Jump to content
House Price Crash Forum
Sign in to follow this  
Bland Unsight

Creating Money - For What Purpose - Adair Turner

Recommended Posts

First up, a hat tip to Just Yield who posted a link to the talk on Sceppy's recent thread about debt.

I found the slides for the presentation here as a pdf.

My economics background is very thin and though a couple of bits and pieces went straight over my head the talk is pretty accessible and certainly the main thesis is mapped out straightforwardly.

For anyone who browses these boards and thinks that all this "banks make money out of thin air" stuff is just the Tin Foil Hat lunacy of the internet fringe, I direct your attention to 8'02" in the video where Turner says the same thing in Latin, (because he's very dapper).

I think it is absolutely fundamental to understand that banks do not intermediate already existing money, they create money and credit ex nihilo de novo. When a bank gives a loan to, let us say, an entrepreneur and put onto the asset side of their balance sheet Loan to Entrepreneur they put onto the entrepreneur's deposit account the money and at that moment it is quite clear that they have created credit and money. Now there may be some constraints on how much they can create deriving from whether they need to keep reserve assets at a central bank or whether they need to keep equity but quite clearly they create credit money

The argument continues that the creation of new credit money (obviously) creates new purchasing power and that the matter of to whom that purchasing power is granted is fundamental. Turner argues that when economics deals with banks it always assumes that the banks lend the new credit money to firms in order to finance various new commercial endeavours, whereas, Turner states, about 60%-70% of bank lending is allocated to real estate much of it for the purchase of already existing assets. In fact, only about 15% of bank lending fits the profile of 'bank lending' as per the theory.

For me this is final and unavoidable evidence that Lord Turner is Injin.

However, I also think that it is important for anyone who is angered or frustrated by house prices to at least engage with the nature of banking and money creation and get to grips with how our money works, because I think it is the reality of how banks allocate the money that they create that is defining - i.e. it is the cause of the problem and if it does not change it defines the kinds of solution that are possible. If 70% of new credit money was allocated to people who wanted to build houses and only 15% to people who wanted to gamble on the price of existing houses we would not have a big chunk of a generation of 30-somethings living in their childhood bedroom.

The problem is not that we have corrupt too-big-to-fail banks, the problem is that we have the wrong kind of banks with the wrong incentives and by allowing the power to create new credit money to vest in those institutions we allow them to decide what kind of society we are going to have.

Thatcher's government fought an undemocratic concentration of political power in un-elected unions. Maybe she went too far, maybe she didn't. Your political colours will answer that question. However, we did reach a point where there were enough people in society who identified concentration of power in the unions as a plausible candidate for "a problem we need to fix". Today we need our political class to fight an undemocratic concentration of political power in the banks - we need to interpret the ongoing housing crisis for what it really is - a banking crisis. But not a crisis of liquidity or solvency, not an acute crisis - we have a chronic crisis. We are living in a world where the banks are not machines that serve us, we are living in a world created by the banks where we exist to serve them, and that's bonkers.

Edited by ChairmanOfTheBored

Share this post


Link to post
Share on other sites

The LSE has finally realised that money and credit need to be represented in a model of the macroeconomy for it to make any sense? What a f***ing shower. Economics is too important to be left in the hands of these dyscalculic charlatans.

Share this post


Link to post
Share on other sites

The LSE has finally realised that money and credit need to be represented in a model of the macroeconomy for it to make any sense? What a f***ing shower. Economics is too important to be left in the hands of these dyscalculic charlatans.

Amen to that.

There is an amusing exchange between Goodhart and Turner in the Q&A along those lines...

Turner references a past conversation where Goodhart told Turner that economists wanted to make the maths tractable so they made assumptions that were "silly". Turner then asks Goodhart if that account is a fair reflection of the exchange and Goodhart says "Almost"

Edited by ChairmanOfTheBored

Share this post


Link to post
Share on other sites

amen to that. I have had pages of argument on these threads with people who swear blind that FRB does not exist and banks do not create money out of nothing.

If people on these boards still dont get it, either we have a far bigger problem of ignorance than I thought possible, or there are disinfo artists here.

Share this post


Link to post
Share on other sites

First up, a hat tip to Just Yield who posted a link to the talk on Sceppy's recent thread about debt.

I found the slides for the presentation here as a pdf.

My economics background is very thin and though a couple of bits and pieces went straight over my head the talk is pretty accessible and certainly the main thesis is mapped out straightforwardly.

