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Banks To Lend You Your Own Money

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The government is to invest £50bn of your money in British banks so they can lend it back to you with interest.

The historic move is being hailed as a lifeline for the financial system as long as nobody asks too many questions.

Julian Cook, chief economist at Corbett and Barker, said: "The government will give your money to the banks so the banks

can start lending you that money, probably at around 7% APR.

"Thanks to all the interest you're paying on your own money, the banks will make billions of pounds again and normality will be restored.

"After a few years of this the government will cash in the bank shares it bought with your money and use the profits to build a huge f*cking dome somewhere."

He added: "In case you hadn't already worked it out - the entire global financial system is predicated on the assumption that you're an idiot."

Chancellor Alistair Darling said the decision had been taken in tandem with the banking industry, adding: "They used a lot of dirty words I'd never heard before and one of them had an angry looking dog."

Meanwhile, Emma Bradford, a sales manager from Bath, said: "Why doesn't the government just give my money to me so I can buy stuff from businesses who will then make a profit and put it in a bank?"

But Mr Darling insisted: "Shut up."

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Nice spoof report. :lol:

In reality it might be even more convoluted than this if the new Gilts to raise the £50bn are sold to the banks in return for newly issued money. There have been a couple of HPC threads already posing this question of whether the new Gilts will be bought using pre-existent or newly issued money, but no-one seems to know for sure which it is.

So, it could well be that the banks issue £50bn of new money and use it to buy the new Gilts, i.e. IOUs from the taxpayer. The government (on behalf of the taxpayer) then uses this £50bn to buy equity stakes in the banks, who then utilise their expanded capital base to lend further directly to the taxpayer, probably up to many times the £50bn invested.

The banks then have the taxpayers’ IOU via the government, plus the taxpayers’ own direct IOUs (mortgages etc.) as assets, and the taxpayers’ new deposits as liabilities, and all for making a few keystrokes on their computers.

Yes, the banks’ shareholders have had their equity stakes diluted somewhat, but the bonus-grabbing fatcat banking executives have greatly enlarged their business (balance sheet) by the enforced participation of the taxpayer as both shareholder and customer.

Nice work if you can get it.

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