gnvqsos Posted November 6, 2011 Share Posted November 6, 2011 I think she means she wants you to phone her. It should read "Call me ,stupid!" Link to comment Share on other sites More sharing options...
epiphany Posted November 6, 2011 Share Posted November 6, 2011 Wel yes, release money into the economy as loans from banks. Which begs the question, why don't the gov. lend it themselves and make the profit for the treasury, thus reducing the deficit (something which they are apparently terribly keen to do.) I suppose that would require the creation of a large government bureaucracy to make investment decisions. Who would decide where the money is invested? If we are to rely on the commercial banking sector to create money, the best banks to entrust are those with triple bottom lines - those who actually think about the long term externalities of their investment decisions. Link to comment Share on other sites More sharing options...
epiphany Posted November 6, 2011 Share Posted November 6, 2011 Not consciously. I'm still learning. Thatcher was a monetarist which puts me off. You have to admit though, he was more pragmatic and objective than a lot of economists. He challenges you to judge policies on the basis of their outcome rather than their intention. Link to comment Share on other sites More sharing options...
Chris_Sleeps Posted November 6, 2011 Share Posted November 6, 2011 You have to admit though, he was more pragmatic and objective than a lot of economists. *out of my depth now* Erm ..... yeah. Link to comment Share on other sites More sharing options...
I1L2T3 Posted November 6, 2011 Share Posted November 6, 2011 95% of money in circulation has been loaned into existence by commercial banks. Once people understand how this money is created they will understand why banks spend millions every year lobbying parliament to uphold this incredible privilege. I think it's way worse than you describe. Credit creation is the key. Anything that is expected to be converted to money at some future point in time is accepted as money. Banks, shadow banks and other financial insitutions can create this outside of the control of central banks. And that is a problem if the notional value of derivatives (created by financial institutions) is $600trillion, 10 times the entire annual output of the world economy. If the parties exposed to those trades decide to or are forced to deleverage those poisitions where is hundreds of trillions of dollars going to come from to cover them? The whole system is too big to bail out - banks need to keep the cycle turning because if it stops they will have to die. That is why they lobby so intensely. Link to comment Share on other sites More sharing options...
donkey Posted November 6, 2011 Share Posted November 6, 2011 I suppose that would require the creation of a large government bureaucracy to make investment decisions. Who would decide where the money is invested? If we are to rely on the commercial banking sector to create money, the best banks to entrust are those with triple bottom lines - those who actually think about the long term externalities of their investment decisions. Could they not have taken some of the banks they bailed out into public ownership and used existing structures? Link to comment Share on other sites More sharing options...
epiphany Posted November 6, 2011 Share Posted November 6, 2011 I think it's way worse than you describe. Credit creation is the key. Anything that is expected to be converted to money at some future point in time is accepted as money. Banks, shadow banks and other financial insitutions can create this outside of the control of central banks. And that is a problem if the notional value of derivatives (created by financial institutions) is $600trillion, 10 times the entire annual output of the world economy. If the parties exposed to those trades decide to or are forced to deleverage those poisitions where is hundreds of trillions of dollars going to come from to cover them? The whole system is too big to bail out - banks need to keep the cycle turning because if it stops they will have to die. That is why they lobby so intensely. Interesting, thanks for the insight. Link to comment Share on other sites More sharing options...
donkey Posted November 6, 2011 Share Posted November 6, 2011 It should read "Call me ,stupid!" I wondered if anyone would get that. Link to comment Share on other sites More sharing options...
epiphany Posted November 6, 2011 Share Posted November 6, 2011 They could have taken some of the banks they bailed out into public ownership and used existing structures. When you say public ownership do you mean on a decentralised, co-operative basis or full on state-owned nationalisation? There are strong arguments for both, but there is always the chance of successive governments selling back into the hands of private shareholders for a quick buck, which the cynical among us would say will just start the whole destructive process again. As long as our economy is dominated by banks that operate on the basis of a single bottom line, the problem will never go away and yet more problems will arise. Ethical banks are the future of a sustainable free market economy. Link to comment Share on other sites More sharing options...
I1L2T3 Posted November 6, 2011 Share Posted November 6, 2011 Interesting, thanks for the insight. In the 1930s Hayek described the process of money creation outside central bank control. The context was different to today but it's not a new idea. Link to comment Share on other sites More sharing options...
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