For anyone who browses these boards and thinks that all this "banks make money out of thin air" stuff is just the Tin Foil Hat lunacy of the internet fringe, I direct your attention to 8'02" in the video where Turner says the same thing in Latin, (because he's very dapper).

The argument continues that the creation of new credit money (obviously) creates new purchasing power and that the matter of to whom that purchasing power is granted is fundamental. Turner argues that when economics deals with banks it always assumes that the banks lend the new credit money to firms in order to finance various new commercial endeavours, whereas, Turner states, about 60%-70% of bank lending is allocated to real estate much of it for the purchase of already existing assets. In fact, only about 15% of bank lending fits the profile of 'bank lending' as per the theory.

For me this is final and unavoidable evidence that Lord Turner is Injin.

However, I also think that it is important for anyone who is angered or frustrated by house prices to at least engage with the nature of banking and money creation and get to grips with how our money works, because I think it is the reality of how banks allocate the money that they create that is defining - i.e. it is the cause of the problem and if it does not change it defines the kinds of solution that are possible. If 70% of new credit money was allocated to people who wanted to build houses and only 15% to people who wanted to gamble on the price of existing houses we would not have a big chunk of a generation of 30-somethings living in their childhood bedroom.

The problem is not that we have corrupt too-big-to-fail banks, the problem is that we have the wrong kind of banks with the wrong incentives and by allowing the power to create new credit money to vest in those institutions we allow them to decide what kind of society we are going to have.

Thatcher's government fought an undemocratic concentration of political power in un-elected unions. Maybe she went too far, maybe she didn't. Your political colours will answer that question. However, we did reach a point where there were enough people in society who identified concentration of power in the unions as a plausible candidate for "a problem we need to fix". Today we need our political class to fight an undemocratic concentration of political power in the banks - we need to interpret the ongoing housing crisis for what it really is - a banking crisis. But not a crisis of liquidity or solvency, not an acute crisis - we have a chronic crisis. We are living in a world where the banks are not machines that serve us, we are living in a world created by the banks where we exist to serve them, and that's bonkers.

lets just get this absolutely straight.

ANYONE can give credit to anyone...these clowns argue that THAT is money creation. It is not...It IS a credit creation, in the case of the banker, maybe a loan, or maybe a credit card limit.

In the case of a garage, it is installing an engine, or simply giving a credit for future work, say a voucher.

In all cases though, as soon as the credit is called up to be spent, the bank has to cough up whatever cash it can lay its hands on. And it has to get this from somewhere.

There is no banker saying to the chip shop...our client has a credit line and has paid for his dinner with a cheque to his account...we are going to credit your account with xbank and debit his account with us....because, xbank will want something to put into their books to credit THEIR client...the banks have to exchange funds...

This is where credit is different to cash.

The bankers however, count money as both credit and cash in some of their measures of quantity...but YOU cant spend your bank gifted credit without the bank paying the cash over...but YOU CAN spend cash yourself, as THAT is the only means of exchange acceptable in law.

In some cases, I accept, two people may well be at the same bank..in which case, the transfer is a book-keeping exercise.

However, see if the same applies when it comes to creating a repayment at month end...suggest they take a credit from you on your account....oh no, they want cash.

Share this post


Link to post
Share on other sites

lets just get this absolutely straight.

ANYONE can give credit to anyone...these clowns argue that THAT is money creation. It is not...It IS a credit creation, in the case of the banker, maybe a loan, or maybe a credit card limit.

In the case of a garage, it is installing an engine, or simply giving a credit for future work, say a voucher.

In all cases though, as soon as the credit is called up to be spent, the bank has to cough up whatever cash it can lay its hands on. And it has to get this from somewhere.

There is no banker saying to the chip shop...our client has a credit line and has paid for his dinner with a cheque to his account...we are going to credit your account with xbank and debit his account with us....because, xbank will want something to put into their books to credit THEIR client...the banks have to exchange funds...

This is where credit is different to cash.

The bankers however, count money as both credit and cash in some of their measures of quantity...but YOU cant spend your bank gifted credit without the bank paying the cash over...but YOU CAN spend cash yourself, as THAT is the only means of exchange acceptable in law.

In some cases, I accept, two people may well be at the same bank..in which case, the transfer is a book-keeping exercise.

However, see if the same applies when it comes to creating a repayment at month end...suggest they take a credit from you on your account....oh no, they want cash.

