Do you know how money is created?

Tail Docker

Diego Simeone wrote: »

Why do you think it's a scam OP? Do you not think it'd be a far worse situation if money creation didn't exist, and businesses and individuals not have any access to loans? That's what'd happen if banks were prohibited from "creating money".

This is fair enough, but, thing is, Banks are businesses, and their profits benefit individuals...so why can one type of business pull Capital out of their ar5es, and use that ability to screw over all the other types of businesses while others cannot? Does this sound like a good and equitable set-up? Or, in other words, become Bankers Kids, don't be a mug.

Maphisto

pqdvdplayer wrote: »

Right class over the holidays I want a 1000 word essay on "How money is created" . Now I don't mean physically, but do you understand the way in which the value of the money is actually created. I know exactly how, but I am just curious to see if people on here also know about the biggest scam known to mankind (not really, because the majority of mankind doesn't have a f*****g clue)

FYP

renegademaster

is that the time, now to turn over for another 8 hours sheep baaaaaa

SeanW

Diego Simeone wrote: »

Why do you think it's a scam OP? Do you not think it'd be a far worse situation if money creation didn't exist, and businesses and individuals not have any access to loans? That's what'd happen if banks were prohibited from "creating money".

Bull. There would be plenty of Loanable Funds without debt based central banks, but just not enough to have todays 0.000005% interest rates.

Instead, rates would be higher, and say with a gold based system inflation would be nil. That would have a number of largely positive effects:

1. Bubbles would be rarer and would pop sooner.
2. Individuals would be encouraged to be financially responsible. High borrowing costs countered by high interest returns on deposits generating real wealth for the lower and middle classes. Lifestyles would thusly be built around prudence and savings, rather than excess and borrowing.

Maximus Alexander

SeanW wrote: »

1. Bubbles would be rarer and would pop sooner.
2. Individuals would be encouraged to be financially responsible. High borrowing costs countered by high interest returns on deposits generating real wealth for the lower and middle classes. Lifestyles would thusly be built around prudence and savings, rather than excess and borrowing.

Is there any chance that you are oversimplifying things?

topper75

I vote we test the robustness of the system. How about the lot of us go down to our local branches next Tuesday at 14.30 and withdraw our few bob together?

(then go to the pub and spend it on booze whilst watching our heroics play out on Sky News)

userod

This is some dude who watched Zeitgeist and now thinks he's a professor/master of the federal reserve system. :rolleyes:

Valetta

topper75 wrote: »

I vote we test the robustness of the system. How about the lot of us go down to our local branches next Tuesday at 14.30 and withdraw our few bob together?

(then go to the pub and spend it on booze whilst watching our heroics play out on Sky News)

There's a flaw in your argument, because the pub will go straight down to the bank and put the money back in again.

topper75

The flaw comes a little before that again my friend! I apologise now for my facetiousness.

Clue: Fractional reserve lending. :-) They don't got all our monies if we go at once to withdraw!

EuropeanSon

pqdvdplayer wrote: »

Look guys, put simply, the banks create money out of nowhere and lend it to us who work out asses off to pay it back with added interest. The banks then get the real money and the interest and we are left on our asses. The same happens with the government. When a new school needs to be built, they borrow money which has to be paid back by the taxpayer. It is a one way street, with all money eventually ending up at the bankers. If this isnt a scam I really don't know what is.

Correct. You don't.

NewCorkLad

So banks stop lending money they don't have. Great so already stressed businesses cant get loans or overdrafts( which they are already finding hard to get with the creation of all this currency) 50% of businesses shut down brilliant. Next no one can get mortgages for homes or loans for cars. Developers, builders and car dealers have no money so they shut down. So must of the country is out of work which means no one is spending money, the rest of the businesses shut down. Now banks who cant lend money, go out of business. The Government is getting no tax in and they cannot borrow money anymore, as no one can create money so they stop all payments and country is bankrupt. We all go to Australia and the Lizard People led by pqdvdplayer win.

jimgoose

Wealth and money are not the same thing. Wealth is actual value - assets, real estate, plant-and-equipment, going-concern, intellectual property and so forth. "Money" is just a convenient game that's played by mutual consent, with everyone knowing the rules, so we don't all have to go around with, I dunno, goats under our oxters in order to pay for stuff.

