Why bankers rule the world

Jegersmart

Hi Antrobus

Thanks for the response. I am not sure whether you are being deliberately obtuse, I was looking for some reasons as to why I am wrong, not for you to reiterate that you think I am wrong. Does that make sense? Also, why are you so hostile? I am trying to debate an issue which I think affects us all, you seem to be angry at me for some reason?

So to be clear, I am asking you the following:

1. Where does the BOE or Fed or ECB get "money" from? (I think you missed this one)
2. I agree that money expansion does not only increase as a result of money printing, it also increases within the banking system. What I am specifically interested in your answer to is the specific scenario when money is printed. What happens then? What is the process? This ties in with the point being made around governments selling or issuing debt that I made earlier.
3. Why are you being hostile? What is it about thos conversation that upsets you?

I look forward to hearing from you on these points.

J

CLAPTON

Jegersmart wrote: »

Hi Antrobus

Thanks for the response. I am not sure whether you are being deliberately obtuse, I was looking for some reasons as to why I am wrong, not for you to reiterate that you think I am wrong. Does that make sense? Also, why are you so hostile? I am trying to debate an issue which I think affects us all, you seem to be angry at me for some reason?

So to be clear, I am asking you the following:

1. Where does the BOE or Fed or ECB get "money" from? (I think you missed this one)
2. I agree that money expansion does not only increase as a result of money printing, it also increases within the banking system. What I am specifically interested in your answer to is the specific scenario when money is printed. What happens then? What is the process? This ties in with the point being made around governments selling or issuing debt that I made earlier.
3. Why are you being hostile? What is it about thos conversation that upsets you?

I look forward to hearing from you on these points.

J

In simple terms :

The BoE can create money by writing cheques to pay its bills (salaries, benefits, suppliers etc).
These cheques are deposited in retail banks by the recipients.
The retail banks now have 'surplus' money to lend out. In a fractional banking system the total supply of money created will be higher than the initial deposits.


Although in principle the BoE can print notes and mint coins to increase the money supply, in practice it only does this to meet retail demand via the retail banking system. So retail banks will pay for the notes and coins they requires and there is no overall change in the money supply.

Jegersmart

CLAPTON wrote: »

In simple terms :

The BoE can create money by writing cheques to pay its bills (salaries, benefits, suppliers etc).
These cheques are deposited in retail banks by the recipients.
The retail banks now have 'surplus' money to lend out. In a fractional banking system the total supply of money created will be higher than the initial deposits.


Although in principle the BoE can print notes and mint coins to increase the money supply, in practice it only does this to meet retail demand via the retail banking system. So retail banks will pay for the notes and coins they requires and there is no overall change in the money supply.

Where does the BOE get "money"?

In the scenario where money supply needs to be increased due to "retail demand" you are saying that the retail banks pay for that money? How does that work? If there is a need to increase money supply but as you say there is no increase in money supply - how does that work?


Thanks

J

CLAPTON

Jegersmart wrote: »

Where does the BOE get "money"?

In the scenario where money supply needs to be increased due to "retail demand" you are saying that the retail banks pay for that money? How does that work? If there is a need to increase money supply but as you say there is no increase in money supply - how does that work?


Thanks

J

I make a distinction between 'money' and 'notes and coins'
Money in this context is the sum of notes and coins in circulation plus banks and savings accounts.

I've explained how government creates money in my above post

and I've explained that government doesn't use the minting or printing of notes and coins as a way of creating new money.

Jegersmart

CLAPTON wrote: »

I make a distinction between 'money' and 'notes and coins'
Money in this context is the sum of notes and coins in circulation plus banks and savings accounts.

I've explained how government creates money in my above post

and I've explained that government doesn't use the minting or printing of notes and coins as a way of creating new money.

Ah, so I have misunderstood.

So you are saying that the BOE increases money supply by "writing cheques" for its bills and suppliers and by doing so it increases the money supply?

Also I should clarify that at no point have I intended (at least) to mean actual physical money when I refer to "money". If you don't mind I would like to completely ignore the minting of coins and actual printing of physical notes as this is an entirely different discussion in my mind.

Bearing the above in mind so that actual coins and notes do not cloud the pertinent point of discussion, you are saying that the BOE increases the overall money supply by "writing cheques" for its operational costs only?

Thanks

J

CLAPTON

Jegersmart wrote: »

Ah, so I have misunderstood.

So you are saying that the BOE increases money supply by "writing cheques" for its bills and suppliers and by doing so it increases the money supply?

Also I should clarify that at no point have I intended (at least) to mean actual physical money when I refer to "money". If you don't mind I would like to completely ignore the minting of coins and actual printing of physical notes as this is an entirely different discussion in my mind.

Bearing the above in mind so that actual coins and notes do not cloud the pertinent point of discussion, you are saying that the BOE increases the overall money supply by "writing cheques" for its operational costs only?

Thanks

J

I have given a simple example of how the bank can increase the money supply

it can also increase the money supply by changing the banks' liquidity ratio

or it can buy gilts from the banks (QE)

Jegersmart

Hi

How does it "buy Gilts from the banks"? With what?

J

BenjaG

Bankers rule people who have given up on making things and got addicted to cheap loans.

CLAPTON

Jegersmart wrote: »

Hi

How does it "buy Gilts from the banks"? With what?

J

it writes a cheque

CLAPTON

BenjaG wrote: »

Bankers rule people who have given up on making things and got addicted to cheap loans.

lazy thinking