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The gap between rich and poor is the widest it’s ever been in history. It keeps on getting wider.

Plato is purported to have said that , ideally, the person at the top of an organization should earn 6 times more than the person at the bottom. J.P. Morgan said it should be 20 times.

Barclays are currently advertising for a cashier in one their West Midlands branches, salary £12,665. If I multiply that by 500 times I still don’t get to the £6.5 million bonus (on top of £250,000) that Bob Diamond, the Barclays boss, was recently awarded.

Bob Diamond and whoever gets the West Midlands job have almost become different animals. It doesn’t take an anthropologist to tell you that a society has become extremely distorted when you have gulf like that between top and bottom.

I can remember hearing people complaining about this on TV thirty years ago when I was a child. But the gap just keeps on getting wider. All attempts by government to deal with this through taxation or legislation have failed. There are calls for more, but I’m wondering if we’ve reached ‘peak regulation’.

The fact is it’s a simple, inevitable, direct consequence of our modern fiat system of money. This fiat system, in which governments and banks have the power to create money, benefits those closest to the issuance of money –those who get it first - at the expense of those furthest away - those who get it last.

And this short video, beautifully animated by Pola Gruszka, shows how the whole process works.

We need ‘independent money’.

A shorter version of the video appears in the soon-to-be released Renegade Economist film, ‘The Four Horsemen’, on which I helped out as a writer. www.fourhorsemenfilm.com

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The gap between rich and poor is the widest it’s ever been in history. It keeps on getting wider.

Plato is purported to have said that , ideally, the person at the top of an organization should earn 6 times more than the person at the bottom. J.P. Morgan said it should be 20 times.

Barclays are currently advertising for a cashier in one their West Midlands branches, salary £12,665. If I multiply that by 500 times I still don’t get to the £6.5 million bonus (on top of £250,000) that Bob Diamond, the Barclays boss, was recently awarded.

What the film says is correct but doesn't those people who go into the bank to borrow have to bear some responsibilities regarding the enrichment of those

at the top of the pyramid ?

Also, yes, banks do create bank credit, but to be fair, the full story has to be told (these have to be backed by based money and bank's capital).

One can also view this as borrowing from oneself's future income potential, intermediated by the bank. If people don't borrow, then no credit creation.

Edited by easybetman

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.... but it's misleading to claim that retail banks create money out of thin air.

They lend out money they have on deposit, which increases the broad money supply. It's quite different.

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.... but it's misleading to claim that retail banks create money out of thin air.

They lend out money they have on deposit, which increases the broad money supply. It's quite different.

No, they don't.

Retail banks don't lend at all. They just say they are doing, and rely on no one asking to see the cash.

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This is getting really boring.

Injin's 100% right on this one, without needing to take trip to Injin World.

With a reserve of 10%, and a deposit of £100, a bank can lend £900 - that's £800 pounds created out of thin air before you even get down to accounting shenanigans...

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The gap between rich and poor is the widest it's ever been in history.

I very much doubt that. I believe we are only just returning to the sort of income gaps one had in Victorian times.

You don't have to go that far back to see much more inequality than we currently have in the UK.

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Injin's 100% right on this one, without needing to take trip to Injin World.

With a reserve of 10%, and a deposit of £100, a bank can lend £900 - that's £800 pounds created out of thin air before you even get down to accounting shenanigans...

You're missing out many steps that make it look like bank creates money out of thin air.

The animation implies that the bank just make up money and charge interest on it, which is not the case. The money is deposited first. The more times it's deposited and lent, the more broad money you have.

Injin's ever repeating argument is that it's all made up. Money, numbers on screen etc are all meaningless without the govt having guns to force us to 'believe' in the system. It's somewhat true, but that's not the point.

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You're missing out many steps that make it look like bank creates money out of thin air.

The animation implies that the bank just make up money and charge interest on it, which is not the case. The money is deposited first. The more times it's deposited and lent, the more broad money you have.

Injin's ever repeating argument is that it's all made up. Money, numbers on screen etc are all meaningless without the govt having guns to force us to 'believe' in the system. It's somewhat true, but that's not the point.

Yes, it is.

The actual money supply is about 2% of the total amount that banks claim to have.

Therefore, if they say they loaned you money, you have a 98% chance they are full of shit. But all this is academic, and theres a much easier way to sort it. Get out of the chair, turn the PC off and walk down to a bank, then ask them.

Come back when you've found out I am 100% correct.

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Injin's 100% right on this one, without needing to take trip to Injin World.

With a reserve of 10%, and a deposit of £100, a bank can lend £900 - that's £800 pounds created out of thin air before you even get down to accounting shenanigans...

He is right, but no pounds were created at all. Some IOUs may have been created and passed about, but that's all.

You can call their bluff any time you like. Just withdraw your money.

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Yes, it is.

The actual money supply is about 2% of the total amount that banks claim to have.

Therefore, if they say they loaned you money, you have a 98% chance they are full of shit. But all this is academic, and theres a much easier way to sort it. Get out of the chair, turn the PC off and walk down to a bank, then ask them.

