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  #61  
Old 31-10-2017, 10:13 PM
Skintagain Skintagain is offline
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Originally Posted by Spindle View Post
See that bit on the paper that says "I promise to pay the bearer..."

It's all made up and on trust.
Yes thanks for that, I do realise that money has long transcended barter.
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  #62  
Old 31-10-2017, 10:15 PM
Skintagain Skintagain is offline
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Originally Posted by Hpalace View Post
fair answer. Apparently Carney said last year they have too much and wanted to reduce the % so more lending could go on

"Major U.K banks' aggregate common equity tier 1 ratio — a measure of banks' resilience — reached 12.6 percent by the end of last year, the BoE said in March.

Carney added on Tuesday that U.K. banks currently held more capital than they needed. "The market agrees with us," he said, highlighting the rally in U.K. gilts since the referendum."
Now you know he's just a spiv.
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Last edited by Skintagain; 01-11-2017 at 06:35 AM.
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  #63  
Old 31-10-2017, 10:17 PM
cdm61 cdm61 is offline
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Originally Posted by Hpalace View Post
Sorry. What I meant was when one gets a mortgage with 30% deposit one does not actually deposit anything obviously. The bank however (I thought) has to have certain amounts in reserve made up from a variety of sources (product fees/interest etc). They are not actually loaning the deposit (hence £1000 being available from £100 at a (made up) 10x multiple.

I thought that since 2009 the banks had to have higher capital buffers based on the money they hold and the multiples they can therefore lend. This was reduced in 2016 to encourage the banks to lend more to keep the economy ticking over therefore directly meaning that the volume of supply does go up and down depending on how much the BOE states as capital buffer?
If you want to buy a house for £100 and the bank is only prepared to offer you 70% mortgage - you have to find the £30 - the Bank creates the other £70 out of thin air and charges you interest on that loan.

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  #64  
Old 31-10-2017, 10:21 PM
Hpalace Hpalace is offline
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Originally Posted by Skintagain View Post
Know you know he's just a spiv.
Carney? I quite like him. He managed the fallout from brexit quite well I thought when there was a political vacuum. While the interest rate drop may or may not have been necessary it was only .25%. Knocked around £25 a month off my mortgage so it wasn't life changing. What was necessary was stopping a Black Friday style crash and I reckon he handled it all quite well.
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  #65  
Old 31-10-2017, 10:22 PM
cdm61 cdm61 is offline
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EFA

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Originally Posted by Adlerhorst View Post
That’s an extremely basic version of what he is saying. The next thing he will say is it is outrageous the banks make money on this as they created the money out of thin air by typing it in to your account themselves.
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  #66  
Old 31-10-2017, 10:24 PM
Hpalace Hpalace is offline
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Quote:
Originally Posted by cdm61 View Post
If you want to buy a house for £100 and the bank is only prepared to offer you 70% mortgage - you have to find the £30 - the Bank creates the other £70 out of thin air and charges you interest on that loan.

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Yes I know. They do have to

A) have a capital buffer in order to legally loan me the £70
B) take the risk that I will pay the £70 back and/or their £70 won't become £60 in the event of a crash and my default.

At £70 there is little risk. At £95 there is a lot.
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  #67  
Old 31-10-2017, 10:32 PM
cdm61 cdm61 is offline
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Originally Posted by Skintagain View Post
Yes thanks for that, I do realise that money has long transcended barter.
This is a really excellent history of human society, debt and money To view the link you have to Register or Login

Debt the First 5000 years - by David Graber - Debt, the book argues, has typically retained its primacy, with cash and barter usually limited to situations of low trust involving strangers or those not considered credit-worthy.

Every economics textbook says the same thing: Money was invented to replace onerous and complicated barter systems—to relieve ancient people from having to haul their goods to market. The problem with this version of history? There’s not a shred of evidence to support it.
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  #68  
Old 31-10-2017, 10:34 PM
cdm61 cdm61 is offline
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Quote:
Originally Posted by Hpalace View Post
Yes I know. They do have to

A) have a capital buffer in order to legally loan me the £70
B) take the risk that I will pay the £70 back and/or their £70 won't become £60 in the event of a crash and my default.

