By what legal authority can the banks demand repayment?

antrobus

Mike63 wrote: »

....Let me put it another way: why do I owe the bank any more than the #2k they put down in the first place?....

Because the other £98k is somebody else's money, and that somebody else will want their money back from the bank at some point in time. Your failure to repay the bank the £100k that you borrowed might possibly leave the bank in a position that it is unable to repay that someone else their £98k, which would be embarassing for the bank, and might even have dire financial consequences. Something like a Global Banking Crisis, if there were enough people failing to repay their £100ks.


P.S. As regards your "point for discussion". If I had a £1 for every time someone had read something on the internet about banks creating money and how that means that money isn't real and that therefore their debts aren't real and started a thread on MSE to promote this revelation ... well put it this way, I'd be able to write Gideon a cheque big enough to make a real difference to the national finances.

Eonel

There are many ways to create money. The house you bought with the borrowed 100k is likely worth 300k at the end of the mortgage.

Where did this 200k increase come from? No-one & nothing else has lost 200k keeping the money supply in balance. 200k of wealth has been created

Fiat currencies are a nonsense when wealth is being created or destroyed all the time. However, while it remains the system you chose to live in you will still owe the 100k mortgage. You can not be picky and expect to retain any fiat purchased assets while writing off the fiat debt.

You always have an option to dropout of the fiat system and find somewhere to live the subsistence good life in a barter economy.

Mike63

ILW wrote: »

Because you signed a contract saying how much you would repay.

That does not make it legal. If I steal a car and sell it to you under contract, would you honor that contract?

opinions4u wrote: »

More importantly, does your keyboard not have a £ sign on it?

No, it's a USA layout so I have to change the language each time. On some apps it does not work.

opinions4u wrote: »

A typical bank balance sheet will, for every £100 of deposits, have £85 of loans and £15 of capital - the capital services withdrawals and cushions bad debt.

So where did the 85% of loan assets come from if not through electronic creation of money? The bank looks to be 100% capitalised because they add the loan as an asset at the point they create it, but what they actually did was a micro QE event that devalued the currency.

antrobus wrote: »

Because the other £98k is somebody else's money...

No it isn't, by definition. In a fractional reserve banking system some part of that loan is new money. Let's use opinions4u's figure of 15% capitalisation: I deposit #100 in the bank in coins. The bank can meet it's 15% and still now loan out #666 to someone else, thus adding #566 into the money system due as a debt to them, on which they claim interest.

Eonel wrote: »

There are many ways to create money. The house you bought with the borrowed 100k is likely worth 300k at the end of the mortgage.

Where did this 200k increase come from? No-one & nothing else has lost 200k keeping the money supply in balance. 200k of wealth has been created.

Yes, wealth can be created. Printing money is another matter: we have a law specifically against that, even for the banks (Banking reform act 1844). If I sell shares in Mike.Inc I can create wealth by improving their value. If on the other hand I print shares of Microsoft.Inc I go to jail. If a bank prints #10 notes they go to jail. If a bank creates money electronically, then, going back to the original question, how come that's fine? It's not a question of whether to participate in a Fiat monetary system, it's a question about the legal authority under which some specific private companies get to create money.

opinions4u

So where did the 85% of loan assets come from if not through electronic creation of money?

The depositors.

I deposit #100 in the bank in coins. The bank can meet it's 15% and still now loan out #666 to someone else

Except they can't and don't lend out £666. You're in fantasy land, believing there is some great conspiracy when there isn't.

Depositors lend their money to the bank in return for interest.

The bank then lend it on at a higher rate.

There is no magic fairy dust that multiplies this money in the way you suggest.

HappyMJ

Mike63 wrote: »

No, it's a USA layout so I have to change the language each time. On some apps it does not work.

Then press the ALT key followed by the numbers 0163 on your number keypad on the right of your keyboard. You may need to press NUMLOCK first.

Thrugelmir

Mike63 wrote: »

That does not make it legal. If I steal a car and sell it to you under contract, would you honor that contract?

That's different. As in this instance a criminal offence has been committed.

Banks operate within defined rules, regulation and law.

Thrugelmir

Eonel wrote: »

There are many ways to create money. The house you bought with the borrowed 100k is likely worth 300k at the end of the mortgage.

Where did this 200k increase come from? No-one & nothing else has lost 200k keeping the money supply in balance. 200k of wealth has been created

With a contracting money supply for the first time in 40 years. The impact could be profound. The myth of ever increasing house prices could be blown away.

kingstreet

HappyMJ wrote: »

Then press the ALT key followed by the numbers 0163 on your number keypad on the right of your keyboard. You may need to press NUMLOCK first.

Nah. Alt F4 is a much better idea.

ILW

Mike63 wrote: »

That does not make it legal. If I steal a car and sell it to you under contract, would you honor that contract?

No, it's a USA layout so I have to change the language each time. On some apps it does not work.


So where did the 85% of loan assets come from if not through electronic creation of money? The bank looks to be 100% capitalised because they add the loan as an asset at the point they create it, but what they actually did was a micro QE event that devalued the currency.


No it isn't, by definition. In a fractional reserve banking system some part of that loan is new money. Let's use opinions4u's figure of 15% capitalisation: I deposit #100 in the bank in coins. The bank can meet it's 15% and still now loan out #666 to someone else, thus adding #566 into the money system due as a debt to them, on which they claim interest.



Yes, wealth can be created. Printing money is another matter: we have a law specifically against that, even for the banks (Banking reform act 1844). If I sell shares in Mike.Inc I can create wealth by improving their value. If on the other hand I print shares of Microsoft.Inc I go to jail. If a bank prints #10 notes they go to jail. If a bank creates money electronically, then, going back to the original question, how come that's fine? It's not a question of whether to participate in a Fiat monetary system, it's a question about the legal authority under which some specific private companies get to create money.

The bank legally made the money and then sold it to you at an agreed price. Where is the problem?

Angry_Cat

Mike with respect I think you are looking at this from the wrong angle.

When you applied for a loan with your lender, you gave your lender as security for the loan a mortgage by way of legal charge.

This legal charge given by you, to your lender gives your lender a number of rights in regard to the debt and your home.

The right you should be concerned with is the right to possession of your home by your lender.

Instead of placing emphasis on the points you have raised, I would advise that you spend sometime reading the Law of Property Act 1925 - more specifically sections 85 - 120.

In simple terms, if you do not repay the amount that you contractually agreed to pay, you will lose your home.

I am sorry this is very straight forward with no ifs and no buts.

Don't believe me ? Stop paying your mortgage and see what happens