Mungo's monetary musings.

[Gigabit]

I'm not talking about trading systems either
Just the basic level of banking

Banks accept deposits on which they may have to pay interest
Banks can lend some of that money to customers
But not the whole lot


They have to keep in reserve a % to cover liquidity risk
They collect interest (and fees) on money they lend

So if they have say £1,000 in deposits, they can only lend up to £880 in loans leaving £120 for their capital reserve.
That reserve is pre-determined by the regulatory authorities and has to be reported to them on a daily basis (in some countries, more frequently)

Money creation in the modern economy

By Michael McLeay, Amar Radia and Ryland Thomas of the Bank’s Monetary Analysis Directorate.

This article explains how the majority of money in the modern economy is created by commercial banks making loans.

Money creation in practice differs from some popular misconceptions — banks do not act simply as intermediaries, lending out deposits that savers place with them, and nor do they ‘multiply up’ central bank money to create new loans and deposits.

The amount of money created in the economy ultimately depends on the monetary policy of the central bank. In normal times, this is carried out by setting interest rates. The central bank can also affect the amount of money directly through purchasing assets or ‘quantitative easing’.

http://www.bankofengland.co.uk/publicat ... b14q1.aspx

Why don't you try it?
Deposit £1,000 into your bank account
Make a loan to your mother of £1,000
Deposit that £1,000 into her loan account

See how much better off you are?
You've just created "money" out of thin air.

It's that easy you should be rich in no time.

It's official, you're actually stupid. I am diagnosing you as mentally handicapped.

That would be disrespectful to the mentally handicapped though

Trolling Tory boy, cap doffing cunt would be a better description

Actually, I take it back. He's below the mentally handicapped. He is nothing. At least they have the ability to feel, unlike him. He votes Tory and appears to not give a shit what they do to the country.

[calitom]

"Why don't you try it?
Deposit £1,000 into your bank account
Make a loan to your mother of £1,000
Deposit that £1,000 into her loan account

See how much better off you are?
You've just created "money" out of thin air.

It's that easy you should be rich in no time."

You didnt create any money out of thin air. What are you talking about?

[MungoBrush]

"Why don't you try it?
Deposit £1,000 into your bank account
Make a loan to your mother of £1,000
Deposit that £1,000 into her loan account

See how much better off you are?
You've just created "money" out of thin air.

It's that easy you should be rich in no time."

You didnt create any money out of thin air. What are you talking about?

This started when Fletch posted "Banks create money out of thin air"
I kid you not
Those are his actual words.

[MungoBrush]

Actually, I take it back. He's below the mentally handicapped. He is nothing. At least they have the ability to feel, unlike him. He votes Tory and appears to not give a shit what they do to the country.

Hey gigabit, I'm surprised you've got time to post here
I thought you'd be busy printing your own money.

[Fletch]

"Why don't you try it?
Deposit £1,000 into your bank account
Make a loan to your mother of £1,000
Deposit that £1,000 into her loan account

See how much better off you are?
You've just created "money" out of thin air.

It's that easy you should be rich in no time."

You didnt create any money out of thin air. What are you talking about?

This started when Fletch posted "Banks create money out of thin air"
I kid you not
Those are his actual words.

How does a Pound/Euro/Dollar etc come in to existence then mungo?

[Gigabit]

Actually, I take it back. He's below the mentally handicapped. He is nothing. At least they have the ability to feel, unlike him. He votes Tory and appears to not give a shit what they do to the country.

Hey gigabit, I'm surprised you've got time to post here
I thought you'd be busy printing your own money.

You do realise I'm not the BoE right?

[Fletch]

Actually, I take it back. He's below the mentally handicapped. He is nothing. At least they have the ability to feel, unlike him. He votes Tory and appears to not give a shit what they do to the country.

Hey gigabit, I'm surprised you've got time to post here
I thought you'd be busy printing your own money.

You do realise I'm not the BoE right?

Or a bank of any sort.

*See reason why 'bank of Dave' couldn't actually call his 'bank' a Bank.

Spoiler: show

He was operating on 100% reserve lending. That is, like mutual building societies and credit unions, they lend out a percentage of what they have in deposits. They don't create money out of thin air (on a computer) when loans are made. Only Banks can do that

[MungoBrush]

Actually, I take it back. He's below the mentally handicapped. He is nothing. At least they have the ability to feel, unlike him. He votes Tory and appears to not give a shit what they do to the country.

Hey gigabit, I'm surprised you've got time to post here
I thought you'd be busy printing your own money.

You do realise I'm not the BoE right?

Ypu'd better discuss that with Fletch
He told us that it's the commercial banks that create money "out of thin air" not the Bank of England

[MungoBrush]

"Why don't you try it?
Deposit £1,000 into your bank account
Make a loan to your mother of £1,000
Deposit that £1,000 into her loan account

See how much better off you are?
You've just created "money" out of thin air.

It's that easy you should be rich in no time."

You didnt create any money out of thin air. What are you talking about?

This started when Fletch posted "Banks create money out of thin air"
I kid you not
Those are his actual words.

How does a Pound/Euro/Dollar etc come in to existence then mungo?

