Why would I answer your question if you never answered mine? Broski, you think you're the first self righteous misinformed person I have met on the internet? I know how to play your game
Where does a lenders money come from?
- Thread starter jsmoke
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Why would I answer your question if you never answered mine? Broski, you think you're the first self righteous misinformed person I have met on the internet? I know how to play your game
Caporegime
There you go, no-one will answer it. Good game.
Well there we are, you ignored all my answers and question, when you read up and answer them we will resume this conversation. Until then I consider your position forfeit.
Man of Honour
Great... agree to disagree for the time being and leave it there then please .
Caporegime
Double post.
Caporegime
I'd replied before I saw your post Huddy, fair comment. It's going nowhere now anyway.
Caporegime
So what? The money in interest is paid by work. Having enough arbitrary bits of paper to represent that money is totally irrelevant. You seem to be operating under the miscomprehension that money is bits of paper as opposed the reality that those bits of paper represent money.
As I explained before a scam requires duplicity. If I take out a loan from a bank then I get the money I expect and pay it back at the rate I expect. The person I give the loaned money to gets the money they expect and can spend it as they expect. No-one is being scammed.
A Ponzi scheme on the other hand is a scam because the investors are misled about (a) where their returns are coming from and (b) how reliable those returns are.
Nope I was open to either though his replies, I was hoping actually that he meant more of a general influence and would expand on it - that at least would be less stupid... but some of his replies were about actual share holdings in media companies... ergo his statement makes no sense at all... banks don't 'basically own the media'.
Its a common theme though with these CT types... you ask a basic question about some ridiculous statement and they get defensive/butt hurt.
I mean its like claiming that 911 was an 'inside job' then refusing to clarify what you meant by that statement and telling people to 'google it' or 'look it up yourself' as though the statement was unambiguous and any search surrounding it will turn up undisputed evidence supporting the position.
so a bank borrows just over 1k from the bank of England and buys a 100k house? Could you please provide an example of this happening in reality? Sounds very lucrative... what banks would that apply to - sounds like they make huge profit margins - perhaps you could name some of these banks with ridiculously huge profit margins... I mean most big banks are publicly traded - are we all missing a trick here... there seems to be a killing to be made yet... seemingly only you and some other CT nutters know about it... please feel free to provide all the evidence you like - I'm more than happy to be proven wrong if I can invest in that sort of venture.... just give me the name of the bank making that sort of return and I'll be very happy...
A bit of topic but what about those IMF cash injections? The last time i had a peek they are not revealing to whom the cash injection's go other than it is to stimulate the economy. This is printed money right? And if so would that not mean that due to inflation they are defrauding everyone who actually holds currency?
As inflation means less value on the money. But is there the consent from the people to actually print it? Sorry but i actually find the subject really interesting
As inflation means less value on the money. But is there the consent from the people to actually print it? Sorry but i actually find the subject really interesting
Bank buys house.
Lender repays bank.
Bank makes money from other investment ventures.
Which is why this idea of splitting up retail and investment banks is a bit of a red herring and a publicity-driven idea. High street/retail banks are dependent upon investment banking in order to be able to lend. But moronic policymakers are more concerned about winning votes than actually engaging with reality. Or, in a slightly more relevant example, splitting RBS up to make a quick buck to look good, whilst simultaneously being able to falsely bash the banking industry.
If you want to talk about money being created from nothing, look up Arch Cru instead of mortgages. :/
sorry to nit pick but there is no reliance on investment banking in order to lend - that is if you're referring to the IPO, M&A side... commercial banks don't require an investment banking division in order to function, they also don't require any form of brokerage business or prop trading operation. The taking of deposits and making loans can be carried out independently of the rest.... though that in itself isn't an argument for banks to split... something which as you've pointed out is partly driven by some knee jerk political reaction.
They certainly don't require the overly risky parts you highlight, for sure, but this idea that a bank can simply take deposits and not use them to invest in order to derive a return is a fallacy.
e: sorry, coming across a bit of a lame turd here. The reality is that so few people save these days that the tradtional retail banking model simply does not work anymore and retail operations that fulfil those functions we're dependent upon - mortgages, credit cards and overdrafts etc - are simply not feasible now that we've turned from a nation of savers (pre-1950s) to a nation of spenders (baby boomers and onwards). The sad reality is that for all the crap that investment banking operations caused us - and I've no illusions that a lot of it was done simply to line pockets - it was a necessary evil to fund the short-sightedness of the population. The British Public are all too happy to hang a banker, but they simply do not have a bloody clue how their credit card is facilitated by the very people they are so viciously aggressive towards.
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yup - but for a commercial bank a large part of that is simply from making loans... (edit - to clarify that's what it boils down to is what I mean... obviously for a large commercial bank, managing their treasury, the whole sale market is relied upon for various IR swaps, deposits, loans, overnight repos etc etc..)
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A bit of topic but what about those IMF cash injections? The last time i had a peek they are not revealing to whom the cash injection's go other than it is to stimulate the economy. This is printed money right? And if so would that not mean that due to inflation they are defrauding everyone who actually holds currency?
As inflation means less value on the money. But is there the consent from the people to actually print it? Sorry but i actually find the subject really interesting
When people say printing money they can mean many different things. For example one can inject liquidity into the system through quantitative easing, where a central bank purchaches securities in an open market thereby swapping treasuries for cash.
However to me printing money will forever mean debt monitization, where central bank prints money to pay off debt. That cases devaluation of the currency.
