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sossij

The Grip Of Death

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I've been reading The Grip Of Death (literally: mortgage) by Michael Rowbotham and thinking about what other posters have been saying about our financial structures being one based on the creation of money through debt.

As I understand the argument, in a debt based economy, industry uses credit to make goods and provide services. Industry also serves to employ people and provides the wages of our consumer society which in turn buys the goods and services provided by industry. The sale price of the goods and services have to cover not only their production costs and an amount to cover employee wages but also an amount to repay the interest on the amount of debtt outstanding that was used to fund the enterprise in the first place. Across the whole economy, therefore, the wages of the employees are never sufficient to buy all the goods and services in the debt based economy. As a result someone always loses out, either someone cannot afford something or a business has to go bust as it cannot cover its interest payments or someone has to go into debt to cover their existing liabilities. Consequently debt always increases.

And just to rub salt into the wound, not only are employee wages insufficient to purchase the goods and services of the economy, they are subject to government taxation too! Purchasing power is thus fundamentally undermined.

No wonder everyone is running to stand still all the time… depressing isn’t it? :(

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Depressing possibly Sossij, but if you want it can be amazingly liberating. Understanding it means you don't have to play the game. You may though feel like the only sane person in the asylum which could mean that others will think you insane.

"what do you mean you don't want a mortgage?......"

Like all pyramid schemes it is only a matter of time until it collapses.

Tin hats are optional

F :lol:

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Guest DissipatedYouthIsValuable
Depressing possibly Sossij, but if you want it can be amazingly liberating. Understanding it means you don't have to play the game. You may though feel like the only sane person in the asylum which could mean that others will think you insane.

"what do you mean you don't want a mortgage?......"

Like all pyramid schemes it is only a matter of time until it collapses.

Tin hats are optional

F :lol:

I listen to you because you have bouncing breasts

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Depressing possibly Sossij, but if you want it can be amazingly liberating. Understanding it means you don't have to play the game. You may though feel like the only sane person in the asylum which could mean that others will think you insane.

"what do you mean you don't want a mortgage?......"

Like all pyramid schemes it is only a matter of time until it collapses.

Tin hats are optional

F :lol:

It's funny how all the HPI nutters want me and many other FTB to get trapped into a life of slavery, because they were to stupid to look at the negatives of that 6x salary, 40 year loan. :blink:

Just because everyones else is getting 6x 40 year mortgages, don't mean it's the smart thing to do. :lol:

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Depressing possibly Sossij, but if you want it can be amazingly liberating. Understanding it means you don't have to play the game. You may though feel like the only sane person in the asylum which could mean that others will think you insane.

"what do you mean you don't want a mortgage?......"

Like all pyramid schemes it is only a matter of time until it collapses.

Tin hats are optional

F :lol:

Unitl then, I'm reminded of the guy in the Matrix who knew it was all an illusion but asked to have his mind wiped and plugged back in again 'cos the illusion was better than reality.... :(

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Unitl then, I'm reminded of the guy in the Matrix who knew it was all an illusion but asked to have his mind wiped and plugged back in again 'cos the illusion was better than reality.... :(

Well there is that of course. Trouble is you can't go back to sleep once you have been awake.

Doomed to spend the rest of your life on forum such as this with a bunch of random nutters instead!

F :D

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Across the whole economy, therefore, the wages of the employees are never sufficient to buy all the goods and services in the debt based economy. As a result someone always loses out

Wages of employees must be insufficient to buy everything they produce as otherwise their employer could never make any profit. However, this would be the case regardless of whether any debt was involved at all. Hardly a revelation.

As a result someone always loses out, either someone cannot afford something

Gee, now that is what I call hardship :-)

or a business has to go bust as it cannot cover its interest payments or someone has to go into debt to cover their existing liabilities. Consequently debt always increases.

No, that simply does not follow.

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Only got time for a quick post but I just wanted to say I highly recommend that book, even if it will make you feel miserable and trapped in the Matrix!

I thought the really useful part of it was the historical perspective. It goes over past money crises and explains what happened when there was too much credit around and the system choked, leading to various meltdowns. Makes you think it could be set to happen again, but doesn't bear thinking about really.

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The Grip Of Death, Literal translation: mortgage.