At £70 there is little risk. At £95 there is a lot.
Yes agreed - but the buffers can be got around by creating money in shadow banking systems
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  #69  
Old 31-10-2017, 10:34 PM
Hpalace Hpalace is offline
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Quote:
Originally Posted by cdm61 View Post
If you want to buy a house for £100 and the bank is only prepared to offer you 70% mortgage - you have to find the £30 - the Bank creates the other £70 out of thin air and charges you interest on that loan.

Capital requirements To view the link you have to Register or Login
Oh and my £30 is made up money anyway. It's a snapshot in time as to the equity I hold. The people that affects is the FTB that has to find a real £10 at the bottom of the chain and the people cashing in at the top to bank the real £100 equity to give the government/private companies in care home charges.

Last edited by Hpalace; 31-10-2017 at 10:36 PM.
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  #70  
Old 31-10-2017, 10:36 PM
cdm61 cdm61 is offline
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Quote:
Originally Posted by Hpalace View Post
Oh and my £30 is made up money anyway. It's a snapshot in time as to the equity I hold. The people that affects is the FTB that has to find a real £10 at the bottom of the chain and the people cashing in at the top to bank the real £100 equity to give the government in care home charges.
The £30 is someone else's debt, not made up money, as 97% of all money is made from loan deposits
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  #71  
Old 31-10-2017, 10:38 PM
Skintagain Skintagain is offline
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Back to the original post and I can't be bothered to google for accuracy. But didn't the BoE print a load of money (yes I know they use computers) that they gave to the banks to lend to business. The banks just kept it as they couldn't find enough businesses to lend it to.
Isn't that what is being proposed albeit in a different format.
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  #72  
Old 31-10-2017, 10:42 PM
Hpalace Hpalace is offline
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Quote:
Originally Posted by cdm61 View Post
The £30 is someone else's debt, not made up money, as 97% of all money is made from loan deposits
I was thinking on a grander scale than that. The £30 is a % of what I agree to sell my house for and put down on the next one. An overworked surveyor spends 20 minutes agreeing that the £30% is the right number and bobs your uncle someone else gives me the £30. They did the same on theirs and got £20%

My £30 could be worth £20 next month or £40 the month after. It's only real when you bail out of the market. Until then it's just a made up number that a qualified person spends 20 minutes giving the nod too.
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  #73  
Old 31-10-2017, 10:48 PM
Skintagain Skintagain is offline
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Quote:
Originally Posted by cdm61 View Post
This is a really excellent history of human society, debt and money To view the link you have to Register or Login

Debt the First 5000 years - by David Graber - Debt, the book argues, has typically retained its primacy, with cash and barter usually limited to situations of low trust involving strangers or those not considered credit-worthy.

Every economics textbook says the same thing: Money was invented to replace onerous and complicated barter systems—to relieve ancient people from having to haul their goods to market. The problem with this version of history? There’s not a shred of evidence to support it.
£15.92, are you serious, find me one for £2 or preferably free on Prime I'll give it a go.
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  #74  
Old 31-10-2017, 10:49 PM
Hpalace Hpalace is offline
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Originally Posted by cdm61 View Post
Yes agreed - but the buffers can be got around by creating money in shadow banking systems
Agreed. That's a different issue though that can be (or at least should be) legally sorted out.

Ultimately while the banks money is all made up and if there is no risk as it is fictitious why did northern rock go bust, Lehman bros go bust, most major banks in the uk state purchased and several others bailed out/nationalised/state supported throughout the world?

If that didn't happen it would have been a shit storm. If capitalism had been or in the future is allowed to crumble then yes. Your idea comes into play. Everyone will be bust though bar the asset rich/debt free/none of the above.
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  #75  
Old 31-10-2017, 10:52 PM
Hpalace Hpalace is offline
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Originally Posted by Skintagain View Post
£15.92, are you serious, find me one for £2 or preferably free on Prime I'll give it a go.
I will loan you £13.92 over 25 years fixed for five at 1.9%? If you default I own it. After that standard variable 2.2% above base.

