Monday, December 14, 2015

Quote of the day 14th December 2015


Jim said...

Tell that to the commercial banks. The power to create money should bear a huge responsibility, and its far too much power to give to commercial high street banks.

Before you know it they would use that power to inflate huge bubbles in business property and housing, pricing younger people out of the housing market and blasting most of the rest on the financial markets.............oh wait........oh yeah.

Chris Whiteside said...

Which is why we need a good system of banking regulation.

Jim said...

Not really, its more why we need a new monetary system. The power to create money needs to be removed from high street banks.

Jim said...

and then the more you think about it, if the way to "create" money, i.e. taking loans from the bank is bad, because it led to the financial crisis, then how on Earth is it a good idea to solve the recession that followed by getting the banks to lend more?

Its taken me ages to get to this point of understanding, by constantly and reapeated asking the question "what is money?" and "Where does it come from?" i finally understand it.

i looked at lots of models and i had figured the "money multiplier" method must be it, but no, I was wrong again. This report from the BoE confirms that, and there is the problem, that is the crux of the problem. for as long as the power to create money is in the hands of people who are primarily searching for short term profits there is a conflict of interest. as there would be if were in the hands of politicans seeking votes.

But for as long as the system depends on people going into debt to "create" money into the wider economy, and debt repayment effectively means "money destruction" then there can never be a stable economy. That is the main reason HWSNBN and his famous quote of "No return to boom and bust" is and always was, and always was going to be - to use the technical term - "utter B*****ks"

regulation wont help much, complete reform might.

Jim said...

I cant see why the banking charter act of 1844 can't be updated to include bank deposits and electronic money to be honest.

after all, preventing banks creating paper money was the intention of the act, so that power moves to the central bank, why not just amend it to cover bank deposits and money substitutes?

Jim said...

I quite like the postive money campaign, not so much its "solution" as that leaves a lot to be desired, but they do a pretty good job of outlining the problem.