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The Banking and Money Conspiracy
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23-10-2007 11:19pm#1
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"Okay, you give me a potato in a week for the water", banks "invent" money to facilitate the trade. It does not matter how much money they temporarily invent (my potato didn't exist at the start of the trade) as long as it balances in the end.
For someone who knows so much about the financial system this seems to be an an extremely naive viewpoint... it does not matter how much money they invent? and so presumably it does not matter how much usury they can make out of this invented money?? are you serious???
What the video clearly shows is that worldwide debt is perpetually increasing, ..please tell me how that "balances in the end"
Can you answer me one simple question then -I'm sure you guys have heard of the subprime market crash, where people were given too much debt. These people are going to default on the debt they took out that they couldn't afford. But the banks also suffer, for taking on the risk.
why were hundreds of people queing outside northern rock banks frantically trying to get their money out?
What is the bank really risking?? losing money that it never had in the first place?? the real losers are the depositors - the ones frantically trying to get their money out because they know if the bank goes under, their deposits (the only real assets of the bank) are the real risk.
I do find it quite strange that knowledgeable wouldnt address the bigger picture - ie that the tiny few who control the worlds major banks and central banks have such vast power at their fingertips to drastically influence the system. Presumably you reckon these guys are 100% honest and would never try to influence events in their own interest, no?
Neither of you think theres anything wrong with banks charging interest on money they dont actually have. ?
...it does makes me wonder.
:DThat video is Monetary Economics for Idiots
Actually, its not. Rather, it illustrates perfectly how the current monetary and banking system is for Idiots.0 -
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Back. With a sore head. But feeling friendly, so I'll try to make the case for financial markets. I won't take kindly to being called an idiot though.
Once it can be backed up. They "invented" money (literally they provided credit facilities, no money was actually created) so I could make my potato. If they can successfully provide this to ten potato men, all the better.For someone who knows so much about the financial system this seems to be an an extremely naive viewpoint... it does not matter how much money they invent?
There are two problems with your idea. Interestingly, and you really have to consider the logic of your points when I can argue this from both market-based and regulatory-framework principles. In a market-based system, if they try to charge outrageous rates, people simply won't take them up on the offer. It's really that simple. If people are still willing to take loans up on high interest rates (and I'd like you to provide some examples of this, because our interest rates have been historically rock-bottom for the last decade or so), then surely that in itself is an argument for financial intermediation? All these people need credit facilities so much, but you think it's all a big conspiracy that needs fixing?and so presumably it does not matter how much usury they can make out of this invented money??
In reality, interest-rates are set by the central banks - and your central bank is a particularly democratically-orientated one - so you need not worry about banks being greedy.
Also, you have raised an interesting "ethical" point about banks making as much as they want. I notice the video links to a socialist website - perhaps this is a case of conspiracy regulatory capture?
Precisely. If I default on my potato loan, they're obligated to pay. They see that Mr. Oscar "Money Bags" Bravo has €100 in the bank. They also know there's exactly a 1 in 100 chance of someone defaulting on a loan (if you think the odds are higher, I can use algebra if you like). Thus they can offer credit facilities to the sum of €10,000 and, without charging any interest, break even. The leverage allowed is set by central banks and is very much on the safe side. Why? To avoid Northern Rock situation where Money Bags legs it to the bank to withdraw his money because he knows that nobody ever loses money by depositing it in the bank.What is the bank really risking?? losing money that it never had in the first place??
How many people can you name that have lost deposits in banking systems in the west? I know none.the real losers are the depositors - the ones frantically trying to get their money out because they know if the bank goes under, their deposits (the only real assets of the bank) are the real risk.
How many people can you name that have successfully used the financial system to their gain? Every single person I know who's over 25 has.
The real winners are people like me who are going to go into debt to finance their education.
The major banks don't set the interest rates, they're all controlled by central banks. Central banks are controlled by independent economists. You think it would be better to put it in control of the government? Okay, that's a fair argument theoretically (the government are more accountable than independent technicians, after all). But let's have a look at what happens in the real world. How do you think central bank independence effects things that really make a difference in people's lives like inflation?I do find it quite strange that knowledgeable wouldnt address the bigger picture - ie that the tiny few who control the worlds major banks and central banks have such vast power at their fingertips to drastically influence the system.
