Do you know how money is created?

Tangatagamadda Chaddabinga Bonga Bungo

All money comes from a magic tree, in the sense that money is spirited from thin air.

The vast majority of money (97%) comes into being when a commercial bank extends a loan.

85% of MP's in the UK were unaware that new money was created every time a commercial bank extended a loan, while 70% thought that only the government had the power to create new money.
27% of bank lending goes to other financial corporations; 50% to mortgages (mainly on existing residential property); 8% to high-cost credit (including overdrafts and credit cards); and just 15% to non-financial corporates, that is, the productive economy.

Above taken from ---> https://www.theguardian.com/global/shortcuts/2017/oct/29/how-the-actual-magic-money-tree-works

Fractional-reserve banking is the practice whereby a bank accepts deposits, makes loans or investments, but is required to hold reserves equal to only a fraction of its deposit liabilities. Reserves are held as currency in the bank, or as balances in the bank's accounts at the central bank. Fractional-reserve banking is the current form of banking practiced in most countries worldwide.

Aongus Von Bismarck

Is this meant to be a profound insight into how financial markets now work? The FIAT system has been in use in Europe for close to 100 years.

Harry Palmr

God I hope there's a finance forum this can be quickly moved to.

Tangatagamadda Chaddabinga Bonga Bungo

Aongus Von Bismarck wrote: »

Is this meant to be a profound insight into how financial markets now work? The FIAT system has been in use in Europe for close to 100 years.

85% of MP's in the UK were unaware of how money is created.

Want to see how people on Boards thought of it.

Junkyard Tom

Aongus Von Bismarck wrote: »

Is this meant to be a profound insight into how financial markets now work?

No. He was highlighting how money is created and how an awful lot of people don't know.

OP I think this might add to people's knowledge of how money is created, who creates it, how it is used, or as this videos shows misused.

https://www.youtube.com/watch?v=4l06RhFoLE4

DubInTheWest

I stopped reading your post half way down because I don't really care and lost interest, but your username is pretty cool

ytpe2r5bxkn0c1

Tangatagamadda Chaddabinga Bonga Bungo wrote: »

85% of MP's in the UK were unaware of how money is created.

Want to see how people on Boards thought of it.

They say yes to the poll yet haven't a clue - very scientific.


Personally I don't care how it's created (although I know) as long as it doesn't become scarce.

maudgonner

Well when a Daddy Money and a Mammy Money love each other very much...




(There's jokes to be made here about the Vietnamese Dong, giving her a good Pounding, and Quantitative Easing, but I'm above all that kind of thing)

I just thought it came out of a hole in a wall. But then you notice later your bank balance has gone down........ (the b*stards).

The_Valeyard

Its all one big giant illusion.

Tangatagamadda Chaddabinga Bonga Bungo

Addilynn Prickly Cocaine wrote: »

They say yes to the poll yet haven't a clue - very scientific.


Personally I don't care how it's created (although I know) as long as it doesn't become scarce.

The practice certainly helped exacerbate our own Financial Crisis of 2009. Which made money more scare here.

ytpe2r5bxkn0c1

Tangatagamadda Chaddabinga Bonga Bungo wrote: »

The practice certainly helped exacerbate our own Financial Crisis of 2009. Which made money more scare here.

It didn't affect my stash though. So, happy days.

Aongus Von Bismarck

No one ever has a bad word to say about Lemass, but he had the wind of fortune in his face. The Marshall Plan remains the finest act the US has passed, and we got enough to build the social houses people now cannot afford.

Hammer89

Deleted User wrote: »

I just thought it came out of a hole in a wall.

That's a glory hole.

branie2

aka an ATM

Atoms for Peace

Aongus Von Bismarck wrote: »

Is this meant to be a profound insight into how financial markets now work? The FIAT system has been in use in Europe for close to 100 years.

A clapped out FIAT Uno at this stage.

Dr. Kenneth Noisewater

Up the Rossies

matchthis

that would be an ecumenical matter

donegaLroad

Tangatagamadda Chaddabinga Bonga Bungo wrote: »

85% of MP's in the UK were unaware of how money is created.

Want to see how people on Boards thought of it.

I wonder if the same poll was done in the Dail, would the figure also be close to 85%. I think it would.

begbysback

The_Valeyard wrote: »

Its all one big giant illusion.

This is true, money doesn't exist and is actually just an idea, based on trust.

if trust breaks down, then the idea of money is over

McCrack

begbysback wrote: »

This is true, money doesn't exist and is actually just an idea, based on trust.

if trust breaks down, then the idea of money is over

Thats when bitcoin will step in

Decentralised public blockchain

Are Am Eye

Roman Soldiers were paid with salt.

Hence "worth your salt"



* before refridgeration was invented salt was the only way to preserve meat and other food. Was universally valued, accurately measurable, portable and so a good median of exchange or currency.

paleoperson

McCrack wrote: »

Thats when bitcoin will step in

Decentralised public blockchain

Bitcoin is a pyramid. It has no backing at all, its value rests solely on people having faith in its worth - the definition of a pyramid. btw I have some uniquely crafted shiny metal objects, only 2000 of them are in the world and no more will be made, I intend on using them as currency and they may be worth a lot some day. I'll sell you them.

If there is a problem with standard money then the right way to go about it is to get control back of the government. Not just bypass it. How much illegal activity does bitcoin facilitate?!

McCrack

paleoperson wrote: »

Bitcoin is a pyramid. It has no backing at all, its value rests solely on people having faith in its worth - the definition of a pyramid. btw I have some uniquely crafted shiny metal objects, only 2000 of them are in the world and no more will be made, I intend on using them as currency and they may be worth a lot some day. I'll sell you them.

If there is a problem with standard money then the right way to go about it is to get control back of the government. Not just bypass it. How much illegal activity does bitcoin facilitate?!

Eh well comparing bitcoin to a pyramid scheme demonstrates you dont fully understand either.

At a fundamental level bitcoins value is based on supply and demand.

I couldn't tell you how much illegal activity bitcoin facilitates but I can tell you its far less than fiat money does

Junkyard Tom

paleoperson wrote: »

It has no backing at all, its value rests solely on people having faith in its worth

Can you tell me what contemporary currency such as the USD, EURO, GBP is backed with something tangible and doesn't depend on the faith of its user?

Rubberchikken

I always thought fairies made it. Now I'm heartbroken. Op over to finances for you:p

It would take me a while to rerwrap my head around it and articulate it, but yeah, I have a decent idea of how money is created. It's not intuitive and it's pretty weird that P+I can never be paid back.