Banking and Conspiracies

[slaar]

waffle waffle waffle

In between random rants, you could perhaps look at the syllabus of some basic economics courses. There's no law of an inverse relationship between interest rates and inflation, it depends on many other factors. And it's far from the first thing taught to young economists. But don't let the facts get in the way of a good rant, please.

 

[Jazzz]

Hi ZWord

You've hit the nail on the head with the conundrum, so to speak. Most economists will believe that there's an inverse relationship between interest rates and inflation, but this is just half the picture. Yes, increasing interest rates will mean a lowering of inflation in the short term. This is because it is, so to speak, shutting off the tap of the money supply.

However, in the long run, it's these very interest rates which inexorably drive inflation. As interest increases, so does - year upon year - the debt taken by society in respect of its money supply. As this debt spirals more and bigger loans have to be taken out in order to keep up with the debt (effectively, the debt is simply refinanced, it cannot be ultimately repaid).

 

[rorymac]

!

Fuckin hurray .. I've always hated paying back loans me, especially after you've spent it. That's the worst that is. I told the bank manager who told me his boss would have a canary if he lent me any more money in 1985 that it was quite frankly not good enough to just skim over my business plan in front of Ms Judith Peppard and say 'Good God no oh no no no'. I've only ever had one loan off Barclays and it wasn't worth a shite. I told him he was a unionist or a South African and I was gonna get him. I made sure Ms Peppard heard that bit and we both giggled to be fair.

 

[ZWord]

And on the subject of scooters, or for that matter, pushbikes with broken wheels... The state of the world economy has made it look as if there wasn't much chance of free fuel for a five hundred cc. I never saw anyone offering any. Maybe those who were wise enough to comment wisely would have achieved more if they'd bothered to communicate.

 

[ItWillNeverWork]

Most economists will believe that there's an inverse relationship between interest rates and inflation, but this is just half the picture

Absolutely! In effect, an increase in interest rates is essentially an inflation in the cost of borrowing, and that inflation will have knock on effects in the rest of the economy.

However, as you point out, there is the short term impact of reducing the inflation of other markets such as consumer goods. The use of interest rates by central banks is seemingly a very blunt tool for preventing short term market instabilities; one wonders 1) what the long term impact actually is and 2) who benefits from the initial inflation? (the money lenders do i guess)

 

[rorymac]

Norman Lamont had the best job I ever imagined when he was the chancellor. It was a fuckin laugh a minute. If you asked any fucker who knows about money about inflation and interest rates they only laugh at how dim you are. They'll always tell you that inflation is bad but it's fucking great when you have an ISA like. I saved up only £863 quid aand before you know it I had my first grand. Fuckin hell the following year I had over 10.4 million which I could hardly believe myself. It was nowhere near enough IMO and it madse me twitchy. I used to go up to the bank every day and stick my card in the ATM machine to check that no cunt was pilfering any. After all I had the most money in a current account my branch manager had ever witnessed. He felt it was more prudent to open an additions account and spread it around like. He got the sack for multiple share dealing and ended up plastering my kitchen extension for cash in the hand. I never even had to pay him but he stole my passport and my Joe Strummer poster because he reckoned I could easily be a nark.
He knew fuckall about money him. That George Soros was just a cunt too. Thick as shite.

 

[ZWord]

Absolutely! and 2) who benefits from the initial etc.

That's what you call a self-fulfilling prophecy. It's probably true now, but I don't think it always was.
Anyway, It will never work, that was what pretty much everyone used to say when I told them my defence for intent to supply ecstasy and LSD, but I did it anyway when I had to, and strangely enough, after two years not putting the case in front of a jury like I asked for, they dropped the case altogether.

But, moving on, Recently, in my darker moments, I've been uncomfortably reminded of a friend of mine who me and some others used to play poker with at university, and sometimes he'd have to think for ages about whether or not he was going to fold, even though everyone else knew he was going to fold long before that, and I was wondering if this life'zs a bit like that. But actually, I already tried it, and well, what a dilemma. It's not like I see much point in carrying on carrying on, or that I even get much enjoyment out of it, but you should see my daughter, - and who will tell her the truth if I don't.

You might think, well she won't need to know the truth, and she says she wants to stay six for ever and ever, but what guarantees are there? Bjork sang - jump out, your building's on fire, and I'll catch you, I'll nurse you, destroy all that's keeping you down,- But Dudley moore sang -...jump you fucker jump, jump into this blanket what we are holding here and you will be all right. He jumped, hit the deck, broke his fucking neck, there was no blanket... har har har. And which was truer?

So I don't believe what other people say much these days. Happy Easter.

 

[ItWillNeverWork]

eh?

 

[slaar]

Rory is making a lot more sense than most people on this thread.

And he's funnier, too.

 

[camouflage]

I dunno, Jazzz... it's not that difficult. Especially when you've been here before.

Here you go, fela fan:

'Money' - as we know it - is borrowed into existence by 'Government' in the form of 'Bonds' - promissory notes - 'sold' to a central bank for their face value, secured against future tax revenues.