Oh dear. The cost of having "more accountable" central banks (which can be kicked to touch by legislation) is higher inflation. Which I presume you're aware influences the financial markets - namely it's an ex post transferral of wealth towards the rich. It also causes unemployment.
I don't presume anyone is 100% honest - and that includes you and your video. I do think however that I can analyze financial situations better than you and see that banks can only influence events in their own interest by making deals work and charging interest on it. Look at the evidence of Merrill Lynch this week, please, and tell me how it's any way difference.Presumably you reckon these guys are 100% honest and would never try to influence events in their own interest, no?
No, I think it's great. If this wasn't the case there'd be less availability of credit. Big mean profit-maximising banks would sell this credit to the people who could pay the highest interest and I'd have to work in my final year to live. By removing the myopic view of financial markets, banks now have the ability to lend to me at extremely low interest rates. It benefit me, the average Joe on the street.Neither of you think theres anything wrong with banks charging interest on money they dont actually have. ?
...it does makes me wonder.:D0 -
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Tumble weeds are rolling on that thread.
You've not explained have infrastructure would be supported, how medicine would be made, how doctors would compensated. How people would be trained as farmers. How tractors would be manufactured, or oil processed. How research and development would exist.
Or hey hey just try and claim you made "one tiny flaw" and hope everyone ignores your hopeless moronic and infantile arrangement.
Back to work wage slave.. go work and make money for the elites who were born into the position whereby they don't need to work to make the paper that controls your life.
Capitalism is a pyramid scheme.0 -
Tumble weeds are rolling on that thread.
You've not explained have infrastructure would be supported, how medicine would be made, how doctors would compensated. How people would be trained as farmers. How tractors would be manufactured, or oil processed. How research and development would exist.
Or hey hey just try and claim you made "one tiny flaw" and hope everyone ignores your hopeless moronic and infantile arrangement.
ah yes, I knew there was something I had to do, will sort it out for you tonight 0 -
Back to work wage slave.. go work and make money for the elites who were born into the position whereby they don't need to work to make the paper that controls your life.
Capitalism is a pyramid scheme.
Because yes, Mahatma's system where we all grow our own food, and somehow medicine and stuff will just arrive, somehow, is just, y'know, better.0 -
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So you're not a wage-slave I take it?
Living off the very system you decry?
No, I'm a wage slave. But I know it.
anthithetic wrote:I think my favourite bit is how he mentions China's growth in a positive light but claims that we're being fleeced for oil. The two couldn't be connected by any chance, non? No, Standard Oil's high profits have nothing to do with their new 1.2bn customers, it's all sheer greed driven by capitalism! Overthrow the system and nobody will use oil anymore!
Of course, the increased demand from China is a factor, supply and demand etc. However, it is also apparent that the usual blatant corporate profiteering is at work when you look at the record profits posted by standard oil. I understand the system of increasing profits / shareholder obligations etc. But, as I stated, this is undesireable to the ordinary consumer, as we are being overcharged for the product when clearly there is no reason we should be.anthithetic wrote:My second favourite bit is the use of the phrase "race to the bottom". I've formulated a mathematical model on the "race to the bottom" phenomenon. What do you know about it, Kernal? Care to elaborate, or can we all just resort to catchphrase? Capitalism is freedom!
The race to the bottom is the process by which a corporation seeks to maximise profits at the expense of the employees and the consumer. The system by which a corporation will pay as little as possible, produce a product as cheaply as possible (poor quality components etc.) and charge the consumer as much as possible. Can you tell me who this system is good for? I never resort to catchphrases, I understand the system and have been a part of it for a long time.ucd_econ wrote:I think you scared him by using the word "mathematical"
Catchphrase economics will solve the world's problems!