The old definition which still applies: Mortgage = a millstone around your neck

......defined by the Free Dictionary as:

'a problem or responsibility that you have all the time which prevents you from doing what you want'.

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I first read Grip of Death back in the late 90s while at Uni. Back then, monetary reform ideas were strongest among green-minded people so that's how I came across the book along with stuff by people like David Boyle. Of course, this was all pre housing boom and I hadn't suffered the real world yet so Grip of Death was just another thought-provoking text among many.

Monetary reformers come under attack for being 'cranks' by classical economists who said the idea of debt-free money would be inflationary (although how creating carefully controlled public money and reigning in the power of bank credit would be more inflationary than the present system's difficult to fathom). In the green movement those who wanted to establish classic Marxism as policy didn't much like the freaky rival and tried to paint monetary reform as requiring 'a conspiracy theory of history' or something far-right (the argument was Social Credit founder Clifford Douglas made anti-semitic remarks and anti-banking is generally found in right-wing populism, etc.) Very specious arguments - most modern monetary reformers tend to lean liberal or left on most issues and include people who see the free market as truly free if there was fairer money and anti-capitalists looking for a workable alternative.

Of course, the next decade saw everything described in Grip of Death played out to the letter as the financial sector sucked all real wealth out of the economy and left vast numbers in a massive, er, grip of death. Crank with a crystal ball, or just a darned good analysis?

Rowbotham, for what it's worth, doesn't talk about pie in the sky ideas. He wants to see basically restricted private bank credit (but not it's abolition) and some debt-free money circulated through public works reducing the need for taxation. Ie. the move to debt-free money can be drip-drip, see-how-it-goes not some pie-in-the sky never-gonna-happen overnight change.

Edited by CrashedOutAndBurned

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I first read Grip of Death back in the late 90s while at Uni. Back then, monetary reform ideas were strongest among green-minded people so that's how I came across the book along with stuff by people like David Boyle. Of course, this was all pre housing boom and I hadn't suffered the real world yet so Grip of Death was just another thought-provoking text among many.

Monetary reformers come under attack for being 'cranks' by classical economists who said the idea of debt-free money would be inflationary (although how creating carefully controlled public money and reigning in the power of bank credit would be more inflationary than the present system's difficult to fathom). In the green movement those who wanted to establish classic Marxism as policy didn't much like the freaky rival and tried to paint monetary reform as requiring 'a conspiracy theory of history' or something far-right (the argument was Social Credit founder Clifford Douglas made anti-semitic remarks and anti-banking is generally found in right-wing populism, etc.) Very specious arguments - most modern monetary reformers tend to lean liberal or left on most issues and include people who see the free market as truly free if there was fairer money and anti-capitalists looking for a workable alternative.

Of course, the next decade saw everything described in Grip of Death played out to the letter as the financial sector sucked all real wealth out of the economy and left vast numbers in a massive, er, grip of death. Crank with a crystal ball, or just a darned good analysis?

Rowbotham, for what it's worth, doesn't talk about pie in the sky ideas. He wants to see basically restricted private bank credit (but not it's abolition) and some debt-free money circulated through public works reducing the need for taxation. Ie. the move to debt-free money can be drip-drip, see-how-it-goes not some pie-in-the sky never-gonna-happen overnight change.

Thanks for that COAB, it would be nice if Rowbotham did an update considering the book is now 10 years old: you can effectuvely double the debt statistics from the early chapters!

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I first read Grip of Death back in the late 90s while at Uni. Back then, monetary reform ideas were strongest among green-minded people so that's how I came across the book along with stuff by people like David Boyle. Of course, this was all pre housing boom and I hadn't suffered the real world yet so Grip of Death was just another thought-provoking text among many.

Monetary reformers come under attack for being 'cranks' by classical economists who said the idea of debt-free money would be inflationary (although how creating carefully controlled public money and reigning in the power of bank credit would be more inflationary than the present system's difficult to fathom). In the green movement those who wanted to establish classic Marxism as policy didn't much like the freaky rival and tried to paint monetary reform as requiring 'a conspiracy theory of history' or something far-right (the argument was Social Credit founder Clifford Douglas made anti-semitic remarks and anti-banking is generally found in right-wing populism, etc.) Very specious arguments - most modern monetary reformers tend to lean liberal or left on most issues and include people who see the free market as truly free if there was fairer money and anti-capitalists looking for a workable alternative.

