Uncharted Waters

MegaMiniMouse

At the time of the banking collapses, it was frequently said that we were in 'uncharted waters', and that is where we remain.

Until recently, the suggestion was that we should all spend spend spend in order to keep the economy afloat. Just now, I read a news report that George Osborne reckons that Big Companies are sitting on massive reserves of cash which they should begin to spend spend spend. Not long ago, the same was being said of Local Authorities.

But the stranglehold on cashflow is mainly being maintained by the banks, and no political party has the freedom and/or the will to speak out.

The civil unrest in North African countries may well have been partly inspired by the pictures of student unrest in Oh-So-Stable London.

In turn, the UK trades unions may begin to gain confidence in their ability to force some changes.

Financially, I can weather almost any storm, but if, as seems likely, I am made redundant because of the banks' recent behaviour, then I will devote my time and energy to campaigning in the streets on behalf of my fellows!

MMM

Davesnave

MegaMiniMouse wrote: »

I will devote my time and energy to campaigning in the streets on behalf of my fellows!

MMM

Resounding silence......

TBF, rousing the masses on a Sunday morning can be a bit tricky.

drc

MegaMiniMouse wrote: »

At the time of the banking collapses, it was frequently said that we were in 'uncharted waters', and that is where we remain.

Until recently, the suggestion was that we should all spend spend spend in order to keep the economy afloat. Just now, I read a news report that George Osborne reckons that Big Companies are sitting on massive reserves of cash which they should begin to spend spend spend. Not long ago, the same was being said of Local Authorities.

But the stranglehold on cashflow is mainly being maintained by the banks, and no political party has the freedom and/or the will to speak out.

The civil unrest in North African countries may well have been partly inspired by the pictures of student unrest in Oh-So-Stable London.

In turn, the UK trades unions may begin to gain confidence in their ability to force some changes.

Financially, I can weather almost any storm, but if, as seems likely, I am made redundant because of the banks' recent behaviour, then I will devote my time and energy to campaigning in the streets on behalf of my fellows!

MMM

I think it is largely too late. Most people in this country are drunk on a stupor of materialism and lulled into a sense that everything will continue plodding along relatively peacefully as it has done for the last 60 years or so. Orwell was very presentient when he talked about learning to love big brother. This seems to be what a lot of people eventually reconcile themselves to unfortunately. Can you beat the system? - I think in the case of the UK, the answer is unfortunately a resounding "no".

[Deleted User]

I agree with the sentiment, however its difficult to know what to do.

Most of the issues ultimately boil down to the fact that money is on the whole created out of debt. A lot of people don't realise that when they take out a loan the bank does NOT pay them with money that the bank has from depositors. The money is simply entered into your bank account as a number. The security the bank keeps (the real value) is your signature on the loan agreement. To stop this creating too much inflation the banks are restricted in how much they can issue in loans by a ratio of loans to deposits hence the term fractional reserve banking. This results in most of the 'money' in the economy never actually being physically printed. The term 'printing money' is often used figuratively.

The above system is adopted worldwide and does have advantages as well as disadvantages. If you wanted to use a 100% reserve system then you are at a disadvantage against a fractional reserve system as your competitors in the fractional system can spend some of their future income on items such as more efficient machines and then beat you in the market place. So, if you want to change the system you will have to do it worldwide. In which case how do you unravel the existing system with all its existing loans and commitments?

If you want to take on the banks without changing this system you will have the problem that if they want to they are powerful enough to take on the central banks (they proved this during the ERM debacle) and are entwined into every part of the economy. Many of them control far more money than our GDP. Consequently they have an enormous amount of influence on our politicians.

If you can come up with a viable alternative I'll back you to the hilt, but I can't think of one.

dopester

https://forums.moneysavingexpert.com/discussion/2572123

You drank deeply and happily enough from the banker's cup. If that left you financially crisis prone, deal with the consequences.

Younger people who've not had decades of mostly prosperous economic conditions, nor long-wave property boom prices.. have a lot more to gain by house prices falling.

Rather than bailing out the reckless who over-borrowed. Do you campaign on behalf of your lodgers? We could have all self-cert, expect another few years of 10%+ HPI, to ride off into sunset with fat profits, leaving some other mug borrowers in the system in even more debt.

Loughton_Monkey

I have never understood the 'spend, spend, spend ourselves out of recession' argument.

Spending, I agree, is 'good' in some ways, since it means it is circulating rapidly around the country and thus 'shares it out' a bit more. If you ask me to make your sandwiches (instead of making them yourself) and pay me for it, then fine. If I ask you to knit my jumpers and pay you for that, then fine. The net result - to the two of us - is perfectly 'neutral'. If we go to the next door neighbour who makes my jumpers and your sandwiches, than we are both 'transferring' profits to our neighbour. But between the three of us, the overall effect is perfectly 'neutral'. All we have done is redistribute wealth. We have not created it or lost it.

