Milton Posted April 4, 2012 Share Posted April 4, 2012 (edited) Here's a quote from Paul Fisher (Executive Director of the BoE and member of the MPC) broadcast on Sunday in a programme called "What is Money?" in the Radio 4 series "Analysis" Presenter: Would you mind if I printed my own money - it wouldn't look anything like yours from the Bank of England.Paul Fisher (Bank of England): Yes we would mind. When you start printing money, you create value for yourself. If you could issue one thousand pounds worth of IOUs, you've got a thousand pounds for nothing. And so we do restrict people's ability to create their own notes in that way. Presenter: You're protecting us against ourselves. Fisher: We're protecting you from charlatans. Listen to the original here (29 min; right towards the end) So if someone can create money out of nothing, they get value for nothing? And are charlatans? Does this only apply if you're printing paper money, or does it also apply to the banks that have created over £2trillion of money out of nothing electronically? Did they get £2trillion of value for nothing? Something for us all (and especially the Bank of England) to ponder! *Positive Money's Newsletter Edited April 4, 2012 by Milton Quote Link to comment Share on other sites More sharing options...
OnlyMe Posted April 4, 2012 Share Posted April 4, 2012 The bankrupt of england want a monopoly in charalatanism. Quote Link to comment Share on other sites More sharing options...
bmf Posted April 4, 2012 Share Posted April 4, 2012 I listened to this and wanted to transcribe the very bit you have provided. The other part was when speaking about QE and asked where the money comes from, before saying "we create it out of nothing" he laughs. I thought it was interesting that this program was on Radio 4. Money is symbolic and Radio 4 isn't quick to question received wisdom. Analysis is on twice (it's repeated on Sunday) so this must have been heard by lots of people. In my experience people do not think about the origin or meaning of money +at all+. It's too woven into the fabric of our society to question it. Once you do question it the path that takes you down is IMHO inevitable. It just takes a loose thread to pull and the whole thing unravels before you. Therefore even though this program was very basic it provides the thread to pull on. Quote Link to comment Share on other sites More sharing options...
SleepyHead Posted April 4, 2012 Share Posted April 4, 2012 (edited) Brilliant. It's got Adam Ferguson on it too. Must listen for everyone. You can't understand the crisis without understanding this. For those who haven't come across 'when money dies', this is the author. Edited April 4, 2012 by sleeping dog Quote Link to comment Share on other sites More sharing options...
easy2012 Posted April 4, 2012 Share Posted April 4, 2012 But who is going to protect us from Bank Of England ? Quote Link to comment Share on other sites More sharing options...
The Spaniard Posted April 4, 2012 Share Posted April 4, 2012 I listened to this and wanted to transcribe the very bit you have provided. Link to a full BBC transcript: http://news.bbc.co.uk/1/shared/spl/hi/programmes/analysis/transcripts/26_03_12.pdf And a link to the posiitvemoney blog and comments on it: http://www.positivemoney.org.uk/2012/03/analysis-on-money-bbc-radio-4-at-2030-monday-26-march/ Quote Link to comment Share on other sites More sharing options...
bmf Posted April 4, 2012 Share Posted April 4, 2012 Link to a full BBC transcript: http://news.bbc.co.uk/1/shared/spl/hi/programmes/analysis/transcripts/26_03_12.pdf And a link to the posiitvemoney blog and comments on it: http://www.positivemoney.org.uk/2012/03/analysis-on-money-bbc-radio-4-at-2030-monday-26-march/ Thanks. Quote Link to comment Share on other sites More sharing options...
Democorruptcy Posted April 4, 2012 Share Posted April 4, 2012 Financial Policy Committee have also refused to make any meaningful effort to limit mortgage lending. Not their department apparently. So what are they there for? Too scared of criticism to do any policies, so they say! Boe warns on mortgage limits http://www.ft.com/cms/s/0/f608f560-78ea-11e1-9f0f-00144feab49a.html Quote Link to comment Share on other sites More sharing options...
24gray24 Posted April 4, 2012 Share Posted April 4, 2012 There's no such thing as money for nothing. It's coming out of diluting the value of everyone else's money. When you do it, it's called counterfeiting. When the government does it, it's called inflation. Quote Link to comment Share on other sites More sharing options...