You're making a distinction between base money (M0) and commercial bank credit (M4). M0 is not availabe to anyone except the 46 banking entities who hold accounts with the BoE. Therefore, commerical bank credit is what we all use as "money" when not paying in cash. It represents more than 97% of the entire UK money in circulation.

Share this post


Link to post
Share on other sites

You're making a distinction between base money (M0) and commercial bank credit (M4). M0 is not availabe to anyone except the 46 banking entities who hold accounts with the BoE. Therefore, commerical bank credit is what we all use as "money" when not paying in cash. It represents more than 97% of the entire UK money in circulation.

I am definately making that distinction.

credit and money more or less spend the same...but it needs a third party to process credit.

you are mistaken on M0 (M-zero) which is the most liquid measure of the money supply. It only includes cash or assets that could quickly be converted into currency. This measure is known as narrow money because it is the smallest measure of the money supply.

ie, cash in your pocket.

Credit settles nothing.

If it did, we wouldnt need banks to borrow, to pay interest, to do anything at all other then book-keep. If they needed more, they simply issue loans...

as we know, this doesnt and cant work

Edited by Bloo Loo

Share this post


Link to post
Share on other sites

I am definately making that distinction.

credit and money more or less spend the same...but it needs a third party to process credit.

you are mistaken on M0 (M-zero) which is the most liquid measure of the money supply. It only includes cash or assets that could quickly be converted into currency. This measure is known as narrow money because it is the smallest measure of the money supply.

ie, cash in your pocket.

Credit settles nothing.

If it did, we wouldnt need banks to borrow, to pay interest, to do anything at all other then book-keep. If they needed more, they simply issue loans...

as we know, this doesnt and cant work

Chicken or egg? We don't need banks to do any of those things. Banks have created a cartel ensuring we do.

Share this post


Link to post
Share on other sites

lets just get this absolutely straight.

ANYONE can give credit to anyone...these clowns argue that THAT is money creation. It is not...It IS a credit creation, in the case of the banker, maybe a loan, or maybe a credit card limit.

I'm assume that you find your argument completely convincing, and that's fascinating.

When your garage mechanic can find a way to present their willingness to install an engine at some point in the future to the Inland Revenue as payment for an existing tax bill, you argument will have carried the day.

In the meantime, if your garage mechanic wants to pay a tax bill but doesn't have the MONEY to do so, they will perhaps consider approaching a bank for a loan. The bank will assess the extent to which the willingness to install engines may lead to other people who have MONEY giving the mechanic MONEY in exchange for services. The bank may then make the loan and of course, unlike your mechanic, when a licensed bank makes a loan by the act of providing credit it creates MONEY. And that is why your argument is gibberish.

I can provide services and accept that payment may only be received at a later date and thus provide what might be broadly characterised as credit. If the world goes to sh!t and everyone is mad for the quality of my engine installation work I could even offer vouchers which could be redeemed for my work and we could all agree that my vouchers were now MONEY. However, whilst the government persists and can through the existence of the courts require me to discharge certain obligations by ponying up an adequate amount of THEIR MONEY the potency of MY GARAGE MONEY would be questionable, (to make matters explicit what I mean by THEIR MONEY is it is the money that the government accept as MONEY - i.e. it is 'theirs' because its the source of its potency is their power).

Most people would agree that THEIR MONEY was MONEY and that MY GARAGE MONEY was a voucher for services at my garage. A market might exist for converting MY GARAGE MONEY into THEIR MONEY but that wouldn't make MY GARAGE MONEY into MONEY.

Crucially, only a bank can provide me with £400,000 of THEIR MONEY which any other bank is legally obliged to accept as MONEY because it is THEIR MONEY.

When you can find a garage who can provide me with a loan of £400,000 of engine installation vouchers that I can subsequently use to buy a house, you have an argument. Until then it's just a load of blah-blah revolving around what you think credit is or should be and what you think money is or should be.

Edited by ChairmanOfTheBored

Share this post


Link to post
Share on other sites

you are mistaken on M0 (M-zero) which is the most liquid measure of the money supply. It only includes cash or assets that could quickly be converted into currency. This measure is known as narrow money because it is the smallest measure of the money supply.

This is just wrong. Unless you know more about the definition of M0 than the Bank of England - which I doubt.

M0 comprised sterling notes and coin in circulation outside the Bank of England (including those held in banks' and building societies' tills), and banks’ operational deposits with the Bank of England.

