[ALB]

Or  the thin edge of the slippery slope …Another aspect of tax dodging by multinational firms here. Their national-based competitors don't like it: because it puts them at a competitive disadvantage:https://www.worldsocialism.org/spgb/socialist-standard/2010s/2013/no-1301-january-2013/cooking-books-who-gains-%E2%80%98tax-justice%E2%80%99

[ALB]

Bollox

[ALB]

Revealing article in today's Times (of London):https://www.thetimes.co.uk/edition/business/channel-islands-trading-boom-hides-influence-of-eu-srx2635nlYou won't be able to read the whole article but the esssential is there and you can get the gist. Guernsey as a more important UK trading partner than China or Japan, what next? The 'trade' involved isn't really trade of course, just financial transactions dignified with the name of 'trade in financial services'. Apparently, quite a high percentage of world trade is that these days, exposing the utter irrationality of the capitalist system.

[ALB]

Actually I think that Lenin's last articles, of which his Notes on Sukhanov was one, show that Lenin realised that Marx had been right and that the only way forward for Russia was capitalism, albeit under the control of the Bolshevik government (which he called the "proletarian state").More evidence to suggest that Lenin admitted Marx was right in this article:http://www.worldsocialism.org/spgb/socialist-standard/1970s/1970/no-788-april-1970/did-lenin-admit-defeat

[ALB]

I thought it was well-known that Marx held that capitalism paved the way for socialism, by developing the productive forces to the point where plenty for all was possible and educating and training a population able to operate them. The implication being that a socialist revolution was not possible in the absence of these conditions and that any attempt to establish socialism in their absence was doomed to failure.You seem to have overlooked that the article did go on to quote a passage from the German Ideology to back this up:

Quote:

Marx and Engels pointed this out in a passage in The German Ideology which is the perfect answer to Lenin’s question (though Lenin was not aware of it since this work wasn’t published until 1932). Discussing ‘the alien relation between men and what they themselves produce’ when there is private property, they wrote:'This “alienation” (to use a term which will be comprehensible to the philosophers) can, of course, only be abolished given two practical premises. For it to become an “intolerable” power, ie. a power against which men make a revolution, it must necessarily have rendered the great mass of humanity “propertyless,” and produced, at the same time, the contradiction of an existing world of wealth and culture, both of which conditions presuppose a great increase in productive power, a high degree of its development. And, on the other hand, this development of productive forces (which itself implies the actual empirical existence of men in their world-historical, instead of local, being) is an absolutely necessary practical premise because without it want is merely made general, and with destitution the struggle for necessities and all the old filthy business would necessarily be reproduced .'

[ALB]

Yes he was a member of the Communist Party of Britain (the Morning Star mob) until 1995.

[ALB]

It is strange but I think it's a a question of reversion rather than conversion as that's what he was before he joined. But would need to check.

[ALB]

We can do better than that. We can send you a review copy. But don't worry. It's a proper 230-page book, fully proof-read and with an ISN and all.  It's in the post already.

[ALB]

The stuff from Varouflakis confirms the point that the discussion amongst bourgeois economists, conventional and unconventional, is not so much about what banks can and cannot do or should or should not be allowed to do as about which policy to pursue to try prevent bank lending getting out of hand in a boom.The theories they have developed are theories tailored to back up their preferred policy. Pretty academic really as none of them are going to work as "excessive" bank lending in a boom is neither the cause of the boom nor the reason why it will eventually end. It is, rather, a reflection of the boom. Booms and slumps are not cause by monetary movements but by movements in the real, productive economy. It is true, though, that mistaken monetary policies can make things worse. For instance, what Positive Money propose: not allowing banks to lend from customers' current accounts would restrict the flow of credit to productive industry and so hold back the accumulation of capital.

[ALB]

Yes, he was a lifelong Russia-lover. The obituary in today's Times says that

Quote:

In 1985 he was expelled from the [Communist] party for "conduct deeply detrimental to the party".

It doesn't say what it was, but at that point the "Eurocommunists" would have been in charge of the CP, wouldn't they?

