Why bankers rule the world

antrobus

Jegersmart wrote: »

Why would you wish to disprove it? Is this an internet thing?

No, but an obsession with 'fractional banking' is most definitely an "internet thing".

Jegersmart wrote: »

... This is why most businesses that do not grow are either cash-rich with limited liabilities (and generally get purchased by other corporations using debt) or the company gets into a spiral of non-growth and often fail because the lending they took on was based on future growth....

Don't be silly. Any successful business will pile up cash like there's no tomorrow. Like Apple; cash reserves of $117bn and counting.

CLAPTON

1. I start with

production = income = consumption
that is the goods and service produced each year are
equal to the income of the people (salary, dividend, interest, rent)
which is equal to consumer spending


'Interest' appears here but so does rent and salaries and dividend and seems to have no 'special' place that implies infinite growth.

Because interest always occurs on both sides of the 'book' it is simply an exchange; one person (the borrower ) may be poorer, but the other person (the lender) become richer. The net effect can zero change in the over all demand.
One can spend more the other spends less.

2. Huge numbers of companies don't 'grow'.

3. I see no relationship between hydrocarbons or indeed any limited resource and the application of interest; total population, the wish to become richer all affect the demand for resources but not 'interest'.

4. I see no basic for the equation Energy = money = debt; indeed I don't understand how you define these three terms.

5. Finally I don't understand what you mean that ALL money is created by debt. I fully inderstand how fractional Banking with debt and savings (equal of course) create new money

Governments can and do simply print money without any specific debt being implied.
Money is both a medium of exchange as well as a store of value.

6. Politician and economists talk about growth because
a. the population of the world is increasing so we need growth to feed and cloth and provide jobs
b. technology at the moment is increasing produativity so we need growth to create sufficient employment even if there were no overall growth in population.
I've not seem any theory that relates it to 'interest'.

Linton

I am not sure what a "resource based" system would be. However there is the little problem of allocating resources. The current monetary system does that, undoubtedly imperfectly but then you would never get agreement as to what would be perfection.

The only alternative I can think of is that a central authority (either democratic or dictatorial) does the allocation. That may have been possible in the days of the Chinese emperors, the English barons, or the 1930s USSR. However now?? The economy is surely just too complex for any one or any organisation to manage in a planned way. We are struggling with a small part with fairly clear objectives - the NHS, how would we cope if everything had to be planned?

Jegersmart

antrobus wrote: »

No, but an obsession with 'fractional banking' is most definitely an "internet thing".



Don't be silly. Any successful business will pile up cash like there's no tomorrow. Like Apple; cash reserves of $117bn and counting.

Ah, we have another participant! Welcome to this thread.

I would say that I have an obsession with with debating issues that affect all of us, not necessarily fractional reserve practices in particular. Don't get me started on our food production systems!

Do you have something to add...or.....?

Silly? Do you think that Apple will not buy other companies with that cash? Do you think that Apple doesn't deposit that money into a bank (s) somewhere? Do you think that Apple has no debts? Do you think that Apple's domination will last forever? In the case of Apple, it has many weaknesses like almost all other companies that could change fortunes for itself very quickly.

Why would you call me silly by quoting such a limited example? I am talking from a high-level point of view, and as such I have to generalise. Of course on the other side of the coin not all smaller cash-rich companies get purchased either. Do you think that Apple can do without growth for the next 10 years? If so why?

Please try to keep personal feelings out of this, I am not here to preach or tell everyone I am right - I am debating solutions or at least trying to bring attention and thinking to issues that I see are very serious for us. Us being you, me and everyone else in this world. Silly? Well, that's your opinion but I think it silly that very few people bother to consider very important issues.......but as I say - maybe that is the wrong way to think?

J

lvader

grizzly1911 wrote: »

Because they lent on bad risks, so didn't get their money back or simply gambled what wasn't theirs and have to repay the people who "trusted them".

For all the failures there will have course been beneficiaries.

They wrote off a lot of bad debt and stopped lending to high risk people some time ago, why are they still doing badly if they are the ones running the show?

antrobus

Linton wrote: »

I am not sure what a "resource based" system would be. ...

See Jacque Fresco. Everything is available in abundance. Everything will be free. Just like the higher phase of Communist Society when the state withers away - "There will then be no need for society, in distributing the products, to regulate the quantity to be received by each; each will take freely 'according to his needs'.

Jegersmart

CLAPTON wrote: »

1. I start with

production = income = consumption
that is the goods and service produced each year are
equal to the income of the people (salary, dividend, interest, rent)
which is equal to consumer spending


'Interest' appears here but so does rent and salaries and dividend and seems to have no 'special' place that implies infinite growth.

Because interest always occurs on both sides of the 'book' it is simply an exchange; one person (the borrower ) may be poorer, but the other person (the lender) become richer. The net effect can zero change in the over all demand.
One can spend more the other spends less.

2. Huge numbers of companies don't 'grow'.

3. I see no relationship between hydrocarbons or indeed any limited resource and the application of interest; total population, the wish to become richer all affect the demand for resources but not 'interest'.