Source: Bank of England - Explanatory Notes - M0

Base money is as dom states notes and coins and the licensed banks' reserve accounts at the Bank and nothing else. By suggesting that it is "assets that could be converted into currency" you are just making a fool of yourself, so stop. Likewise the idea of a 'liquid measure' is nonsense. A google search of +"liquid measure" +money throws up just 2 hits. One is a free game on MSE and the other is some crap site called Trading Economics. The statement therein reads, "The United States Money Supply M0 is the most liquid measure of the money supply including coins and notes in circulation and other assets that are easily convertible into cash." Does that sound familiar?

Truth is that you've just cut and paste lazy copy from some half-wit intern, you're damning yourself with your own ignorance. If you knew what you were talking about you'd lift from better sources. Liquidity is a quality of an asset-like quantity, a measure cannot be liquid.

If you're trolling this thread then you've been called out. If you think you're adding something, you're not. If you want to learn, read. If you have questions, ask.

Share this post


Link to post
Share on other sites

I must admit, I blanched when I saw it was an hour an a half, but it was actually a fairly digestible lecture (actually, i've only seen the first half, as it didn't download properly)

I can't decide whether too give them a bit of credit for actually appearing more intelligent then I thought, or if I'm in shock at how out of touch they were/are.

So it seems that they had a very simplistic model, that seemed to work quite nicely up to the turn of the century or so, and then fell apart. And now they've done a lot of analysis, and they've come to the coclusion that that sometimes credit expands too fast, that actual total credit outstanding can be too high, and that too much of it gets diverted into bidding up the price of assets, instead of being invested in productive industry. It's actually quite encouraging that they've finally noticed, but really, don't any of them have any comon sense. How can it be that it was so obvious to us just from observing the reality on the sreets, and none of them even noticed it?

Actually, I wonder myself if the old simplistic model might have worked if they had just taken into account the shocks caused by the internet and China, and had targetted an inflation rate of -5% or so for the last decade.

Share this post


Link to post
Share on other sites

Credit settles nothing.

This is true, credit/debit (97% of money) must be settled with the 3% of money that is not debt based when the loan is paid off.

This is clearly impossible - so 97% is either going to be defaulted on causing deflation taking us back to the price levels of the early 1970s (or more like the 1770s given wealth distribution), or the central back will QE in behind that debt to settle it. It will buy the debt (all of it) and cancel it by losing it down the back of the sofa.

Given this credit and money are one and the same, unless you shop at Aldi/Lidl..........

Share this post


Link to post
Share on other sites

This is true, credit/debit (97% of money) must be settled with the 3% of money that is not debt based when the loan is paid off.

This is clearly impossible - so 97% is either going to be defaulted on causing deflation taking us back to the price levels of the early 1970s (or more like the 1770s given wealth distribution), or the central back will QE in behind that debt to settle it. It will buy the debt (all of it) and cancel it by losing it down the back of the sofa.

Given this credit and money are one and the same, unless you shop at Aldi/Lidl..........

And consequently QE will not cause any inflation -it will merely pay for the inflation we have already had........ Any dithering in applying that QE will bring about deflation.

Edited by admann

Share this post


Link to post
Share on other sites

This is just wrong. Unless you know more about the definition of M0 than the Bank of England - which I doubt.

Source: Bank of England - Explanatory Notes - M0

Base money is as dom states notes and coins and the licensed banks' reserve accounts at the Bank and nothing else. By suggesting that it is "assets that could be converted into currency" you are just making a fool of yourself, so stop. Likewise the idea of a 'liquid measure' is nonsense. A google search of +"liquid measure" +money throws up just 2 hits. One is a free game on MSE and the other is some crap site called Trading Economics. The statement therein reads, "The United States Money Supply M0 is the most liquid measure of the money supply including coins and notes in circulation and other assets that are easily convertible into cash." Does that sound familiar?

Truth is that you've just cut and paste lazy copy from some half-wit intern, you're damning yourself with your own ignorance. If you knew what you were talking about you'd lift from better sources. Liquidity is a quality of an asset-like quantity, a measure cannot be liquid.

If you're trolling this thread then you've been called out. If you think you're adding something, you're not. If you want to learn, read. If you have questions, ask.

so, a banks reserve account in the BoE is not an asset that can be converted to currency?

Of course it is...as far as the bank is concerned, THAT is used to settle it account with other banks...this is the electronic money that is fabled...and of course, I dont have an account at the BoE.

