Campaign for debt free money, stable house prices, pension still worth something...

Thrugelmir

Masomnia wrote: »

Fractional reserve banking has been going on for centuries.

Building societies never have. In part why the desire to demutualise in the 90's. Most of the problems we face today are the results of recent political economic intervention not historic.

Mike4DebtFreeMoney

Masomnia raises some valid questions.

Masomnia wrote: »

You'd rather everybody be poorer, so that banks can't make a profit?

Quite the opposite. If this rampant money inflation had not been going on everyone would be much better off. If we use an average UK house price of £180k, then in 1983 (Nationwide index start date) that house cost £29000. If that house had risen with general inflation it would now cost £85k, which would make a large difference in people’s budgets as well as making it easier to get on the property ladder. People are paying interest on the additional £100,000 because that’s the easiest most profitable destination for commercial banks to put new money. It also led to the bubbles of 1988 and 2007 and the negative equity suffered as a result, and then a global financial crash due to reckless lending, causing millions worldwide to lose jobs and drop into poverty. On balance we would be better off if we removed power to print electronic money from the banks.

I want banks to make a profit commensurate with the service they provide. I want them to provide credit from savings and make a margin on it. I want them to provide banking services and charge a fair price for them. However the market we have is not efficient and we are not paying a fair price. There are plenty of examples, let me provide just one: electronic cash costs just pennies per transaction to operate, yet if you buy an i-something on a credit card you will via the retailer pay several pounds in charges.

Masomnia wrote: »

Of course there would be less growth if there is less access to lending, isn't that obvious?

True. But we only need enough to match the growth: 1%? We got much more, and it ended up in financial instruments and property. The money supply was not managed to match growth, it was managed to maximise profits of banks. Of £375bn QE, only 8% ended up in the productive economy. The BoE admits its role is no longer control of the money supply:
http://www.bankofengland.co.uk/publications/Pages/news/2014/051.aspx#
“This description of how money is created differs from the story found in some economics textbooks. For instance, in normal times, the central bank does not in practice choose the amount of money in circulation”

Secondly, what’s the measure of growth? GDP used to be a measure of increase in living standards for everyone – in 1950. But it’s been detached for at least a couple of decades and the politicians have yet to catch up. Let me give you a trite example: if I break your leg, GDP goes up. An ambulance arrives, petrol and bandages are used, medical staff get paid, the police are called, Court officials are involved.... GDP went up. I think the evidence is clear to most today: GDP is rising, cost of living somewhat worse.

Masomnia wrote: »

Fractional reserve banking has been going on for centuries.

Certainly. But the ability to abuse the system comes with size and scope. If Shylock had gone bust, a handful of local customers would have lost out, whereas we had a global financial collapse. The introduction of computers allowed the banks to inflate the risk (to us, less so to them) massively in the same way that email has inflated the number of communications.

antrobus

Mike4DebtFreeMoney wrote: »

Yes, after I wrote that I thought you’d be picky about it given that the BoE wasn’t nationalised until 1946. That part of my statement was incorrect, but I admit when I get it wrong. The important point is that pre- and post- nationalisation it was established through Parliamentary Act to act as the Bank for the Government under specific rules in support of society and democratic aims, unlike private banks let loose to create property bubbles and a global financial crash.....

That's not the point I was making. The point I was making (in effect) was that said private banks were busy inflating the money supply, and creating property bubbles and financial crashes all the way through the period of the British Empire and the Industrial Revolution.

Mike4DebtFreeMoney wrote: »

...You were not thinking when you typed that. It’s demonstrated to be incorrect by the example of lending a tenner to a friend down the pub: credit without creating money....

You are wrong on both counts. I was in fact thinking very clearly when I wrote that, and the example that you quote proves exactly the reverse.

Joe, Mike, and Simon are down the pub. A man approaches them as they are sitting at the table and asks them 'how much money have you all got?' Joe says that he has £10, Mike and Simon shake their heads and admit they are skint. Joe then decides to lend Mike a £10. When the man returns and asks them once more how much money they have, Joe says he has £10, and now Mike says he has £10 as well, so now there is £20 worth of money where there was only £10 before. As long as Joe thinks that the £10 that he lent Mike is his money, then it's his money, in the same way as when people lend money to banks, they still think that it's their money.

Mike4DebtFreeMoney wrote: »

...The latter is how people think banks work;

Even if that were statement were true, how people "think banks work" is neither here nor there. It is how they actually do work that matters.

Mike4DebtFreeMoney wrote: »

...and the aim of my petition is that this is how they would work. The difference today is that through the money creation trick a bank can loan a tenner and yet the money they loaned is still on their books...

I don't understand the significance of that point. If a bank lends someone £100, of course they're going to keep a record of it.

Mike4DebtFreeMoney wrote: »

....Even though you don’t say you agree, what you say confirms my assertions and my petition:..

I'm not sure that I actually used those exact words. But you're right. I don't agree. And I can assure you that I do actually mean it.

Mike4DebtFreeMoney wrote: »

...You, I and the Bank of Canada agree that the public benefits from Seniourage undertaken by the BoE.

Well apparently we do now. But you previously wrote of a "bank expecting the returns from seniourage/printing money for free", so you clearly had a different idea before.

Mike4DebtFreeMoney wrote: »

.... You and I agree that the banks make a bucket load of cash on the money they create and that it is a very big bucket.

No we don't.

