Biggest Conspiracy off them all

STEVO B

Ibid wrote: »

It's a little bit like insurance markets. If everyone who owned a car in Ireland crashed tomorrow, every insurance market .....blah blah blah

How is money created?

Rigormortis asked and a few more of us would also like to hear your insight. So please do tell.

Mahatma coat

OK the odds of everyone in the country, or even a large majority of them, crashin their cars on the same day are a bit of a longshot, but a run on the bank, all that is required for this is a panic situation to hit consumer confidence, then what, 'sorry folks we built this system on the assumption that ye'd be gullible enough to go along with it and generate us obscenely large profits along the way, oh sorry cos you want yer money back there are no profits, there aint even any real money.

Oh BTW since money no longer exists in any meaningful way you have no way of repayin yer loans so we're foreclosin on yer houses to pay our staff!!!!

bonkey

supersonicman wrote: »

This is besides the point, a lot of money is created through the fractional reserve process.

No-one has denied otherwise.

Take an example, I lend €100 to the bank at 2%. They can now lend our €900, given the 10% fractional reserve required. They lend at 20% on a lot of credit cards. Over the course of a year they earn €180 in interest ans pay €2 to me. An overall profit of €178.

In order to make that 178 overall profit, however, the banks rely on someone else earning that money. If that person doesn't earn the money, then they can't repay the loan. If you trace it far enough back - what the banks are actually doing is taking a cut of wealth that someone else is creating.

Take the artist who turns a blank piece of canvas and some tubes of paint into a work which someone will exchange cash for. They've created wealth. All the bank does is give them access to cash before they've earned it, in return for a cut of that wealth that they've created.

Not bad work if you can get it.

Not bad work if you can get it right. UBS is just after writing off $20 billion in bad debts. The Basel1 and Basel2 accords were put in place to try and manage risk, so that banks didn't put themselves excessively at risk by getting it wrong.

The fractional reserve situation is nothing more than a con job, anyone who says otherwise has undisclosed interests.

Yet another variation of "where we can't find evidence, its proof that evidence has been hidden"....

Is that really teh best you can do?

So we have now debated this for two/three pages, with two of the "best" trinity minds on the case and nothing apart from arrogance has been displayed.

Hmmm. If I were to adopt your "lack of evidence is evidence" approach, I'd say that this sentence proves you to be either a reincarnation of a banned poster, or a sock-puppet.

AngryHippie

Read "The Shock Doctrine" by Naomi Klein. Its got some very interesting information on Milton Friedman and the consequences of the adoption of his policy in developing countries, Including Chile, Nicaragua, South Africa, Poland Russia, China, Sri Lanka, Bolivia, Argentina etc...
Don't know whether she is drawing all the right conclusions TBH but it is a very unnerving book if you sit back and examine the power that is wielded by the IMF , G8 and world bank, Especially if seen in the light of Aaron spellings film about the Federal Reserve and US taxation. It is definitely one of the causes of the rolling conflict in developing countries as they struggle to impose reform to improve the future prospects of their countries, and there is no question that it favours the enrichment of the few over the security of the many

supersonicman

bonkey wrote: »

In order to make that 178 overall profit, however, the banks rely on someone else earning that money. If that person doesn't earn the money, then they can't repay the loan. If you trace it far enough back - what the banks are actually doing is taking a cut of wealth that someone else is creating.

Rubbish, the whole thing is based on debt. And another thing, how is wealth created in a service economy? We have China a "communist" country as the world manufacturer. This shows just how far gone people are.

bonkey wrote: »

Not bad work if you can get it right. UBS is just after writing off $20 billion in bad debts. The Basel1 and Basel2 accords were put in place to try and manage risk, so that banks didn't put themselves excessively at risk by getting it wrong.

As we seen with northern rock, the banks are in a no lose situation, when profits are to be made they reap, then when losses occur, these losses are pushed onto the public. Pity for a banker? There is a reason why many refer to such people as banksters.

bonkey wrote: »

Yet another variation of "where we can't find evidence, its proof that evidence has been hidden"....

I am asking a simple question, no one has yet provided an answer.

How is money created?

bonkey

supersonicman wrote: »

Rubbish, the whole thing is based on debt. And another thing, how is wealth created in a service economy?

If you can't answer the question you posed, then you don't have the basis to support your claim that "the whole thing is based on debt".

If you can answer the question that you posed, then Why don't you go right ahead and answer it to show how wealth is created differently to how I mentioned, in a manner consistent with the claim that the whole system "is based on debt".

We have China a "communist" country as the world manufacturer. This shows just how far gone people are.

I'm not sure what your complaint is here. Are you bemoaning that the Chinese aren't proper communists, and are instead beginning to embrace capitalism more and more? I'm not entirely sure how that's any more relevant to the discussion at hand than the Zimbabwe comment earlier that you dismissed out of hand.

