Credit Cards

conkeroo

Is this true. Does anyone have any idea about the legal side?

jhegarty

That makes no sense to me... if I understand it correctly your signature makes the money appear on the bank mangers desk by magic ?

Rhonda9000

I really have no idea what you are getting at. Where is this quotation cited from? It sounds like a scandalized banking customer having a rant about big bad banks.

What would be illegal or surprising about a bank creating credit? If anyone is feeling hard done by the whole system [how ever it works - I do not know], they don't have to sign up to get a credit card?

conkeroo

Rhonda9000 wrote: »

I really have no idea what you are getting at. Where is this quotation cited from? It sounds like a scandalized banking customer having a rant about big bad banks.

What would be illegal or surprising about a bank creating credit? If anyone is feeling hard done by the whole system [how ever it works - I do not know], they don't have to sign up to get a credit card?

My point is, if it's your signature that creates the funds and they dont exist beforehand, why are you liable to pay back the bank when in fact you borrowed no money from them. According to this a bank basically endorses your "iou" but in fact gives you none of their money. Thats the reason I asked was it true, I dont know how it works either.

jhegarty

conkeroo wrote: »

My point is, if it's your signature that creates the funds and they dont exist beforehand, why are you liable to pay back the bank when in fact you borrowed no money from them. According to this a bank basically endorses your "iou" but in fact gives you none of their money. Thats the reason I asked was it true, I dont know how it works either.

Your signature create nothing ... they give you money (or to the shops where you used your credit card) and thats why you have to pay it back...

did you think the money comes out of thin air ?

conkeroo

jhegarty wrote: »

Your signature create nothing ... they give you money (or to the shops where you used your credit card) and thats why you have to pay it back...

did you think the money comes out of thin air ?

I didnt say it comes out of thin air. I just thought it was interesting take and wanted to know what other people thought. Like I said, I dont know how credit cards work, so I just wanted to see if anyone else did.

Rhonda9000

conkeroo wrote: »

My point is, if it's your signature that creates the funds and they dont exist beforehand, why are you liable to pay back the bank when in fact you borrowed no money from them. According to this a bank basically endorses your "iou" but in fact gives you none of their money. Thats the reason I asked was it true, I dont know how it works either.

A credit card is defined in (among other places) s. 2(1) of the Consumer Credit Act 1995 as - "a card issued by a credit institution by means of which goods, services or cash may be obtained by an individual on credit and amounts in respect of the goods, services or cash may be charged to the credit card account of the individual."

What provision the bank makes behind the scenes to support this credit is neither here nor there if you ask me.

I cannot see how it can be any other way than; where the card is used in a shop, the bank covers the debt to the shopkeeper for the user to pay back later ..and.. when the card is used in an ATM the bank is quite obviously giving out it's own cash.

conkeroo

Rhonda9000 wrote: »

What provision the bank makes behind the scenes to support this credit is neither here nor there if you ask me.

I have to disagree. How the bank supports credit is very interesting. The reason I posted the thread was to find out how it works. It's intriguing that IF, not saying it's the case, but if the bank isn't lending a person it's money, then where does that money come from? That was all I was asking.

johnnyskeleton

The way it works is like this:

1) people put money into the bank and create deposits of, lets say €100k
2) the bank knows that at any one time their customers will only require €25k.
3) they therefore loan out the other €75k at interest
4) so at any one time the bank will have 1/4 of the deposits they hold in cash or another liquid asset
5) The 75k that is loaned out is also put into a deposit account, so the bank can then loan out 75% of the 75k on the same basis

This is how banks work. They lend out the money that has been deposited by other people.

When you get a credit card the same thing applies. They lend you money from their deposits.

And yes, you do have to pay it back if that's what you're really asking.

conkeroo

johnnyskeleton wrote: »

The way it works is like this:

1) people put money into the bank and create deposits of, lets say €100k
2) the bank knows that at any one time their customers will only require €25k.
3) they therefore loan out the other €75k at interest
4) so at any one time the bank will have 1/4 of the deposits they hold in cash or another liquid asset
5) The 75k that is loaned out is also put into a deposit account, so the bank can then loan out 75% of the 75k on the same basis

This is how banks work. They lend out the money that has been deposited by other people.

When you get a credit card the same thing applies. They lend you money from their deposits.

And yes, you do have to pay it back if that's what you're really asking.

lol Thats not what I was asking at all. I basically was asking how it works and yes, if the banks lend you money from their deposits or not. Like I said, I came across the initial quote and it got me thinking, that's all.

pirelli

http://ezinearticles.com/?Where-Does-The-Money-Come-From&id=498481

Article by world renowned economist Carl Peterson

Trillions of dollars worth of new debt is created each year around the world. All this debt is sold through the banks at high interest, in exchange for negotiable securities like mortgages, debentures, personal guarantees and the like. All this new money originates from outside our governments' sovereignty and control. It may all originate in cyberspace. And no one has any means of tracing it to its source

So there you have it. Taxes create a shortage of wealth and money in the private sector, forcing individuals and businesses to borrow from the banks to replace that "stolen" by government taxes and government incompetence.

Local banks use our security documents to create mortgage bonds and other financial instruments through which they can borrow amounts far in excess of their actual deposit holdings from "offshore" sources. It is these offshore entities who actually create our "new" money (the new money we have been forced to borrow through taxation) out of thin air.

Once our loans have been repaid, the local banks are able to profit on the interest differences times ten or more, giving them plenty of incentive to kep quite about the system.

This answers your very question: Highly relevant (It really tackles the question at 2:20 min into the video.)

follow up
http://ie.youtube.com/watch?v=LgkYjFYr2QI&feature=related

Victor

conkeroo wrote: »

My point is, if it's your signature that creates the funds and they dont exist beforehand, why are you liable to pay back the bank when in fact you borrowed no money from them. According to this a bank basically endorses your "iou" but in fact gives you none of their money. Thats the reason I asked was it true, I dont know how it works either.

Its either A and/or B.

A. Highly academic with little practical relevance.
B. Paranoid and deluded.

conkeroo

Victor wrote: »

Its either A and/or B.

A. Highly academic with little practical relevance.
B. Paranoid and deluded.

Sorry, what's either A and/or B? The video? So if the monetary system does work as is outlined, there's little practical relevance?

EDIT: And how can it be both highly academic and paranoid and deluded? That's a complete paradox.

Victor

conkeroo wrote: »

EDIT: And how can it be both highly academic and paranoid and deluded? That's a complete paradox.

Not as much as you'd think.

conkeroo

Victor wrote: »

Not as much as you'd think.

Im intrigued now. How so?

Edit: Just seen your edited first comment. You weren't addressing the video.

Rhonda9000

If the theory in the video is the reality, then it would strike me that the current sub prime credit crunch is just what the doctor ordered - making some of this unsustainable debt money vanish out of the financial system through bank losses.

pirelli

Victor wrote: »

Not as much as you'd think.

But a paradox nonetheless.