But, If the bank was a bit short paying me, it can ask the BoE to send cash as its a bit short...the BoE will check there are reserves available and convert to pieces of paper...deliver it to the bank..If there are insufficient reserves, then the BoE will either create a loan via normal procedures or offer an emergency short term loan.

I think you have misunderstood my post, as from your own link for the BoE definition of M0:

DEFINITIONS

M0 comprised sterling notes and coin in circulation outside the Bank of England (including those held in banks' and building societies' tills), and banks’ operational deposits with the Bank of England.

Edited by Bloo Loo

Share this post


Link to post
Share on other sites

This is true, credit/debit (97% of money) must be settled with the 3% of money that is not debt based when the loan is paid off.

This is clearly impossible - so 97% is either going to be defaulted on causing deflation taking us back to the price levels of the early 1970s (or more like the 1770s given wealth distribution), or the central back will QE in behind that debt to settle it. It will buy the debt (all of it) and cancel it by losing it down the back of the sofa.

Given this credit and money are one and the same, unless you shop at Aldi/Lidl..........

apart from QE, all money is a debt note.

Thus, as in the famous bank scene in Mary Poppins, the entire banking system as it is currently allowed to play out, relies on people not spending all their deposits at once ( fractional reserve theory) and velocity, ie the ability to get some money if you need it.

Share this post


Link to post
Share on other sites

I don`t agree with any of this, it`s just a man talking his book.

What wrong with an economy based on 3 things, sound money, optimum population and the usual increment from technology? Such an economy would satisfy the needs of most (times 10) but not the wants of this bloke and fellow greedy barstads.

It`s easy to see that it`s not working and hasn`t worked for 20 years and will work even less well as each year passes.

Share this post


Link to post
Share on other sites

lets just get this absolutely straight.

...

There is no banker saying to the chip shop...our client has a credit line and has paid for his dinner with a cheque to his account...we are going to credit your account with xbank and debit his account with us....because, xbank will want something to put into their books to credit THEIR client...the banks have to exchange funds...

This is where credit is different to cash.

The bankers however, count money as both credit and cash in some of their measures of quantity...but YOU cant spend your bank gifted credit without the bank paying the cash over...but YOU CAN spend cash yourself, as THAT is the only means of exchange acceptable in law.

In some cases, I accept, two people may well be at the same bank..in which case, the transfer is a book-keeping exercise.

However, see if the same applies when it comes to creating a repayment at month end...suggest they take a credit from you on your account....oh no, they want cash.

This is not how our banks work. This is how you think they work, but you are completely mistaken.

In point of fact in the paragraph where you begin "There is no banker..." is, if you replace the words "There is no banker..." with words to the effect of "Loosely speaking how banks actually work is...", is actually a loosely correct description of how things actually work, (up to the claim that they must "exchange funds").

What they actually do is report the detail of the transactions to each other but only settle the net flow. By chance on a given day you could have Lloyds telling Barclays that their UK customers were to receive £100m from Barclays and Barclays agreeing and Barclays telling Lloyds that by coincidence their customers were to receive £100m from Lloyds and Lloyds records would concur. In a sense £100m would move in both directions, but as they settle in net, in another sense, nothing would move at all. Certainly you would have £200m of payments on the day, and not a single penny of base money moving between the two Bank of England accounts.

The idea that gross flows of credit money between licensed banks gives rise to corresponding gross flows of base money of the same order is completely, totally wrong.

At least, that's what the Bank of England think.

Payment and Settlement Systems

Share this post


Link to post
Share on other sites

so, a banks reserve account in the BoE is not an asset that can be converted to currency?

Of course it is...as far as the bank is concerned, THAT is used to settle it account with other banks...this is the electronic money that is fabled...and of course, I dont have an account at the BoE.

But, If the bank was a bit short paying me, it can ask the BoE to send cash as its a bit short...the BoE will check there are reserves available and convert to pieces of paper...deliver it to the bank..If there are insufficient reserves, then the BoE will either create a loan via normal procedures or offer an emergency short term loan.

I think you have misunderstood my post, as from your own link for the BoE definition of M0:

DEFINITIONS

M0 comprised sterling notes and coin in circulation outside the Bank of England (including those held in banks' and building societies' tills), and banks’ operational deposits with the Bank of England.

