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How Can The Debt Be Repaid......


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God help us all. You guys have fallen for the leftist argument.

Well, if banks can create money, why did Northern Rock fail?

I understand that here at HPC, we do not allow the facts to get in the way of our socialist revolutionary ideology.

The supply of MONEY is dictated by the central bank (which is simply an arm of the treasury) and the money supply exists as e-deposits at the central bank or in notes and coins in circulation.

The rest of us, including banks, issue promises to pay money. We CANNOT CREATE MONEY and NEITHER CAN THE COMMERCIAL BANKS.

And just because a bank lends money+interest and then 'declares' the total as an asset on a balance sheet, does not constitute money creation. Anyone can claim they hold assets to any notional value they like.... Try selling them to find out how much money you will really get.

The stuff you guys talk about is in DIRECT contention with what is actually taking place 'ie, the credit crunch'

Let's deal in facts hey?

Commercial banks can expand their balance sheets of assets and liabilities up to the limits imposed by the Basel regulations. They do this by making loans.

When a loan of size £X is made, two book-keeping entries come into existence simultaneously – the positive entry in the borrower’s bank account of £X (a bank liability) and the equal and opposite negative entry of -£X (a bank asset) in the borrower’s loan account. This happens quite independently of the government and the BoE, assuming that the banking regulations are not broken. The integrity of the bank's balance sheet is preserved.

Thereafter the positive entry of £X is, to all intents and purposes, new money. The money supply M4 has been expanded – the aggregate numbers in the banking system are now bigger than they were before the loan was made, all else being equal. The recipient of the £X can spend it, change it into legal tender (M0) etc. It has purchasing power just as much as any other positive electronic number-money in the banking system.

It is a matter of semantics whether or not you use the phrase “banks create money” to describe the above nuts-and-bolts facts about the basic operations of commercial banks.

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Have you considered the possibility that, taking the long/big view, they DON'T WANT the debt to be repaid?

The 'money' they have lent out either doesnt exist or isnt theirs (delete depending on whether you think the banks are primarily confidence tricksters or primarily crooks - I think these options and the spectrum in between covers most sane rational viewpoints), and so they want you to keep paying them for the use of it. If it was repaid, what earthly use would it be to them then?

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The total money supply in notes and coins is around £60billion, of which around £55bn is held by banks. All the other money is PC numbers and only exists on bank PC screens.

The rest is in wallets and teapots etc up and down the country.

If the banks stop giving out both types in new loans, how can anyone repay the old debts?

Why do you only include notes and coins? Why not checking, deposit accounts and other money sustitutes after all they are all technically the same.

Banks don't give out mortgages in notes and coins - well they didn't with mine nor did I pay it back with a bag of cash.

Why should PC numbers be any different to old fashioned deposit account books? It would increase greatly the cost of money if we could only use cash for all transactions - which is why we don't.

Strange question.

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Why do you only include notes and coins? Why not checking, deposit accounts and other money sustitutes after all they are all technically the same.

Banks don't give out mortgages in notes and coins - well they didn't with mine nor did I pay it back with a bag of cash.

Why should PC numbers be any different to old fashioned deposit account books? It would increase greatly the cost of money if we could only use cash for all transactions - which is why we don't.

Strange question.

Legal tender?

p-o-p

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Why do you only include notes and coins? Why not checking, deposit accounts and other money sustitutes after all they are all technically the same.

Legal tender has to be accepted. PC screen numbers don't. When push comes to shove, only legal tender counts.

Banks don't give out mortgages in notes and coins - well they didn't with mine nor did I pay it back with a bag of cash.

Then why are you repaying them with cash?

£1,000,000,000 - keep the change.

Why should PC numbers be any different to old fashioned deposit account books? It would increase greatly the cost of money if we could only use cash for all transactions - which is why we don't.

They aren't different. Neither of them are cash.

Strange question.

In addition, the value of something has something to do with it's supply. The value of money is found by it's actual supply, with some distortion due to people thinking there is a lot more of it than there really is.

Imagine how much cash would be worth if all the banks collapsed and vanished tomorrow morning.

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I am able to exchange the "numbers" on a PC for legal tender when I wish so what is the difference?

Usually, but it's not guaranteed. And in most cases no legal tender is invlolved, which means that no legal tender is involved.

Just like me saying I will give you an elephant isn't me giving you an elephant really.

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Wrong way round and the law says that the notes and coins do have value.

p-o-p

Money has no value the paper is worthless it is only the stamp of the issuing authority that gives it authority and makes it a means of exchange.