Of course, the next decade saw everything described in Grip of Death played out to the letter as the financial sector sucked all real wealth out of the economy and left vast numbers in a massive, er, grip of death. Crank with a crystal ball, or just a darned good analysis?

Rowbotham, for what it's worth, doesn't talk about pie in the sky ideas. He wants to see basically restricted private bank credit (but not it's abolition) and some debt-free money circulated through public works reducing the need for taxation. Ie. the move to debt-free money can be drip-drip, see-how-it-goes not some pie-in-the sky never-gonna-happen overnight change.

Yes , the Grip of Death is a brilliant book. As you say, Rowbotham doesn’t advocate “some pie-in-the sky” overnight change, he believes a gradual approach is possible.

One of the things he emphasises is that it’s the present situation, where we are effectively using debt as our sole means of exchange, that is the departure from the norm. Until fairly recently (post-war years) over 40% of the money supply was actually created debt-free, and at a useful profit to the country, by the Treasury, in the form of notes and coins.

Now that very little cash is needed, this debt-free input has fallen to around 3%, with businesses and ordinary people having to borrow the other 97% into existence - and keep re-borrowing it back into existence as fast as it’s repaid (faster, in fact, to cover the costs of servicing the debt) if we are to have the money necessary to exchange goods and services with each other.

It’s difficult to understand why, in the cheques and plastic era, successive governments haven’t supplemented the small amount of debt-free cash they continue to issue with enough debt-free, publicly-created credit to make up the difference, rather than placing the burden of creating our national currency on the shoulders of ordinary people.

When posters on this website say that those now up to their ears in debt have only themselves to blame, they might give a thought to the fact that without mass borrowing there would be a recession, as the banks would be unable to create the money needed to keep the wheels of the economy turning. People who have overextended themselves may have been greedy, foolish, or desperate: but in fact, though they may not realise it, they have been going into the red on behalf of their country, since if all debts were repaid, there would be no money in circulation at all.

You can read the first chapter of The Grip of Death here: http://www.freewebs.com/whosemoney

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Wages of employees must be insufficient to buy everything they produce as otherwise their employer could never make any profit.

But the point is that they cannot in principle ever earn enough, their spending power is always undermined.

Edited for rudeness, sorry.

Edited by sossij

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When posters on this website say that those now up to their ears in debt have only themselves to blame, they might give a thought to the fact that without mass borrowing there would be a recession, as the banks would be unable to create the money needed to keep the wheels of the economy turning. People who have overextended themselves may have been greedy, foolish, or desperate: but in fact, though they may not realise it, they have been going into the red on behalf of their country, since if all debts were repaid, there would be no money in circulation at all.

Pointing out the stupidity and greed of people who overextend themselves is not tantamount to advocating a puritan 'don't ever use credit or spend anything more than you absolutely have to' stance.

Accessible credit is a good thing but what has happened in the last 5 or 6 years is a ridiculous loosening of credit standards. However, the credit providers aren't forcing anyone to take their credit and most of the massive debt has been incurred by people in the pursuit of speculation and living a lifestyle beyond their normal means.

Hence, I think it's entirely justified to not feel very sympathetic towards most of the people who are just about to get a 100 ton weight dropped on their financial heads.....

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I have to say I love it this debt based society we have, its great I mean everyone is out there keeping up with the joneses buying computers televisions cars and houses overconsuming with spendthrift greed. they are telesoping the future into the present. and yet the people on here with their careful savings of that ever so unpopular conservative investment of cash quitely sitting in the bank earning 6% compound interest are forgoing todays consumption for tommorows. we will be sitting in our brazilian holiday homes by the pool surrounded by hot chicas while the loosers who blew it all on an X5 and a 3 bed house are still toiling away at the mortgage, and paying for my caprihanans.

Why would you want it any other way ? there is nothing new in economics. its just fear and greed, fear and greed and then you die....you might as well enjoy it!

