Mungo's monetary musings.

[Rolluplostinspace]

The truth is out: money is just an IOU, and the banks are rolling in it

Back in the 1930s, Henry Ford is supposed to have remarked that it was a good thing that most Americans didn't know how banking really works, because if they did, "there'd be a revolution before tomorrow morning".

Last week, something remarkable happened. The Bank of England let the cat out of the bag. In a paper called "Money Creation in the Modern Economy", co-authored by three economists from the Bank's Monetary Analysis Directorate, they stated outright that most common assumptions of how banking works are simply wrong, and that the kind of populist, heterodox positions more ordinarily associated with groups such as Occupy Wall Street are correct.

To get a sense of how radical the Bank's new position is, consider the conventional view, which continues to be the basis of all respectable debate on public policy. People put their money in banks. Banks then lend that money out at interest – either to consumers, or to entrepreneurs willing to invest it in some profitable enterprise. True, the fractional reserve system does allow banks to lend out considerably more than they hold in reserve, and true, if savings don't suffice, private banks can seek to borrow more from the central bank.
What the Bank of England admitted this week is that none of this is really true. To quote from its own initial summary: "Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits" … "In normal times, the central bank does not fix the amount of money in circulation, nor is central bank money 'multiplied up' into more loans and deposits."
In other words, everything we know is not just wrong – it's backwards. When banks make loans, they create money. This is because money is really just an IOU. The role of the central bank is to preside over a legal order that effectively grants banks the exclusive right to create IOUs of a certain kind, ones that the government will recognise as legal tender by its willingness to accept them in payment of taxes. There's really no limit on how much banks could create, provided they can find someone willing to borrow it. They wi>>>>>>>>>>>>>>> https://www.theguardian.com/commentisfr ... -austerity

The Bank of England finally admit Mungos belief was bullshit all along.
What you were taught at economic school was bullshit.
What many economists have believed for years was bullshit.
Banks create our money out of thin air but Mungo doesn't want to read this .......
The truth is out: money is created by high street banks .... out of thin air. ..... https://www.theguardian.com/commentisfr ... -austerity

Yes yes yes
I've read that and there's nothing new in it at all

BUT there is absolutely no mention of the words "thin air"
So can you please post the sentence that contains that phrase
Or are you just another liar?

Try out of nothing.
Actually try nothing you'll obviously never understand.

[MungoBrush]

Mungo. Where and how does a Pound/Euro/Dollar come in to existence?

This is the fundamental issue we're talking about, not the intricacies of regulation.

You just don't understand at all do you?
Regulation goes to the very heart of banking
It's what drives it
It's what places limits on its activities
It's what consumes their management every single day
It's what Gordon Brown said that he "didn't understand"

If you can't answer a simple question about fractional reserves, I'll assume that you know nothing - as I orginally suspected.

Sorry, I missed the answer to the question I posed.

Where and how does a Pound/Euro/Dollar come in to existence?

You have them in your pocket, as do most people. How and where did they come in to existence. Seems a straight forward question but you keep avoiding it for some reason.

No, it's you that's avoiding the question
It was a qualifying question of mine to see if you were competent to make an accusation that I didn't understand fractional reserve banking
And you've failed
In fact - in all of the literature on that subject - there is no mention anywhere of "thin air" as a source of funds.

[McAz]

Ha ha ha - the ego has landed.

[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?

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

Yeah but the other day you said the BoE can't create money. So you're a liar, or an idiot. Which is it?

[Rolluplostinspace]

..... But in fact, money is being created out of thin air all the time. And this process has hugely important implications for issues like housing, inequality and the environment.

Most of the money we use comes in digital form, as the numbers we see on our bank statements. This money is created by private banks like HSBC and Natwest when they make loans. They create it by simply typing numbers into a computer – some might call this magic!
http://positivemoney.org/what-we-do/magic-money-tree/

[Rolluplostinspace]

Most of the money in the economy is created, not by printing presses at the central bank, but by banks when they provide loans.

See that Mungo?
Money is created when loans are provided.

