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why cant we just print some more money?
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Don't they already do this with NS&I? 100% government backed and terrible interest rates...Offer a 100% secure govt savings account that offers low interest interest BUT has a double platinum titanium guarantee on it, the panicky public will love this more than the low interest deters them.:heartpuls
:heartpuls
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Don't they already do this with NS&I? 100% government backed and terrible interest rates...
Yep & what a resounding success they were as well.
The only thing I could think of to make them more attractive is to make all NS&I products tax free but they probably have the same market share restrictions that now apply to Northern Rock.0 -
This won't save anything. The bad debt needs to be liquidated. Either you get it over as one sharp shock, or you drag it out. Rather like having a leg amputated without anesthetic, I'd rather it took a couple of minutes than a couple of hours.
Most people by their nature will do anything to avoid having to do things the hard way. Alas, all that will happen is that they will suffer the pain of having looked for and paid for bail-outs - and still have to do it the hard way.
The bad debts are in reality the interest banks promised you on the loans you gave them in the form of savings. What creditors does a bank have that need to be repaid? Everyone who has savings.
Has anyone here heard there bank say you can't have any interest on your savings as we aren't getting enough back on our lending? Infact look at interest rates now well up.
No they just collapse...except they don't collapse, other banks who previously wouldn't loan to them make an expensive loan to the government that the banks demand they loan on dead cheap, if not free. Then they have even more money to lend BOE overnight (instead of lending to others, or the public) and claim interest from the treasury on.
Who picks up the bill for the interst on the treasuries borrowing? We do.
As you say it needs to be short and sharp, the Northern Rock revoltion. If the governemnt hinted for one moment that that was there plan. The commercial banks would change there tune and it would be back to business as normal in no time.0 -
The bad debts are in reality the interest banks promised you on the loans you gave them in the form of savings. What creditors does a bank have that need to be repaid? Everyone who has savings.
Bond holders. They also have liability in the early years for the MBSs they issued. Also derivatives.
It's a mess, and not at all like the banking system they may have taught you in school."Follow the money!" - Deepthroat (AKA William Mark Felt Sr - Associate Director of the FBI)
"We were born and raised in a summer haze." Adele 'Someone like you.'
"Blowing your mind, 'cause you know what you'll find, when you're looking for things in the sky." OMD 'Julia's Song'0 -
Bond holders. They also have liability in the early years for the MBSs they issued. Also derivatives.
It's a mess, and not at all like the banking system they may have taught you in school.
Well I guess it's a good think i didn't really pay attention.
I suspect a banks prime creditors are however lenders who are savers/pensioners/bond holders, so in the event of a bankrupcy the shell company remains, bank lending (mortgages etc) are repaid to the shell, the shell co then passes that on to savers/pensioners and bondholders first in line, then all other "riskier/less secure" lenders get whats left.
Those who risked risky lending on the chance of high profits, knew it was risky, thats why there were high profits.
The whole system remains and the circle of life continues, except a lot of bankers who have a ton of other assetts don't get to rob everyone.0 -
Who comes first depends on the contracts that were written.
In more normal times it's bond holders, then unsecured debt holders (including depositors) and then shareholders.
God knows where in that hierarchy derivatives come in."Follow the money!" - Deepthroat (AKA William Mark Felt Sr - Associate Director of the FBI)
"We were born and raised in a summer haze." Adele 'Someone like you.'
"Blowing your mind, 'cause you know what you'll find, when you're looking for things in the sky." OMD 'Julia's Song'0 -
Alternative solution might be to print new money, but insist banks increase their fractional reserve deposist in proportion to with the new money untill the the bank ratios are 1 to 1. The government can then print money and banks can't create it, if the government prints more money than it needs to pay for the public services it offers, inflation will rise, the public will vote them out.0
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Ever heard of the German hyper-inflation?0
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painted_lady wrote: »Ever heard of the German hyper-inflation?
Ever learned to read: "but insist banks increase their fractional reserve deposits in proportion to with the new money untill the the bank ratios are 1 to 1."
New money entering into the system but in a similar time frame it is being soaked up and the money that commercial banks used to create is decreased.
No more inflation than pouring water into a bucket and at the same time putting a hole in the bottom BUT the water starts moving through the system again and the banks can't get us into this position again.0
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