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I have to say I love it this debt based society we have, its great I mean everyone is out there keeping up with the joneses buying computers televisions cars and houses overconsuming with spendthrift greed. they are telesoping the future into the present. and yet the people on here with their careful savings of that ever so unpopular conservative investment of cash quitely sitting in the bank earning 6% compound interest are forgoing todays consumption for tommorows. we will be sitting in our brazilian holiday homes by the pool surrounded by hot chicas while the loosers who blew it all on an X5 and a 3 bed house are still toiling away at the mortgage, and paying for my caprihanans.

Why would you want it any other way ? there is nothing new in economics. its just fear and greed, fear and greed and then you die....you might as well enjoy it!

Excellent post.

Why spend tomorrow`s wages today, then have to pay back more than you spent ? I`d rather save today`s wages, then spend it tomorrow when it is worth a little more (and I know that all of the bills are paid).

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Is there any reason why the money lending (money creation) industry should not be in the hands of a democratically elected body. Monetary policy would remain unchanged but the interest paid on money borrowed would off-set taxation rather than profit private institutions. My fundamental gripe with the current system is the fact that private business, domestic or foreign, can issue a national currency for profit.

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Is there any reason why the money lending (money creation) industry should not be in the hands of a democratically elected body. Monetary policy would remain unchanged but the interest paid on money borrowed would off-set taxation rather than profit private institutions. My fundamental gripe with the current system is the fact that private business, domestic or foreign, can issue a national currency for profit.

what you mean like a government?

why not try www.zopa.com? you can do it too....

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Interesting that someone else on this thread brought up "The Matrix", this is exactly how I described reading Rowbotham's superb book to my friends: "Now I feel like I can see the matrix"...

If anyone reading this thread hasn't read it, you should.

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It's funny how all the HPI nutters want me and many other FTB to get trapped into a life of slavery, because they were to stupid to look at the negatives of that 6x salary, 40 year loan. :blink:

Just because everyones else is getting 6x 40 year mortgages, don't mean it's the smart thing to do. :lol:

Thing is, this isnt actually the case. Check out all the posts attacking baby boomers with 500k equity. The recent 5 x mortgage crowd are relatively modest arrival on the scene. The vast majority of the house owning population has profited without much risk coming from a HPC - a hundred or two hundred k in equity. OK it may evaporate tomorrow but as of today its still there.

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I've been reading The Grip Of Death (literally: mortgage) by Michael Rowbotham and thinking about what other posters have been saying about our financial structures being one based on the creation of money through debt.

I read the book recently, it started out sensibly enough for the first couple of chapers then I think it turned into nonsense.

Book says: If money is only being extracted from the economy by the banks, we all go into debt trying to pay the interest with the remaining money.

I say: The banks are owned by somebody and that money will re-enter the economy, it all balances up again and the debts can be repaid. (not that most people will unless they have to).

Please correct my misunderstanding if there is one.

VMR.

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I read the book recently, it started out sensibly enough for the first couple of chapers then I think it turned into nonsense.

Book says: If money is only being extracted from the economy by the banks, we all go into debt trying to pay the interest with the remaining money.

I say: The banks are owned by somebody and that money will re-enter the economy, it all balances up again and the debts can be repaid. (not that most people will unless they have to).

Please correct my misunderstanding if there is one.

VMR.

That's ok if you want to be a debt slave for most of your life and gift the banks your labour ! What did the banks do for us to achieve such mass ownership ? Nothing save be given the ability to create debt money. Its about usury - the transfer of wealth. I dont' begrudge the banks making a profit, but once you allow them to create 97% of the money in circulation you are doomed to have to pay it back to them. However it should never have been theirs to begin with !

Government should create enough money for trade and no more. Banks should not be able to create debt money beyond what they have in reserves. Whenever banks get control it leads to inflation, boom and bust, and a tranfer of wealth which is completely unwarranted. As time goes by, less property is owned outright, and more is owed. In reality this is creaping ownership by the banks. It is also happening with industry as company debt increases.

What is truely scary about this book is that all its predictions have come true. You can argue for a long time whether classical economics or reform economics have the correct model, but the evidence is with what is described in the Grip of Death. We are not becoming more wealthy as a society, but more in debt. We own less of our own homes, work harder, now both parents have to work, soon many will have to take on second jobs, and still we naively believe we are becoming more wealthy. We are not !

