July 16, 2012 at 8:50 am #86766
Just come across a video on Youtube by the Richard Werner who wrote that article with Green MP Caroline Lucas:http://www.youtube.com/watch?v=wDHSUgA29LsIt’s quite a clear statement of the case for saying that banks can create money out of nothing, but since this is so divorced from reality, how did he ever get to be a professor of banking? Typical of the Green Party to give credence to such views.July 20, 2012 at 8:43 am #86767
Interesting aside in the report in yesterday’s London Evening Standard on the handing over of some Lloyds Bank branches to the Co-op Bank:Quote:If done well, banking is a dull affair, a bit like central heating. You try to use it as little as possible, but it never fails when you need it. It used to be called 3-6-3 banking (pay interest at 3%, charge interest at 6%, hit the golf course at 3pm)
This contrasts with the currency crank theory that it should be called 0-6-3 banking (create money from thin air, charge interest at 6%).July 21, 2012 at 10:24 am #86768
A comrade has sent in an article by columnist Deborah Orr from the Guardian of 14 July with the comment “please write a reply to this silly woman, Don’t let her get away with this nonsense”.Here’s the nonsense she wrote:Quote:The big international banks manufactured money using very simple raw materials. All they needed were computers and borrowers. Every time they made a loan, the banks simply typed the amount they were lending into their computer system, transferred it to their victim’s account, and charged interest for the privilege.
Nonsense indeed, but Guardian-readers must like this as the paper gives free rein to people’s spouting such nonsense. She goes on to advocate that banks shouldQuote:be lending from their capital, not ‘lending’ money they had conjured from the thin air of cyperspace.
She doesn’t seem to understand the difference between a bank’s capital (the money invested in the business) and money that has been deposited with it which it relends (only private banks, moneylenders and loan sharks lend their own money). Assuming that she means the latter, what she is advocating is what banks, including the big international ones, do anyway: relend money that has been lent to them or which they have borrowed. So the “reform” she is advocating isn’t needed.She discloses that she banks with the Co-operative Bank and urges others to switch to it, which suggests that she knows that this bank lends only what it has (or maybe she thinks that it’s against this bank’s proclaimed “ethical” principles to exercise the power it could to create money out of thin air). But she can’t have it both ways: either all banks can create money to lend out of thin air or none can. Actually, none can.July 21, 2012 at 11:18 am #86769AnonymousInactive
Isn’t responding to tripe such as this part of the remit of the Media Department?July 21, 2012 at 3:43 pm #86770
Agree that our Media Dept could have put something about the Deborah Orr nonsense on the comment section. Unfortunately, that’s now closed but there were 449 comments. Most of these were either from currency cranks of one sort or another or from friends of the Coop Bank. There were a few intelligent contributions, though. For instance.Quote:Ignorant tosh. Money creation has nothing to with electronics and would still happen if everything worked via parchment, quill and carrier pigeon. I think there might be a teensy bit more to it than described here: if banks really can create money at the stroke of a keyboard and that’s it, how can they ever go bust? Why don’t they just create money every time they need to pay somebody?Quote:When Deborah Orr or Zoe Williams tell me that money is created by banks ex nihilo or Simon Jenkins tells me that Quantitative Easing is just moving figures from one column in a spreadsheet to another I think to myself that they are probably wrong. I say that because commentators without any technical expertise in the area in which they are commenting always love explanations that are simple, plausible and wrong.Debt and credit are two sides of the same coin. A bank can lend money it does not have immediately available so long as it can borrow money to cover its consequent debts. A borrower can borrow money so long as its creditors believe it will be able to pay it back. What happened to Northern Rock, RBS, Lehman Bros, most Irish banks and Bankia of Spain is that they got to a situation where they were unable to borrow any more money. What has happened to Greece and is in severe danger of happening to Spain and Italy is that they have arrived at the same place. If any of those institutions or sovereign states could continue to create money out of nothing they would do so. But they cannot.Quote:I think this column sets a new low in terms of its level of confusion about money creation. Deborah Orr has basically reproduced a non-sensical conspiracy theory promulgated by positive money.Perhaps the Guardian could get someone who has mastered economics to at least A-level standard to comment on the workings of the financial system.Quote:banks can’t create money out of thin air. If you genuinely think that then you really should go and find a professional to explain it to you.
We didn’t get in, but someone from Zeitgeist did:Quote:But are you so blind not to see that the problem is the monetary system and how it works?Have you done your research? Do you know how modern money mechanics work?The only solution is to end the monetary system.One of the solutions is called Resource Based Economy.This is supposed to be an alternative paper, please please stop this nonsense and talk about real alternatives to this slavery system.
That’s probably expecting too much from the Guardian.July 21, 2012 at 3:53 pm #86771AnonymousInactive
Excellent contributions; nonetheless WE should be on the lookout for any and every opportunity to comment on topical issues. It isn’t really that difficult as some of us have already discovered.July 30, 2012 at 4:32 pm #86772hallblitheParticipant
Here’s another such opportunity:Graham Hodgson writes, “One paragraph from the Socialist Standard article contains the key insight that the writer has completely missed:”One thing banks do is to reduce the need for cash. They have done this ever since, in the 17th century, they became an important feature of the capitalist economy. In addition, through clearing houses, they settle payments without the actual transfer of cash.”….There are no new arguments in the SS article. The whole piece is just a “no it isn’t” reaction to the PM/NEF critique of the conventional view of banking. They are further hampered by their underlying ideology that economic relations are materialistic, that they necessarily relate to material exchange, even though they admit that symbols can for a time stand in for the real thing. This makes it very difficult indeed to think of money as fundamentally immaterial.” Join the debate.July 30, 2012 at 4:39 pm #86773hallblitheParticipant
And on a related note, FYI: Hello to all of you who have purchased or watched any or all of my Money as Debt Trilogy movies. I HAVE A NEW MOVIE! It is FREE online and I am asking for your help to make it go viral as quickly as possible. The title is “What the Heck is a Bailout?” a question that might be puzzling a lot of people right now. I compress information and logic from the Money as Debt Trilogy into 9 minutes of widescreen HD animation that provides my answer to that question,and, in the process, concisely explains the core of my analysis of the banking system and why the business cycle is so destructive. I invite you to watch it and, if you think it worthy, send the remainder of this message on as far and wide as you can. Thank you, Paul GrignonJuly 31, 2012 at 7:35 am #86774Young Master SmeetModeratorQuote:Isn’t responding to tripe such as this part of the remit of the Media Department?
