pongo Posted July 9, 2014 Share Posted July 9, 2014 Well I mostly more or less agree with what you are saying. Except that it is anyhow surely questionable whether sticking money in a bank actually represents an effective method of saving today. Interest rates are virtually zero whilst real wallet inflation far exceeds the official measures. Saving is a way of losing the value of your savings. Even assuming that the bank is secure. It's no wonder that the stock market is so over valued. Surely the only sharp investment at this point is an actual business where you can get your hands dirty and really know what is going on. Link to comment Share on other sites More sharing options...
Lxxx Posted July 9, 2014 Share Posted July 9, 2014 Well I mostly more or less agree with what you are saying. Except that it is anyhow surely questionable whether sticking money in a bank actually represents an effective method of saving today. Interest rates are virtually zero whilst real wallet inflation far exceeds the official measures. Saving is a way of losing the value of your savings. Even assuming that the bank is secure. It's no wonder that the stock market is so over valued. Surely the only sharp investment at this point is an actual business where you can get your hands dirty and really know what is going on. Good points. I would also point out that the stock market isn't overvalued and is only going to go higher. Capital is fleeing from public to private with the sovereign debt and bond markets looking shakier by the month. Large corporations are much more financially stable than countries at this moment in time and I would go as far as to say blue chips are still undervalued from where they are going. Link to comment Share on other sites More sharing options...
rodders Posted July 9, 2014 Share Posted July 9, 2014 No need to worry... Spain will be Muslim in 5 years. Muslims don't do interest. Link to comment Share on other sites More sharing options...
Karellen Posted July 10, 2014 Share Posted July 10, 2014 Interesting graphic, but in reality the UK is much, much further down the road of becoming a caliphate than Spain. Link to comment Share on other sites More sharing options...
John Wright Posted July 10, 2014 Share Posted July 10, 2014 Although Spain has asked for extra time to sort out its deficit and there are still lots of issues with local authority, community and regional and provincial spending, plus the Catalan question, it sorted out its banks some time ago. Bulgaria had to sort its banks out 2 weeks ago after a run and a close of doors for a few days by one institution, and the EU chipped in, but no comment or reaction. Portugal is more iffy. Problem is we don't know where the hidden off balance sheet debt is hidden in many places, with assets the banks have taken ownership of being held in entities at over value Link to comment Share on other sites More sharing options...
Truth Seeker Posted July 10, 2014 Share Posted July 10, 2014 In many ways there is a good argument for taxing deposits. There always has been. Personally, like most people, I would obviously do everything to avoid it. But saving cash is effectively a form of hoarding. Money should be invested back into business and the economy. Hoarding money is obviously bad for the economy. Especially in an era when banks are nervous of lending. The whole point of banking should have been to expand liquidity. Banks are supposed to lend almost everything back out again. And several times over. Still. The reality is that, despite all of the worst case scenarios which were postulated, the EU and the € specifically are politically more robust than before the US banking and investment crisis dragged much of the world's economy towards crisis. The biggest threat at this point would seem to be regional instability - ie that the war is getting ever closer (geographically). I don't think you understand Frational Reserve Banking. For every say 1 million deposits, the bank can now create out of thin air 10 million of loans, that means for every 1 million of withdrawals the bank now does not have the reserves for the 10 million in loans. The Bank Northern Rock, got round this problem by borrowing in the inter bank market, the down side to that is its very short term, 3 to 6 months so they had to keep going back to keep up the reserves, but when other banks became concerned about Northern Rock viability, the bank hit the Rocks, if you will pardon the pun. If you are wondering how can banks create money/loans out of thin air and not get Hyper Inflation, the banks do not keep the amount loaned out, they only keep the interest, so if a bank makes say a 200,000 loan the bank is Minus 200,000 on its books, when the loan is paid back its book is now even, and they have the interest as profit. I would ask everyone to study Fractional Reserve Banking for them selves. Link to comment Share on other sites More sharing options...
Truth Seeker Posted July 10, 2014 Share Posted July 10, 2014 Money as debt 3, The truth about money. https://www.youtube.com/watch?v=rxZhtGeRa-M Link to comment Share on other sites More sharing options...
Truth Seeker Posted July 10, 2014 Share Posted July 10, 2014 If your looking for solutions to the ponzi scheme Fractional Reserve Banking, see the link below. Could These 3 Simple Changes to Banking Fix the Economy? http://www.positivemoney.org Link to comment Share on other sites More sharing options...
Slim Posted July 10, 2014 Share Posted July 10, 2014 Isn't that what he said with 'banks are supposed to lend everything back out again several times over'? Link to comment Share on other sites More sharing options...
Truth Seeker Posted July 10, 2014 Share Posted July 10, 2014 Isn't that what he said with 'banks are supposed to lend everything back out again several times over'? First he said hoarding money is bad for the economy, if people as he put it hoard money in banks, the banks can make new loans, but the problem is where do you get the money to pay the interest on the loans? if everyone tried to pay back the loans 97% of the money supply would disappear, the 3% is just the paper money and coins. So if people withdraw money from the banks, they now don't have the reserves to make new loans, with out new loans/money it becomes harder to pay off the old loans. Fractional Reserve Banking is ponzi scheme. Eventually you can't get enough new loans to pay off the old debt. This is the situation the world is in now. Link to comment Share on other sites More sharing options...