I suggest that it would be easier for you to accept that the Trading Economics definition that you chose is very poor, rather than try to retroactively harmonise it with the standard definition. You may feel that there is something to be gained from trying to convince yourself that because the set of all "assets that can be easily converted into currency" includes the base money in the form of central bank ledger entries then 'your' definition can be defended. It is a strategy logically akin to suggesting that the definition "apple pie is pudding made from fruit and pastry" is just as good as, or even the same as, the definition "apple pie is a pudding made from apples and pastry".

Anyway, you can have the last word on this one. If you're not prepared to accept that you picked a poor definition from a poor source then this discussion is unlikely to be... fruitful?

Share this post


Link to post
Share on other sites

I suggest that it would be easier for you to accept that the Trading Economics definition that you chose is very poor, rather than try to retroactively harmonise it with the standard definition. You may feel that there is something to be gained from trying to convince yourself that because the set of all "assets that can be easily converted into currency" includes the base money in the form of central bank ledger entries then 'your' definition can be defended. It is a strategy logically akin to suggesting that the definition "apple pie is pudding made from fruit and pastry" is just as good as, or even the same as, the definition "apple pie is a pudding made from apples and pastry".

Anyway, you can have the last word on this one. If you're not prepared to accept that you picked a poor definition from a poor source then this discussion is unlikely to be... fruitful?

The source I picked was less parochial than the Bank of England.

There are no other assets that easily be converted...All others have to be bought, sold or securitised.

Share this post


Link to post
Share on other sites

This is not how our banks work. This is how you think they work, but you are completely mistaken.

In point of fact in the paragraph where you begin "There is no banker..." is, if you replace the words "There is no banker..." with words to the effect of "Loosely speaking how banks actually work is...", is actually a loosely correct description of how things actually work, (up to the claim that they must "exchange funds").

What they actually do is report the detail of the transactions to each other but only settle the net flow. By chance on a given day you could have Lloyds telling Barclays that their UK customers were to receive £100m from Barclays and Barclays agreeing and Barclays telling Lloyds that by coincidence their customers were to receive £100m from Lloyds and Lloyds records would concur. In a sense £100m would move in both directions, but as they settle in net, in another sense, nothing would move at all. Certainly you would have £200m of payments on the day, and not a single penny of base money moving between the two Bank of England accounts.

The idea that gross flows of credit money between licensed banks gives rise to corresponding gross flows of base money of the same order is completely, totally wrong.

At least, that's what the Bank of England think.

Payment and Settlement Systems

where did I say they pay the total amounts and move them back and forth?

They settle daily and pay whatever they are left owing, or collect daily what they are due. As it is all book-keeping, its all done probably with a few journals...journals being the word for dailys.

You are putting methods into my mouth that are clearly not what I said.

Share this post


Link to post
Share on other sites

where did I say they pay the total amounts and move them back and forth?

They settle daily and pay whatever they are left owing, or collect daily what they are due. As it is all book-keeping, its all done probably with a few journals...journals being the word for dailys.

You are putting methods into my mouth that are clearly not what I said.

Oh, and they used to do it with moving banks gold holdings from one pallet to another.

Share this post


Link to post
Share on other sites

where did I say they pay the total amounts and move them back and forth?

They settle daily and pay whatever they are left owing, or collect daily what they are due. As it is all book-keeping, its all done probably with a few journals...journals being the word for dailys.

You are putting methods into my mouth that are clearly not what I said.

Really?

lets just get this absolutely straight.

ANYONE can give credit to anyone...these clowns argue that THAT is money creation. It is not...It IS a credit creation, in the case of the banker, maybe a loan, or maybe a credit card limit.

In the case of a garage, it is installing an engine, or simply giving a credit for future work, say a voucher.

In all cases though, as soon as the credit is called up to be spent, the bank has to cough up whatever cash it can lay its hands on. And it has to get this from somewhere.

There is no banker saying to the chip shop...our client has a credit line and has paid for his dinner with a cheque to his account...we are going to credit your account with xbank and debit his account with us....because, xbank will want something to put into their books to credit THEIR client...the banks have to exchange funds...

This is where credit is different to cash.

The bankers however, count money as both credit and cash in some of their measures of quantity...but YOU cant spend your bank gifted credit without the bank paying the cash over...but YOU CAN spend cash yourself, as THAT is the only means of exchange acceptable in law.

In some cases, I accept, two people may well be at the same bank..in which case, the transfer is a book-keeping exercise.

However, see if the same applies when it comes to creating a repayment at month end...suggest they take a credit from you on your account....oh no, they want cash.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   203 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.