Maybe you could explain that too?

Pity for a banker?

No-one asked you to have pity.

I am asking a simple question, no one has yet provided an answer.

How is money created?

You first participated on this thread just a touch over an hour ago...yet you make it sound like you've been asking this question here for a long time.

Suspiciously, its the excact same question that the "casey collective" banned accounts were asking earlier in the thread.

Hi casey. Welcome back. We've missed you.

Mahatma coat

bonkey wrote: »

No-one has denied otherwise.


In order to make that 178 overall profit, however, the banks rely on someone else earning that money. If that person doesn't earn the money, then they can't repay the loan. If you trace it far enough back - what the banks are actually doing is taking a cut of wealth that someone else is creating.

Take the artist who turns a blank piece of canvas and some tubes of paint into a work which someone will exchange cash for. They've created wealth. All the bank does is give them access to cash before they've earned it, in return for a cut of that wealth that they've created.

not really, if that artist gets some money from the bank via a credit card etc then before he paints anything he is in debt with interest to the banks before he even started

Not bad work if you can get it right. UBS is just after writing off $20 billion in bad debts. The Basel1 and Basel2 accords were put in place to try and manage risk, so that banks didn't put themselves excessively at risk by getting it wrong.

hey I run the risk of givin the wrong builder credit and destroyin my company, where are the protections in place to protect me if I get it wrong?

Yet another variation of "where we can't find evidence, its proof that evidence has been hidden"....

Is that really teh best you can do?


Hmmm. If I were to adopt your "lack of evidence is evidence" approach, I'd say that this sentence proves you to be either a reincarnation of a banned poster, or a sock-puppet.

if by this you mean a call by some poster for direct and understandable answers that has been met repeatedly with circuitous mumbo jumbo and a lack of clarification of the points, then maybe you can clarify some f the points for us thickos in the back

Mahatma coat

well thats the Kiss of death for this thread, Casey212 is agreein with me.

I'd still like a clear answer tho, How is the money in our pockets created and whats its actual worth?

bonkey

Mahatma coat wrote: »

not really, if that artist gets some money from the bank via a credit card etc then before he paints anything he is in debt with interest to the banks before he even started

Think it through. How can the artist pay back the loan and the interest?

They do so by earning money, which they then pay back to the bank.

Given that we're taking a simple example here...the artist earns money by creating and then selling artt.

Lets say the spent 100 quid on their credit card getting supplies and materials. They now need to earn at least 110 to break even (100 plus 10 interest).

So the artist paints his picture, and sells it for 200 quid. Do you not accept that the artist has created wealth? They've turned 100 quid of materials into 200 quid of art.

The artist has made 90 quid profit, the banks have made 10 quid profit. If the bank didn't exist to give the artist the 100 quid up front, they couldn't have bought the material, and wouldn't have created art. 100 quid of materials would remain unsold

hey I run the risk of givin the wrong builder credit and destroyin my company, where are the protections in place to protect me if I get it wrong?

Turn your company into a multi-billion dollar enterprise, the destruction of which would have massive implications on the common man and the economy in general, and you'll get exactly the same type of protections.

I'd be additionally willing to bet that your business isn't subject to (for example) restructions like the Basel 1 or Basel 2 agreements to limit the risks that you're allowed take?

if by this you mean a call by some poster for direct and understandable answers that has been met repeatedly with circuitous mumbo jumbo

No. I mean someone claiming to have a PhD in the field being called on that claim as a result of the lack of basic understanding they demonstrate in their (alleged) chosen field of expertise.

maybe you can clarify some f the points for us thickos in the back

I'm already trying to, using my artist analagy above. It mightn't be far-enough along to answer all your questions yet, but given that we're already at a point of disagreement we can't meaningfully go further until we resolve that.

If you can accept that wealth (sometimes referred to as "value added") is being created in the above scenario, then we're nearly there. The bank aren't doing anything but taking a cut. If the artist didn't sell his picture, died, or failed to generate more than 100 quid for his materials, the bank would not receive back part or all of their loan, and wouldn't receive any interest. In effect, they're asking for a share of the "value add" in return for that risk.

Mahatma coat

yeah I'm not questionin how the Artist generates his wealth, get a cow, cut it in half stick it in a vat of formaldahyde, hey presto

this costs the artist 100 quid which the bank generously gave him on the premise that he give it back wit ten quid more on the completion of his project, the artist makes 90 pounds more, deposits that in the bank and all of a sudden the banks can 'create' about $800 from this.

the old 'classic' example of bankin that I was taught as a child seems to be a load of bollox, I'd like to know how the new system actually works to prevent runs, or is it just a case of lets hope that dosent happen.