Traktion Posted April 4, 2012 Share Posted April 4, 2012 (edited) It's funny, really. They rename debt, as credit, then conflate credit with money, while pretending that bits of paper can be swapped for something, when they can't. If anyone else tried this crap, they would call it fraud. Money is barter. It isn't something magically invented as the video suggests - it is just an evolution. Swapping eggs for carrots may be useful, but swapping eggs for silver, then for carrots is still barter - it just involves a item which is more universally valued (silver) than the others (eggs or carrots). You can call this commonly bartered item 'money', but it is still a bartered item. Interestingly, digital money doesn't need to be in the most commonly bartered good. As any good can be traded instantly with another, you can ensure whatever the other party wants can be provided. If you have a holding of carrots and want to bug eggs, a digital wallet could trade the carrots for silver, allowing you to swap the silver for eggs. Ofc, banks could already offer these services via bank cards and their digital network. However, you're restricted to what the banking cartel will offer you and at what price. Swapping items for promises of items isn't complex either. As long as you're aware of the difference, it is a free trade. One in the hand is worth two in the bush, as the saying goes, but if you're happy to trust the bush, that's just dandy. The problem occurs, when someone pretends promises are items. They are clearly not the same thing. Worse still is when a third party makes bad promises on your behalf and then dilutes your items to make the bad promises good. That's what QE is doing and it devalues the currency, to avoid promises being broken. If you break money down into its component form, it really isn't complex. It seems to me that people who try to tell you otherwise are deliberately trying to mislead. edit: typo Edited April 4, 2012 by Traktion Quote Link to comment Share on other sites More sharing options...
Traktion Posted April 5, 2012 Share Posted April 5, 2012 (edited) Yes- money is a great intermediating tool between items however you do it. The real problem arises when people try to 'store wealth' by lengthening the time bewtween interemediation of items. The whole purpose of inflation is to age money to nothing to try and bring the system back to balance. Unfortunately the wealthy know this and swap their money wealth for stuff people will always need, which due to population growth, economic growth, improvements to market access and liquidity, has meant their stored wealth isn't only stored but massively increased. That is when the taxation tool has to be more effective - where we sit now. I would argue that without legal tender legislation and tight planning legislation, the rich would fine it hard to monopolise markets. With bailouts and so forth, the market will take from those who seek rapid gains too. Giving people the choice to use whatever money they like, means that when an item type becomes overly hoarded, alternatives can be used instead. Granted, in the age of physical (paper/metal) money, there was resistance to use unknown alternatives. In the age of digital money, there will be little resistance, as items can be valued and traded with external 3rd parties, before final payment is made to the person you are directly trading with. However, there is an argument that hoarding isn't a problem anyway, as it will just cause the value of the currency to rise until the hoarded money is released. Unless you have lots of credit, deflation is not a problem. Item prices going down, relative to the price of money going up, is not in itself harmful though. Even the 'stickiness' of prices can be worked around, through contracts which plan accordingly. Ofc, we do have loads of credit in our current system, which then means deflation could destroy it. However, if the current system is flawed due to this inflexibility, requiring all sorts of complex counter measures to counterbalance, arguably it should fail. The system needs to be able to breath out, as well as in. Edited April 5, 2012 by Traktion Quote Link to comment Share on other sites More sharing options...
Sour Mash Posted April 5, 2012 Share Posted April 5, 2012 Yes- money is a great intermediating tool between items however you do it. The real problem arises when people try to 'store wealth' by lengthening the time bewtween interemediation of items. The whole purpose of inflation is to age money to nothing to try and bring the system back to balance. Unfortunately the wealthy know this and swap their money wealth for stuff people will always need, which due to population growth, economic growth, improvements to market access and liquidity, has meant their stored wealth isn't only stored but massively increased. That is when the taxation tool has to be more effective - where we sit now. Rubbish - how do you propose people are able to defer the fruits of their personal production? Note that stuffing your excess income in a bank isn't actually 'hoarding' in any sense of the word as you are providing the bank with capital against which to leverage and extend bank credit to productive enterprises. (That the banks have been stupidly choosing to extend credit to hopeless, unproductive borrowers isn't the fault of the saver.) Or would you see everyone forced to borrow in order to buy things that cost more than their disposable income, thus incurring an interest penalty on top of the cost of purchase? Inflation doesn't serve any useful grand purpose. It is however a tool overused by those in control of money issuance to get something for nothing. Quote Link to comment Share on other sites More sharing options...