Slim Posted July 10, 2014 Share Posted July 10, 2014 First he said hoarding money is bad for the economy, if people as he put it hoard money in banks, the banks can make new loans, but the problem is where do you get the money to pay the interest on the loans? if everyone tried to pay back the loans 97% of the money supply would disappear, the 3% is just the paper money and coins. So if people withdraw money from the banks, they now don't have the reserves to make new loans, with out new loans/money it becomes harder to pay off the old loans. Fractional Reserve Banking is ponzi scheme. Eventually you can't get enough new loans to pay off the old debt. This is the situation the world is in now.I think it's you that doesn't understand. If people withdraw money from the banks and spend it, it ends up in another bank who can loan it. That liquidity is what Pongo is talking about, that's what's vital for a strong economy. Liquidity isn't bad for banks, it's good as they earn more. Fractional Reserve Banking isn't a ponzi scheme. In a Ponzi, you pay out investors leaving the scheme from new investors, not from the fund. In banking the loans are made based on deposits, a reserve ratio, future interest/earnings and from the central bank increasing the supply of money. Payouts aren't just from deposits and the value of the units is maintained throughout. A ponzi is a closed loop that relies on new money entering to pay the old debts. Banking isn't a closed loop, it does rely loaning based on expectations in the future, but that's not the same thing as a ponzi. Money is used for exchange. It's not good when it's static, it needs to move. Fractional Reserve Banking facilitates that. Link to comment Share on other sites More sharing options...
Lxxx Posted July 10, 2014 Share Posted July 10, 2014 The whole financial system is at the moment being held together by sticking plaster, in reality creative accounting and shadow banking. Portugal's largest bank missed it's bond payments on Wednesday causing massive waves. Anyone with any sense would be well out of banks and bonds and into the stock market, UK and primarily the US, with all the money flowing back into that country due to FATCA and the fact that the dollar is still seen as a safe haven. Link to comment Share on other sites More sharing options...
Donald Trumps Posted July 10, 2014 Share Posted July 10, 2014 Maybe we could buy the steam packet on the cheap Link to comment Share on other sites More sharing options...
Truth Seeker Posted July 10, 2014 Share Posted July 10, 2014 First he said hoarding money is bad for the economy, if people as he put it hoard money in banks, the banks can make new loans, but the problem is where do you get the money to pay the interest on the loans? if everyone tried to pay back the loans 97% of the money supply would disappear, the 3% is just the paper money and coins. So if people withdraw money from the banks, they now don't have the reserves to make new loans, with out new loans/money it becomes harder to pay off the old loans. Fractional Reserve Banking is ponzi scheme. Eventually you can't get enough new loans to pay off the old debt. This is the situation the world is in now. I think it's you that doesn't understand. If people withdraw money from the banks and spend it, it ends up in another bank who can loan it. That liquidity is what Pongo is talking about, that's what's vital for a strong economy. Liquidity isn't bad for banks, it's good as they earn more. Fractional Reserve Banking isn't a ponzi scheme. In a Ponzi, you pay out investors leaving the scheme from new investors, not from the fund. In banking the loans are made based on deposits, a reserve ratio, future interest/earnings and from the central bank increasing the supply of money. Payouts aren't just from deposits and the value of the units is maintained throughout. A ponzi is a closed loop that relies on new money entering to pay the old debts. Banking isn't a closed loop, it does rely loaning based on expectations in the future, but that's not the same thing as a ponzi. Money is used for exchange. It's not good when it's static, it needs to move. Fractional Reserve Banking facilitates that. I haven't made the point clear, Money disappears when loans are paid back, you may have heard economists say there is a contraction in the money supply, what they are telling us is loans are being paid off but not enough new loans are being created. The only money that circulates is the 3% of the paper and coin money, The debt/money that is created out of thin air disappears when the principle is paid back, its gone, there will never be enough money to pay the interest, the way to keep the Ponzi scheme going is to create more loans. That increases the supply of money but also increase the amount of interest, eventually the increase in new loans has to fall, thats when the Ponzi scheme come to a end. To sum up, there is not enough of this debt/money to pay off all the interest. Link to comment Share on other sites More sharing options...
Slim Posted July 10, 2014 Share Posted July 10, 2014 I haven't made the point clear, Money disappears when loans are paid back, you may have heard economists say there is a contraction in the money supply, what they are telling us is loans are being paid off but not enough new loans are being created.That is one thing that can cause contraction in the supply. There are others, eg raising reserves, govt/central banks selling bonds.The only money that circulates is the 3% of the paper and coin money, The debt/money that is created out of thin air disappears when the principle is paid back, its gone, there will never be enough money to pay the interest, the way to keep the Ponzi scheme going is to create more loans.That's not really the case. The money that circulates is real money, it doesn't matter if it's paper or coin or on a bank balance sheet, it's still real money. The important part is if it's sitting in reserve doing nothing, or being circulated. I don't understand your assumption that there'll never be enough to pay off the interest. The money loaned out is used for making more money, and that pays the interest. Why do you think it'll be lost somehow?That increases the supply of money but also increase the amount of interest, eventually the increase in new loans has to fall, thats when the Ponzi scheme come to a end.That's not a ponzi scheme. It's not a closed loop, the system doesn't rely on new money paying off old.To sum up, there is not enough of this debt/money to pay off all the interest.There doesn't need to be, as there are multiple ways of controlling the supply of money. Link to comment Share on other sites More sharing options...
Recommended Posts
Archived
This topic is now archived and is closed to further replies.