Quote LeighGionaire="LeighGionaire"Who'd have thought it, a mainstream news source explaining how banks create money from nothing . . . . www.guardian.co.uk/commentisfree ... ed-stealth Just think about this as an example. Say it takes a days work for a bank employee to process a mortgage application for a customer. If the mortgage is over a period of 25 years and one days pay per week is needed to repay the mortgage, the customer is essentially giving up 5 YEARS of work for the initial days work it took the bank sorting out the paperwork to conjour up the money out of thin air in the first place! This is debt slavery in a nutshell.'" Letting nutters from the Occupy movement take over CiF is probably one of the silliest things the Grauniad has ever done. The fact that the Gruadian chose to do it does not mean that 'mainstream media' have suddenly become converted to their idiot ideas. There's a good repost to the whole nonsense [url=http://ukhumanrightsblog.com/2011/11/15/freemen-of-the-dangerous-nonsense/here[/url

Quote LeighGionaire="LeighGionaire"Who'd have thought it, a mainstream news source explaining how banks create money from nothing . . . . www.guardian.co.uk/commentisfree ... ed-stealth Just think about this as an example. Say it takes a days work for a bank employee to process a mortgage application for a customer. If the mortgage is over a period of 25 years and one days pay per week is needed to repay the mortgage, the customer is essentially giving up 5 YEARS of work for the initial days work it took the bank sorting out the paperwork to conjour up the money out of thin air in the first place! This is debt slavery in a nutshell.'" Letting nutters from the Occupy movement take over CiF is probably one of the silliest things the Grauniad has ever done. The fact that the Gruadian chose to do it does not mean that 'mainstream media' have suddenly become converted to their idiot ideas. There's a good repost to the whole nonsense [url=http://ukhumanrightsblog.com/2011/11/15/freemen-of-the-dangerous-nonsense/here[/url

There is some very confused thinking on here. People bemoan the fact that we got into a mess due to credit being freely available and most policy suggestions involve growth via further deabt but at the same time bemoan the fact that mortgages for first time buyers are not given away!

But we appear to have gone from a situation where money was being thrown around, to one where it's kept under lock and key and nobody can have any. I guess banks have never heard of a happy medium?

They have no choice. Things went wrong now they need fixing. If we take, say, a 25 year period - previous 15 years and next 10 you will probably see there was a happy medium on average - just dramatically skewed between the first and second half of that period.

That average will really help businesses who are struggling to get finance to expand and boost growth.





Banks [udo[/u have a choice. They chose to throw money around and now they choose not to. My main problem with the latter (whether it's better for the economy or not) is that banks' profligacy and bad decisions led in part to their problems, yet when the taxpayer helps them out, keeping them in jobs and bonuses, their answer to the taxpayer seeking to borrow money (not asking for it back - BORROW) is almost always NO.



Would Gideon's growth forecasts and figures be as bad if the banks were made to lend at least some of it back?

Spot on.





Can't see it. Latest forecasts have UK population up from 70m to 90m within about 30 years. Gotta live somewhere and sales of tents are static.

They chose to throw money around because they were given the ability to. Being forced to now hold more capital to help avoid future bail outs has now removed that ability.



Ufortuanately we can't have it both ways.

We had strong 'growth' during the period when boom and bust ended but debt was racked up to such a degree that it's more or less brought the country and large parts of the world to its knees. We need a slightly better approach that debt fuelled growth to solve this. How about hard graft and an acceptance of lower living standards?

Gotta love LeighGionaire's periodic 'I dont understand the banking system' threads





If banks create money completely out of thin air, in the way you've just described, how in 2007/8 did we end up in a position in which banks suffered from a liquidity crisis resulting in a run on Northern Rock etc. Were all the people responsible for adding zeros to the banks balance sheet off sick or something?





The global financial crisis was partly a result of US' problems with the sub-prime mortgage industry. Banks were lending money to people who weren't credit worthy, and were fairly likely to default on their repayments. If banks simply create the money out of thin air in the way you describe, with none of this lent out money actually coming from the banks income, how could the sub-prime lenders defaulting on their repayments be a problem?



If a bank creates 100k completely out of thin air to give to you to buy a house, you repay 10k before going bankrupt, even if by this point the value of the house has crashed surely the banks have still made a profit?

Also why were these debts being sold on in the form of CDO's? Surely if the banks funded new mortgages by creating money out of thin air, and not from 'real' money from the banks income, they would have absolutely no need to do so.

Banks create money out of nothing. However they need a borrower's signature to create the money. That's the trick. They can't just sit there all day and night creating money willy-nilly.



If banks don't create money then how do you explain a comment like this?

Quote tb="tb"Letting nutters from the Occupy movement take over CiF is probably one of the silliest things the Grauniad has ever done. The fact that the Gruadian chose to do it does not mean that 'mainstream media' have suddenly become converted to their idiot ideas. There's a good repost to the whole nonsense [url=http://ukhumanrightsblog.com/2011/11/15/freemen-of-the-dangerous-nonsense/here[/url'" The link you provided doesn't mention the article I linked so how can it be a 'repost to the whole nonsense'? Now here is a link that discusses the issues addressed in the Guardian article, it's from the Financial Times. However they don't slate the Guardian article for being wrong about money creation, they instead lampoon the author for only just finding out how the system works! Quote tbCongratulations to Ben Dyson, self-professed “money and banking specialist” for finally discovering, err, money. Or, how money works. In a column in the Guardian on Tuesday, Dyson recounts in grand revelatory style how the solution to the system’s current ails is nothing other than recognition of the fact that “money has been privatised”. Shock, horror!'" ftalphaville.ft.com/blog/2011/11 ... /#comments

Quote tb="tb"Letting nutters from the Occupy movement take over CiF is probably one of the silliest things the Grauniad has ever done. The fact that the Gruadian chose to do it does not mean that 'mainstream media' have suddenly become converted to their idiot ideas. There's a good repost to the whole nonsense [url=http://ukhumanrightsblog.com/2011/11/15/freemen-of-the-dangerous-nonsense/here[/url'" The link you provided doesn't mention the article I linked so how can it be a 'repost to the whole nonsense'? Now here is a link that discusses the issues addressed in the Guardian article, it's from the Financial Times. However they don't slate the Guardian article for being wrong about money creation, they instead lampoon the author for only just finding out how the system works! Quote tbCongratulations to Ben Dyson, self-professed “money and banking specialist” for finally discovering, err, money. Or, how money works. In a column in the Guardian on Tuesday, Dyson recounts in grand revelatory style how the solution to the system’s current ails is nothing other than recognition of the fact that “money has been privatised”. Shock, horror!'" ftalphaville.ft.com/blog/2011/11 ... /#comments