How the banking system and financial sector really work.

adze67

adze67

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Prof. Werner brilliantly explains how the banking system and financial sector really work.
There is also a longer talk he did in Dublin for the Public Banking Forum of Ireland below...really explains how the system works, what's broken with it and solutions too...



Detailed Index - Professor Richard Werner’s Talk:

1 - Why is banking so important for the economy, society and the sustainable development of regions and communities?
2 - What causes the recurring boom-bust cycles and crises?
3 - What policies or banking systems have historically been most successful in avoiding these cycles and crises?
4 - What kind of banking system and banking policy do we need?
5 - While we are at it, can we solve the major problems of our time with this?
6 - What are the policies which are being pushed that we need to oppose?

4:40 - Banks create the Money

7:00 - Where is your Money Safe?

8:50 - Trade Secrets of Banking – Banks don’t lend Money, Banks don’t take Deposits!

10:40 - The bank doesn’t pay-out, it will just record its debt to you, which is called “a deposit” and we use it as Money.

12:45 - Credit Suisse & Barclays Bank – Create their own Capital

16:25 - Cash & QE

17:35 - The money supply is created and allocated by Banks

22:30 - Colwyn Report 1918 – nothing’s Changed!

22:40 - Bank Collusion

24:00 - Banking Market Concentration - The 'Herfindahl-Hirschman Index’ – (H-HI)

26:30 - Number of financial institutions (Banks & Credit Unions) – Debate

27:00 - H-H Index for Germany

29:00 - The Creation of Boom-Bust Cycles

30:50 - Credit for GDP transactions - financial circulation credit (Asset Credit Creation)

36:10 - The East Asian Economic Miracle – Credit Guidance

40:30 - Abuse of Power by the Bank of Japan – A warning to All

47:10 - The German Banking System

51:20 - Hampshire Community Bank Project - Local First CIC

56:40 - Dangers of Centralise Money creation & allocation (Central Banks)

58:00 - The Alternative to bailing out the Banks. Ireland - what the Central Bank could have done

1:00:00 - Japanese Bank Restructuring 1945-47 and 1990s

1:06:00 - Iceland

1:06:50 - Activities of the ECB

1:07:00 - EU war on Community Banks

1:08:30 - Negative Interest Rate Policy of the ECB, favours speculators to the detriment of the economy

1:10:25 - War on Cash

1:11:45 - Lower Interest Rates do not stimulate the economy

1:14:00 - Quantity of money not the price of money that drives the Economy – Bank credit for GDP transactions drives the economy

1:15:45 - Current Central Bank War on Cash

1:19:30 - ‘Princes of the Yen’, Central Bank Truth Documentary on YouTube (247,000 views, Nov 2016) & Book plus other Publications.

Prof Werner’s Books on Amazon: https://www.amazon.com/Richard-Werner...

‘Princes of the Yen’: Central Bank Truth Documentary

1:20:00 - Irish Government - Stop the issuance of Government Bonds - 12% Vs 4%

1:22:38 - END
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A quick google search and Werner's most interesting contribution to economics seems to be his postulation that financial transactions are a zero-sum game ie if you gain through a financial transaction, someone else loses. No value has been added.

Now I'm with him on the level that credit provided for productive improvements are good in the sense that productivity enhances wealth, whilst credit provided for consumption is bad in the sense that consumption destroys wealth, but can you explain why credit provided for financial transactions (and he mentions the housing market as an example) does not lead to an enhancement in wealth? As far as I see it, when someone takes out a loan for a piece of property, they are exchanging say $500 000 for a property that they value at more than $500 000. After all if they didnn't value it at more than the amount of the loan then they would not take that debt on in the first place. To my way of thinking, that financial transaction has enhanced the wealth of both the lender and the borrower.
 
mmm....shiney! said:
A quick google search and Werner's most interesting contribution to economics seems to be his postulation that financial transactions are a zero-sum game ie if you gain through a financial transaction, someone else loses. No value has been added.

