Banking and Conspiracies

[118118]

i'm sure there was lots of reasons, really.

 

[slaar]

Afterazll, you can't say that it what caused by God

Although, ironically, they frequently did.

 

[kyser_soze]

fela, what do you think capitalism is? Just a quick definition.

 

[kyser_soze]

I don't think I agree with the historical analysis. The welfare state as we understand it developed out of the class realpolitik of the end of the Second World War - the 'historic compromise', not out of ruling-class Victorian bleeding-heartism.

Lloyd George introduced the first welfare legislation after WW1 with National Insurance to pay for pensions for the elderly.

The modern welfare state did develop as you describe it, but there was about 300 years worth of philosophy, religion and cultural change that went into building it, and the Beveridge report that the Welfare state emerged from was directly influenced by things like the Fabian movement - I don't usually like relying on Wiki, but it's got a pretty decent summary of where the man who along with Keynes can probably lay claim to being the architect of the modern welfare state.

William Beveridge, the eldest son of a judge in the Indian Civil Service, was born in Bengal, India, on 5th March 1879. After studying at Charterhouse School and Balliol College, Oxford, he became a lawyer.

Beveridge became interested in the social services and wrote about the subject for the Morning Post newspaper.

In 1908, now considered to be the United Kingdom's leading authority on unemployment insurance, he joined the Board of Trade, and helped organize the implementation of the national system of labour exchanges.

In 1909 Beveridge was appointed Director of Labour Exchanges; his ideas influenced David Lloyd George and led to the passing of the 1911 National Insurance Act. During Asquith's Liberal government of 1908 to 1914 Beveridge was asked to advise Lloyd George on Old Age Pensions and National Insurance; the government began to take action to combat poverty.

During World War I (1914–1918) Beveridge was involved in mobilising and controlling manpower. After the war, he was knighted and made permanent secretary to the Ministry of Food.

In 1919 he left the civil service to become director of the London School of Economics and Political Science (LSE). Over the next few years he served on several commissions and committees on social policy.

Lord Beveridge was so highly influenced by the Fabian Society socialists – in particular by Beatrice Potter Webb, with whom he worked on the 1909 Poor Laws report – that he could readily be considered one of their number. However, he was perhaps the best economist among them – his early work on unemployment (1909) and his massive historical study of prices and wages (1939) being clear testaments of his scholarship. The Fabians made him a director of the LSE in 1919, a post he retained until 1937. His continual jousts with Cannan and Robbins, who were trying to wrench the LSE away from its Fabian roots, are now legendary.

In 1937, Beveridge was appointed Master of University College, Oxford.

 

[A Dashing Blade]

I don't understand where the problem is here ADB. You seem to have things upside down.

Perhaps I can quote from wikipedia - Open Market Operations

. . .

I understand this can all be a bit confusing.

e2a: and to correct you, the securities are created by the government not the central bank. That's why they are government bonds

Unwise to cite a wiki article as proof. A lot, and I do mean a lot of the stuff on there about financial markets is, to the professional, at best ambiguous, at worst plain incorrect and often fails to distinguish between the wood and the trees. While not being Finance 101 level, they are mainly "undegraduate level.

Note in my original post I used the technical term "Issue" NOT "Buy" or "Sell".

Note in your riposte that you appear to be confusing the "primary" and "secondary" markets (apols for the technical jargon and beginning to see what I mean about wiki's ambiguity?), I was referring to the former, you are citing an artical that refers to the latter.

You are however quite correct to distinguish between a DMO and a central banks.

 

[Backatcha Bandit]

Thailand's changing fast but it's still a mostly rural society and I reckon the old, co-operative ways still remain to a greater extent in the villages than the towns and cities.

Very true.

What we usually miss, viewing the world from our own perspective with it's 'internalised capitalist assumptions' (econo-goggles), is that when 'our' culture and values infect a new place, they actually displace an existing system, rather than 'fill a vacuum'.

Since the 'value system' we are exporting renders us blind even to the existence of the one being displaced, we can carry on thinking that we are actually doing them a favour - giving them 'economics' where *none* existed before.

It's the same attitude held by colonialists, it's just that now we can use 'economics' (with it's total absence of morality) to shield us from the harsh reality of what we're doing (in that we see it as a 'natural progression'), whereas the old colonialists had to rely on dodgy racist science, or assumptions of the inferiority of others, etc.

What the mechanism of usury does to our 'economics', through it's hardwiring in of the need for growth, is to force it to be an aggressive, expansionist force.

