Glass Steagall, banks have been motivated to present accepting the risks as being a desirable investment. The fact that these risks were underwritten only on margin leads us to our predicament today... where both banks and the sovereign nations forced to support them are running out of credibility.

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If the printing of money was illegal, then "money" would have to consist of something that's not printed.

The price iof the average house would therefore be 40 gold soverigns.

I guess the next question has to be (if money printing had been a hanging offence) ........ how long would one have to work to afford a house?...... avg wage & house?

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I despair.

Can a bank just lend money from nothing?

Why then do banks have funding or 'liquidity' problems.? Why would it matter if there is a 'run on a bank' if they could just magic it out of thin air. Why on earth do they take deposits or failing that, the money markets where surplus countries are recycling their surpluses....yes, we're getting closer to an answer aren't we.

Come on guys...utter b*llocks. Just concentrate and get your thinking caps on!

It amounts to the same thing and you know it.

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I despair.

Can a bank just lend money from nothing?

Up to a certain point they can. At least on paper. The problem is that when they reach that point they have to keep going. Their bonuses depend on it. Which is why what has happened will keep happening over and over again.

Why then do banks have funding or 'liquidity' problems.? Why would it matter if there is a 'run on a bank' if they could just magic it out of thin air. Why on earth do they take deposits or failing that, the money markets where surplus countries are recycling their surpluses....yes, we're getting closer to an answer aren't we.

Come on guys...utter b*llocks. Just concentrate and get your thinking caps on!

They don't have funding or liquidity problems because if necessary the government will simply take your money and give it to them.

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Up to a certain point they can. At least on paper. The problem is that when they reach that point they have to keep going. Their bonuses depend on it. Which is why what has happened will keep happening over and over again.

They don't have funding or liquidity problems because if necessary the government will simply take your money and give it to them.

So you're saying that they don't print money from thin air. They borrow it from future taxes and it increases govt. debt?

Else the bank of england buys assets from the banks directly and takes those assets onto their balance sheet?

Neither of which are 'thin air'.

No bank creates money out of thin air - they may adjust their liquidity ratios down or up but that's not the same thing. If they could create their own money out of thin air they would and there would be no possibility of them ever going bust. Northern Rock of Soc Gen would simply create more deposits themselves.

It's baffling this myth persists given it's so simplisitically disprovable.

I blame silly memes like printy printy.

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  • 334 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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