Currency expansion

inspector_monkfish

RDB wrote: »

If someone takes out a mortgage for £100K, then where does that money come from?

The bank doesnt take it from anywhere, its just created out of thin air.

So as soon as you sign the mortgage contract there is another £100K in the world. Added to the worlds currency supply.


So if that person doesnt pay it back at all, has anyone lost any money?

What??

Of course tha Bank lends them 'actual' money.
i dont mean hard physical cash in a big fat briefcase.
they will just take it from their books somewhere.

Really2

RDB wrote: »

A few decades ago it was millions, then Billions now these I O Us are in the trillions.

Mars bars could be a £1bn one day, as long as everything else inflates at the same rate nothing as actually changed other than the amount of 000's on the end of your notes. (well not that simple but value is relative)

Looking at the £000000's 50 years ago simply ignores inflation.

kennyboy66_2

Generali wrote: »

I think you're talking about fractional reserve banking and have perhaps misunderstood the point slightly. Banks don't just pull money out of their Asres but they do create money. Basically the way that it works is that a bank lends money to someone, they spend it and it is lodged by the seller in their bank from where it can be lent and so on.

Look up fractional reserve banking on Google or get a macreconomics textbook from your local library in which there will be a chapter on it.

If they don't just "pull it out of their Asres", why does money sometime need laundering.
I thought it must have been soiled in some way, so was sent to the local laundrette.
Hey presto - clean money.

I am sure this is true - I saw a video on the internet about it.

Generali

kennyboy66 wrote: »

If they don't just "pull it out of their Asres", why does money sometime need laundering.
I thought it must have been soiled in some way, so was sent to the local laundrette.
Hey presto - clean money.

I am sure this is true - I saw a video on the internet about it.

Was it money or an umbrella that was pulled out..?

Really2

kennyboy66 wrote: »

If they don't just "pull it out of their Asres", why does money sometime need laundering.
I thought it must have been soiled in some way, so was sent to the local laundrette.
Hey presto - clean money.

I am sure this is true - I saw a video on the internet about it.

Poor Merve, I bet QE was painful in more ways than one.

Thrugelmir

RDB wrote: »

Yes fractional reserve banking means they are only supposed to create currencey out of thin air up to 20 x what savers put into the bank. But we all know they fiddle the numbers and sometimes they create far more than that. Hence the crisis.

Banking despite the crisis is still heavily regulated. A Company such as BP has far more flexibility than say Barclays in the way it presents its financial information and in the way its operating profit is determined.

Lehmans, it would appear, acted fraudently in the way that securities were bundled together. They acted similar to a used car salesman who is selling a car with 10,000 miles on the clock, whereas the vehicle had actually done 150,000. The asset has a totally dfferent market value.

Nothern Rock exploited loop holes in the Fractional Reserve System by creating an off shore vehicle through which it securitised its own debt. The problem was that the whole concept fails when no one is willing to be the securitised debt. The Treasury were aware of the business model as far back as 2004.

When_is_the_reset?

Fractional reserve banking system creates checkbook money but this gets destroyed when repaid.

I think the OP is asking what happens when this contractual money is not repaid? It is still in circulation as it has been spent by the borrower. This increases the money supply permanently and must (I assume) show as a loss on the lender.

The banks definitely do create M4 money supply through loans and this is supposed to be destroyed. Except that the interest charged is in addition to the loan and this has to come from somewhere else.

The big problem seems to be, in a debt driven society, this interest flows towards the banks and all money will eventually end up in their pockets. The best plan would be to start a bank or start applying for a banker's job.

RDB

Can any one find a graph of the worlds currency supply?

I can find one of $ going back 100yrs which is shocking the line just goes straight up last 2 yrs.

Helicopter Ben has been busy lately.


http://www.chartingstocks.net/2009/03/chart-of-the-us-money-supply-1917-2009/


But thats a year old the line goes up that much again this last year.

But cant find one for the worlds currency supply?

This is good at the end, Ron Paul is asking Ben Bernanke where the IMF get the money from to bail out Greece? The truth is of course its just typed into their bank account out of thin air.

http://www.youtube.com/watch?v=CtvHAqK8P14

tomterm8

I think you'll find that Ron Paul is a complete american nutbar.

RDB

tomterm8 wrote: »

I think you'll find that Ron Paul is a complete american nutbar.

For you to say that do you mean you disagree with what he said there?

Tomterm8 if you disagree that that money just came out of thin air, then where do you think it came from?

Its all very well calling someone a nutbar but if you have to agree with what they say then what does that make you?