easy2012 Posted April 5, 2012 Share Posted April 5, 2012 Yes- money is a great intermediating tool between items however you do it. The real problem arises when people try to 'store wealth' by lengthening the time bewtween interemediation of items. The whole purpose of inflation is to age money to nothing to try and bring the system back to balance. Unfortunately the wealthy know this and swap their money wealth for stuff people will always need, which due to population growth, economic growth, improvements to market access and liquidity, has meant their stored wealth isn't only stored but massively increased. That is when the taxation tool has to be more effective - where we sit now. Not really - that was not the original purpose of money. Money was originally a standardise unit of account to record favours owed. So, I give you a sheep today and we standardise that as £5. So, I can get £5 worth of something back from you some days later. As the unit is standardised, it is fungible. It is a records of human trade relationships. The printing and bank credit inflation beyond what could ever be repaid were the problem and those involves should pay the price. Those that should go bust should go burst and debts are swapped for assets. The purpose of inflation is none other than to default on one's obligation without going bust. Quote Link to comment Share on other sites More sharing options...
Democorruptcy Posted April 5, 2012 Share Posted April 5, 2012 a question uppermost in my mind.these idiots helped create the biggest credit bubble in our histroy and still didn't manage to see it coming. What makes you think they didn't see it coming? Who do you think they are looking out for and have those people done well out of it? Quote Link to comment Share on other sites More sharing options...
libspero Posted April 5, 2012 Share Posted April 5, 2012 Surely it doesn't "create value", it simply redistributes a little bit from everybody else to you. Quote Link to comment Share on other sites More sharing options...
OnlyMe Posted April 5, 2012 Share Posted April 5, 2012 (edited) Surely it doesn't "create value", it simply redistributes a little bit from everybody else to you. Maybe they are refering to "creating value" in the same way as gaming the economy with QE is creating value in their massively one -nstrument allocated pension fund. Redistribution - more like racketeering and fraud. Edited April 5, 2012 by OnlyMe Quote Link to comment Share on other sites More sharing options...
billybong Posted April 5, 2012 Share Posted April 5, 2012 a question uppermost in my mind.these idiots helped create the biggest credit bubble in our histroy and still didn't manage to see it coming. It's not as if they didn't have a similar (but far smaller) bubble just about 18 years ago to learn from - peak to peak. Quote Link to comment Share on other sites More sharing options...
winkie Posted April 5, 2012 Share Posted April 5, 2012 ...when the banks aren't lending the BofE have to print to fill the gap....inflation growth is the only way out, upwards and onwards, until the people stop spending. Quote Link to comment Share on other sites More sharing options...
zebbedee Posted April 5, 2012 Share Posted April 5, 2012 I think he just misspoke, he actually meant to say Creating Money Gives You "Nothing of Value". I wonder if the obvious conclusion re QE of his statement actually dawned on him at any point then or after. Quote Link to comment Share on other sites More sharing options...
Lepista Posted April 5, 2012 Share Posted April 5, 2012 ...If you could issue one thousand pounds worth of IOUs, you've got a thousand pounds for nothing. And so we do restrict people's ability to create their own notes in that way.... Is that really true? If so, then are you allowed to write IOU's? If you are allowed to create IOU's, what's to stop you printing a "note" that promises to pay the bearer on demand the sum of £1? I can write an IOU to my friend, the pub, the local shop. Can I be locked up for counterfeiting for that? Quote Link to comment Share on other sites More sharing options...