The systems that it displaces tend to be more passive - one could say 'sustainable' - in their nature, which is why they are invariably destroyed when confronted with 'ours'.

I've noticed how, when the two worlds collide, we humans seem to have an uncanny knack of adopting the worst aspects of each.

 

[Backatcha Bandit]

Deep breath, a bond is simply an IOU, nothing more, nothing less.

ie "Lend me 100m mate! I'll pay you back in 10 years and give you 5% a year for your trouble". Add a bit of tehnical jargon to bullsh*t the client and, genuinely, that is all there is to it.

Deeper breath.

If I borrow a fiver from someone and write them an 'IOU' note, I wouldn't expect them to extract interest from me.

If they were expecting interest, it would be a 'loan agreement', with the terms and interest rate clearly spelled out and agreed.

Totally different from a simple 'IOU'.

 

[Fruitloop]

Lloyd George introduced the first welfare legislation after WW1 with National Insurance to pay for pensions for the elderly.

The modern welfare state did develop as you describe it, but there was about 300 years worth of philosophy, religion and cultural change that went into building it, and the Beveridge report that the Welfare state emerged from was directly influenced by things like the Fabian movement - I don't usually like relying on Wiki, but it's got a pretty decent summary of where the man who along with Keynes can probably lay claim to being the architect of the modern welfare state.

Fabian reformism was basically revolutionary socialism de-fanged, though, and the reason why the ruling class as a whole were prepared to accept this kind of socialism-lite was that it allowed them to retain their primary advantage, whilst offering a sop to the demands of the working class - classic divide and rule. As you point out the process was begun already pre-WWII, but it only came to fruition with ruling-class pant-shitting concerning the returning armies of proletarians - for evidence of which you can look at the attempts to confiscate weapons from returning soldiers and the social push to elbow women out of the workplace to create employment for the returning men; all efforts explicitly aimed at preserving the essentials of the political status quo.

 

[slaar]

Very true.

What we usually miss, viewing the world from our own perspective with it's 'internalised capitalist assumptions' (econo-goggles), is that when 'our' culture and values infect a new place, they actually displace an existing system, rather than 'fill a vacuum'.

Since the 'value system' we are exporting renders us blind even to the existence of the one being displaced, we can carry on thinking that we are actually doing them a favour - giving them 'economics' where *none* existed before.

It's the same attitude held by colonialists, it's just that now we can use 'economics' (with it's total absence of morality) to shield us from the harsh reality of what we're doing (in that we see it as a 'natural progression'), whereas the old colonialists had to rely on dodgy racist science, or assumptions of the inferiority of others, etc.

What the mechanism of usury does to our 'economics', through it's hardwiring in of the need for growth, is to force it to be an aggressive, expansionist force.

The systems that it displaces tend to be more passive - one could say 'sustainable' - in their nature, which is why they are invariably destroyed when confronted with 'ours'.

I've noticed how, when the two worlds collide, we humans seem to have an uncanny knack of adopting the worst aspects of each.

You're making an awful lot of assumptions here, and putting a lot of words into other people's mouths.

I'm well aware of what capitalist systems are replacing, and I certainly don't see anything as a "natural progression" or "doing somebody a favour".

 

[Fruitloop]

I would have thought that in the first instance capitalism, like empire, tends to co-opt the existing power structures. Examples include British India, Afghanistan, Iraq - in fact just pick a colonial country at random.....

 

[A Dashing Blade]

Deeper breath.

If I borrow a fiver from someone and write them an 'IOU' note, I wouldn't expect them to extract interest from me.

If they were expecting interest, it would be a 'loan agreement', with the terms and interest rate clearly spelled out and agreed.

Totally different from a simple 'IOU'.

Hmmmm, ok, point taken. (But was really trying to keep in simple)

 

[Jazzz]

Unwise to cite a wiki article as proof. A lot, and I do mean a lot of the stuff on there about financial markets is, to the professional, at best ambiguous, at worst plain incorrect and often fails to distinguish between the wood and the trees. While not being Finance 101 level, they are mainly "undegraduate level.

Note in my original post I used the technical term "Issue" NOT "Buy" or "Sell".

Note in your riposte that you appear to be confusing the "primary" and "secondary" markets (apols for the technical jargon and beginning to see what I mean about wiki's ambiguity?), I was referring to the former, you are citing an artical that refers to the latter.

You are however quite correct to distinguish between a DMO and a central banks.

ADB,

It's really quite clear - when a central bank purchases government bonds, the money supply is increased. Are you really still disputing that? In which case, seeing as you don't think wikipedia articles cut the mustard, what do you propose to enlighten us with?