But now do this on a large scale, and we cannot avoid imported goods. Hence some of the profits are going abroad. For the Global economy, it is perfectly neutral. For the UK economy as a whole, it is negative. So in the 'real' world, when you consider imported goods, my example means that you and I have 50 units of wealth each. Our neighbour has zero. By 'spend, spend, spend', ultimately our negihbour will have 30 units of wealth, and so will we. That's 90 units of wealth - the other 10 is now in China.

So what do you prefer? 100 units of wealth in the hands of 2 people? Or 90 units between 3 people?

Many would say the latter, on emotional grounds, because of the poor b*gger who has nothing if we don't spend. But in our system, that's a bit irrelevant since under both scenarios, the government is going to 'steal' a bit of your wealth, and my wealth, and redistribute it to the third person (after sucking some of it in to pay for their own salary and to pay for infrastructure). So I rule out any need to consider emotional/fairness arguments.

Hence I argue against the 'spend' argument since it can only make the nation poorer in the end. To make ourselves richer, we need to 'invest' or 'sell' abroad so that we make a profit from abroad. How we re-distribute those profits is another issue.

I believe Brother Gordon's attitude to all this was totally flawed, especially so when it was HIM spending OUR money. He tended to believe that 'spending' £45K on a new "Spirituality and Ethics Consultant" by any local council was 'good' for the economy, not least because the person involved would otherwise have drawn benefits (£12K?), but will now 'spend' some of his/her £45K income.

That's a bit like me telling my wife to 'blow' another £10K on unnecessary designer clothes, because I will get another 10,000 Air Miles on my Amex card. Or £100 extra on my Cashback card. Are we all that stupid?

Arcaine

[quote=[Deleted User];40745034]I agree with the sentiment, however its difficult to know what to do.

Most of the issues ultimately boil down to the fact that money is on the whole created out of debt. A lot of people don't realise that when they take out a loan the bank does NOT pay them with money that the bank has from depositors. The money is simply entered into your bank account as a number. The security the bank keeps (the real value) is your signature on the loan agreement. To stop this creating too much inflation the banks are restricted in how much they can issue in loans by a ratio of loans to deposits hence the term fractional reserve banking. This results in most of the 'money' in the economy never actually being physically printed. The term 'printing money' is often used figuratively.

The above system is adopted worldwide and does have advantages as well as disadvantages. If you wanted to use a 100% reserve system then you are at a disadvantage against a fractional reserve system as your competitors in the fractional system can spend some of their future income on items such as more efficient machines and then beat you in the market place. So, if you want to change the system you will have to do it worldwide. In which case how do you unravel the existing system with all its existing loans and commitments?

If you want to take on the banks without changing this system you will have the problem that if they want to they are powerful enough to take on the central banks (they proved this during the ERM debacle) and are entwined into every part of the economy. Many of them control far more money than our GDP. Consequently they have an enormous amount of influence on our politicians.

If you can come up with a viable alternative I'll back you to the hilt, but I can't think of one.[/QUOTE]


The main problem with banks is how they are NOT allowed to fail. It is in breach of an open and free market economy. None of this FSA claptrap about splitting investment arms and retail (because that worked so well in America didnt it!), if a bank is bust it should be taken immediately into public ownership, bond holders and shareholders should be wiped out. The board sacked and replaced (ends the whole bonus debate too). The government can then run the bank as they see fit.

black_taxi_2

since i took the decision to become MF and budgeted--i realised how easy it is to get off course/mainly thru consumer spending

i.e.---i was going to buy nokia mobile---3 weeks later---5 months later newer version/then apple bring out theres(its never ending)

same with tv HD(did buy 42 samsung inch for sport/film--excellent--will keep for years)but now there trying to get you to buy 3D tv(biggest con ever in tv marketing)

3D great cinema----home forget it---plus you want to relax watching tv at home.

ILW

MegaMiniMouse wrote: »

At the time of the banking collapses, it was frequently said that we were in 'uncharted waters', and that is where we remain.

Until recently, the suggestion was that we should all spend spend spend in order to keep the economy afloat. Just now, I read a news report that George Osborne reckons that Big Companies are sitting on massive reserves of cash which they should begin to spend spend spend. Not long ago, the same was being said of Local Authorities.

But the stranglehold on cashflow is mainly being maintained by the banks, and no political party has the freedom and/or the will to speak out.

The civil unrest in North African countries may well have been partly inspired by the pictures of student unrest in Oh-So-Stable London.

In turn, the UK trades unions may begin to gain confidence in their ability to force some changes.

Financially, I can weather almost any storm, but if, as seems likely, I am made redundant because of the banks' recent behaviour, then I will devote my time and energy to campaigning in the streets on behalf of my fellows!

MMM

Please explain how the banks behaviour is going to make you redundant?

black_taxi_2

he might be a banker

Thrugelmir

ILW wrote: »

Please explain how the banks behaviour is going to make you redundant?

Something to do with the big bad banks strangling cashflow.......