Eh if I did try to turn my business into a multi billion dollar industry I'd probably get snaffled by monopolies comission or some such like ****e


AND ANYWAY who say I'm not a multi billion dollar industry, I know that if we closed our mill it would destroy the small comunity where its based

Mahatma coat

casey, hows about ya keep the head down, lurk for a bit and when you want to ask an important question e-mail one of us who aint blacklistedYET and we might (provided it has some proximity to coherence) post it on your behalf, otherwise it aint gonna be long till yer not just sitebanned but IP blocked aswell

Mahatma coat

we hold entreprenurial billionares in high esteem for the wealth they generate off their own graft, I know first hand about the ruthlessness etc of business, a bloke just wrote a book about the allegedly'nasty'* things my boss did in PNG in the eighties and early ninetys.



*absolutley no truth in it, pure baseless acusations, slander at best

Mahatma coat

from experience its better to be 2IC to a member of the club than an actual target yerself, all the benefits minimal risk, but this has nothing to do with the question in hand

OllieMac

Wow, you are both very boring! Just drop it will you!

Mahatma coat

OllieMac wrote: »

Wow, you are both very boring! Just drop it will you!

why thank you for your riveting insight into this topic, where may I sign up to your newsletter?

muffler

OllieMac wrote: »

Wow, you are both very boring! Just drop it will you!

Another troll that needs his ass kicked

bonkey

Mahatma coat wrote: »

yeah I'm not questionin how the Artist generates his wealth, get a cow, cut it in half stick it in a vat of formaldahyde, hey presto

this costs the artist 100 quid which the bank generously gave him on the premise that he give it back wit ten quid more on the completion of his project, the artist makes 90 pounds more, deposits that in the bank and all of a sudden the banks can 'create' about $800 from this.

The banks can make $800 more available for others to borrow...which isn't quite the same thing. They don't get to just add $800 to their profit line, on the grounds that the have $90.

the old 'classic' example of bankin that I was taught as a child seems to be a load of bollox,

It may be, depending on what you were taught. Its not what I was taught, because I was taught from the very start that banks can lend more money than they actually have.

I'd like to know how the new system actually works to prevent runs, or is it just a case of lets hope that dosent happen.

The system doesn't prevent banks from collapsing...it just makes it less likely.

Have a look, for example, at The Basel 1 Accords or their successor - The Basel 2 Accords.

These are systems put in place by the banks themselves to try and prevent future problems caused by large banks collapsing, primarily due to excessive risk-taking.

Mahatma coat

bonkey wrote:

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Yesterday 17:53
bonkey
Quote:
Originally Posted by Mahatma coat View Post
yeah I'm not questionin how the Artist generates his wealth, get a cow, cut it in half stick it in a vat of formaldahyde, hey presto

this costs the artist 100 quid which the bank generously gave him on the premise that he give it back wit ten quid more on the completion of his project, the artist makes 90 pounds more, deposits that in the bank and all of a sudden the banks can 'create' about $800 from this.
The banks can make $800 more available for others to borrow...which isn't quite the same thing. They don't get to just add $800 to their profit line, on the grounds that the have $90.

Quote:
the old 'classic' example of bankin that I was taught as a child seems to be a load of bollox,
It may be, depending on what you were taught. Its not what I was taught, because I was taught from the very start that banks

Quote:
I'd like to know how the new system actually works to prevent runs, or is it just a case of lets hope that dosent happen.
The system doesn't prevent banks from collapsing...it just makes it less likely.

Have a look, for example, at The Basel 1 Accords or their successor - The Basel 2 Accords.

These are systems put in place by the banks themselves to try and prevent future problems caused by large banks collapsing, primarily due to excessive risk-taking.
Yesterday 15:58
muffler
Quote:

I'll wait till you edit that bit in the middle, so that the thing makes coherent sense

bonkey

Done. Sorry - dunno what happened.

Mahatma coat

Cool,

right Basel is self regulation, and more of a set of guidlines for banks as to how to avoid losing money their money, not how to avoid losing customers money.

OK I was taught that when a bank created money on a loan that loan went back to the bank and was balanced out across the books, ie they give you $5000 (of which they had at least 20% in liquid assets and the rest in other forms ie Gold, Cash being the top of the pyramid and the Pensions and 'Debt futures' being the other end), you buy my car (very nice car it is too, y'd be doin well for $5K;) )

I then go back to the bank and deposit the cheque for 5 Grand, the bank then credits me with 5000 dollars and you have a bank loan to repay for $5500 assuming 10% interest for handiness plus an asset worth 5K which the bank can repo if you default on payment, As you make repayments your balance returns to zero and the bank makes a profit of 500 Dollars over the life of the loan. at the end you own the car, until then effectivley I have sold them the car and they are sellin it to you.

bonkey

Mahatma coat wrote: »

Cool,

right Basel is self regulation, and more of a set of guidlines for banks as to how to avoid losing money their money, not how to avoid losing customers money.