 

[A Dashing Blade]

ADB,
In which case, seeing as you don't think wikipedia articles cut the mustard, what do you propose to enlighten us with?

Professional hands-on knowledge gleaned from 21 years in the City the last 10 of which sitting on a bond trading desk enough for you?

Dead serious Jazz, it really is unwise to cite Wiki articals wrt financial markets.

 

[jbob]

Dead serious Jazz, it really is unwise to cite Wiki articals wrt financial markets.

It's unwise to cite Wiki [fullstop] in any serious discussion.

 

[fela fan]

fela, what do you think capitalism is? Just a quick definition.

And a quick answer. Putting in work and making enough money, with profits wherever possible in order to improve the potential of one's life.

I'd say capitalism is actually inherent in human nature, but the version i don't like is the rampant capitalism. Ie the sort that i have referred to as a dog-eat-dog world.

 

[Backatcha Bandit]

I'm well aware of what capitalist systems are replacing, and I certainly don't see anything as a "natural progression" or "doing somebody a favour".

That's refreshing to hear from an economist.

Would you go so far as to suggest that your views are prevalent amongst others in your profession?

 

[phildwyer]

The problem with phil's analysis of capitalism is that it leads nowhere. What sort of political praxis would result from equating commodified labour with Satan? How is it to be combated, with daily scourgings and a hair-shirt?

Neither revolutionary nor reformist attempts to destroy capitalism have proved successful. At best, the socialist revolutions of the twentieth century managed to delay the onset of capitalism by a few decades. Has any capitalist system ever been destroyed by revolutionary or reformist socialism?

Why not?

The single most successful revolutionary movement in history is Christianity, which brought down the most powerful empire the world has ever seen by changing consciousness, not by seizing state power.

 

[Fruitloop]

You're gonna have to spell that out for me a bit more. I mean, the advantage of an autocracy from a proselytizing point of view is that there's only one guy you have to convince, surely?

What could this possible mean from a present-day point of view?

 

[Jazzz]

Professional hands-on knowledge gleaned from 21 years in the City the last 10 of which sitting on a bond trading desk enough for you?

Dead serious Jazz, it really is unwise to cite Wiki articals wrt financial markets.

No, sorry ADB. I've spoken to another that was a financial trader for years that had never even heard of fractional reserve banking. Just because you know what a bond looks like doesn't mean that you understand how the money supply is actually affected when they change hands, which it appears you don't. wikipedia gets it right - hardly surprising really.

May I go over it again for you? When a central bank buys goverment bonds, it is effectively loaning money at interest to the government. This it does however with money it conjures out of thin air; it simply increases the deposits held by the government in its account. It does this a lot, it's a way of controlling interest rates through lending. It's very much like how a high st. bank creates money when it makes a loan to you or me, the crucial difference is that this money increases the reserves on which fractional reserve lending will certainly occur. The money supply is increased.

Are there any parts of this that you are still having trouble with?

 

[pk]

I love the way Jazzz thinks he can argue with experts based upon the shit he reads on the internet.

It's so funny.

 

[goldenecitrone]

I love the way Jazzz thinks he can argue with experts based upon the shit he reads on the internet.

It's so funny.

You could say he's a Jazzz of all trades.

 

[118118]

The single most successful revolutionary movement in history is Christianity, which brought down the most powerful empire the world has ever seen by changing consciousness, not by seizing state power.

so are you trying to create an ideology that is religious, or one to replace religion?

the thing about christainity etc. is, as far as i can tell, that its a pretty universal experience. everyone feels the same way about an all powerful creator. without some kind of practical universal tie to life, creating some metaphysical/existential ideaology that money is x or y, will only affect a few people, depending on how you spin it. and people are quite cynical about things which aren't tied to life.

 

[Jazzz]

I love the way Jazzz thinks he can argue with experts based upon the shit he reads on the internet.

It's so funny.

oh run along now pk

It's not as if you have anything meaningful to contribute here.

 

[118118]

i'm just saying that 'god' fills a "gap".

 

[Fruitloop]

I think Óscar Romero tried that whole anti-capitalist thing, and look where it got him.

 

[Jazzz]

Here's another source for ADB for his basic introduction to money supply mechanics:

What Determines the Money Supply?

Federal Reserve policy is the most important determinant of the money supply. The Federal Reserve affects the money supply by affecting its most important component, bank deposits.