The law cannot demand people use a certain note or coin it has to ba accepted as a medium of exchange first by the people in other words people have to accept a medium of exchange and be happy with it first. It is not the law that makes it an acceptable medium of exchage it is the stamp of authority and the acceptance of that authority.

If the issuing authority is unable to honour its commitments then the stamp of authority on all money (notes coins deposits becomes worthless).

Edited by gravity always wins
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In law a bank account is a credit balance. It's not a pile of money that can be stolen even though it is not representing anything physical.

Other examples of virtual property are patents etc. The law has no problem in recognizing them in that loss of the facility inflicts harm on the holder.

If you wish to believe that credit does not exist, only notes and coins, thats upto you. The courts think otherwise.

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Wrong way round and the law says that the notes and coins do have value.

p-o-p

Money has no value the paper is worthless it is only the stamp of the issuing authority that gives it authority and makes it a means of exchange.

The law cannot demand people use a certain note or coin it has to ba accepted as a medium of exchange first by the people in other words people have to accept a medium of exchange and be happy with it first. It is not the law that makes it an acceptable medium of exchage it is the stamp of authority and the acceptance of that authority.

If the issuing authority is unable to honour its commitments then the stamp of authority on all money (notes coins deposits becomes worthless).

Now you're being more rebellious than Injun! I'm not sure but I think that rubbishing legal tender is covered in our Terror legislation.

p-o-p

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go on don't stop.

Loan procedure -

Customer walks into bank. Banker has an emtpty vault. Customer asks for a loan.

Banker gets out paperwork, asks customer sign a promissory note to the value of the borrowing - lets call it £10,000. Banker ADDS £10,000 to his balance sheet, then gives the customer an account with £10,000 in it.

Customer spends that £10,000.

At this moment, everyone is even. The customer gave an asset worth £10,000 and was paid for it, his books are balanced.

The bank received an asset worth £10,000 and then paid for it - the banks books are balanced. All square, nothing to see here...if the customer asks for cash, the banker will say it takes a few days, then either sell the promissory note on the open market or cash it in at the central bank, still nothing owing because all the value comes from the "borrower".

but...

The banker has a piece of paper from the borrower indicating that if the bank lends the cusomer £10,000, then the customer has to repay £10,000 + interest. If the customer is ignorant of the above procedure, then all he will see is that he has had £10,000 and will then give the banker another £10,000 + interest. If he fails to do so and is ignorant of the procedure then the bank will take him to court and can make a very good show of pretending they have loaned money. They can show signed forms, accounting slips etc etc and the borrower is almost certainly ignorant of how banking works and can be had over in this way.

Credit is something else. Credit is when the bankers just show bits of paper with figures on them to the gullible and pay for stuff with it, then charge the customer for the priveledge of piggybacking their fraud.

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Loan procedure -

Customer walks into bank. Banker has an emtpty vault. Customer asks for a loan.

Banker gets out paperwork, asks customer sign a promissory note to the value of the borrowing - lets call it £10,000. Banker ADDS £10,000 to his balance sheet, then gives the customer an account with £10,000 in it.

Customer spends that £10,000.

At this moment, everyone is even. The customer gave an asset worth £10,000 and was paid for it, his books are balanced.

The bank received an asset worth £10,000 and then paid for it - the banks books are balanced. All square, nothing to see here...if the customer asks for cash, the banker will say it takes a few days, then either sell the promissory note on the open market or cash it in at the central bank, still nothing owing because all the value comes from the "borrower".

but...

The banker has a piece of paper from the borrower indicating that if the bank lends the cusomer £10,000, then the customer has to repay £10,000 + interest. If the customer is ignorant of the above procedure, then all he will see is that he has had £10,000 and will then give the banker another £10,000 + interest. If he fails to do so and is ignorant of the procedure then the bank will take him to court and can make a very good show of pretending they have loaned money. They can show signed forms, accounting slips etc etc and the borrower is almost certainly ignorant of how banking works and can be had over in this way.

Credit is something else. Credit is when the bankers just show bits of paper with figures on them to the gullible and pay for stuff with it, then charge the customer for the priveledge of piggybacking their fraud.

Does your argument still apply if the bank uses its own money? The signature is a promise to repay the loan and to compensate the bank because it cannot use the money itself for its own purposes.

The borrower does not swap the 10k for an asset but for a signature a promise to repay the amount plus compensation (interest).

The loan agreement is only an asset as long as the borrower continues to repay as soon as they default the asset is no longer performing.

