Why bankers rule the world

deary65

watch this video the money masters(3hrs)
http://www.youtube.com/watch?v=HfpO-WBz_mw

John_Pierpoint

antrobus wrote: »

What do you mean by "reasons that you are wrong"? You made a statement 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". That statement is just wrong, inaccurate, mistaken, unsound, etc and so forth, and so on.



No.



Why do you interpret disagreement as hostility?



Debate works on this basis - You make a statement. I say the statement is wrong. You reply by either admitting you were wrong, or coming up with arguments in support of your original statement. Acting all bewildered doesn't cut it.



To do what exactly? If you're talking about quantitative easing, it doesn't get it from anywhere. That's the whole point.



There you go, I told you, you were wrong.



You mean, what is quantitative easing?
http://www.bbc.co.uk/news/business-15198789



You really have a thing about 'hostility' don't you? In what way do you think I'm 'upset'?

All this debt is simply borrowing from the next generation, unless a serous inflation 1970s style makes it disappear.

I think Jegersmart has a right to a reasoned reply to the points he makes, even when they seem partly self contradictory

PaulF81

John_Pierpoint wrote: »

All this debt is simply borrowing from the next generation, unless a serous inflation 1970s style makes it disappear.

I think Jegersmart has a right to a reasoned reply to the points he makes, even when they seem partly self contradictory

Already discussed this already. Bump up the pensions age for anyone not already in retirement, no grandfather rights.

Have a tiered healthcare system with the most expensive treatments limited based upon age.

Deficit gone overnight.

grizzly1911

PaulF81 wrote: »

Already discussed this already. Bump up the pensions age for anyone not already in retirement, no grandfather rights.

Have a tiered healthcare system with the most expensive treatments limited based upon age.

Deficit gone overnight.

Any increase in pensionable age needs to be phased to allow people time to manage the change. Those closer to retirement may not be a position to accommodate a severe change.

It is irrelevant for many as they will just stay on benefits for longer without job creation/availability.

I would suggest healthcare is already rationed by age, perhaps rationed by lifestyle maybe, but that will just lead to more time spent on disability or similar for many.

Jegersmart

antrobus wrote: »

What do you mean by "reasons that you are wrong"? You made a statement 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". That statement is just wrong, inaccurate, mistaken, unsound, etc and so forth, and so on.



No.



Why do you interpret disagreement as hostility?



Debate works on this basis - You make a statement. I say the statement is wrong. You reply by either admitting you were wrong, or coming up with arguments in support of your original statement. Acting all bewildered doesn't cut it.



To do what exactly? If you're talking about quantitative easing, it doesn't get it from anywhere. That's the whole point.



There you go, I told you, you were wrong.



You mean, what is quantitative easing?
http://www.bbc.co.uk/news/business-15198789



You really have a thing about 'hostility' don't you? In what way do you think I'm 'upset'?

Thanks for the response Antrobus. I don't agree that a debate is a situation where one person raises issues and the other party simply states that the other is wrong. Where is the debate there?

Some of my points may have been too generalistic which you have pointed out. What I am getting at is that virtually all the money that exists is debt, i.e. it has interest applied to it and this is very important to understand for all of us because it has serious consequences. I also do not understand why central banks have been given the power to create money based on debt. Do you think this is a good system? Do you disagree that the system is inherently inflationary?

J

antrobus

Jegersmart wrote: »

Thanks for the response Antrobus. I don't agree that a debate is a situation where one person raises issues and the other party simply states that the other is wrong. Where is the debate there?..

If one person keeps insisting that the moon is made of green cheese, I'm not sure what else you would expect a rational person to do other than point out that this is in fact not correct.

Jegersmart wrote: »

Some of my points may have been too generalistic which you have pointed out. What I am getting at is that virtually all the money that exists is debt, i.e. it has interest applied to it and this is very important to understand for all of us because it has serious consequences.

If you mean to say that banks (or indeed any other institution performing the same function) take deposits (on which they pay interest) and then make loans (on which they charge interest) then yes, that is what happens. I'm not sure why anyone would think that doing this has 'serious consequences'? What do you think the consequences would be if nobody did it and everybody simply stuffed their spare cash under the mattress?

Jegersmart wrote: »

I also do not understand why central banks have been given the power to create money based on debt.

They haven't.

Jegersmart wrote: »

Do you think this is a good system?

No one's come up with a better one yet.

Jegersmart wrote: »

Do you disagree that the system is inherently inflationary?

Yes.

What would it matter if it was?

Jegersmart

antrobus wrote: »

If one person keeps insisting that the moon is made of green cheese, I'm not sure what else you would expect a rational person to do other than point out that this is in fact not correct.



If you mean to say that banks (or indeed any other institution performing the same function) take deposits (on which they pay interest) and then make loans (on which they charge interest) then yes, that is what happens. I'm not sure why anyone would think that doing this has 'serious consequences'? What do you think the consequences would be if nobody did it and everybody simply stuffed their spare cash under the mattress?




They haven't.



No one's come up with a better one yet.



Yes.

What would it matter if it was?

Wow - green cheese? Seriously?

So if we agree that banks pay and apply interest, that is to say that they either borrow money from others (in the form of deposits) and then lend out as much as possible whilst keeping their required reserves then all money has interest applied to it no? If you don't agree why not?

Instead of saying "they haven't" (been given the power to print money) - tell me why you say that. Where doe the BOE get money from?

OK, so we agree that the system is not a good one.

You disagree that the system is inherently inflationary, why?

Perhaps you could actually answer some questions instead of telling me how foolish I am?

