A banking conundrum.

[AlanHo]

I am totally puzzled.

A few months ago the media were beating the drum about the disgusting profits being made by banks at our expense. They were calling for loan rates to be reduced and saving interest rates to be increased because the profits were seen as grotesquely excessive.

Fast forward a few months and the banks are skint - where on earth has the money gone......

Answers on a postcard in plain English please.

[catgate]

It is extremely simple.

They did not have the money to lend in the first place. What they lent was credit backed up by notional money. It may be interesting to note that the word "credit" means "belief". Incredible = unbelievable,

"Can you credit it?" = "Can you believe it?"

For generations they have been lending "makebelieve money" that did not exist. At least 10x what was on deposit. They refer to it in several ways. (You must have heard of "gearing"). This was why some of the mutual building societies were demutulaised, and then taken over, so that this practice of deceit could be enlarged and even more profit could be made.

I have suspected for a couple of weeks now that what they are currently trying to do is "pretend" these invented assets were real, and not pure invention, and thus should be included in the "rescue deals". (Nice one if it comes off.....increase your real assets at the taxpayers expense).

This lending of notional money was always destined to blow up in a big way. Money is nothing other than a token used in the place of barter and bartering labour for produce/goods has been occuring for millenia.

When you take everything right back to basics the only true cost of anything is labour. Raw materials are there free for the taking. Metal ore, water, stone, oil, trees, grass, etc. The only cost is labour for extracting that material and converting it into something else.....such as machinery for getting bigger quantities out of the earth cheaper and quicker.

So the action of reducing labour, which has been going on since Arkwright, and before, has reduced the number of people actually producing goods in return for proper tokens.

Had society stuck to tokens then things might have taken longer to reach the present stage, but with the banks almost forcing companies to pay employees by Credit Transfer and then introducing Credit cards, the acceleration into deep doodoo was totally predictable and inevitable, because the tokens have now become purely notional...or even just magnetic impulses on a bit of plastic or even on a neurone.

I find it rather amusing (and disturbing) that the the three things that have brought us to this state of affairs, Religion, Politics and Banking are all very similar. They are all systems based on Belief, and controlled by people whose interest is purely self interest at the expense of the punter.

The Popes and Bishops live in splendour and promise a world of eternity, flowing in milk and bottle tops, if you will just be humble, put a few quid in the collection and "Believe what I say".

The politicians live in splendour and promise a world full of unemployment benefits, free teeth, hernia for all pensioners and a five day weelkend if you will just vote us into Power, keep paying your taxes (or we will come and get you) and "Believe what I say."

The Bankers live in splendour and promise enough money to live a life of luxury and buy as much petrol and electricity as you like, and pay off your debts, if you just keep paying your credit card instalments and "Believe what we say."

Religion, Politics and Banking...truely the Three Horsemen of the Alcopops.

edit .....Sorry Alan, it would not all go onto a postcard.

[gordythegouge]

It is extremely simple.

They did not have the money to lend in the first place. What they lent was credit backed up by notional money. It may be interesting to note that the word "credit" means "belief". Incredible = unbelievable,

"Can you credit it?" = "Can you believe it?"

For generations they have been lending "makebelieve money" that did not exist. At least 10x what was on deposit. They refer to it in several ways. (You must have heard of "gearing"). This was why some of the mutual building societies were demutulaised, and then taken over, so that this practice of deceit could be enlarged and even more profit could be made.

I have suspected for a couple of weeks now that what they are currently trying to do is "pretend" these invented assets were real, and not pure invention, and thus should be included in the "rescue deals". (Nice one if it comes off.....increase your real assets at the taxpayers expense).

This lending of notional money was always destined to blow up in a big way. Money is nothing other than a token used in the place of barter and bartering labour for produce/goods has been occuring for millenia.

When you take everything right back to basics the only true cost of anything is labour. Raw materials are there free for the taking. Metal ore, water, stone, oil, trees, grass, etc. The only cost is labour for extracting that material and converting it into something else.....such as machinery for getting bigger quantities out of the earth cheaper and quicker.

So the action of reducing labour, which has been going on since Arkwright, and before, has reduced the number of people actually producing goods in return for proper tokens.

Had society stuck to tokens then things might have taken longer to reach the present stage, but with the banks almost forcing companies to pay employees by Credit Transfer and then introducing Credit cards, the acceleration into deep doodoo was totally predictable and inevitable, because the tokens have now become purely notional...or even just magnetic impulses on a bit of plastic or even on a neurone.

I find it rather amusing (and disturbing) that the the three things that have brought us to this state of affairs, Religion, Politics and Banking are all very similar. They are all systems based on Belief, and controlled by people whose interest is purely self interest at the expense of the punter.

The Popes and Bishops live in splendour and promise a world of eternity, flowing in milk and bottle tops, if you will just be humble, put a few quid in the collection and "Believe what I say".

The politicians live in splendour and promise a world full of unemployment benefits, free teeth, hernia for all pensioners and a five day weelkend if you will just vote us into Power, keep paying your taxes (or we will come and get you) and "Believe what I say."

The Bankers live in splendour and promise enough money to live a life of luxury and buy as much petrol and electricity as you like, and pay off your debts, if you just keep paying your credit card instalments and "Believe what we say."

Religion, Politics and Banking...truely the Three Horsemen of the Alcopops.

edit .....Sorry Alan, it would not all go onto a postcard.

Yes...it is extremely simple...............we're doooooooomed!!!!!

[andsome]

Woe is me.