4. I see no basic for the equation Energy = money = debt; indeed I don't understand how you define these three terms.

5. Finally I don't understand what you mean that ALL money is created by debt. I fully inderstand how fractional Banking with debt and savings (equal of course) create new money

Governments can and do simply print money without any specific debt being implied.
Money is both a medium of exchange as well as a store of value.

6. Politician and economists talk about growth because
a. the population of the world is increasing so we need growth to feed and cloth and provide jobs
b. technology at the moment is increasing produativity so we need growth to create sufficient employment even if there were no overall growth in population.
I've not seem any theory that relates it to 'interest'.

Phew, quite a few points there.

No government can print money without interest being applied. The UK government does not print money, they BOE does in the case of the UK. Whenever the government want to increase the monetary supply they have to issue notes that the BOE print on and apply interest. As stated, it has been reported recently that the interest the government paid on those gilts will be paid back to itself by the BOE - at least while they hold them. But at the very creation of money interest is applied, and this makes the system inherently inflationary as more and more interest is applied as the money supply expands. Why does a government need to pay interest on money it creates? Well, I am pretty sure that it is not for the benefit of the government.:) There is a reason why central banks have fought governments tooth and nail to become masters of money.

There is no net effect of interest in terms of lender and borrower - because the lender lends out multiples, hence there is always a greater need for "money" than currently exists to pay off the money owed. This requires growth.

The relationship between energy and money is not a direct one. If we agree that interest needs growth to pay it off, the simplest way to explain this is that energy is needed to allow that growth. Whether it is energy to build more homes, cars, heating, air-conditioning, mining metals, drilling for oil - all these things take an immense amount of energy to achieve - and as these resources are finite (well at least I believe so, perhaps you don't?) there will come a time when these things will clash. Put it other another way, if oil rises to $500 per barrel this year, do you think it will impact growth? If so, how?

You make some references to "not having seen research" on certain points. I am asking you to think and debate with me on these, not regurgitate stuff you have seen or heard - most of which may have been produced by economists or similar who are educated and conditioned by this system at least as much as everyone else. My aim here is not to win a debate but rather to have an open one even if it means thinking about issues in a new way or considering things that are quite frankly very uncomfortable to the majority of people.

J

Jegersmart

antrobus wrote: »

See Jacque Fresco. Everything is available in abundance. Everything will be free. Just like the higher phase of Communist Society when the state withers away - "There will then be no need for society, in distributing the products, to regulate the quantity to be received by each; each will take freely 'according to his needs'.

Hi

Do I detect a hint of sarcasm here? If not my sincere apologies!

Yes, I think a system similar to the one he talks about could be viable, but it does require people to think outside of the ways of the current system. Communism is very similar to Capitalism in the sense that it is still a monetary system and open to all the abuses such a system promotes. Even to debate a resource-based system requires us to think in a very different way - even using the word "free" implies that one cannot imagine a world without "money". Perhaps you could share your views on such a system? Or any system? Do you think the monetary system works and will work in the long term? If so why? If not, why?

J

CLAPTON

Jegersmart wrote: »

Phew, quite a few points there.

No government can print money without interest being applied. The UK government does not print money, they BOE does in the case of the UK. Whenever the government want to increase the monetary supply they have to issue notes that the BOE print on and apply interest. As stated, it has been reported recently that the interest the government paid on those gilts will be paid back to itself by the BOE - at least while they hold them. But at the very creation of money interest is applied, and this makes the system inherently inflationary as more and more interest is applied as the money supply expands. Why does a government need to pay interest on money it creates? Well, I am pretty sure that it is not for the benefit of the government.:) There is a reason why central banks have fought governments tooth and nail to become masters of money.

There is no net effect of interest in terms of lender and borrower - because the lender lends out multiples, hence there is always a greater need for "money" than currently exists to pay off the money owed. This requires growth.

The relationship between energy and money is not a direct one. If we agree that interest needs growth to pay it off, the simplest way to explain this is that energy is needed to allow that growth. Whether it is energy to build more homes, cars, heating, air-conditioning, mining metals, drilling for oil - all these things take an immense amount of energy to achieve - and as these resources are finite (well at least I believe so, perhaps you don't?) there will come a time when these things will clash. Put it other another way, if oil rises to $500 per barrel this year, do you think it will impact growth? If so, how?

You make some references to "not having seen research" on certain points. I am asking you to think and debate with me on these, not regurgitate stuff you have seen or heard - most of which may have been produced by economists or similar who are educated and conditioned by this system at least as much as everyone else. My aim here is not to win a debate but rather to have an open one even if it means thinking about issues in a new way or considering things that are quite frankly very uncomfortable to the majority of people.

J

I have a £20 note in my pocket; how much interest is the government paying on it and to whom?

Thrugelmir

CLAPTON wrote: »

what has a fractional banking system got to do with 'endless' growth?




in a fractional banking system the amount lent by banks is more than covered by the amount borrowed by banks.
'everyone' don't pay interest; some, the people who borrrow from bank pays interest, others who lend to bank receive interest; banks make their profit on the margin between the two flows.


you don't need to lend to banks; there are an increasing number of peer to peer lending/borrowing organisations that you can patronise instead.

I would suggest you read Niall Ferguson "The Ascent of Money". Not in the least technical. Written in a very straightforward way. So ideal for non-financial people.