The Bank of England Lights A Fuse Under the Field of Economics
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Marion Post Wolcott Man washing car at Sarasota, Florida, trailer park January 1941 There will be many people who don’t care, there will be many more
[See the full post at: The Bank of England Lights A Fuse Under the Field of Economics]Dang.
Banks bending Austrian, and now this?Sea Change?
Ever wonder what would happen if Banks were cut loose from all State control, protection and regulation, and were forced to perform for their customers for a living? And if they didn’t, their customers would simply vote with their feet, and leave ’em destitute?
Ah, but that would require honest money. Money uncontrolled by politics. Money that would retain it’s value in the hands of the people. Money the Banks would need to compete with each other to be entrusted with. Money, in order to be entrusted with, governments would need to actually perform.
It will happen with or without the blessing of TPTB. The more obstructions erected against grass roots shadow economic activity, the harder they clamp down, the more of it will necessarily occur.
I can only imagine the subsystems cropping up in places like Argentina and Venezuela as authority continues it’s assault on economic freedom of choice.
Not hard though, after experience in a war torn nation, witnessing street exchange rates established between local currencies, gold, the dollar and military payment certificates. The “official” window resembled the Maytag repairman’s office, and with the street vender, one might have had to take a number.
The BoE has more authority then me.
BUT … like you said nobody will pay any attention.I got to repeat what was said.
<b>”In other words, everything we know is not just wrong – it’s backwards. When banks make loans, they create money. This is because money is really just an IOU. The role of the central bank is to preside over a legal order that effectively grants banks the exclusive right to create IOUs of a certain kind, ones that the government will recognize as legal tender by its willingness to accept them in payment of taxes. There’s really no limit on how much banks could create, provided they can find someone willing to borrow it.
Just consider what might happen if mortgage holders realized the money the bank lent them is not, really, the life savings of some thrifty pensioner, but something the bank just whisked into existence through its possession of a magic wand which we, the public, handed over to it.”</b>I don’t know if Graeber’s argument that the BofE paper destroys the theoretical basis for austerity holds water. Finite resources (or how finite) will determine if austerity rules the day. Does Graeber think that more borrowing is the answer to the world’s problems?
Monetary policy just shifts around the claims on wealth/real resources. Current monetary policy shifts the claims upward and imposes austerity on the masses.
this issue has been covered in a number of videos and books. i think the important point is that if the creation of debt and thus the creation of the money supply were the responsibility of the government instead of privately owned banks, the national debt would be wiped out and income tax could be eliminated since the cost of operating the government could be met by interest on the loaned money. the only purpose of income tax is to pay interest to the bankers.
the US government very successfully issued its own money both during the revolutionary war and the civil war, and it was not inflationary.
also, i believe somebody said it would be possible to give everybody on the planet a cash stipend whether or not they “worked” for it simply by computer entries, if the governments issued the “money.”
Money created through loans by the government is not more or less inflationary than money created by banks through loans. The main difference is that the interest charged on these loans are siphoned off into the pockets of bankers. Bankers really don’t contribute much (I am tempted to say nothing) to the economy. It is the surest way to make money. If it does not work, government will bail you out. We have seen the model during the 2008 bailout. Profits are privatised while losses are socialised. This exploits ordinary citizens and benefit bankers. Governments could have used this money to reduce taxes. Suggestion to voters: Only vote for a party that vows to eliminate private banks under the current economic model of central banks. Am I missing something?
Only vote for a party that vows to eliminate private banks under the current economic model of central banks. Am I missing something?
Yeah, there are no such parties anywhere. Beppe Grillo probably comes closest.
Also, banks don’t only not contribute much, they suck away a very substantial part of the value of real production in an economy.
Sure, there are no such parties, but the self interest of voters should ensure that they enjoy large support when started. That very fact should be enough incentive to start these parties. With the internet, it should be relatively easy to spread the word.
I don’t follow Italian politics. I have thouroughly enjoyed some of Grillo’s speeches, but what has he (the 5* movement) accomplished since elections were held? Is the movement still growing in popularity?
I think most people are aware that the bigger the FIRE economy, the more the real economy suffers.
I listened to an interview Nicole did with JHK. In the light of the bank bailouts, was she not too soft on Obama?