[ALB]

dms wrote:

ALB wrote:

dms wrote:

is named this way because it is backed by private credit.https://www.ecb.europa.eu/explainers/tell-me-more/html/what_is_money.en.html

Absolutely, but they didn't end there with a full stop, did they? It is a colon because it's misleading if they left the sentance as you left it. They went on a bit longer than that :

ECB wrote:

is named this way because it is backed by private credit: if all the claims held by banks on private debtors were to be settled, the inside money created would be reversed to zero.

They qualified after the colon "backed by private credit" to mean that the money they create is backed by the liability on the debtor to pay it back. That they're able to do it as it's temporary.  They then go on :

ECB wrote:

  So, it is one form of currency that is created

If that's what the ECB meant (and you could be right, though "backed" would be an odd word to use in that context) then all they are describing is double-entry bookkeeping where every new asset has to be balanced in the accounts by a new liability and every new liability by a new asset. In the case of a bank loan, the loan is the liability that is balanced by an asset (an IOU from the borrower). But this still does not explain where the bank got the money to lend from in the first place. Some say it's from thin air but in fact it's from money the bank has itself borrowed or will soon have to borrow, as the Bundesbank explained:

Quote:

The banks also keep a constant eye on the costs that may incur by granting loans and creating book money. For example, if the customer uses the new credit balance to transfer money to an account at another bank, from the bank's point of view money will be flowing out. The bank then often has to recover this money, for example by taking out a loan from another bank, or by "refinancing" itself with a loan from the central bank. Alternatively, it can persuade savers to invest cash or credit balances at the bank in the form of savings or fixed-term deposits.

The often (mis)quoted 2014 article from the Bank of England makes the same point:

Quote:

Figure 1 showed how, for the aggregate banking sector, loans are initially created with matching deposits. But that does not mean that any given individual bank can freely lend and create money without limit. That is because banks have to be able to lend profitably in a competitive market, and ensure that they adequately manage the risks associated with making loans. Banks receive interest payments on their assets, such as loans, but they also generally have to pay interest on their liabilities, such as savings accounts. A bank’s business model relies on receiving a higher interest rate on the loans (or other assets) than the rate it pays out on its deposits (or other liabilities). (…) The commercial bank uses the difference, or spread, between the expected return on their assets and liabilities to cover its operating costs and to make profits. The banks also keep a constant eye on the costs that may incur by granting loans and creating book money. For example, if the customer uses the new credit balance to transfer money to an account at another bank, from the bank's point of view money will be flowing out. The bank then often has to recover this money, for example by taking out a loan from another bank, or by "refinancing" itself with a loan from the central bank. Alternatively, it can persuade savers to invest cash or credit balances at the bank in the form of savings or fixed-term deposits.(see: https://www.worldsocialism.org/spgb/socialist-standard/2010s/2014/no-1317-may-2014/cooking-books-harry-graeber-and-magic-wand

It also doesn't distinguish a bank from a payday loan company or even a pawnbroker. The money they lend is also balanced by an IOU from the debtor, so why are they not said to create new money, whether out of thin air or elsewhere? Actually, a bank is similar to them, and all lenders of money, in that they have to have (or quickly obtain) the money they lend. What all these and other financial institutions are involved in is the mere circulation of money. They are not, as Alan has just pointed out, creating any new wealth for money to buy.

[ALB]

dms wrote:

It's partly conjured up out of thin air, and partly money that the banks have borrowed from depositors, other banks and financial institutions. They do this because they have to meet their reserve requirement.

Not according to the European Central Bank you yourself cited earlier in this discussion. They say it is wholly backed by "private credit" (without a cubic centimetre of thin air):

European Central Bank wrote:

Commercial banks can also create so-called “inside” money, i.e. bank deposits – this happens every time they issue a new loan. (….). Inside money (….) is named this way because it is backed by private credit.https://www.ecb.europa.eu/explainers/tell-me-more/html/what_is_money.en.html

[ALB]

Forgot to add that all these articles will be on the Archives section of this website:http://www.worldsocialism.org/spgb/socialist-standard/archive

[ALB]