These days it is thought of and treated as the commodity that it is. Interest/usury/daylight-robbery-by-Lizard-People is just the cost of the use of the commodity.

y0ssar1an22

So what happens if every person in the world wants to withdraw all their money? Will it be worthless or what? I'm confused

Davarus Walrus

jimgoose wrote: »

Wealth and money are not the same thing. Wealth is actual value - assets, real estate, plant-and-equipment, going-concern, intellectual property and so forth. "Money" is just a convenient game that's played by mutual consent, with everyone knowing the rules, so we don't all have to go around with, I dunno, goats under our oxters in order to pay for stuff.

These days it is thought of and treated as the commodity that it is. Interest/usury/daylight-robbery-by-Lizard-People is just the cost of the use of the commodity.

Your goats ain't no use around here, Jim.

jimgoose

y0ssar1an22 wrote: »

So what happens if every person in the world wants to withdraw all their money? Will it be worthless or what? I'm confused

You get a banking panic, loans and mortgages called in, bankruptcies all over the shop, failure of several individual financial institutions and Lizard People roaming the dusty highways on Kawasaki Z1000s beating people up and stealing fuel.

jimgoose

Davarus Walrus wrote: »

Your goats ain't no use around here, Jim.

Don't be like that! They're nice goats!

BeerWolf

Find it funny that banks are allowed to make money "out of thin air" through loans of which they currently don't have in reserves or deposits, to which you pay back with interest, essentially giving the banks free money in the long run.

For common Joe, doing this... aka Counterfeiting, you'd be arrested and jailed for up to 20 years.

Banks got in trouble when people were pulling out their money, money which the bank didn't have since they were loaning out hell out of a load more than they actually have, and from their own doings the Governments gave them bailouts...

God damn system's a legal scam! And people wonder why Bankers are so God damn rich, even when let go they get their bonus package or whatever in the millions...

Elites covering the elite and all that, what what.

Maphisto

BeerWolf wrote: »

Find it funny that banks are allowed to make money "out of thin air" through loans of which they currently don't have in reserves or deposits, to which you pay back with interest, essentially giving the banks free money in the long run.

For common Joe, doing this... aka Counterfeiting, you'd be arrested and jailed for up to 20 years.

Banks got in trouble when people were pulling out their money, money which the bank didn't have since they were loaning out hell out of a load more than they actually have, and from their own doings the Governments gave them bailouts...

God damn system's a legal scam! And people wonder why Bankers are so God damn rich, even when let go they get their bonus package or whatever in the millions...

Elites covering the elite and all that, what what.

That's all true but without governments and banks doing that we all go back to the dark agesat the double quick.

BeerWolf

Maphisto wrote: »

That's all true but without governments and banks doing that we all go back to the dark agesat the double quick.

And that's why it's such a "perfect" system for them rich folk ain't it ? Regular people are at their mercy, which they don't show a lot - they won't hesitate putting you out to the streets to repossess your home if you aren't meeting up with payments.

We're all born to be slaves to them unfortunately.

Buzz Killington the third

userod wrote: »

This is some dude who watched Zeitgeist and now thinks he's a professor/master of the federal reserve system. :rolleyes:

Despite some of the bullshít spouted by Zeitgeist, they did in fact get it right about how money is made.

thelad95

BeerWolf wrote: »

And that's why it's such a "perfect" system for them rich folk ain't it ? Regular people are at their mercy, which they don't show a lot - they won't hesitate putting you out to the streets to repossess your home if you aren't meeting up with payments.

We're all born to be slaves to them unfortunately.

Or you can work hard like a lot of them did to get to their level.

In my opinion society now is at the most civilised it ever has been and possibly ever will be. If you look back a couple of hundred years society was chaotic. Technological advancement was non-existent, life expectancy was half what it is now and you were likely to die either by torture or some debilitating disease.