No, it’s not.July 31, 2012 at 8:12 am #86775
Paul Grignon is a classic Currency Crank who spouts utter nonsense. For instance, in the “analysis” he invites us to refer to here, under section 8 he seems to think that all deposits with banks originally come from money banks have lent! There is an exchange with him in the December 2008 and October 2009 Socialist Standards:http://www.worldsocialism.org/spgb/dec08/page16.htmlhttp://www.worldsocialism.org/spgb/oct09/page19.htmlWe also had an email exchange with him. Here’s it what he says about socialism (email of 15 October 2009):Quote:In a socialist system in which there is no money how does one get what one needs or wants? Are we allowed to have “wants”? To me it seems that it must mean saying goodbye to the ultimate freedom that matters to people, the freedom to EARN what we desire. Am I correct? If there ‘s no money, there’s no measuring of energy exchanges. Therefore there’s no way to EARN more than your fellow by working harder or having more initiative than he does. If I am correct, then everything has to be assigned to us. How and by whom?This is the exact same question I ask the Zeitgeist Addendum/Venus Project followers who also insist that we need to do away with money completely. So in that respect you are on the same team with Zeitgeist against me.I think such ideas are escapist nonsense at best and a deliberate attack on real monetary reform at worst. Why? Because it will NEVER HAPPEN. So it is a completely safe “utopian” vision to sell people on and DISTRACT THEM away from understanding and demanding real substantive reform to the actual system we are currently enslaved to, the one that IS HAPPENING IN REAL LIFE.
Ironic, then, that Zeitgeist should be recommending his videos (as they did at the Hammersmith meeting on 22 July).His “solution” is to keep capitalism (and the “freedom” to work for wages) but introduce some sort of electronic money which would not allow interest (as if you could have capitalism just with profit but not interest). People would have to keep their savings under their bed and interest would only be able to paid in kind (so if you borrowed 6 apples giving back 7 in return would be allowed). And he thinks that he is living in the real world!July 31, 2012 at 9:14 am #86776alanjjohnstoneKeymaster
Isn’t it about time we had a dedicated pamphlet on this topic, or at least an educational study guide. I am not sure how much and how detailed Darren P intends to include in his effort but i find our responses are scattered higgelty piggelty in articles and on discussion lists eg their mis-quotes, their misrepresentations of early banking history and what not. Surely we should now be considering collating it all into a proper answer to all this since these currency and bank cranks are not going away and are actually gaining influence with many mainstream commentators being taken in by their seemingly authorative-based evidence. And it overlaps from those on the Left and Right wings. It is easy enough to say the Media Committee or whichever department that has the responsibilty to respond to articles and blogs but they require the tools. If we have something substantial and in depth then even ordinary members can respond with its link to debunk any banking and money myths they come across. It may not convince those who appear to have gone beyond facts but for the neutral third-parties i think it is desirable we reach out to them with something meatier to undermine the “reasonable” analysis of Positive Money or NEF I’m not asking too much. I think we have produced enough rebuttals over the years in print and online and all it requires is editing into a single reply and checked and double checked by those i know are well qualified in the subject. i think it should be treated as a priority.July 31, 2012 at 12:07 pm #86777AnonymousInactiveYoung Master Smeet wrote:Quote:Isn’t responding to tripe such as this part of the remit of the Media Department?
No, it’s not.
Really? Whose remit is it then?August 3, 2012 at 9:00 pm #86778DJPParticipantalanjjohnstone wrote:I am not sure how much and how detailed Darren P intends to include in his effort
The pamphlet is just a series of reprinted articles, Buick’s reply to the NEF, a section of a Socialist Studies pamphlet by Hardy, part of a chapter from ‘Banking’ by Walter Leaf and an article by Professor Cannon.I was hoping to do something on the money supply for my economics course work but it’s outside the scope of the course. Still, i’ve managed to find a few articles on money supply and inflation in various economics journals if anyone would like me to send them.August 18, 2012 at 1:49 pm #86779
Just listened to this programme on peer-to-peer lending on BBC Radio 4. It can be heard again here and on the radio tomorrow at 9pm and next Wednesday at 3pm.It’s about cutting out banks as intermediaries and people lending directly to borrowers. No nonsense in the programme about banks being able to lend without having the money themselves. It seems that in fact you can get a better rate here as both a lender and a borrower than banks offer. But this wouldn’t be the case if banks could create money to lend out of thin air while peer-to-peer websites and call centres have to pay interest to lenders.August 18, 2012 at 3:01 pm #86780jondwhiteParticipant
I suppose the collapse of Barings Bank and Nick Leeson might be the most famous and therefore good example of private banks inability to create credit.
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