It’s a big thing that a central bank publishes the true description of how money is created. The Swedish central bank, Riksbanken, did that in June 2013 by including a chapter on creating money in their annual publication The Swedish Financial Market 2013. See pages 74 – 77. https://www.riksbank.se/Documents/Rapporter/Finansmarknaden/2013/rap_finansm_130830_eng.pdf
Why did Riksbanken and the Bank of England do this? I know that Riksbanken over the last years have got an increasing number of questions from the public who obviously know how money is created. Since the central bank is dependent on being trustworthy in the eyes of the public, they have reached a point where they needed to act. This action, however, means that the risk of loosing public trust is transferred to the politicians. So now they have the ball.
You bring in many thoughts. Freeform, let me consider:
If the government ‘prints’ the money and lends it, does it follow that government payroll, purchases and the like are then done by direct payment of ‘new’ money? Don’t get me wrong, I think that’s a good thing. If payments exceed receipts (of the interest earned on ‘loans’ made to businesses and individuals), there would be an inflationary ‘tax’ that would be quite rational and equitible. The pressure from this might result in lowered government expense as folks figure it out. Hopefully.
Furthermore, from an inflationary standpoint, what difference does it make whether the government prints the money into existence or borrows it into existence, other than eliminating interest expense?
Overall, I say good on the Bank of England… God save the Queen and all that rot!
Craig
Yet they still get it 100% wrong. We all knew this decades ago, no one listened then, will they now?
Yes… the book, “Overshoot” was published (by Univ. of Illinois) in 1982. 1982, FOR GOD’S SAKE!!!
It could have been written yesterday. And yet… and yet… it is as if nothing was said.
Very discouraging, if you ask me.
Craig
Deutsche Bundesbank was first. This is published in 2009: https://www.bundesbank.de/Redaktion/DE/Downloads/Service/Schule_und_Bildung/geld_und_geldpolitik_kapitel_3.pdf?__blob=publicationFile.
See page 70 “Geldschöpfung”Come on, we don’t need anyone to tell it to us, it is basic logic. My book “The Money PSYOP” shows that it can’t be any other way, money can only be created as a measure of value it cannot be the value it measures.
https://bibocurrency.com/index.php/money-psyop-2
Graham Towers former Governor of The Bank of Canada said it in 1939
https://www.publications.parliament.uk/pa/jt201213/jtselect/jtpcbs/98/98vw36.htmThe multiplier is impossible without money being created and that has been taught for years. But that is neither here nor there, as my article posted above in my previous post says, the real point is that money is not value it is only a record of value. So money contracts cannot be valid if conceived with a definition that confuses value with the record of value. If I owe a kilo of flour do I owe a kilo or do I owe flour? See:
I am not arguing with you, Marc. My argument is that several central banks obviously have felt the need to declare what they know as a fact in a world full of neoclassic people like Krugman. Too many ordinary people understand how money is created and they will loose their trust in central banks that plays along with the Krugmans. Loosing public trust is a price that a central bank cannot afford.
HI Oscar,
My apologies I didn’t mean to imply an argument. I am just hoping that after so much effort on the part of those of us that have gone counter the status quo’s assumed beliefs, we can start to have confidence in numbers to put an end to the money mind trap. Because of its importance as a sort of mass cult religion that has managed to subdue humanity so profoundly, we must on mass but on purely rational and objective grounds, completely debunk the current paradigm. The rational approach is in our favour in terms of making both present and future better and healthier.
Thanks for your comments and this blog,
Marc
if money is property then it can be lent, borrowed, sold and rented. The question then is if money “IS” an object of property/value subject to “supply”. It turns out that such a notion is “THE” underlying double think. Interest on money is justified by that false notion and even if prohibited, as long as people believe money IS an object of value, interest will be charged whether legally or not.
The bankers and those who are their proxies by default, as a consequence of failing to pay attention to the facts, rather than going on to utter and repeat absolute gibberish about IOU’s and other ridiculous senseless nonsense, will forever confuse the issue if we are not alert to the truth. Clearly, an example of the gibberish referred to, is the article cited, by David Graeber of the Guardian, when he writes of the recent disclosure by the Bank of England of its mechanism of money creation. The article he writes by no means remotely touches on the truth. We need not spend long to discover the answer as to why, except to say we need only compare his musings with the simple explanation presented here –
THERE IS NO DEBT ITS JUST YOUR IMAGININGS
THERE IS NO DEBT IT’S JUST YOUR IMAGININGSAgreed!
Logically it is only possible to “owe” the value of real goods and services, money at best is a record of that value never a substitute of it. That is the essence of our thesis too.
Love to talk about it if you like send me a mail to [email protected].
Great work!
Marc
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