These 'bonds' carry a premium - or charge in addition to their face value - generally referred to as their 'yield' or 'interest'.

OK. Lets assume for the purpose of demonstration that we are on an island with a population of 10 individuals in the 'economy' and one Bank(er).

For these 10 individuals to trade goods and services they need a 'medium of exchange', which will be supplied by the Bank - 'lent' onto the 'economy' - at a premium of 10% (to keep the figures simple).

The Bank lends each of our islanders £100, expecting upon maturity of the loan a return of £110 - that's the initial sum plus the 10% interest. So the Bank stands to make £100 on top of the £1000. With me so far?

OK. So where is that £100 going to come from? The Bank only lent £1000 'into existence'. How is the 10th individual going to find the £110 to pay back to the Bank? Because only £1000 is in 'circulation' within our island 'economy', what we can see here is the mechanism by which our islanders are forced into unnatural 'competition' with each other in order to repay the loan.

By it's very nature, a 'competition' will have a 'loser'. In this case, the 'loser' will be the 10th individual who cannot repay the loan as ther is only £10 left in the 'economy' to do so. 9 X £110 paid back by the 'winners' is £990.

So what options are open to our 'loser'?

Their only option is to either borrow more from the Bank, forfeit property (real wealth) or perhaps engage in some 'overseas adventure' to bring 'wealth' in from some outside 'loser' on another island.

This is the fundamental mechanism that underpins the 'debt based monetary system'. The need for 'growth' is systemic.

A political tool that by it's very nature will concentrate real wealth in the hands of those with at the expense of those without.

...And you can't say that there is 'No Alternative'. If a 'Government' is able to issue a promissory note to a central bank (at interest), there is no reason that they cannot issue the equivalent in debt free currency themselves.

-

'Debt based' currency is an insidious evil that permeates every aspect of our lives.

Brilliant! I was wanting to discuss this stuff a few weeks ago, opened a couple of threads in general, people just stared at me funny like they do sometimes. Only found this post and this thread through a link in another part of the forum.

I will have to keep an eye on theory & philosophy & history from now on. Quality.

 

[phildwyer]

Brilliant! I was wanting to discuss this stuff a few weeks ago, opened a couple of threads in general, people just stared at me funny like they do sometimes. Only found this post and this thread through a link in another part of the forum.

I will have to keep an eye on theory & philosophy & history from now on. Quality.

Yep, BB's a smart guy alrıght. He claıms to know me ın real lıfe, but he won't tell me who he ıs!

 

[camouflage]

Interesting topic for discussion, Phil.

What is quite apparent is the fact that whenever the topic (Money and the systems/mechanisms involved in it's creation) comes up for discussion, it isn't long before a baying mob of posters who don't actually seem to have the intellectual capacity to understand the basic systemic failings, or the underlying fundamental mechanisms that hardwire into the system the inevitable catastrophic effects that we all have to endure, start screaming 'conspiraloon' etc.

This makes any honest, rigorous and therefore *useful* discussion regarding or examination of the systemic problems nigh on impossible.

Take, for example, a recent thread Phil started in General regarding 'Atheism and Capital'.

427 posts into the thread, I felt obliged to comment:

The article I linked to there is written by a Scholar and sits on the website of The British Library. It provides what I consider to be a fairly simple explanation of these fundamental mechanisms which dictate the course of much of our lives - essential reading if you've never come across the idea of 'usury' or have never really looked very hard at it's nature.

The pavlovian response my posting elicited from, for example, 'Laptop' - a poster who I'm sure you'll all agree appears to be among the more 'rational' and 'authoritative' on these boards - is a testament to the accuracy of Phil's observation in the O/P of this thread:



'Not read the piece - but...'? 'some species of conspiraloon'?

Toward the end of that particular thread, I managed to engage one of our resident economists (slaar) in a fairly well mannered discussion regarding the nature of interest and the mechanisms involved in the creation of money.

Rather that reiterate the details, I'll post a summary of our exchange offered by another poster:

What slaar appeared to be telling me was that 'yes, the description of the mechanisms as I articulated them are correct' but that not being a professional economist myself I somehow couldn't really understand them or the need for them, and that basically 'things are the way they are because they are' and there is nothing that can be done to sort them out.

In other words, the systems are in some way 'natural'.

That's pretty much where it ended, bar an interesting and revealing (in the context of this thread) comment from '118118':


That 'lol' sounded somewhat hollow, but the words preceding it demonstrate the prevalent notion regarding the subject, in that the problems as identified should be ignored as there is 'nothing we can do about them'.

Perhaps the feelings of bewilderment and helplessness when faced with the enormity and pervasiveness of the *scam* leave us floundering, with many finding recourse in being able to 'shut out' the unsettling 'cognitive dissonance' by applying those time-honoured mechanisms of shouting 'Conspiraloon' or 'Anti-semite' which render any further thought on the subject 'unnecessary'.

Perhaps even, in the way that '419 scam' or 'pyramid scheme' victims continue to send progressively greater sums, even when they must have a suspicion that they are being 'taken', the psychological costs of admitting that they've been duped allow their fears to be outweighed by their sense of hope that their endeavour will, in the end, pay off.

