Debt Slavery : Wed Nov 16, 2011 9:48 pm  

Who'd have thought it, a mainstream news source explaining how banks create money from nothing . . . . It's common knowledge that printing your own £10 notes at home is frowned upon by Her Majesty's police. Yet there's a small collection of companies that are authorised to create – and spend – more new money than the counterfeiters have ever been able to print. In industry jargon, these companies are called "monetary and financial institutions", but you probably know them by their street name: "banks". The money that they create, effectively out of nothing, isn't the paper money that bears the logo of the government-owned Bank of England. It's the electronic money that flashes up on the screen when you check your balance at an ATM. Right now, this electronic money makes up over 97% of all the money in the economy. Only 3% of money is still in that old-fashioned form of real cash that can be touched. http://www.guardian.co.uk/commentisfree ... ed-stealth Just think about this as an example. Say it takes a days work for a bank employee to process a mortgage application for a customer. If the mortgage is over a period of 25 years and one days pay per week is needed to repay the mortgage, the customer is essentially giving up 5 YEARS of work for the initial days work it took the bank sorting out the paperwork to conjour up the money out of thin air in the first place! This is debt slavery in a nutshell.

Who'd have thought it, a mainstream news source explaining how banks create money from nothing . . . . It's common knowledge that printing your own £10 notes at home is frowned upon by Her Majesty's police. Yet there's a small collection of companies that are authorised to create – and spend – more new money than the counterfeiters have ever been able to print. In industry jargon, these companies are called "monetary and financial institutions", but you probably know them by their street name: "banks". The money that they create, effectively out of nothing, isn't the paper money that bears the logo of the government-owned Bank of England. It's the electronic money that flashes up on the screen when you check your balance at an ATM. Right now, this electronic money makes up over 97% of all the money in the economy. Only 3% of money is still in that old-fashioned form of real cash that can be touched. http://www.guardian.co.uk/commentisfree ... ed-stealth Just think about this as an example. Say it takes a days work for a bank employee to process a mortgage application for a customer. If the mortgage is over a period of 25 years and one days pay per week is needed to repay the mortgage, the customer is essentially giving up 5 YEARS of work for the initial days work it took the bank sorting out the paperwork to conjour up the money out of thin air in the first place! This is debt slavery in a nutshell.

Re: Debt Slavery : Wed Nov 16, 2011 9:51 pm  

And which "mainstream news source" is that?

Re: Debt Slavery : Wed Nov 16, 2011 9:56 pm  

Bugger - link added.

Re: Debt Slavery : Wed Nov 16, 2011 10:06 pm  

It was always one of the major reasons behind Thatcher's "Right to Buy". There was no interest in allowing council house tenants to own their own homes just for the sake of it. It was however another way of ensuring a compliant workforce. From going into arrears on rent, with little fear of eviction, suddenly those who may have gone on strike realised that if they didn't pay the mortgage, they may not be reposessed immediately but their debts would rack up at an alarming rate and the fear of losing "their" home was ever present.

Re: Debt Slavery : Wed Nov 16, 2011 10:21 pm  

If people don't want to become debt slaves they shouldn't borrow money or at least unrealistic amounts. It's quite simple. The real reason asset prices increase is actually savings (esp. pension funds) - the constant flow of money into the investment system causes asset prices to go and periodically crash back.

Re: Debt Slavery : Wed Nov 16, 2011 10:33 pm  

Dally wrote:

If people don't want to become debt slaves they shouldn't borrow money or at least unrealistic amounts. It's quite simple. The real reason asset prices increase is actually savings (esp. pension funds) - the constant flow of money into the investment system causes asset prices to go and periodically crash back.

And what do you think of the fact that the money for said loans was created out of thin air? I used to think that when I got a loan for my mortgage it was some pensioners hard earned savings being handed over to me and so I had a moral obligation to pay it back with a little interest on top.

Now I realise I was basically scammed and 97% of our 'money' is infact bank created IOU's, so 97% of our money supply is backed by an equal debt (actually it's more when you include the interest). The only way to keep this debt pyramid going is by somebody somewhere taking on even more debt or the whole system collapses. This is why the European response to the sovereign debt crisis is to give the countries in trouble more debt!

Re: Debt Slavery : Wed Nov 16, 2011 11:56 pm  

Its not slavery its a voluntary transaction. If you lend someone money then you usually expect a price for deferring being able to consume now to being able to consume later. The interest rate is the price of that deferred consumption. As long as the lender and borrower both agree and its a voluntary transaction and both parties have full information then there isn't anything wrong with it.

Re: Debt Slavery : Thu Nov 17, 2011 9:27 am  

sally cinnamon wrote:

Its not slavery its a voluntary transaction. If you lend someone money then you usually expect a price for deferring being able to consume now to being able to consume later. The interest rate is the price of that deferred consumption. As long as the lender and borrower both agree and its a voluntary transaction and both parties have full information then there isn't anything wrong with it.

I think you'd agree though, that only the initial borrowing is a voluntary transaction.
Thereafter, the actions of the banks and the vagaries of the financial markets etc. are outside the control of most of us.
Unfortunately, no-one ever has "full information", which is why the economists' favourite, the so-called "perfect market", is an unachievable fiction.

Re: Debt Slavery : Thu Nov 17, 2011 9:42 am  

At the end of the day we're at the start of an adjustment. Probably 10 + years of so-called de-leveraging. By the end of that we'll have house prices, etc at about half of current levels in real terms and real family incomesdown dramatically. In o9ther words the debt fuelled frenzy will inevitably unravel and people will be back to roughly where they were before the frenzy. So in a longer time frame there is no problem. In the shorter term the pain could be enormous if governments and central banks fail to rig the markets to spread the pain over a decade. If they don't then we'll have banks and country's going under and there will be mayhem on a scale most of us cannot imagine. Worrying about the abstract will be the least of Legionnaire's and our problems.

Re: Debt Slavery : Thu Nov 17, 2011 10:16 am  

Dally wrote:

... in a longer time frame there is no problem...

Who has stolen Dally's login ID?
Come on, own up.

Dally wrote:

... In the shorter term the pain could be enormous .... banks and county's going under and there will be mayhem on a scale most of us cannot imagine...

Phew, it's Dally all right.