Now I'm with him on the level that credit provided for productive improvements are good in the sense that productivity enhances wealth, whilst credit provided for consumption is bad in the sense that consumption destroys wealth, but can you explain why credit provided for financial transactions (and he mentions the housing market as an example) does not lead to an enhancement in wealth? As far as I see it, when someone takes out a loan for a piece of property, they are exchanging say $500 000 for a property that they value at more than $500 000. After all if they didnn't value it at more than the amount of the loan then they would not take that debt on in the first place. To my way of thinking, that financial transaction has enhanced the wealth of both the lender and the borrower.
Click to expand...

My take on it is that the "loan" for the property doesn't result in any "real" increase insofar as the same property is in play only it's "perceived" value has increased (maybe?), and that financial transaction is the same zero-sum game as 1 party gains (picks up "credit") while the other loses (gets saddled with a debt)...but if the "loan" was taken out to fund the building of a new property then there is a productivity increase...
 
What are thoughts on this quote: "I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a moneyed aristocracy that has set the government at defiance. The issuing power of money should be taken away from the banks and restored to the people to whom it properly belongs." - Thomas Jefferson
 
LibertyLover said:
What are thoughts on this quote: "I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a moneyed aristocracy that has set the government at defiance. The issuing power of money should be taken away from the banks and restored to the people to whom it properly belongs." - Thomas Jefferson
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Was Jefferson referring to the establishment of a central bank and fiat money?
 
Very interesting.

It gets good about half way through, but I was floored by the claim near the end that the city of London is outside the UK and doesn't have democracy.

Whats that about? Did he just go full conspiritard?
 
BuggedOut said:
Very interesting.

It gets good about half way through, but I was floored by the claim near the end that the city of London is outside the UK and doesn't have democracy.

Whats that about? Did he just go full conspiritard?
Click to expand...

The "City of London" is different from "London"...this short vid helps to explain ;)


and Part 2

 
BuggedOut said:
It gets good about half way through,
Click to expand...

I actually thought it started pretty well too ;)
00:20 – 01:20
Well first of all it’s interesting that the “National Accountants”, who think a lot about the overall economy, how to measure it and how to structure the data…they actually have been struggling for decades with the question “What to do with the Financial Sector?” Why? Because GDP is actually created by National Accounting by adding up “Value Adding” activities and that’s where the financial sector has a problem, what is the value added? And it’s been so difficult that, essentially, the National Accounting statisticians have to make up a “fictional” value and add it on to GDP and say “Ok that’s, we can say, that maybe is what the Financial Sector’s doing"…essentially there’s no value added, there’s value extracted, so really you need to subtract it from GDP…
Click to expand...

How different would GDP figures look with Financial Sector "costs" subtracted o_O
 
adze67 said:
My take on it is that the "loan" for the property doesn't result in any "real" increase insofar as the same property is in play only it's "perceived" value has increased (maybe?), and that financial transaction is the same zero-sum game as 1 party gains (picks up "credit") while the other loses (gets saddled with a debt)...but if the "loan" was taken out to fund the building of a new property then there is a productivity increase...
Click to expand...
I would add that debt creation from banks has created high property prices. Rental yields haven't provided support to property prices as rents have risen at a much slower pace than property prices. If bank lending wasn't sufficiently available long term, then buyers overall would lack the spending power to offer to buy at such high prices.
 
Interesting points that appear to be missed...
Banks don’t take deposits and banks don’t lend money
Banks borrow money from the public – they purchase securities/promissory notes
What we call deposits is the banks record of its debt to the public
We are the banks creditors – not debtors
 
adze67 said:
Interesting points that appear to be missed...
Banks don’t take deposits and banks don’t lend money
Banks borrow money from the public – they purchase securities/promissory notes
What we call deposits is the banks record of its debt to the public
We are the banks creditors – not debtors
Click to expand...

Yes, that was the bit that really perked my interest.

I'll take a much closer look at the fine print if I ever take out another loan.
 
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