-

As I'm sure you are aware, the first stage in 'fixing' a problems must be in identifying the cause of the problem, as if you just go in and fix the symptoms, the problem itself will reoccur.

It's like repairing an electrical appliance. If the fuse blows and you simply replace the fuse, you've done nothing to address the problem of why the fuse blew in the first place.

It could simply be that the appliance was abused in some way, which temporarily overloaded the circuit and caused the fuse to do it's job. Alternatively, the blown fuse might well indicate a more serious problem which, if left unaddressed, might eventually result in your house burning down.

, and for that matter

 

[camouflage]

Yep, BB's a smart guy alrıght. He claıms to know me ın real lıfe, but he won't tell me who he ıs!

Glad you started the thread in the first place, kinda wish you'd linked to the other thread you mentioned in the OP.

I don't see why the whole money system thing has people shouting Conspiraloon! Certaily there are conspiraloonatic elements amongst those who are interested in discussing the issue, people who think a Gold Standard would sort it all out for instance (that would just make it easier for the controller-rich to corner tghe gold market and control the economy, surely? ) and anti-semite conspiraloon elements who've noticed that usury was first practised by the jews thousands of years ago (yet the Chinese don't get blamed for every war involving guns that's occured in the last 400 years).

but basically, this thread is much welcome by me, I shall be reading as much of it as I can get away with today.

My opinion quikly dashed out is that governments should issue debt-free money as society needs it, but I do wonder if the interest system is what drives the economy to have grown the way it has in the last hundred years, driving us to make more consumer electronics and money to buy those consumer electronics and internet dating sites for instance.

 

[camouflage]

Interesting that you think that jazz. I'm not convinced, I think the role that FRB plays in providing incentives for future capitalist activity outweighs its negative effects in terms of risk of banking collapse, certainly for the system as a whole up to a very high amount of debt.

Whether we're at the critical level yet is open for debate, but the amount of potential economic activity in, for example, China and India is absolutely enormous. Suggesting that "capitalism has overstretched itself this time" is an old accusation with a poor pedigree.

I wondered about this, "would capitalism work without inbterest?" FRB and the way the money-system works to do does seem unsustainable, and has evolved around some very concentrated interests, but it also does provide 'forward momentum' for economic growth, it's just a matter of hoping 'forward momentum' doesn't turn into 'fall on the face'... if that's not possible, perhaps the money-system should be changed back to control by the (hopefully democratic) state?

 

[camouflage]

Sure thing. One interpretation of what FRB is really doing though is extending private property rights and contracts to future economic activity. I presume that since you're not averse to capitalism that you're not averse to interest on monetary loans backed by current real assets?

It's not that big a step to then project that forward to future assets that are yet to exist. So I would then guess your objections are more in terms of what this does in terms of the need for exponential future economic growth, or its distributional impacts?

But I may be completely wrong.

But doesn't hthat mean one day Reality and Speculation will slam into eachother like two cars racing down the same road of consumption, and Speculation (being something that exists in peoples heads) will come off worse where reality (whatever's left of it) will wobble on, somewhat diminished by the event. Or to put another way, there'll be a shortage of critical resources consumed by the markets an then a big crash, leaving millions of destitutes all over the place, like victims thrown from an economic pile-up. The forward momentum of everything they expected to make tommorow and the year after, ripping away whatever they had today sort of thing.

 

[Crispy]

infinite growth, finite world, bad thing.

 

[camouflage]

infinite growth, finite world, bad thing.

Yeah, but the growth's really just a human illusion isn't it, the banks might consider themselves to be owed more money than is in the world economy, byt really that's all just numbers written in computers. When there's no more stuff to be used up, that's it, when the music stops, like musical chairs really, except ALOT of people will end up without chairs.

But on the other hand, cunjuring money up from nowhere means there's plenty of it to be used whenever someone invents a new sector or something, right? The days of gold and iron and cows and farmland and elbow-grease being the only valuable things are long gone, people find hair-dressers valuable, they find peope tapping away at computer screens valuable, so you can't have money that just pegs everything to a few ounces of shinney mineral and a cow anymore, money from thin air is necessary and useful for todays crazy mixed-up world I think. Maybe I'm wrong.

 

[Crispy]

You could argue that all all the new worthless-worth is a natural artifact of the debt-based economy. We long passed the point where we could comfortably give everyone a decent material standard of living, so we had to find other crazy ways to spend.

 

[camouflage]

You could argue that all all the new worthless-worth is a natural artifact of the debt-based economy. We long passed the point where we could comfortably give everyone a decent material standard of living, so we had to find other crazy ways to spend.

Don't think it's "worthless worth", if people are prepared to spend their cash on it, if they value a fashionable haircut, if they value abit of bespoke code to make their internet site prettier or cleverer... it's service industry. The think is it's not so much tied to minerals or energy or land or peopel working fucking hard with shovels like stuff was in earlier ages.

So we seem to be living in an economy based on future haircuts and future websites to pay of the debts of future interest no? Or is it all one big pyramid scheme.