Introduction    9Part I :     The February Revolution: A Bourgeois Revolution    151.    The Russian Upheaval(Socialist Standard, December 1905)    172.   The Russian Revolution(Socialist Standard, April 1917)    223.    The Russian Situation(Socialist Standard, June 1917)    234.    Russia and Ourselves(Socialist Standard, July 1917)    26Part II :    The October Revolution: The Bolshevik Coup    315.    The Russian Situation(Socialist Standard, January 1918)    336.    The Revolution in Russia: Where it Fails(Socialist Standard, August 1918)    357.    Parliament or Soviet? A Critical Examination(Socialist Standard, April 1920)    458.    The Russian Dictatorship(Socialist Standard, July 1920)    499.    A Socialist View of Bolshevist Policy(Socialist Standard, July 1920)    5810. The Super-Opportunists: A Criticism of Bolshevist Policy(Socialist Standard, August 1920)    6411.   Editorial: Famine in Russia(Socialist Standard, October 1921)    6812.    The Collapse of Capitalism(Socialist Standard, February 1921)    7113.    The Passing of Lenin(Socialise Standard, March 1924)    7514.    Socialism and 'The Third International'(Socialist Standard, March 1925)    86Part III:   Bolshevik Russia: The Class Struggle Continues    9115.    The Class Struggle in Soviet Russia(Socialist Standard, December 1927)    9316.    Should the Workers Fight for Russia?(Socialist Standard, April 1928)    9917.    Russia: Land of High Profits(Socialist Standard, September 1930)    10618.    What Stalin Forgot To Mention(Socialist Standard, May 1933)    11219.    Changing Russia(Socialist Standard, September 1934)    11420. What is Wrong with Russia? The Mystery of the Trials(Socialist Standard, March 1937)    11821. Life in Soviet Russia(Socialist Standard, June 1937)    12422.    Some aspects of Russia(SocialistStandard, December 1937)    12823.    Inequality in Russia(Socialist Standard, January 1943)    132Part IV:    State Capitalism: The Nightmare Continues  13724. The Struggle for Power in Russia(Socialist Standard, February 1953)    13925.    From Lenin to Stalin(Socialist Standard, April 1953)  14226.    Cracks in the Russian Dictatorship  (Socialist Standard, May 1953)    14827.    The Russian Revolution – Its Impact on the Socialist Movement (SocialistStandard, September 1954)    15228.    Stalin the God and Stalin the Gangster(Socialist Standard, April 1956)    15729.    Stalin – the God Who Fell  (Socialist Standard, December 1961)    16030.    Russia Puts the Clock Back(Socialist Standard, June 1962)    16231.    Russian State Capitalism: Tony Cliff, Russia: A MarxistAnalysis, (International Socialism)(Socialis Standard, September 1964)    15232. Lenin: Just a Russian Revolutionary(Socialist Standard, April 1970)    17133. State Capitalism for Russia(Socialist Standard, April 1970)    17434.    Russia: Leftists in Dispute(Socialist Standard, January 1976)   17635.    Russia's Tolpuddle Martyrs(Socialist Standard, May 1978)    17936.    The Working Class in Russia(Socialist Stan dard, June 1979)   18237- What's the Russian for "Blackleg"?(Socialist Standard, November 1985)    186Part V:     Back to the Future? The Collapse of the Soviet Union    19138.    Where is Russia Going?(Socialist Standard, September 1988)    19339.    Gorbachev and the End of Communism(Socialist Standard, October 1988)    20340.    Socialism Has Not Failed(Socialist Standard, January 1990)    20941.    From Cold War to Class War(Socialist Standard, February 1990)    21442.    Marxism Versus Leninism(Socialist Standard, March 1990)    219 

[ALB]

Yes, if you define bank loans as money then in making a loan a bank is ceating money (by definition). If they extra loans over and above those being repaid then they expand the "money supply" (by definition). But the question remains: where does the money to make the loans, and the extra loans, come from? Is it simply conjured up out of thin air or is it money that the banks have borrowed from depositors, other banks and financial institutions, and/or the central bank? I don't think Zeitgeist is a reliable source of information on how banks work. Maybe they have learnt something in the meantime, but at the beginning they were out-and-out thin-airists. See:http://www.worldsocialism.org/spgb/socialist-standard/2000s/2009/no-1253-january-2009/banks-money-and-thin-air

[Author]

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