*in order to grant this loan I have around £1.75 of capital.
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  #76  
Old 31-10-2017, 10:54 PM
cdm61 cdm61 is offline
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Originally Posted by Skintagain View Post
Back to the original post and I can't be bothered to google for accuracy. But didn't the BoE print a load of money (yes I know they use computers) that they gave to the banks to lend to business. The banks just kept it as they couldn't find enough businesses to lend it to.
Isn't that what is being proposed albeit in a different format.
QE - £465bn of debt free money created by BoE to buy back government debt from banks, fund houses, pension funds. And lately corporate debt. Note it did not print it - it created it by typing digits.

This new money was meant to be lent on by banks or spent on by others. All it did as used to buy assets whose price increased. It propped up the asset prices of the wealthy. It did not increase production or consumption of real things.

QE for the people argues using debt free money created by the BoE to create real things - infrastructure increases economic activity and wages.

QE direct to the people in the form of a citizen's income will increase consumption and lower debt levels.

But they are finally balanced - if too much money enters the system inflation will result - increasing consumption needs a corresponding increase in production.

Last edited by cdm61; 31-10-2017 at 11:01 PM.
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  #77  
Old 31-10-2017, 11:00 PM
cdm61 cdm61 is offline
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Originally Posted by Hpalace View Post
If capitalism had been or in the future is allowed to crumble then yes. Your idea comes into play. Everyone will be bust though bar the asset rich/debt free/none of the above.
I think you need to split capitalism from money supply. Or productive capital - finance capital. Or productive activity/administrative activity

Money can be supplied by banks through loans - but the tendency is for banks to over supply and the principle plus the interest is greater than the supply of money - which means loans will default - eventually that means banks go bust and have to be bailed out...capitalism could exist with state created money supply - in fact it would become far more stable.
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  #78  
Old 31-10-2017, 11:13 PM
Hpalace Hpalace is offline
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Originally Posted by cdm61 View Post
I think you need to split capitalism from money supply. Or productive capital - finance capital. Or productive activity/administrative activity

Money can be supplied by banks through loans - but the tendency is for banks to over supply and the principle plus the interest is greater than the supply of money - which means loans will default - eventually that means banks go bust and have to be bailed out...capitalism could exist with state created money supply - in fact it would become far more stable.
Agreed assuming those that run the state are fair. It's a bit like the Henry vIII powers the conservatives are trying to grab. Brexiteers, ukippers, and conservatives are relaxed about it as they are in power. If/when corbyn is in power they will be outraged by them.

Equally too much power to too few on the left can equally lead to massive corruption (see china/Russia) A state run finance system sounds fair, balanced and something I could get behind if I had any faith that those that ran it would be fair, balanced and beyond corruption.

Unfortunately people tend to **** up ideals.
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Old 31-10-2017, 11:20 PM
cdm61 cdm61 is offline
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Originally Posted by Hpalace View Post
Agreed assuming those that run the state are fair. It's a bit like the Henry vIII powers the conservatives are trying to grab. Brexiteers, ukippers, and conservatives are relaxed about it as they are in power. If/when corbyn is in power they will be outraged by them.

Equally too much power to too few on the left can equally lead to massive corruption (see china/Russia) A state run finance system sounds fair, balanced and something I could get behind if I had any faith that those that ran it would be fair, balanced and beyond corruption.

Unfortunately people tend to **** up ideals.
It would require and independent monetary group - not made up of MP's - that would recommend the economy's need for money - either on the consumption side or productive side - taxation would be used to control for inflation/deflation - Banks would have to be 100% reserve.
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Old 31-10-2017, 11:33 PM
Hpalace Hpalace is offline
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It would require and independent monetary group - not made up of MP's - that would recommend the economy's need for money - either on the consumption side or productive side - taxation would be used to control for inflation/deflation - Banks would have to be 100% reserve.
And what would maintain this independency in the event that a majority government (of either persuasion) enacted laws in our parliamentary democracy removing the independence?

Parliament can do as parliament wishes. It's why we have to look at those Henry VIII clauses being put through parliament now and understand that rogue governments (of either persuasion) can seek control and manipulate.

I'm all for a Star Trek world of no money and self betterment. It's never going to happen though as people are arseholes.
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