Here's how it works. The Federal Reserve requires commercial banks and other financial institutions to hold as reserves a fraction of the deposits they accept. Banks hold these reserves either as cash in their vaults or as deposits at Federal Reserve banks. In turn, the Federal Reserve controls reserves by lending money to banks and changing the "Federal Reserve discount rate" on these loans and by "open-market operations." The Federal Reserve uses open-market operations to either increase or decrease reserves. To increase reserves, the Federal Reserve buys U.S. Treasury securities by writing a check drawn on itself. The seller of the Treasury security deposits the check in a bank, increasing the seller's deposit. The bank, in turn, deposits the Federal Reserve check at its district Federal Reserve bank, thus increasing its reserves. The opposite sequence occurs when the Federal Reserve sells Treasury securities: the purchaser's deposits fall and, in turn, the bank's reserves fall.

http://www.econlib.org/library/Enc/MoneySupply.html

 

[Backatcha Bandit]

i'm just saying that 'god' fills a "gap".

Would you not agree that 'money', or perhaps it's worship, fills the same 'gap' in the lives of the 'Godless'?

 

[A Dashing Blade]

No, sorry ADB. I've spoken to another that was a financial trader for years that had never even heard of fractional reserve banking.

By FRB I meant the way in which a person puts (say) £50,000 on deposit with a retail bank which, in turn, lends it out (in round numbers) 20 times. Please accept my apologies if I got the exact term wrong but I'm pretty sure the term "Fractional" is in there somewhere. Iirc this multiple used to be regulated by the BoE (some Govt org anyway) untill the mid '80's (?) and was known as the "Reserve Asset Ratio".
No real reason why your contact should know that (what does s/he trade btw?)

Just because you know what a bond looks like doesn't mean that you understand how the money supply is actually affected when they change hands, which it appears you don't. wikipedia gets it right - hardly surprising really.

I havn't seen an actual bond certificate for many many (20 ish) years, the legal transfer of ownership occurs electronically these days.

May I go over it again for you? When a central bank buys goverment bonds, it is effectively loaning money at interest to the government.

Only when particapating in the "Primary" market or auction. This is a term I'm using that is analagous to the IPO of an equity issue ie the purchase from the issuer, of a bond at issue (analagous to the original issue of BT/Brit Gas/BA etc during Thatcher's privatisation regime). In the UK, this normally takes the form of a "Gilt Auction"

Subsequent to this, any and all bond trades are traded on what is generically known as the "secondary" market, this market is OTC (ie is not conducted through a regulated exhange) with trades done directly between 2 counterparties.

(this is a simplification as most trading is, of course, done electronically through one of the 3 or 4 electronic "exchanges" - Bloomberg, Tradeweb, Market Axxess and one other that I can't remember atm, note that there is a legal distinction between an exchange and a market, they call themselves exchanges but are, legally, market places) .

I hope it is clear that secondary market tading is far larger (by volume) than primary market issuance.

Wrt the secondary market, I don't see how, even if a central bank was one of these counterparties, that the money supply changes.

Assuming we're now talking about the "primary" market . . .

This it does however with money it conjures out of thin air; it simply increases the deposits held by the government in its account.

Sounds about right.

It does this a lot, it's a way of controlling interest rates through lending.

At the short end of the curve yes but, therefore, (kind of) at a (relatively) day-to-day level. Long end G7 bond issuance has dried to a trickle over the last 5 years tho' there was, last week, a French 2040 index-linked OAT issued.

It's very much like how a high st. bank creates money when it makes a loan to you or me, the crucial difference is that this money increases the reserves on which fractional reserve lending will certainly occur. The money supply is increased.

Again, that sounds about right.

Sorry for the long post, but the point I'm attempting to illustrate is that the devil is in the detail wrt financial stuff and, I'm afraid, Wiki doesn't cut the mustard. FYI, seminal works on bonds would include anything written by a guy called Fabozzi.

Apols in advance if you're able to pick up on any errors, apart from spelling, the above was written off the top of my head.

 

[118118]

yeah, but thats saying that the gap is better as a void. and god is only dead because of scientific advances/lack of miracles. not because the gap wants to be an abyss.

erm, fwiw i don't worship money in the same way as i would god.

 

[phildwyer]

erm, fwiw i don't worship money in the same way as i would god.

You don't need to worship it, but you do have to acknowledge its power and obey its dictates. Money is indeed the god of this world, which means that we live in a time of universal mass idolatry. The late Roman empire was another such time. The antidote to idolatry is monotheism, and thus it is written "Ye cannot serve God and Mammon."