apom Posted May 10, 2006 Share Posted May 10, 2006 (edited) Mine hurts a little.. It's 2001.. four people buy homes.. Four houses are sold one in Devon, two in London and one in Brighton. They all make money.. 2005 and it's time to move… Devon House 1 £100,000 increases to £215,000 London House 2 £130,000 increases to £215,000 House 3 £135,000 increases to £215,000 Brighton House 4 £89,000 increases to £215,000 Now a weird thing happens and the owner of house two needs to move to Devon and Buys house one from the owner who has bought house 4 in Brighton and will miss good beaches but gain better bars. Matey in Brighton has sold up and moved to London, the commute was killing him and Ghandi himself would go postal driving round that one way system So we have an equitable increase in these properties of £406,000 They sold for the same amount so none of the owners had to increase their borrowing (*moving costs were free and stamp duty was waved by a nice man from the tax office. So where did the £406,000 come from.? Who has the £406,000 and if no one has had to see it or produce it what does this mean.? Now do the same sum, but they all sold their properties to each other for £5 each. That would be an equitable loss of £454,020 But again no one has had to find any money, has not made any money or lost any money.. So what the hell happened to the £454,020? Confusing? Fiat money? explains a hell of a lot. But those who have mewed to buy a nice shiny or two.. They won't see what it explains at all.. I would hope this sparks a bit of light hearted banter.. A eureka or two.. In understanding this you are half way toward the dawning realisation of just what makes the whole idiot world tick Edited May 10, 2006 by apom Quote Link to comment Share on other sites More sharing options...
munimula Posted May 10, 2006 Share Posted May 10, 2006 So where did the £406,000 come from.? the increased value in the houses combined. Who has the £406,000 and if no one has had to see it or produce it what does this mean.? what is your point? They would have the £406K between them if they all sold their houses. Now do the same sum, but they all sold their properties to each other for £5 each. That would be an equitable loss of £454,020 But again no one has had to find any money, has not made any money or lost any money.. So what the hell happened to the £454,020? the £454,020 is still in mortgages so owed to the banks assuming mortgages haven't been reduced Confusing? yes - you are Quote Link to comment Share on other sites More sharing options...
DonnieDarker Posted May 10, 2006 Share Posted May 10, 2006 I think the point of the original mail is to say that an enormous amount of money seems to have spawned out of nowhere and it has devalued everything else since..? Quote Link to comment Share on other sites More sharing options...
apom Posted May 10, 2006 Author Share Posted May 10, 2006 I think the point of the original mail is to say that an enormous amount of money seems to have spawned out of nowhere and it has devalued everything else since..? spot on... the increased value in the houses combined. what is your point? They would have the £406K between them if they all sold their houses. the £454,020 is still in mortgages so owed to the banks assuming mortgages haven't been reduced yes - you are Love your footer.. add this? the first year on year drop in VAT receipts since the tax was launched over 30 years ago, latest government figures show Full year VAT revenues in the 2004 fiscal year were £73bn, but slipped slightly to £72.9bn in the just finished year. In the first calendar quarter, receipts were £18.3bn. compared to £18.5bn the previous year. what is your point? They would have the £406K between them if they all sold their houses. They did al sell their houses, the houses sold for that much more then they did in 2001, but this money never existed. Quote Link to comment Share on other sites More sharing options...
Shamus Posted May 10, 2006 Share Posted May 10, 2006 They did al sell their houses, the houses sold for that much more then they did in 2001, but this money never existed. Now if none of them remortgaged for MEW then the extra equity would just be a value on paper. The problem comes when people MEW. Quote Link to comment Share on other sites More sharing options...
CrashedOutAndBurned Posted May 10, 2006 Share Posted May 10, 2006 (edited) So where did the £406,000 come from?Who has the £406,000 and if no one has had to see it or produce it what does this mean? It means big huge fat crippling mortgages are how money is added into circulation. It's ony in the last generation or two that this travesty has gone without being seriously challenged. The creation and supply of money is now left almost entirely to banks and other lending institutions. Most people imagine that if they borrow from a bank, they are borrowing other people's money. In fact, when banks and building societies make any loan, they create new money. Money loaned by a bank is not a loan of pre-existent money; money loaned by a bank is additional money created. The stream of money generated by people, businesses and governments constantly borrowing from banks and other lending institutions is relied upon to supply the economy as a whole. Thus the supply of money depends upon people going into debt, and the level of debt within an economy is no more than a measure of the amount of money that has been created.Mortgages support over 60% (£420 billion) of the money stock in the UK and over 70% ($4.2 trillion) in the US. Housing-debt statistics for the UK and the US show that there has been a dramatic decline in true home ownership as mortgages become higher and ever more widespread. There can be little question that relying upon housing debt to supply money to an economy lacks economic and political justification. The Grip Of Death Edited May 10, 2006 by CrashedOutAndBurned Quote Link to comment Share on other sites More sharing options...
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