Without the banking system society would possibly return to the above. It's not perfect and it certainly isn't in any way secure but it's what holds society together in a capitalist economy.

coffee_cake

BeerWolf wrote: »

And that's why it's such a "perfect" system for them rich folk ain't it ? Regular people are at their mercy, which they don't show a lot - they won't hesitate putting you out to the streets to repossess your home if you aren't meeting up with payments.

We're all born to be slaves to them unfortunately.

Yeah those bank tellers are real rich people in charge of everything

You're not at their mercy*. You don't have to get a mortgage or use their system if you really don't want to


* except for the stupid bailout yokes with public money

Buzz Killington the third

bluewolf wrote: »

You don't have to get a mortgage or use their system if you really don't want to

You need a bank account these days. Most companies will not pay in cash and most services require direct debit payments.

coffee_cake

credit unions do the same services iirc

Buzz Killington the third

bluewolf wrote: »

credit unions do the same services iirc

Only announced less than 2 months ago about Visa Debit cards. But wont be introduced until next year and still limited:

"It is expected half of all credit unions would be able to offer electronic payments by end of 2015."

http://www.independent.ie/business/personal-finance/credit-unions-will-take-on-banks-with-new-debit-card-30294712.html#sthash.zGyNc8L6.dpuf

I didn't know you could have direct debits from your CU account. I was under the impression they were all savings accounts.

jimgoose

Buzz Killington the third wrote: »

You need a bank account these days. Most companies will not pay in cash and most services require direct debit payments.

They can take a running fcuk. I don't do direct-debits.

jimgoose

Buzz Killington the third wrote: »

Only announced less than 2 months ago about Visa Debit cards. But wont be introduced until next year and still limited:

"It is expected half of all credit unions would be able to offer electronic payments by end of 2015."

http://www.independent.ie/business/personal-finance/credit-unions-will-take-on-banks-with-new-debit-card-30294712.html#sthash.zGyNc8L6.dpuf

I didn't know you could have direct debits from your CU account. I was under the impression they were all savings accounts.

Oh yes, the local credit union here has "Link" accounts, which are basically current accounts sans some of the more eye-watering fees. They also ran the "TruCash" cards for a while, which was basically a MasterCard-compatible debit card. They didn't work very well though, and were binned after a couple of years.

Iwasfrozen

BeerWolf wrote: »

And that's why it's such a "perfect" system for them rich folk ain't it ? Regular people are at their mercy, which they don't show a lot - they won't hesitate putting you out to the streets to repossess your home if you aren't meeting up with payments.

We're all born to be slaves to them unfortunately.

Except no one ever forces you to take out a loan.

the culture of deference

y0ssar1an22 wrote: »

So what happens if every person in the world wants to withdraw all their money? Will it be worthless or what? I'm confused

Everyone would get about 2% of their asset/cash value(non derivative about .02 to .004 %).

The total Planets GDP is about 80 trillion a year.
Value of derivatives is now at minimum 700 trillion + up to a few quadrillion (1 followed by 15 zero's), this is all tied into the main financial system.

Anyone fancy trying to explain derivatives to this thread.

Iwasfrozen wrote: »

Except no one ever forces you to take out a loan.

You create the money you borrow when you sign the legally binding contract to unconditionally repay a specified amount within a defined time frame.

pqdvdplayer

NewCorkLad wrote: »

So banks stop lending money they don't have. Great so already stressed businesses cant get loans or overdrafts( which they are already finding hard to get with the creation of all this currency) 50% of businesses shut down brilliant. Next no one can get mortgages for homes or loans for cars. Developers, builders and car dealers have no money so they shut down. So must of the country is out of work which means no one is spending money, the rest of the businesses shut down. Now banks who cant lend money, go out of business. The Government is getting no tax in and they cannot borrow money anymore, as no one can create money so they stop all payments and country is bankrupt. We all go to Australia and the Lizard People led by pqdvdplayer win.

You couldn't be more wrong. Do you understand that if the banks stopped creating money, the cost of the houses and cars would also fall, therefore rendering the borrowing of large amounts of money pointless.