So you want banks to go back to being just a warehouse for money basically where people who put there money in are charged a fee, rather than getting interest, for the bank to hold their money for them and the money sits idle unusable by society? Do you think most people will be happy with that? Do you think it's a good way of allocating society's scarce capital? You say say that increasing the monetary base doesn't create inflationary effects? It creates permanent inflationary effects because the money stays in circulation where as if it is paid by debt, the debt drops out of circulation once it has been paid. You are advocating govt robbing citizens surreptitiously to pay for things. How is that different to govt printing money to "stimulate" the economy today? The financial status quo can't be maintained no matter who wants it to, no matter how powerful they are. All they can do is drag it out. But it's not just them, no-one wants the correction. It will be harsh and severe and there will be widespread calls for the govt to "do something" to relieve the pain. There is no answer but they will do what they think has the best chance of working and prolong the pain. Not because banks want them to, but because everyone else wants them to. If you really take a harsh look at the system you will see that nothing really works particularly well and it is just a question of trade-offs. Human nature and the world are what they are.
No. The inflation is maintained by ensuring that even as credit is paid back (destroyed), more and more is created to take it's place ensuring ever increasing credit. It's why they fear deflation so much and want to encourage borrowing. As to your second point, if bank's create money out of thin air, why would they ever go bankrupt? And why do Aussie banks need to source funds from overseas?
I simply don't think my savings should be considered anyone else's capital. If I choose to put them in a bank, then that is where they should be. If I choose to invest MY capital, then I will, I definitely do not need some banker doing things with it for my own good because they think they know how to manage society's scarce resources. That's exactly the sort of thing that usurps people's sovereignty, because pretty soon the politicians are enacting laws that give bankers the right to do as they please with your hard-earned and you've just lost a little more of your liberty. We really need to respect individual's property rights, I reckon, not trade them away in collectivist compromises. I also believe that if productive capacity is increased (through cheaper power, better roads, improved infrastructure, new technologies, new frontiers, etc.) inflationary effects are cancelled out due to the new value, capacity, productivity and societal benefit created. That is, the size of the pie is increased along with the number of slices. Inflation is where more money is chasing after the same quantity of goods, like Spain importing tonnes of gold from the new world or the RBA printing up wads of cash, when there is no new production to soak up the new currency. I'm talking about instances where economic capacity of the financial domain is increased by investment of the new money created. But you're right in that there is nothing surer than the politicians compounding their screw ups in a command and control economy.
Banks do create money, but not out of thin air literally. They create the money against collateral. They are therefore allowed to effectively buy everything there is for sale as long as there is an intermediary, ie you or a company etc that is willing to risk their future earning capacity against it. Banks don't go bankrupt because they can't create more money out of thin air, but rather when they have no longer got adequate collateral cover or reserves to cover the amount of money that they have created out of thin air. Deflation devastates a bank's balance sheet like nothing else. If they have lent out $1 trillion say, and suddenly the assets they have against those loans - the created money - are now valued much less, then the bank is suddenly insolvent and cannot meet its reserve requirements. Deflation isn't shunned because it is bad for the average person, deflation is shunned because it is the biggest enemy of bank viability. The truth is that if banks actually marked their assets to market then you would find most banks including Australian banks to be already bankrupt. That's the dirty secret. That's what inflation and monetary easing at any cost is all about.
This is a fallacy. The only reason people require credit to buy a home is because they can use credit to buy a home. It's a vicious circle. Increased availability of credit leads to higher prices, which leads to the need for more credit and so on. That's how bubbles are inflated. We know this is true because when credit dries up, prices deflate. So without credit, a societies consumers cannot consume more than they produce.
Wouldnt that be great.... 3rd world here we come ..I say bring on a bit of credit & get the big wheel turning. I dont see how saying most people require credit to buy a house is a fallacy its truth .What percentage of people do you really think can either save the entire amount to buy one or have the skills to build one even if they were deflated ?. like i said 3rd world living conditions people living in humpys made of corrugated iron & pallets..Intelligencer you usually say some great stuff but you lost me on this one....cue twilight zone music
http://www.deathandtaxesmag.com/147...usly-to-support-occupy-wall-street-whos-next/ Adding better source: http://www.huffingtonpost.com/2011/09/29/nyc-transit-union-joins-o_n_987156.html
Mate- you obviously haven't noted the cosy relationship between credit and sky high RE prices... Take away one and the other will collapse. It may take time, but you'll see it too someday
This comes back to the point I was trying to make earlier. You are correct that it starts out as mostly a fallacy. But someone will always want to start the borrowing off (to get a bigger house, better location,whatever). This then kicks off the vicious circle (the keeping up with Jones's effect) which gradually over time results in more and more borrowing. This is the 50/60 year credit cycle which then comes to the point where society just doesn't have the capacity to borrow anymore.
First of all I've seen the claim in multiple places that banks create money out of thin air but I've never seen any proof. And considering that it doesn't make sense and that the simple act of lending and re-lending "creates money" and that this makes complete sense and fits the data means I have a very difficult time accepting the claim that banks create money. And if that is true and the collateral is the Aussie houses themselves then why the need for overseas funding? Why the need for deposits at all? Surely they would be better off without these liabilities? Surely they would discourage customers from depositing their money? That would make business sense to me. Maximise the assets on your balance sheet, reduce the liabilities.
You will find this very useful in understanding the process of money creation http://www.youtube.com/watch?v=Dc3sKwwAaCU
the message has gotten through to gen-y :thumbsup: [youtube]http://www.youtube.com/watch?v=uZmPWcLQ1Mk[/youtube]
So looks like Anonymous are going to shut down the NYSE on Monday!! 10/10/11 [youtube]http://www.youtube.com/watch?v=Gz0swK0mpMk[/youtube]
^^^ Sounds nice - However, i think Walls St will be attacking Wall St - we the people, we the 99% my ar.e Attacking them, and we dont know who they are? You cant have exposures in the Trillions and be caught with your pants down. Doesnt make sense. Things will change, but for the worse. They always did. There was never this much deception in the world.
A big claim. They would not be able to do it unless they have the resources of a government agency. Not convinced that Anonymous isn't one of the the shadow government's own departments running it's own opposition in order to control both sides.
Live feed of protests: http://www.livestream.com/globalrevolution Reports of about 100 arrested. Buses moving in to carry away arrested. News reports on Steve Jobs death instead because the 1% are more important I suppose.
working late and having a cup of coffee, decided to see what's going on at http://www.jsmineset.com/ , seems like the wheels are really falling off over in the USA. The top three stories are: - Unions endorse, will join Occupy Wall Street protests http://www.cnn.com/2011/10/05/politics/occupy-wall-street/index.html?hpt=hp_t1 - Layoffs In September EXPLODE 126% In Worst Month Since April 2009 http://www.businessinsider.com/layoffs-in-september-explode-126-just-from-last-month-2011-10 - Job Loss Could Put One in Three Out of Their Home http://www.dsnews.com/articles/job-...three-homeowners-out-of-their-home-2011-09-30 It all adds up to people getting increasingly desperate.