You have to ask how all the productivity increases, improvements in technology, and longer hours worked has got us into the situation that we owe so much more than in 1950 ! Our houses haven't changed that much. Our needs haven't changed much. We may have a few more gadgets, but we are not more wealthy. We are truely in the financial 'grip of death' with a corrupt money system that amounts to usuary and a tranfer of our wealth to the banks.

Edited by sikejsudjek

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That's ok if you want to be a debt slave for most of your life and gift the banks your labour ! What did the banks do for us to achieve such mass ownership ? Nothing save be given the ability to create debt money. Its about usury - the transfer of wealth. I dont' begrudge the banks making a profit, but once you allow them to create 97% of the money in circulation you are doomed to have to pay it back to them. However it should never have been theirs to begin with !

Government should create enough money for trade and no more. Banks should not be able to create debt money beyond what they have in reserves. Whenever banks get control it leads to inflation, boom and bust, and a tranfer of wealth which is completely unwarranted. As time goes by, less property is owned outright, and more is owed. In reality this is creaping ownership by the banks. It is also happening with industry as company debt increases.

What is truely scary about this book is that all its predictions have come true. You can argue for a long time whether classical economics or reform economics have the correct model, but the evidence is with what is described in the Grip of Death. We are not becoming more wealthy as a society, but more in debt. We own less of our own homes, work harder, now both parents have to work, soon many will have to take on second jobs, and still we naively believe we are becoming more wealthy. We are not !

You have to ask how all the productivity increases, improvements in technology, and longer hours worked has got us into the situation that we owe so much more than in 1950 ! Our houses haven't changed that much. Our needs haven't changed much. We may have a few more gadgets, but we are not more wealthy. We are truely in the financial 'grip of death' with a corrupt money system that amounts to usuary and a tranfer of our wealth to the banks.

Wow! Excellent post, sikejsudjek. Post of the Thread award goes to you! :)

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Pointing out the stupidity and greed of people who overextend themselves is not tantamount to advocating a puritan 'don't ever use credit or spend anything more than you absolutely have to' stance.

Accessible credit is a good thing but what has happened in the last 5 or 6 years is a ridiculous loosening of credit standards. However, the credit providers aren't forcing anyone to take their credit and most of the massive debt has been incurred by people in the pursuit of speculation and living a lifestyle beyond their normal means.

Hence, I think it's entirely justified to not feel very sympathetic towards most of the people who are just about to get a 100 ton weight dropped on their financial heads.....

Sorry, wasn't telling anyone how they should feel about people who go dangerously into debt, just that we're all dependent on lots of them doing so.

The point I was making was that borrowing is becoming increasingly less optional, with more and more loans having to be taken out to replace what is continuously being lost in debt repayments, just to keep the economy going - which is presumably why the banks were given a free rein to go on their loose lending spree.

What we have is not casual, but systemic debt - we now actually use debt as the country's sole means of exchange, with every single pound doing the rounds being owed by someone, somewhere to the banking system. Even the Treasury notes and coins which were originally owed to no-one have been mopped up along the way, since we are now collectively in hock to the banks for more money than exists to pay off the debt.

Restricting the banks to lending money which they actually had, and providing the country with a publicly-created, debt-free national currency in the place of debt wouldn't solve all our economic problems; but it would at least give us a stable means of exchange and a monetary system less subject to manipulation by powerful financial and corporate interests.

http://www.freewebs.com/whosemoney

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Restricting the banks to lending money which they actually had, and providing the country with a publicly-created, debt-free national currency in the place of debt wouldn't solve all our economic problems; but it would at least give us a stable means of exchange and a monetary system less subject to manipulation by powerful financial and corporate interests.

I don't know if it's sensible to do away with fractional reserve banking altogether, and remove banks' right to create more deposits than they have cash to cover. That would make life much harder for the central bank, as they would have to get involved in the management of day-to-day fluctuations in the demand for money. But would it not be a step in the right direction to impose a serious reserve requirement, that required banks to hold say 10% backing for their deposits?

On a related note, it's important that people don't confuse a "debt-free currency" with a debt-free society. Whatever the nature of the means of exchange, there will always be people who want to enjoy the use of money today in exchange for paying it back with interest, and there will always be people who are happy to forego the use of money today in exchange for receiving interest payments. A bank's primary role used to be to perform the useful service of acting as an intermediary between these people. Debt is a useful tool for households and businesses, when used wisely.

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