Now liquidity injections by central banks do largely increase money supply in the economy which in the long term does result in equivalent increase in inflation, however, and it's a big one, short term it does not. Moreover inflation depends on velocity of money and even though since 2008 there's been huge increase in money supply it did not in fact cause high inflation (apart from the UK, UK central bank is like the worst out of all developed countries) because all that liquidity that banks receive just sits at the bank or goes right back into safe assets as opposed to loans to businesses. So even though we have high increase in money supply, the velocity of money is very low, we are locked in fear, a long with new basel accord banks are putting all their effort into staying alive, hence we do not see high inflation.
Of course while things start improving and banking sector starts moving again along with the velocity of money, central banks will start reducing the money supply as to prevent high inflation. Big question is, is this paralyzing fear in financial sector here to last for 10 years or more.
Do you know what is absolutely terrifying about QE though? They're royally ****ing us all over. The UK government issues gilts which are bought by the BofE at an artificially inflated market price in order to give the government more money to spend.
BUUUUT, in the UK, annuity rates are determined by gilt prices AND pensions funds are bound to hold a certain amount of Gilts. So the government is complicit in driving down gilt prices, which in turn has a negative knock on effect on millions of peoples' retirement income.
Sorry to hijack your post, but it's nothing short of the most arrogant market manipulation that has happened since 2008 and these ****ers are getting away with it whilst lambasting an entire industry for allegedly doing something far less brazen!! :/
e: OOOOH and Jesus Herbert Christ - nevermind just the bond holdings - you guys know how bond duration works, right? So a 0.5% increase in interest rates causes a 1% capital loss on a 2-year bond? The bond markets have exploded to these ridiculous amounts where negative yields happened for an albeit brief period, but once interest rates start to rise - and they will have to given that the economy is actually expanding given what the partisan anti-Tories would have you believe - the capital values of government debt will plummet back to 2007 levels. Now THAT is terrifying, because everybody has piled into Gilts thinking they're a safe haven and they're anything but.
e2: that 'anti-Tory' comment would've been 'anti-Labour' if they were in power. It's not a partisan judgement, just a comment on the current governing party.
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Soldato
I'm no accountant but as I understand it, it works in the following manner; please correct me, if I'm wrong.
Fiat currency= a token that is accepted as having value to obtain goods or services, though it has no intrinsic value and is not backed by reserves eg a Bank of England promissory note.
Fractional reserve banking= a bank retains only a portion of its customers' deposits as readily available reserves from which to satisfy demands for withdrawals; around 3% for UK.
Book keeping or accounting should show assets and liabilities that balance.
An asset is something one can sell, it has value ie cash, promissory notes, cars, houses etc.
A liability is owing money ie a debt.
e.g.
If you loan a company £10,000 cash, the cash is recorded as an asset matched with an liability of £10,000 showing the company owes you £10,000. The liability is proof you loaned the cash to the company and they owe you the money.
You sign an agreement, mortgage, loan etc and deposit it with the bank; it then (usually) becomes a negotiable instrument or type of promissory note. The bank records the promissory note as an asset matched by a new liability, the new liability (deposit or cheque) is money they owe you but THEY OMITTED TO MENTION THIS PART OF THE TRANSACTION!
The promissory note is then traded for credit/cash with other banks for the full value.
The bank then allegedly loans you that money/credit and expects you to pay it back with interest!
DID SOMEONE MENTION SCAM!!!?
Fiat currency= a token that is accepted as having value to obtain goods or services, though it has no intrinsic value and is not backed by reserves eg a Bank of England promissory note.
Fractional reserve banking= a bank retains only a portion of its customers' deposits as readily available reserves from which to satisfy demands for withdrawals; around 3% for UK.
Book keeping or accounting should show assets and liabilities that balance.
An asset is something one can sell, it has value ie cash, promissory notes, cars, houses etc.
A liability is owing money ie a debt.
e.g.
If you loan a company £10,000 cash, the cash is recorded as an asset matched with an liability of £10,000 showing the company owes you £10,000. The liability is proof you loaned the cash to the company and they owe you the money.
You sign an agreement, mortgage, loan etc and deposit it with the bank; it then (usually) becomes a negotiable instrument or type of promissory note. The bank records the promissory note as an asset matched by a new liability, the new liability (deposit or cheque) is money they owe you but THEY OMITTED TO MENTION THIS PART OF THE TRANSACTION!
The promissory note is then traded for credit/cash with other banks for the full value.
The bank then allegedly loans you that money/credit and expects you to pay it back with interest!
DID SOMEONE MENTION SCAM!!!?
How old are you? 12? Why don't you just talk like a normal person. I am not "butt hurt" or "stupid" and I am not a "CT type" when I said "the banks basically own the media" I did not mean it literally (I do not know exactly what shares they may own, how would I know that?)... I meant that if the media wanted to do a story it would not be allowed to be broadcasted. The reason it would come across as a conspiracy theory is that it would only be reported by unofficial sources as opposed to a the news or a documentary on the BBC etc. It does not make any sense to annoy the general public any more then they are already by telling them about these sorts of things. eg. "Did you know BTW that although you spend 40 hours a week working to pay off your mortgage you are effectively paying for nothing except another holiday home for a banking executive"...
A lot of the "conspiracy theories" are actually based on fact and reality.... Its just they seem like "conspiracy theories" because they are documented by unofficial sources. Also the stigma which has been built up around "conspiracy theorists" and them being basically crazy people with tin foil hats is good for them because ignorant people such as yourself (Dowie) are quick to just assume that anything out of the mainstream media is a "conspiracy theory" and dismiss it as crazy rubbish (although a lot of conspiracy theories are indeed crazy rubbish)...
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Soldato
So, does everyone agree with my understanding of the banking system or have I been written off as a conspiracy nut?