Lepista Posted April 5, 2012 Share Posted April 5, 2012 (edited) I don't think so. For instance, anyone can issue an invoice which is a 'you owe me'. And invoices can even be traded e.g. by invoice factors. The last government even made it legal to charge interest against unpaid invoices. (they didn't really understand what they were doing wrt what that means for the money supply). You still have the small problem of paying taxes. And it doesn't help you to avoid tax...except by illegal means (as it is the value of goods and services earned/traded that is key). I don't think so. For instance, anyone can issue an invoice which is a 'you owe me'. And invoices can even be traded e.g. by invoice factors. The last government even made it legal to charge interest against unpaid invoices. (they didn't really understand what they were doing wrt what that means for the money supply). You still have the small problem of paying taxes. And it doesn't help you to avoid tax...except by illegal means (as it is the value of goods and services earned/traded that is key). well exactly - an invoice is only the other side of the coin to an IOU. If creating IOU's is illegal, then surely an invoice is illegal too? EDIT: Sorry, Completely misread your post. If writing IOU's is NOT illegal, then surely I can wriet a "note" that says that I promise to pay the bearer, on demand, the sum of £1. If I did that, then what's to stop people using that "note" as a "currentcy and trading / bartering with said note? Edited April 5, 2012 by Lepista Quote Link to comment Share on other sites More sharing options...
Bloo Loo Posted April 5, 2012 Share Posted April 5, 2012 Yes- money is a great intermediating tool between items however you do it. The real problem arises when people try to 'store wealth' by lengthening the time bewtween interemediation of items. The whole purpose of inflation is to age money to nothing to try and bring the system back to balance. Unfortunately the wealthy know this and swap their money wealth for stuff people will always need, which due to population growth, economic growth, improvements to market access and liquidity, has meant their stored wealth isn't only stored but massively increased. That is when the taxation tool has to be more effective - where we sit now. hoarding shouldnt be a problem, as the wealth created by the sensible lending in the first place, is now available to borrow against. sadly, much lending is against unproductive assets...like housing...housing will absorb more and more spending power...as does ANY ponzi scheme. Quote Link to comment Share on other sites More sharing options...
Sour Mash Posted April 5, 2012 Share Posted April 5, 2012 Is that really true? If so, then are you allowed to write IOU's? If you are allowed to create IOU's, what's to stop you printing a "note" that promises to pay the bearer on demand the sum of £1? I can write an IOU to my friend, the pub, the local shop. Can I be locked up for counterfeiting for that? Of course it's perfectly legal to write your own IOUs and if people are willing to trade them for goods and services, well done. What's illegal is counterfeiting the Bank of England's IOUs. Quote Link to comment Share on other sites More sharing options...
Lepista Posted April 5, 2012 Share Posted April 5, 2012 Of course it's perfectly legal to write your own IOUs and if people are willing to trade them for goods and services, well done. What's illegal is counterfeiting the Bank of England's IOUs. Yes, but then you're not writing an IOU - you're counterfieting, you're promising that the BOE will pay you £1 on demand. It would be the same as my mate bob writing an IOU saying *I* will pay £1 on demand. That would also be "counterfeighting" (or fraud). Quote Link to comment Share on other sites More sharing options...
Traktion Posted April 5, 2012 Share Posted April 5, 2012 Not really - that was not the original purpose of money. Money was originally a standardise unit of account to record favours owed. So, I give you a sheep today and we standardise that as £5. So, I can get £5 worth of something back from you some days later. As the unit is standardised, it is fungible. It is a records of human trade relationships. The printing and bank credit inflation beyond what could ever be repaid were the problem and those involves should pay the price. Those that should go bust should go burst and debts are swapped for assets. The purpose of inflation is none other than to default on one's obligation without going bust. Whether it was the original purpose or not, clearly some do want to hold money, hoping it will store value. As such, the unit of account changes in value (against other items), depending on the supply/demand for the money. If you have all of your contracts in a single money (including loans), then fluctuations in the value of that money can affect your ability to plan. However, this is very much a contractual problem. If you were free to choose what to use or accept as a unit of account, you would likely pick the one which was most predictable and stable. This gives you something to anchor your activities around. You may also decide to put the exchange/inflation/deflation risk on to the 3rd party. For instance, if you were trading carrots, you may want to promise to deliver £100 worth of carrots, rather than 1000 carrots. Perhaps you can have the biggest/smallest of the two even. Quote Link to comment Share on other sites More sharing options...
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