Why bankers rule the world

grizzly1911

lvader wrote: »

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?

Because bad debts are still being written off. If they had done it all at once they would have simply stopped.

Whilst they were gambling away and lending disproportionately, they were, in part, financing this with the profits from the like s of PPI. Now that miss selling has been uncovered they are having to pay those "miss spent" profits back through compensation.

What little profit they are making is then being put back into their capital coffers, as the regulators have told them to do, ready for the next round.

Jegersmart

CLAPTON wrote: »

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

That would be impossible to say, but what is your point?

J

CLAPTON

Jegersmart wrote: »

That would be impossible to say, but what is your point?

J

some-one posted

Whenever money is printed - i.e. money supply increased - interest is always applied.

My £20 note was printed. So I asked where was interested applied.

Jegersmart

Hi Clapton

I think you are looking at this the wrong way from my point of view. I made a point that whenever the money supply is increased, governments do so by issuing gilts/t-bills whatever and the central bank in question buys those interest bearing instruments from the government which it created out of thin air. If we can agree that this is what happens then your £20 and mine are all effectively debt. If you don't agree that this happens then perhaps make a constructive point? Asking if I can tell you who your £20 is owed to seems a bit hostile. Are you being hostile? If so, why?

J

antrobus

Jegersmart wrote: »

... I made a point that whenever the money supply is increased, governments do so by issuing gilts/t-bills whatever and the central bank in question buys those interest bearing instruments from the government which it created out of thin air....

You appear to have seized the wrong end of so many sticks it's difficult to know where to start.

The money supply can increase irrespective of what actions governments take regarding debt. As a general rule, governments don't sell debt to their central bank. Our central bank (the BoE) may well have been buying gilts in recent months, but they've been buying them from existing holders (and not the government), and what's more they've done so and the money supply has fallen.

Jegersmart

Antrobus

Thanks for that, would it be possible for you to comment on which sticks these are and how I am wrong?

Put it another way, where does the BOE (for example) get "money" from?

J

ruggedtoast

These discussions always end up like this.

This explanation is about my level as it uses the medium of cartoon:

https://www.youtube.com/watch?v=jqvKjsIxT_8

Jegersmart

ruggedtoast wrote: »

These discussions always end up like this.
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Thanks for the link, but I wonder why these discussions always "end like this"? The value of a debate is surely to explore and probe in an open fashion to see what we can agree, what we can't and whether we can learn something new?

I will wait for Antrobus' answer to my question above, he has told me that I am wrong and I wouldn't mind hearing why that is.

J

ruggedtoast

Jegersmart wrote: »

Thanks for the link, but I wonder why these discussions always "end like this"? The value of a debate is surely to explore and probe in an open fashion to see what we can agree, what we can't and whether we can learn something new?

I will wait for Antrobus' answer to my question above, he has told me that I am wrong and I wouldn't mind hearing why that is.

J

You're new here aren't you.

antrobus

Jegersmart wrote: »

Antrobus

Thanks for that, would it be possible for you to comment on which sticks these are and how I am wrong?

What? My entire post consited of doing so. Let's try again.

Jegersmart wrote: »

.. I made a point that whenever the money supply is increased, governments do so ...

Wrong.The money supply can increase irrespective of what actions governments take regarding their own debt.

Jegersmart wrote: »

..
governments do so by issuing gilts/t-bills whatever and the central bank in question buys those interest bearing instruments from the government which it created out of thin air. ..

Wrong. As a general rule, governments don't sell debt to their central bank.

ruggedtoast wrote: »

These discussions always end up like this....

Sadly the world (and particularly the interweb) is full of wannabee financial genuises who have 'discovered' the 'truth' about the financial system and developed some magic solution that will cure all ills, completely unaware of the fact that they're just dealing with material covered by first year Economics students.