No doubt when you come to buy a house in the future you will use this sytem and will sign a promise to repay if you then feel it necessary to default and not repay then it reflects on your character.

Banks also take deposits and make an equal promise to repay what is the difference.

I accept that the value of loans to deposits is pretty crazy its not the system that is wrong credit is essential in many transactions but the manipulation of the system that is crazy.

Edited by gravity always wins
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Does your argument still apply if the bank uses its own money? The signature is a promise to repay the loan and to compensate the bank because it cannot use the money itself for its own purposes.

Nope, but banks can't use their own money, they have none.

The borrower does not swap the 10k for an asset but for a signature a promise to repay the amount plus compensation (interest).

The loan agreement is only an asset as long as the borrower continues to repay as soon as they default the asset is no longer performing.

Oh no, it becomes an asset the moment the bank pays for it and values it and adds it to the balance sheet. It's a bit rich to say it's not worth anything while at the same time valuing it at £10,000. Their own actions prove them liars.

No doubt when you come to buy a house in the future you will use this sytem and will sign a promise to repay if you then feel it necessary to default and not repay then it reflects on your character.

I have already cancelled all my bank "debts" using the above knowledge. As I have said elsewhere I will have nothing more to do with such an evil, immoral and dysfunctional system. I no longer have a bank account or cards or any of that crap. Actually the bankers owe me all those "repayments" I made for all those years but I can't see them paying me out, can you?

Banks also take deposits and make an equal promise to repay what is the difference.

It's equally fraudulent, i'll give you that.

I accept that the value of loans to deposits is pretty crazy its not the system that is wrong credit is essential in many transactions but the manipulation of the system that is crazy.

Banks don't need to exist. They are pointless and worthless middlemen con artists. When their con fails i is catastrophic but to say that they should be supported is bass ackward - they shouldn't be allowed to set up in the first place. Prevention > cure.

Prosecute them like the fraudsters they are.

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As it happens I was self employed at the time and am now shacked up with my stash, my food and a few other bits and bobs for a bit and just do a few bits and bobs for people I know and trust to pay the last remaining bill I have - the food. Now is probably the best time in history to be taking time off. We'll never see this level of affluence, peace or social order again in my lifetime I would imagine and as the state is about to catastrophically fail, I can't see there being pensions for the boomers etc either.

Head down, feet up etc etc before the fun starts, you know it makes sense.

Very true. Anyone who has to work over the next few years (due to lack of savings) is in a very unfortunate position as they will likely get very little in return for their labour.

And anyone putting in extra hours at work in the hope of career progression is probably wasting their time.

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Have you considered the possibility that, taking the long/big view, they DON'T WANT the debt to be repaid?

Spot on. What "they" want is a never-ending stream of interest payments. If you pay off the capital, they have to find another sucker customer to whom they can lend the money. Why do you think Credit Cards have a 'minimum balance' repayment requirement? Because the bank's best earner is someone who only pays the minimum balance each month and maxes out their card(s) to the limit, but doesn't default. Some people apparantly regard this as 'living within their means'! People who are genuinely financially prudent are not good customers for the banking system, as some Egg customers who paid off their balances each month found out recently...

Perhaps if we stopped calling it 'Credit' or even 'Debt' and started calling it 'Economic Slavery' instead, it might encourage a few more people - and Governments - to think a bit more deeply before they borrow money... :unsure:

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Banks don't need to exist. They are pointless and worthless middlemen con artists. When their con fails i is catastrophic but to say that they should be supported is bass ackward - they shouldn't be allowed to set up in the first place. Prevention > cure.

Prosecute them like the fraudsters they are.

How would you effect the exchange of goods and services without banks or a clearing system?

The division of labour makes it impossible for the direct exchange of goods and services without some sort of middle man.

For all those who think the world is run by banks why do we constantly inflate away our debts? Deflation is best for banks but we never get it.

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How would you effect the exchange of goods and services without banks or a clearing system?

You use money.

The division of labour makes it impossible for the direct exchange of goods and services without some sort of middle man.

Probably best off using money then.

For all those who think the world is run by banks why do we constantly inflate away our debts? Deflation is best for banks but we never get it.

It's best for banks that we all keep on banking. Othrwise they;d have to go and get real jobs.

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You use money.

Probably best off using money then.

It's best for banks that we all keep on banking. Othrwise they;d have to go and get real jobs.

So how does a business raise finance? start knocking on peoples doors asking for cash?

How does the holder of large cash deposits look after their money hire a security guard to stand outside their house?

Using money is one thing directing capital is another.

I believe we need banks what we have now is an abuse of a reasonable system.

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