Mike4DebtFreeMoney wrote: »

....You and I agree that new money is created from loans, but you prefer the term credit. You and I agree that this is done by typing numbers into a computer. You and I agree that BoE created money is sanctioned and that Stirling is backed by the taxpayer: we disagree on terminology:

Loans, credit, debt, don't matter what you call it. I have no issue as regards terminology.

P.S. I don't agree that it is "done by typing numbers into a computer". It is done by actually lending money. How you record that transaction is not particularly relevant. The same thing happened when banks recorded their transactions by writing everything in bound ledgers with quill pens.

P.S. Stirling is a town in Scotland.

Mike4DebtFreeMoney wrote: »

....candyfloss credit from private companies is not sanctioned by Parliament, it’s just not specifically illegal (yet)....

If this "candyfloss credit" (as you call it) is "not sanctioned by Parliament" how do these "private companies" ever manage to persuade the courts to force people to repay them?

Mike4DebtFreeMoney wrote: »

....Most people would think that banks are making a bucket load, even if you don’t:
http://www.belfasttelegraph.co.uk/news/local-national/uk/barclays-bonus-pool-up-to-24bn-29997131.html

Ah the popularity argument. Lots of people agree with me so I must be right. Google 'argumentum ad populum'.

Mike4DebtFreeMoney wrote: »

...That a bank is paying 0.05% interest on the liability IOUs it types into customers’ savings account is irrelevant.

It's no more relevant or irrelevant than the fact that a bank is receiving 0.10% interest on the asset IOUs it types into customers’ loan accounts.

Mike4DebtFreeMoney wrote: »

...
I pay Council tax, so what? I don’t get to print money from nothing. Neither should private banks.

And banks pay rates and don’t get to print money from nothing. So you're in the same boat.

Mike4DebtFreeMoney wrote: »

...
http://epetitions.direct.gov.uk/petitions/64050
If you haven’t signed an e-petition before, then you have to provide your name, address, and an email. That information does not get published but it is used to verify you as a UK resident. This is what elevates e-petitions above blogs and forums and into an arena that can get Government attention.

Thanks for that.

antrobus

Thrugelmir wrote: »

Building societies never have. In part why the desire to demutualise in the 90's.....

I'd dispute that statement.

The traditional building society model was to take deposits that were repayable on demand and lend out the proceeds for 25 years. That's pretty 'fractional' if you ask me.

antrobus

Mike4DebtFreeMoney wrote: »

....Secondly, what’s the measure of growth? GDP used to be a measure of increase in living standards for everyone – in 1950. But it’s been detached for at least a couple of decades and the politicians have yet to catch up. Let me give you a trite example: if I break your leg, GDP goes up. An ambulance arrives, petrol and bandages are used, medical staff get paid, the police are called, Court officials are involved.... GDP went up. I think the evidence is clear to most today: GDP is rising, cost of living somewhat worse......

I'm puzzled. What do you think happened to GDP when people broke their legs in 1949?

CLAPTON

Mike4DebtFreeMoney wrote: »

Let me give you a trite example: if I break your leg, GDP goes up. An ambulance arrives, petrol and bandages are used, medical staff get paid, the police are called, Court officials are involved.... GDP went up. I think the evidence is clear to most today: GDP is rising, cost of living somewhat worse.

.

so basically, you are arguing that medical services, in general, are parasites on society and add no value?

Mike4DebtFreeMoney

Wow, I don't know where you got that! My apologies for being unclear, I was providing an example to show that GDP rising does not mean everyone is better off. For some years now medium term adjusted average salaries declined even whilst GDP rose. What this graph says is that someone got better off, it probably was not you.

Plot your pay rises and salary against the graph of mony I posted in #27 and let me know how you did.

From HMG research:
"Alhough GDP per capita is often used as an indicator of living standards or prosperity, it has a number of weaknesses:
...
* GDP per capita is a single figure that provides no indication as to how prosperity is distributed within a country"
http://www.parliament.uk/documents/commons/lib/research/rp98/rp98-064.pdf

CLAPTON

Mike4DebtFreeMoney wrote: »

Wow, I don't know where you got that! My apologies for being unclear, I was providing an example to show that GDP rising does not mean everyone is better off. For some years now medium term adjusted average salaries declined even whilst GDP rose. What this graph says is that someone got better off, it probably was not you.

Plot your pay rises and salary against the graph of mony I posted in #27 and let me know how you did.

From HMG research:
"Alhough GDP per capita is often used as an indicator of living standards or prosperity, it has a number of weaknesses:
...
* GDP per capita is a single figure that provides no indication as to how prosperity is distributed within a country"
http://www.parliament.uk/documents/commons/lib/research/rp98/rp98-064.pdf

if you wanted to say that distribution (within the population) of goods and service is different to per capita GDP then one can't disagree
nor could one disagree that GDP is a pretty poor measure of the actual income experience of ordinary people.

Thrugelmir

antrobus wrote: »

I'd dispute that statement.

The traditional building society model was to take deposits that were repayable on demand and lend out the proceeds for 25 years. That's pretty 'fractional' if you ask me.

In no way leveraged though.

CLAPTON

antrobus wrote: »

I'd dispute that statement.

The traditional building society model was to take deposits that were repayable on demand and lend out the proceeds for 25 years. That's pretty 'fractional' if you ask me.

that's not the normal meaning of 'fractional'
that would simply be 'borrowing short and lending long'