Perhaps I'm older and wiser than yourself, but then again, that's an assumption on my part, based on your UCD nick. Experience goes a long way.0 -
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I’m really not bothered explaining the economic benefits of profit maximisation, go Google it or pick up a book. You’re prospective is like that of someone who advocates windfall taxes on oil companies.You still haven't pointed out why being against gross profit maximisation is stupid of me?
Please don’t link sites that are insane enough to question whether courts may carry out judicial review. If you can’t explain the point you’re trying to make, a flurry of links doesn’t compensate.Quasi-State body?? It's a consortium of banks who decide how much money to print. Where is the government control of this body?
http://www.save-a-patriot.org/files/view/whofed.html
http://www.apfn.org/APFN/fed_reserve.htm
Second, I don’t know of many private ‘companies’ that are required by law to make biannual reports to a Legislature. If you believe what is on those sites then it’s probably a waste of my time in even trying to explain anything.
The democratic oversight comes in two forums: First, the U.S. President appoints the Governors of the Federal Reserve System (they, appointed by a democratically elected office, have a majority on the FOMC; 7/5). The second comes from Congress. The Fed’s legal mandates could be changed at any time by Congress & members of the FOMC are appointed by the U.S. President.
The government is delegating the task of a central monetary policy to the Fed. At any point that could be removed. That, the power and ability to manipulate and guide, is the definition of control. The power to print money should be separate from the power to spend it.
First, I need to point out that you said, “since they are influenced hugely by corporate interests”. Research who are the largest corporate contributors to political parties in the U.S., then consider the influence those interests could, in your view, wade over monetary policy.I don't actually have much faith in politicians, particularly in the US, since they are influenced hugely by corporate interests. However, at least the people have some voice in electing representatives and enacting policy changes and laws through political elections. There is no such power with a corporation, unless you are on the board.
But, I see the point you’re trying to make - so I’m going try to give a really, really brief history of central banking in the U.S. and then explain why there is general consensus that political independence for an NCB is important.
The Federal Reserve System in its current state comes from the 1913 Federal Reserve act, and structure wise from 1935 & 1978. The current system is the third attempt at central banking, the first lasted from 1791 to 1811, the second attempted also lasted twenty years from 1816 to 1836. Who took on Central Bank's role (monetary policy) between 1836 and 1913? The Treasury. This meant the there was political control of money and finance (favour might be given to certain interest...). Politicians are biased towards low rates of interest, high growth - inflation takes a back seat.
You then also had the problem of, what was a watermark of the times, a run on a bank, or multi-bank panics. There was nine I think between 1836 and 1913. Following the last in 1907 the Federal Reserve Act came into effect. Its structure (that you bemoan) was to avoid over centralisation, so you had 12 regional Federal Reserve Banks. The reason for this was to provide a broad view of activity from all sections of the country. Not trying to go into detail... standing facilities, lender of last resorts, federal insurance on deposits = more stable private banking sector = less average Joes lose their money when banks collapse.
You seem to advocate the average man/working Joe, yeah? Inflation hits those in the lowest income bracket worst. The few savings they have are eroded, the wages they are receive become subsistence level, unemployment, etc. Hence, you should consider inflation to be the scourge of the working class person. I’m going to link this again even though it’s on the first page:
This is a diagram you’ll get in any macro economics text. As you can see, since records began there is a high correlation between central bank’s independence and the general inflation rate. Why? Basically because independent economists can take actions without the thought, ‘I’m up for re-election next year, better not put up the interest rate to stop inflation creeping further.’ It’s the reason the ECB, whose sole mandate is price stability, i.e. low inflation across the EMU, is independent from political persuasion.
The structure is based on that of the Fed, regional banks, monetary policy executed through a policy committee. The structure you want to scrap, i.e. have congress printing money which is the equivalent of the Central Committee of the Communist Party of China.Are you saying that communist China does not control it's own currency?
http://news.yahoo.com/s/ap/20080807/...rency_controls
http://www.iht.com/articles/2007/05/20/news/trade.php
The Chinese government doesn’t want to tackle inflation; it sees that as a barrier to growth (for them growth = politicl stability). Only recently it announced its sole aim was to push for growth, moving away from considering a retraction phase. This further reinforces the view that political control of monetary policy is bad. Just look at Zimbabwe.