So when a building society grants a mortgage - are they "creating money out of thin air"?
Or when a leasing company makes a new lease for some capital equipment?
Or when you borrow money from a finance organisation to buy a car on a PCP
Or when your pension fund lends money to a company as an investment
Or that high street shop that does "log book loans"

Are they all creating money "out of thin air"?

[Fletch]

Actually, I take it back. He's below the mentally handicapped. He is nothing. At least they have the ability to feel, unlike him. He votes Tory and appears to not give a shit what they do to the country.

Hey gigabit, I'm surprised you've got time to post here
I thought you'd be busy printing your own money.

You do realise I'm not the BoE right?

Ypu'd better discuss that with Fletch
He told us that it's the commercial banks that create money "out of thin air" not the Bank of England

Money creation in the modern economy

By Michael McLeay, Amar Radia and Ryland Thomas of the Bank’s Monetary Analysis Directorate.

This article explains how the majority of money in the modern economy is created by commercial banks making loans.

Money creation in practice differs from some popular misconceptions — banks do not act simply as intermediaries, lending out deposits that savers place with them, and nor do they ‘multiply up’ central bank money to create new loans and deposits.

The amount of money created in the economy ultimately depends on the monetary policy of the central bank. In normal times, this is carried out by setting interest rates. The central bank can also affect the amount of money directly through purchasing assets or ‘quantitative easing’.

http://www.bankofengland.co.uk/publicat ... b14q1.aspx

You don't appear to be reading the thread mungo.

[Fletch]

"Why don't you try it?
Deposit £1,000 into your bank account
Make a loan to your mother of £1,000
Deposit that £1,000 into her loan account

See how much better off you are?
You've just created "money" out of thin air.

It's that easy you should be rich in no time."

You didnt create any money out of thin air. What are you talking about?

This started when Fletch posted "Banks create money out of thin air"
I kid you not
Those are his actual words.

How does a Pound/Euro/Dollar etc come in to existence then mungo?

So when a building society grants a mortgage - are they "creating money out of thin air"?
Or when a leasing company makes a new lease for some capital equipment?
Or when you borrow money from a finance organisation to buy a car on a PCP
Or when your pension fund lends money to a company as an investment
Or that high street shop that does "log book loans"

Are they all creating money "out of thin air"?

Only commercial banks create money out of thin air. (and BoE)

That is, they create the £1000 you want to borrow when you sign on the dotted line. It didn't exist before you took out the loan and it won't exist when you've paid it back. (but the interest payable will as profit)

That was the driving factor for the mutual building societies changing over to banks and all the carpet baggers who made money out of opening accounts for likely converting institutions. It was stopped after a while and a time limit put in meaning new/recent accounts wouldn't qualify.

[MungoBrush]

You don't appear to be reading the thread mungo.

I'd like my pension fund manager to boost my pension pot by creating extra money "out of thin air"
Please send me the instructions so that I can pass them on.

[MungoBrush]

"Why don't you try it?
Deposit £1,000 into your bank account
Make a loan to your mother of £1,000
Deposit that £1,000 into her loan account

See how much better off you are?
You've just created "money" out of thin air.

It's that easy you should be rich in no time."

You didnt create any money out of thin air. What are you talking about?

This started when Fletch posted "Banks create money out of thin air"
I kid you not
Those are his actual words.

How does a Pound/Euro/Dollar etc come in to existence then mungo?

So when a building society grants a mortgage - are they "creating money out of thin air"?
Or when a leasing company makes a new lease for some capital equipment?
Or when you borrow money from a finance organisation to buy a car on a PCP
Or when your pension fund lends money to a company as an investment
Or that high street shop that does "log book loans"

Are they all creating money "out of thin air"?

Only commercial banks create money out of thin air. (and BoE)

That is, they create the £1000 you want to borrow when you sign on the dotted line. It didn't exist before you took out the loan and it won't exist when you've paid it back. (but the interest payable will as profit)

That was the driving factor for the mutual building societies changing over to banks and all the carpet baggers who made money out of opening accounts for likely converting institutions. It was stopped after a while and a time limit put in meaning new/recent accounts wouldn't qualify.

So when a bank makes a new home mortgage the funds come from "thin air"
But when a building society makes a mortgage if comes from existing funds

Is that correct?

[Fletch]

You don't appear to be reading the thread mungo.

I'd like my pension fund manager to boost my pension pot by creating extra money "out of thin air"
Please send me the instructions so that I can pass them on.

Money is only ever created as debt (or tied to debt)(QE)

That is the whole problem. A usurious debt based money supply from private banks rather than state issued money as a unit of credit means countries, and indeed the world, is held to ransom by private banks.

None of this is a secret or unknown. I'm surprised you, as a self confessed economics lecturer, don't know this.

[MungoBrush]

You don't appear to be reading the thread mungo.

I'd like my pension fund manager to boost my pension pot by creating extra money "out of thin air"
Please send me the instructions so that I can pass them on.

Money is only ever created as debt (or tied to debt)(QE)

That is the whole problem. A usurious debt based money supply from private banks rather than state issued money as a unit of credit means countries, and indeed the world, is held to ransom by private banks.

None of this is a secret or unknown. I'm surprised you, as a self confessed economics lecturer, don't know this.

My pension fund makes loans
It lends my money to organisations in the form of various financial instruments such as shares etc.
Is it creating money out of thin air?