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TalkingSense

Economics, banks, regulation, money creation and house prices

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So, I guess we're all agreed on this forum that house price inflation began in late '90s and continued onwards due to deregulation of money creation by private banks. This includes Building Society de-mutualisation, and allowing banks into the residential mortgage market.

I have since been following Prof Richard Werner, Prof Steve Keen and read Treasure Islands by Nicholas Shaxson. Also 'Debt: The First 500 Years' by David Graeber and 'Austerity, The History of a Really Bad Idea' is a great book too.

There are 3 sources of creation of money:

a) BOMD (Bank Originated Money and Debt) - i.e. when a bank creates your mortgage, all it is doing is buying  a security from you, and changing a figure in your bank account to show your new debt. I.e. it has no money, no money changes hands.
Watch:
https://www.youtube.com/watch?v=EC0G7pY4wRE

B) Govt runs a surplus - which really means pushing a) and c) offshore

c) Govt spends more than it gets back in taxes
And the clever bit is c).
Because a govt has it's own bank (BoE), it can create money. And unlike private banks (BOMD) - it is created free of debt.

Prof Werner speaks of bringing in 'guidance of bank credit' rules. So that we have the right amount of money created for investing in productive activities and can moderate that created for speculation / property.

Also PositiveMoney.org has a lot of info and a rapidly growing base of activists.
 

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33 minutes ago, TalkingSense said:

So, I guess we're all agreed on this forum that house price inflation began in late '90s and continued onwards due to deregulation of money creation by private banks. This includes Building Society de-mutualisation, and allowing banks into the residential mortgage market.

(Emphasis added.)

I've read and enjoyed a number of the books you mention, but I disagree with your claim. UK house prices are volatile and whilst this volatility shows up over timescales that are significant compared to working lives, the volatility is still there and is still a hazard to be negotiated over an individual's lifetime. The roots of this volatility and the extent to which land (or perhaps the land value of housing wealth) has become so problematic in the UK economy are not some late 90s phenomenon. It was the same damn thing in the late 1980s (and before that too).

Really dreadful idea to suggest that you have a feel for what everyone on the forum agrees upon. You've knocked out 150-ish posts since 2007. Are you on the forum? Does the forum have a party line that correctly represents you even if you fail to represent yourself? My advice (I realise you didn't ask for it) is that you should set forth your own views because you want to. Imagining yourself as a voice of reason who is talking sense and making sense out of the forum is almost always a bad move.

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