You seem to intent on separating those in government and the pursuit of self-interest...I never claimed to be an expert in economics, but it is apparant to me that a government should control the finances of the country, rather than a group of banks serving their own interests.
Don’t reply with a flurry of links to sites that are clearly biased and of dubious believability.0 -
I’m really not bothered explaining the economic benefits of profit maximisation, go Google it or pick up a book. You’re prospective is like that of someone who advocates windfall taxes on oil companies.If you can’t explain the point you’re trying to make, a flurry of links doesn’t compensate.
See the irony?Second, I don’t know of many private ‘companies’ that are required by law to make biannual reports to a Legislature. If you believe what is on those sites then it’s probably a waste of my time in even trying to explain anything.
The democratic oversight comes in two forums: First, the U.S. President appoints the Governors of the Federal Reserve System (they, appointed by a democratically elected office, have a majority on the FOMC; 7/5). The second comes from Congress. The Fed’s legal mandates could be changed at any time by Congress & members of the FOMC are appointed by the U.S. President.
The government is delegating the task of a central monetary policy to the Fed. At any point that could be removed. That, the power and ability to manipulate and guide, is the definition of control. The power to print money should be separate from the power to spend it.
First, I need to point out that you said, “since they are influenced hugely by corporate interests”. Research who are the largest corporate contributors to political parties in the U.S., then consider the influence those interests could, in your view, wade over monetary policy.
But, I see the point you’re trying to make - so I’m going try to give a really, really brief history of central banking in the U.S. and then explain why there is general consensus that political independence for an NCB is important.
The Federal Reserve System in its current state comes from the 1913 Federal Reserve act, and structure wise from 1935 & 1978. The current system is the third attempt at central banking, the first lasted from 1791 to 1811, the second attempted also lasted twenty years from 1816 to 1836. Who took on Central Bank's role (monetary policy) between 1836 and 1913? The Treasury. This meant the there was political control of money and finance (favour might be given to certain interest...). Politicians are biased towards low rates of interest, high growth - inflation takes a back seat.
You then also had the problem of, what was a watermark of the times, a run on a bank, or multi-bank panics. There was nine I think between 1836 and 1913. Following the last in 1907 the Federal Reserve Act came into effect. Its structure (that you bemoan) was to avoid over centralisation, so you had 12 regional Federal Reserve Banks. The reason for this was to provide a broad view of activity from all sections of the country. Not trying to go into detail... standing facilities, lender of last resorts, federal insurance on deposits = more stable private banking sector = less average Joes lose their money when banks collapse.
You seem to advocate the average man/working Joe, yeah? Inflation hits those in the lowest income bracket worst. The few savings they have are eroded, the wages they are receive become subsistence level, unemployment, etc. Hence, you should consider inflation to be the scourge of the working class person. I’m going to link this again even though it’s on the first page:
This is a diagram you’ll get in any macro economics text. As you can see, since records began there is a high correlation between central bank’s independence and the general inflation rate. Why? Basically because independent economists can take actions without the thought, ‘I’m up for re-election next year, better not put up the interest rate to stop inflation creeping further.’ It’s the reason the ECB, whose sole mandate is price stability, i.e. low inflation across the EMU, is independent from political persuasion.
The structure is based on that of the Fed, regional banks, monetary policy executed through a policy committee. The structure you want to scrap, i.e. have congress printing money which is the equivalent of the Central Committee of the Communist Party of China.
The Chinese government doesn’t want to tackle inflation; it sees that as a barrier to growth (for them growth = politicl stability). Only recently it announced its sole aim was to push for growth, moving away from considering a retraction phase. This further reinforces the view that political control of monetary policy is bad. Just look at Zimbabwe.
You seem to intent on separating those in government and the pursuit of self-interest...
Don’t reply with a flurry of links to sites that are clearly biased and of dubious believability.
Thanks for that, it was a good post with substance. I shall read up and take on board what you've said and try to reply as soon as I have time. Here's a link to a video which delves into the root of the corporate capitalist / credit / wage slave problem, which you may enjoy.0 -
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