Thanks
J

John_Pierpoint

ruggedtoast wrote: »

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

Perhaps I can flesh out this video on "Fractional Reserve Banking" just a little.

It has been made from an American perspective so it revolves round American history and "democracy".

Let us get a bit more of a European historical perspective [Let us not talk about "Chinese Money" - meaning Imperial Chinese Money].

The crusaders brought back an improved system for counting, with its critically important concept of the Zero.

The squabbling states of Italy, still ruled by the mores of the Roman Catholic Church, now had a tool for tracking monetary obligations, using the debit and credit concepts of double entry book keeping.

http://www.bbc.co.uk/programmes/b01nzgjz

The tool of double entry book keeping, though resisted by clerks of the time, enabled bigger "safer" financial structures to be built - it also enabled money to become just entries in a ledger - though periodic bank runs also required something "real" as reserve backing for those entries.

http://www.bbc.co.uk/ahistoryoftheworld/objects/JO391t6cRtGxstjbE4EEmg

However the "real" something does not have to be a rare mineral - it can just be confidence in a government, its people and their industry:
The Rentenmark replaced the Papiermark. Due to the economic crises in Germany after World War I, there was no gold available to back the currency. Therefore the Rentenbank, which issued the Rentenmark, mortgaged land and industrial goods worth 3.2 billion Rentenmark to back the new currency. The Rentenmark was introduced at a rate 1 Rentenmark = 1012 Mark, establishing an exchange rate of 1 United States dollar = 4.2 RM. [Putting "the Mark" back where it was prior to the folly of WW1- The American people appear to have been doing something similar by selling off their assets to foreigners]

http://en.wikipedia.org/wiki/Accountancy#History

The American video also conveniently skates round the large alternative Jewish religion, which allowed lending out of money in exchange for a rent ("interest"), though traditionally it did have a mechanism for avoiding debt bondage/slavery.

http://judaism.about.com/od/prayersworshiprituals/f/jubilee.htm

In the Holy Bible, Leviticus 25:8-13 states, [1] "And thou shalt number seven sabbaths of years unto thee, seven times seven years; and the space of the seven sabbaths of years shall be unto thee forty and nine years. Then shalt thou cause the trumpet of the jubile to sound on the tenth day of the seventh month, in the day of atonement shall ye make the trumpet sound throughout all your land. And ye shall hallow the fiftieth year, and proclaim liberty throughout all the land unto all the inhabitants thereof...............

Unfortunately by the time some of the 10 tribes had arrived in Italy, this concept had been left behind.

So the Italian merchant families living in self governing cities (cf City of Venice v City of London) were in a position to develop capitalism as we know it (rather than build an Empire - though the world Empire on which "The sun never set", used double entry book keeping as one of its major tools).

Historically capitalists got a real 2% return on their capital [Current rate in the UK is probably nearer minus 2%] and were thus encouraged to go forth seek higher returns.

There is no problem creating money with a 2% rent for borrowing it if the entrepreneur can achieve a real (say) 7% return - everyone is a winner - except for the near subsistence peasant, who is impoverished by over breeding, while facing falling prices for any surplus commodities produced. I]Especially when the USA department of agriculture or the EU CAP subsidises its high technology farmers to undercut peasant producers[/I.

The problem we have now is that an organisation capable of creating
money, does so by issuing more promises than the ability to tax its citizens can support and then "invests" the money in lost causes.
It is though we had an organisation that borrowed money and then gave it to "the dogs home". Bankers would be mad to support such an organisation, unless they could lay off the risk by borrowing money, multiplying it up by fractional reserve lending and know that the resulting inflation would hurt his depositors before it hurt him.

I]As a capitalist I would be wondering if we could "brand" stray dogs as "English" and get a premium price for them from (say) Korea[/I

antrobus

Jegersmart wrote: »

....

So if we agree that banks pay and apply interest, that is to say that they either borrow money from others (in the form of deposits) and then lend out as much as possible whilst keeping their required reserves then all money has interest applied to it no? If you don't agree why not?

Define money.

Jegersmart wrote: »

....
Instead of saying "they haven't" (been given the power to print money) - tell me why you say that.

Because in general, governments don't give their central banks power to 'print money'. Those that do usually crash and burn. I suspect you've been confused by quantitative easing. Quantitative easing is a specific policy response to a specific problem, it's not normal (it's never been tried before in the UK), it's intended to be temporary, has nothing to with banking per se, and has nothing to do with the subject of this thread, as in the ideas of Margrit Kennedy.

Jegersmart wrote: »

....
Where doe the BOE get money from?

And I repeat my question; to do what exactly? What central banking functions are you asking about?

Jegersmart wrote: »

.... we agree that the system is not a good one.

No, the system is fine. The regulation is (or at least has been) very poor.

Jegersmart wrote: »

You disagree that the system is inherently inflationary, why?

The 'system' has been deflationary in the past. The money supply is currently conracting.

Jegersmart wrote: »

Perhaps you could actually answer some questions instead of telling me how foolish I am?

I have pointed out your factual errors. I'm not sure where you get the 'foolish' bit from.

ruggedtoast

Inflation isnt the same as growth. Bust is hard wired into an economy based on compound debt as is boom, because the debts will eventually outweigh the growth. Once people start defaulting the system goes into reverse.

The money supply in the 30s collapsed as no one could borrow, with devastating consequences.

The current strategy of borrowing our way out of trouble is only loading debt onto future generations. It is clear no one has any idea how they will pay it off, of whether they will even want to.