tag:blogger.com,1999:blog-10815380.post1393033945214970047..comments2024-03-14T12:42:51.995+00:00Comments on Chris Whiteside's Blog: As three months of negative inflation come to an end: should we do this more often?Chris Whitesidehttp://www.blogger.com/profile/02888720969479013951noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-10815380.post-30723598503645604962015-12-18T15:51:53.531+00:002015-12-18T15:51:53.531+00:00Economists have, as you probably know, several dif...Economists have, as you probably know, several different definitions of money. But the general principle is that, if you can use it to settle a debt or buy something, it's money.<br /><br />Debt is not inevitably a problem per se, it becomes a problem if you do not have the assets to cover it.<br /><br />I don't think it is a mad system, but I do agree that no chancellor is ever going to be able to "abolish boom and bust" while we have it - I doubt they could do so under any other system either.<br /><br />And yes, it was a silly thing to say and an even sillier thing to deny having said.Chris Whitesidehttps://www.blogger.com/profile/02888720969479013951noreply@blogger.comtag:blogger.com,1999:blog-10815380.post-76345253332892930352015-12-18T08:27:30.594+00:002015-12-18T08:27:30.594+00:00Also how on Earth can HWSNBN say that he never sai...Also how on Earth can HWSNBN say that he never said <a href="https://www.youtube.com/watch?v=zja3ZUg7z1o" rel="nofollow">no return to boom and bust</a> and expect people not to call him out for telling porkies.<br /><br />I mean the evidence he showing he did is pretty overwhelming.Jimhttps://www.blogger.com/profile/00373005279697295131noreply@blogger.comtag:blogger.com,1999:blog-10815380.post-41956530828136335782015-12-18T08:02:51.318+00:002015-12-18T08:02:51.318+00:0097% of the money we use is not "money" a...97% of the money we use is not "money" as such, its just numbers typed into a computer by a high street bank. This is the money you have "in" your bank account. Its not actually money at all, what your bank balance is, is a promise by your bank to pay you a certain amount at some point in the future.<br />These figures are created when banks make loans, they just enter 2 lines into the books, well more accurately on to the balance sheet. its a system of double entry book keeping. then charge interest on it.<br /><br />so i take out a loan for £1000 at 5%,<br /><br />the bank records £1000 into my bank account (which is not money, just a promise to pay me some money) this is recorded as a Liability of the bank.<br />At the same time they create an asset (this is my loan as i have promised to pay the bank £1000 + £50 in interest).<br /><br />At the end of the loan term when I have paid £1050 to the bank then the £1000 is "destroyed". <br /><br />its a very important concept to grasp that banks are not middle men, loaning money from savers to borrowers, they don't.<br /><br /><br />Thing is, if we have £1 it means some one somewhere owes £1. So the only way we can get money is to borrow it, that is go into debt. Though we end up with a lot of money in the overall economy, it also means we have a lot of debt (the boom). Though then, because there is way too much debt, people start to default on it, others then get a bit panicky and "repay their loans" or destroy the money. the bank is reluctent to lend more, as there is more chance of a default, and those who have defaulted leave the bank in a hard place. (the bust)<br /><br />Unfortunatly the government "bail out the banks" in order to keep this mad system working. so quite simply, when things are going well the banks cream a lot of money from the productive section of the economy, when it all goes tits up, then the government bail out the banks which puts the debt (via taxes and government borrowing) onto the productive section of the economy.<br /><br />This is why under the current system there can never be any removal from boom and bust. And any politician who ever tells you there can is either Ignorant, being economic with the actualite, or is plain simple telling porkies. <br />Jimhttps://www.blogger.com/profile/00373005279697295131noreply@blogger.com