Why are you making that distinction? If you lodge money to a bank, the bank uses that money (investments etc.). Although its fallen mostly by the wayside, the reason you (used to) get interest on your savings is because the bank gets to use that money.

If the banks lose their money, they also lose your money. A run on a bank is caused when enough of those who have deposits lose faith in the security of their deposits, and want the money back.

So if you see the B1 and B2 Accords as being a way to protect the bank's investments, it is and must be - by definition - also a protection of customer's deposits and other investments with the bank.

ie they give you $5000 (of which they had at least 20% in liquid assets and the rest in other forms ie Gold, Cash being the top of the pyramid and the Pensions and 'Debt futures' being the other end),

Part of that (notional) 80% are investments, right...things like stocks which the banks hold?

One of the other things that the bank can invest in is a loan. If the bank wants to cover 1K of your cash, it could have 200 in liquid reserves, 200 in stocks, 200 tied up in the future's markets , and 400 in the form of loans awaiting repayment.

So what you were taught was correct...its just that you weren't given (and presumably didn't consider what would constitute) a complete list of the 'other forms' that the 80% could be held in.

rubadub

DeVore wrote: »

I'm sure most of you have seen www.zeitgeist.com (if not, you can watch the entire thing on that website for free). The 9/11 stuff is a little dodgy but the banking section is very much on target.

After watching zeitgeist I was surprised at some of the economic section, but I saw nothing really shocking in it. The narrator throughout the film seems patronising and has the OMG tone all the way through. After the economic bit I just thought, "nothing anybody who studied economics didn't know already, nicely dumbed down all the same"

supersonicman wrote: »

How is money created?

In the mint. I am not being smart, it is something I do have an interest in. What happens to lost money? Hoarded money? Who pays for the production of money in Ireland?

I have heard the production of some coins costs more than their monetary value, i.e. it might cost 10cent to produce and issue a 5cent coin.

What genuinely puzzles me is why whoever has to pay for this new money is not seeking the old money. Supermarkets have these 3rd party machines which will count your coins and take 10% and issue you the remainder. If the central bank has to foot the bill for new coins then why do they not offer this service FOC. In fact people could almost hold the money to ransom with them, make them pay them 10% more in notes to get the €100 worth of 5cent coins back that would cost them €200 to produce.

In the 80's this happened in a way, I remember mcdonalds and superquinn were giving free burgers and doughnuts (in effect money) to get £5 worth of loose change from customers. AFAIK you did not have to buy anything, so it was not like a marketing scam, though it was a way to give "free" samples I suppose. I was told that supermarkets may have to pay extra for coins from banks, I am not sure if that is true. I was told that was the reason it was cheaper for them to pay customers rather than pay the bank.

I think it is odd no supermarket accepts old change and issues you with a voucher to be used in their shop for that value, weird that they allow apparent 3rd party companies come in an fleece their customers. I have been told banks do not freely accept change either, in this day and age it would be easy to get a counting machine, rather than expect people to fill all those little bags, they had them on the toll bridges years back.

Does anybody benefit from this old money not resurfacing from the big jars in peoples houses?

rubadub

rubadub wrote: »

I think it is odd no supermarket accepts old change and issues you with a voucher to be used in their shop for that value,

Just back from tescos today and they have just that very machine! Freaky, must be those chips they implanted in my brain, stealing my ideas

Ekancone

rigormortis wrote: »

The money system.


This is beyond question. Does not everyone work for the stuff for the majority of their lives, yet people do not know the first thing about it.

Yes, let us return to a system of barter under semi-autonomous local collectives.

MeatProduct

daithifleming wrote: »

Yes, let us return to a system of barter under semi-autonomous local collectives.

Seemed to work in The Holy Grail! It would be interesting if we did return to a barter system, I'm sure there would be loads of confusion.

Minder

I have tried to follow the arguments (on topic) here about the origins of money, but am confused. Is money spent into existence? or is money loaned into existence? Because as I understand it, money is (mostly) loaned into existence through temporary and permanent open market operations.

JOHNSPILLANE

The money system is quite the scam.

Ekancone

JOHNSPILLANE wrote: »

The money system is quite the scam.

Yawn...

oscarBravo

JOHNSPILLANE wrote: »

The money system is quite the scam.

Please explain.

bill_ashmount

Minder wrote: »

I have tried to follow the arguments (on topic) here about the origins of money, but am confused. Is money spent into existence? or is money loaned into existence? Because as I understand it, money is (mostly) loaned into existence through temporary and permanent open market operations.

Me too, I'm very confused. Maybe economics and banking isn't my strong point. I just don't see where it comes from despite the examples....:(