Come back when you've found out I am 100% correct.

That's how banking works. It's not a conspiracy. Do you expect them to take your cash and lock it away for whenever you turn up?

All banks are illiquid. The idea is that the central bank can add liquidity if there's a 'run'.

The world hasn't crashed because of the way our money works, it's crashed because it was abused. At 10:1 ratio there needs to be a lot of defaults before a bank becomes insolvent. At 50:1 a much smaller amount.

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That's how banking works.

It doesn't work, it completely collapses the economy every decade or so, but whatever.

It's not a conspiracy. Do you expect them to take your cash and lock it away for whenever you turn up?

yes, because that's what they contracted to do. I also expect them to have some money when they loan, not just pretend to and write it down.

All banks are illiquid. The idea is that the central bank can add liquidity if there's a 'run'.

No, all banks are always insolvent. That the CB can actually do what the bansk have already signed contracts to the effect has alreayd happened just proves all banking is fraud.

The world hasn't crashed because of the way our money works, it's crashed because it was abused. At 10:1 ratio there needs to be a lot of defaults before a bank becomes insolvent. At 50:1 a much smaller amount.

Piffle.

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That's how banking works. It's not a conspiracy. Do you expect them to take your cash and lock it away for whenever you turn up?

Certainly that is most people's perception of how the system operates, so I think it's fair to call it a conspiracy, given that it's a) surreptitious and B) fraudulent.

The world hasn't crashed because of the way our money works, it's crashed because it was abused. At 10:1 ratio there needs to be a lot of defaults before a bank becomes insolvent. At 50:1 a much smaller amount.

But because the system is 'abusable', it will inevitably be abused to the point that it does crash, courtesy of human nature. It is 'the fact that the possibility of abuse exists in this way', rather than 'the fact that the system has been abused', which leads one to conclude that 'the world has indeed crashed because of the way our money works'.

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At this point I am going to point out something that always fascinates me about banking and those who say there is nothing wrong with it.

They acknowledge that the general public perception isn't quite how the system really works, and then breeze right past that fact like it doesn't matter. But the general public signs contracts with the banking empire all day every day. If they are doing so at best in error, how can anyone say that this circumstance is perfectly fine.

Anyone?

Joe public and the banks sign contracts, but apparently joe publics understanding means ****** all, he's just wrong and captain banker is always right. How come?

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At this point I am going to point out something that always fascinates me about banking and those who say there is nothing wrong with it.

They acknowledge that the general public perception isn't quite how the system really works, and then breeze right past that fact like it doesn't matter. But the general public signs contracts with the banking empire all day every day. If they are doing so at best in error, how can anyone say that this circumstance is perfectly fine.

Anyone?

Joe public and the banks sign contracts, but apparently joe publics understanding means ****** all, he's just wrong and captain banker is always right. How come?

It sounds like contract fraud to me. There has been no 'meeting of minds'.

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How about a world without fraudsters?

Fraud? Is there really anyone out there (with a IQ above 70) who thinks that the money they deposit in a bank isn't lent to someone else?

Do you think the bank should not lend out your money? In which case you are suggesting world without debt?

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He is right, but no pounds were created at all. Some IOUs may have been created and passed about, but that's all.

(...)

At the risk of needless complication:

It should create £s.

The bank should make a profit on the trade,

retain part of this profit and lodge it with the BoE,

at which point it becomes cold hard Core Tier 1 Capital.

At this point I am going to point out something that always fascinates me about banking and those who say there is nothing wrong with it.

They acknowledge that the general public perception isn't quite how the system really works, and then breeze right past that fact like it doesn't matter. But the general public signs contracts with the banking empire all day every day. If they are doing so at best in error, how can anyone say that this circumstance is perfectly fine.

Anyone?

Joe public and the banks sign contracts, but apparently joe publics understanding means ****** all, he's just wrong and captain banker is always right. How come?

I'd see that as a problem of education.

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Fraud? Is there really anyone out there (with a IQ above 70) who thinks that the money they deposit in a bank isn't lent to someone else?

Yes, the majority of the general public think exactly that their money is there at the bank, waiting for them.

Do you think the bank should not lend out your money? In which case you are suggesting world without debt?

I think that the bank should keep hold of my money, safely and securely until I need it.

Just like I asked them to and just like the general public ask them to.

I don't care about consequences, btw. Just the morality.

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Yes, the majority of the general public think exactly that their money is there at the bank, waiting for them.

I think that the bank should keep hold of my money, safely and securely until I need it.

Just like I asked them to and just like the general public ask them to.

I don't care about consequences, btw. Just the morality.

I think you're looking for fraud and conspiracy, when as Timm said, it's really a problem with an uneducated public. (this is whole other issue).

But under your suggestion, there would only be narrow money and no debt. We'd need to experiment, but I have a feeling this would greatly reduce our standard of living. It would put us just past the bartering stage.

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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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