Money is more than banknotes and coins. If you have a bank account, you can use what’s in it to buy things, typically with a debit card. Because you can buy things with your bank account, we think of this as money even though it’s not cash

Therefore, if you borrow £100 from the bank, and it credits your account with the amount, ‘new money’ has been created. It didn’t exist until it was credited to your account.

This also means as you pay off the loan, the electronic money your bank created is “deleted” – it no longer exists. You haven’t got richer or poorer. You might have less money in your bank account but your debts have gone down too. So essentially, banks create money, not wealth.

Banks create around 80% of money in the economy as electronic deposits in this way. In comparison, banknotes and coins only make up three percent. Finally, most banks have accounts with us at the Bank of England, allowing them to transfer money back and forth. This is called electronic central bank money, or reserves.

From The Bank of England's own site Mister Mung.

http://edu.bankofengland.co.uk/knowledg ... y-created/

[Rolluplostinspace]

The Bank of England again ......

• 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.

In the modern economy, most money takes the form of bank
deposits. But how those bank deposits are created is often
misunderstood: the principal way is through commercial
banks making loans. Whenever a bank makes a loan, it
simultaneously creates a matching deposit in the
borrower’s bank account, thereby creating new money.
The reality of how money is created today differs from the
description found in some economics textbooks:
• Rather than banks receiving deposits when households
save and then lending them out, bank lending creates
deposits.
• In normal times, the central bank does not fix the amount
of money in circulation, nor is central bank money
‘multiplied up’ into more loans and deposits.
https://www.bankofengland.co.uk/-/media ... E476E01654

[Rolluplostinspace]

Get it yet Mister Bean?
The Bank of England says economic textbooks are wrong.
It says you're wrong.
It says clearly that money is created by borrowing from high street banks who create new money everytime they make a loan!
Get it yet Mister Bean?
No debt equals no money!
You live where money is created as a unit of debt as opposed to a unit of value.

[MungoBrush]

..... But in fact, money is being created out of thin air all the time. And this process has hugely important implications for issues like housing, inequality and the environment.

Most of the money we use comes in digital form, as the numbers we see on our bank statements. This money is created by private banks like HSBC and Natwest when they make loans. They create it by simply typing numbers into a computer – some might call this magic!
http://positivemoney.org/what-we-do/magic-money-tree/

Wow! Creating money out of thin air
You should show Corbyn how to do that
He can pay for all his election promises with thin air

[McAz]

Gosh, what a comeback.

[MungoBrush]

Gosh, what a comeback.

Your welcome
Glad you liked it

[McAz]

Gosh, what a comeback.

Your welcome
Glad you liked it

As I've already told you, I'm a fan of all your trolling.

[Cannydc]

..... But in fact, money is being created out of thin air all the time. And this process has hugely important implications for issues like housing, inequality and the environment.

Most of the money we use comes in digital form, as the numbers we see on our bank statements. This money is created by private banks like HSBC and Natwest when they make loans. They create it by simply typing numbers into a computer – some might call this magic!
http://positivemoney.org/what-we-do/magic-money-tree/

Wow! Creating money out of thin air
You should show Corbyn how to do that
He can pay for all his election promises with thin air

The Tories call it a Magic Money Tree - and have used it several times, not least to magic up over a billion magic GB Pounds to bribe 10 DUP MPs to vote for them...

[Rolluplostinspace]

..... But in fact, money is being created out of thin air all the time. And this process has hugely important implications for issues like housing, inequality and the environment.

Most of the money we use comes in digital form, as the numbers we see on our bank statements. This money is created by private banks like HSBC and Natwest when they make loans. They create it by simply typing numbers into a computer – some might call this magic!
http://positivemoney.org/what-we-do/magic-money-tree/

Wow! Creating money out of thin air
You should show Corbyn how to do that
He can pay for all his election promises with thin air

Fuck me your thick you don't even believe The Bank of England.
Or don't understand.
I think you lack understanding.
The textbooks are wrong according to the bank.
Not long ago The Bank of England denied all of this but under pressure because of the internet they finally caved in and admitted to the world that you're a wanker.

[Cannydc]

But......Masters Degree...........