This should change the whole game soon

Jonbvn

padington wrote: »

... And it could be an enormous threat to London or at least the banking sector ...

http://www.telegraph.co.uk/business/2016/03/13/central-banks-beat-bitcoin-at-own-game-with-rival-supercurrency/

Not to forget the price of bit coins.

Just another alternative coin (altcoin). Not sure this one offers any benefits over the numerous coins already available such as the current plat du jour Ethereum.

NB: Never take AEP seriously - you would never get out of bed.

mwpt

Generali wrote: »

Physical cash is a tiny fraction of bank deposits and TBH is pretty meaningless in the C21st.

If you set up a new bank and everyone tried to withdraw their money physically or electronically to put it there then all the other banks would be bust. Banks only hold a small proportion of the deposits that people have hence the phrase fractional reserve banking.

The way it works is thusly.

A bank receives a deposit of £100. It has a reserve requirement of 10% so it needs to put £10 in its vaults (not literally but it's simpler to explain if we use the old ways) and can lend out £90.

That £90 is lent to someone to do up their house and is paid to a builder who puts it in his bank account.

That bank has £90 in new deposits and so can lend £81 to the builder who uses that money to buy a nice bottle of English not-Champagne........

And so it goes on. Ultimately (because maths) that £100 becomes almost £1,000. That is how money is created via fractional reserve banking.

If anyone says money is pulled out of thin air then they are either stupid or being disingenuous.

Firstly, thank you for your considered reply. But without meaning to sound too frank, you didn't answer my question at all. I understand the stuff above, it's not new info (to me).

Please accept that my original question is a hypothetical one invented in order to understand something else. I knew as I pushed submit I'd probably made a mistake because someone would focus on the rather irrelevant concept of cash that I'd mentioned, but can you understand why I tried to frame it this way? The physical representation of cash was just a way to frame it so I could get the answer to "is there more money in existence today than 20 years ago".

Can you understand that I'm trying to ask? if we net all deposits and loan, or assets and liabilities or however you want to frame it, do we have more money (at the basest meaning of the word possible) in existence today than 20 years ago?

If I've got any term technically wrong, I apologise and ask you to try to look past that to the meaning behind my question.

paddyrg

That's really just a state-sanctioned implementation of a blockchain technology, and it's a very good idea. Bitcoin's main limitation is that it's still Wild West frontierland, plus some small technical details. The lack of a central authority (attractive to some) is a limitation when the community are divided - you either fork the currency or don't, so you end up with a bit of mess. A central authority acting for the interests of the long term stability of the cryptocurrency and to dampen speculation is a good thing.

CLAPTON

mwpt wrote: »

Firstly, thank you for your considered reply. But without meaning to sound too frank, you didn't answer my question at all. I understand the stuff above, it's not new info (to me).

Please accept that my original question is a hypothetical one invented in order to understand something else. I knew as I pushed submit I'd probably made a mistake because someone would focus on the rather irrelevant concept of cash that I'd mentioned, but can you understand why I tried to frame it this way? The physical representation of cash was just a way to frame it so I could get the answer to "is there more money in existence today than 20 years ago".

Can you understand that I'm trying to ask? if we net all deposits and loan, or assets and liabilities or however you want to frame it, do we have more money (at the basest meaning of the word possible) in existence today than 20 years ago?

If I've got any term technically wrong, I apologise and ask you to try to look past that to the meaning behind my question.

yes new money is created by central banks

mwpt

CLAPTON wrote: »

yes new money is created by central banks

As something apart from the QE we had recently, something more regular? Where is this concept explained please? How much per year? etc.

CLAPTON

mwpt wrote: »

As something apart from the QE we had recently, something more regular? Where is this concept explained please? How much per year? etc.

the central banks create 'enough' money to try to meet their monetary objectives which usually are to broadly keep inflation under control but to provide enough liquidity for business to function and grow.
there is no fixed amount as QE demonstrated

antrobus

mwpt wrote: »

...The physical representation of cash was just a way to frame it so I could get the answer to "is there more money in existence today than 20 years ago". ...

Yes.

M4 (unadjusted) was £566,463m in 1994 and £2,103,500m in 2014. However it was £2,155,575m in 2010; the money supply has been shrinking over the past few years.

(Other measures of the money supply are available.:))

antrobus

CLAPTON wrote: »

yes new money is created by central banks

New money is created by the banking system. You don't need a central bank to do that. Banks came before central banks.:)

Generali

mwpt wrote: »

Firstly, thank you for your considered reply. But without meaning to sound too frank, you didn't answer my question at all. I understand the stuff above, it's not new info (to me).

Please accept that my original question is a hypothetical one invented in order to understand something else. I knew as I pushed submit I'd probably made a mistake because someone would focus on the rather irrelevant concept of cash that I'd mentioned, but can you understand why I tried to frame it this way? The physical representation of cash was just a way to frame it so I could get the answer to "is there more money in existence today than 20 years ago".

Can you understand that I'm trying to ask? if we net all deposits and loan, or assets and liabilities or however you want to frame it, do we have more money (at the basest meaning of the word possible) in existence today than 20 years ago?

If I've got any term technically wrong, I apologise and ask you to try to look past that to the meaning behind my question.

I tried to answer in my first sentence, I apologise that I didn't answer well.

Antrobus (as ever) has answered very well.

HTH

CLAPTON

antrobus wrote: »

New money is created by the banking system. You don't need a central bank to do that. Banks came before central banks.:)

nwpt had already said he understood fractional banking and how it can 'create' money.

I was just adding that in the UK the BoE can create (unlimited) money.