critique of loon theories around banking/money creation/the federal reserve
- Thread starter SpineyNorman
- Start date
frogwoman
No amount of cajolery...
Cant do it now because I'm working and I don't fancy searching for such a thing while at work but I'm going to post up that Casa Pound picture showing the fist grasping the snake of "finance". As keeps being said it's not merely an incomplete critique of capitalism it's a critique of capitalism associated with a particular ideology. After years on this forum I cannot believe that Jazzz could have read all of these patiently explained posts from Love Detective and others and still be unwilling to understand them, I know economics is a difficult thing to understand and I don't fully understand it myself, but his explanations have been as clear as any I've read.
equationgirl
Respect my existence or expect my resistance
No, it's not just you.
frogwoman
No amount of cajolery...
Nonsense.
How do these 'funds flow' if not by change in accounting entries?
Do little mice carry the money?
no people with big noses do
Monkeygrinder's Organ
Dodgy geezer swilling vapid lager
It's totally expected I'd say. The thing is what Jazzz basically deals with are revealed truths. He knows he's right, therefore anyone disagreeing is wrong by definition. He might engage with them to a point but he can't be bothered to do it fully - why bother taking the time when you know it's all wrong?
You aren't going to fully understand money creation by reading love-detective posts.
The extraordinary thing is that in these threads I back up my position by several quotes from economists who really know their stuff. I can't recall love-detective ever quoting anyone.
For instance, we had the Ann Pettifor link earlier (the one Spiney Norman liked, then when I pointed out it agreed with me totally, said he was reading it, then we haven't heard back from that).
The power to create money out of thin air - Ann Pettifor
I eagerly await anyone to find any quote from any serious economist to say echo love-detective's bizarre comment that "assets are funded by liabilities". Because that is nonsense, and it's come about because LD has had to adjust his position because he has had to make it up as he goes along. I invite all the participants fawning over love-detective - for no other reason that he is taking a contrary view to mine here, to find such a quote. At least Spiney Norman has had a go talking about money so puts his head above the parapet so to speak. My greatest disdain is for those that simply snipe. What's the point? I don't get it.
I like the way you have moved from 'fund' to 'helps fund'. Which is it?
Let me give you another example. You set our your company, love-detective ltd, in which you write fictional stories of forensic accountants solving mysteries. You own the only share. Initially, your assets, liabilities and equity are all zero. You then write a book from the comfort of your own home at no expense in your spare time. Then, a major publisher takes it on and pays you £100,000 for all rights to the work. So, you now have
assets: £100,000
liabilities: £0
equity £100,000
So, how did your assets get 'funded'?
I say your equity came from your assets. And your assets were funded by the publisher.
But if you wish to bizarrely claim that your equity funded your assets, by your creation of the company, then you may be my guest, because - drum roll - you would be saying that £100,000 has been 'funded' out of thin air.
Note to all - no answer to this one. This should be very simple if LD really understood money.Nonsense.
How do these 'funds flow' if not by change in accounting entries?
Do little mice carry the money?
Anyone else have any idea?
cesare
shady's dreams ♥
Little mice *have* to carry the money because they haven't got any pockets.
love detective
there's no love too small
I like the way you have moved from 'fund' to 'helps fund'. Which is it?
Let me give you another example. You set our your company, love-detective ltd, in which you write fictional stories of forensic accountants solving mysteries. You own the only share. Initially, your assets, liabilities and equity are all zero. You then write a book from the comfort of your own home at no expense in your spare time. Then, a major publisher takes it on and pays you £100,000 for all rights to the work. So, you now have
assets: £100,000
liabilities: £0
equity £100,000
So, how did your assets get 'funded'?
I say your equity came from your assets. And your assets were funded by the publisher.
But if you wish to bizarrely claim that your equity funded your assets, by your creation of the company, then you may be my guest, because - drum roll - you would be saying that £100,000 has been 'funded' out of thin air.
Equity can either fund completely the assets of the company or can help to fund them with the rest being funded by liabilities (which is why I gave two stages of the example above, the first when the equity of Jazz Ltd funded all of the assets in the company when the only asset was the Piano, and the next when a further £1,000 of assets were purchased and funded by a loan from a friend. At that stage the £2,000 of assets in the company were funded partly by £1,000 of equity and partly by £1,000 of liabilities (i.e. borrowings)
Why I am bothering even replying to your example above I don't know, but here you are:-
The assets of love detective ltd (the 100 grand in the bank) are funded by the equity that continues to be left in the company by the shareholder(s)
The equity at that stage represents the accumulated profits of the company
If the shareholder(s) wanted to withdraw that equity (through dividends in this case as the equity represents realised profits), there would no longer be 100 grand of assets in the love detective ltd
Therefore the only way it is possible for love detective limited to continue to have 100 grand of assets in the company is if the owners of the equity allow it to remain within the company
The equity of the company funds the continued existence of the assets in that company
This is exactly the same example I gave above, and one which you clearly are struggling to get your head around
Nice avoidance of all the other topics though
littlebabyjesus
one of Maxwell's demons
You made a mistake in your example, jazzz. You said 'you now have'. That's not right. ' Love detective ltd now has' is what you should have said.
love detective
there's no love too small
Why should I continue to provide patient and detailed answers to your questions when you have yet to answer one question that has been put to you by me or anyone else - you've dodged every single pertinent question from the start of this exchange, preferring to settle in tangential safe cul-de-sacs to detract attention away from your continued inability to give answers to simple questions asked of you
I was looking through one of the earlier threads to see if you had ever answered a question I had put you and the one example that I did find where you attempted to answer a question, I think explains why you no longer attempt to answer questions.
During a discussion you had claimed, as you always do, that banks do not need to fund the lending that they make
I then asked you why, in that case, did european banks have to borrow over a trillion euros from the ECB in December 2011/February 2012. My answer to this was the correct answer that they had to rely on this funding to replace previously held market funding that they could not longer secure (or believed they couldn't secure in the coming year or so) so needed the backstop facility of the ECB
Your answer was that in 2011/2012 those banks must have made new lending of 30 trillion euros - and that was why they needed to borrow 1 trillion from the ECB
That the only explanation you could come up with, was in the middle of what can only be described as an extended depression across Europe where banks were winding down lending and customers & businesses not wanting to borrow, shows how disconnected your loon theories of how the system works really are. You actually don't look at what's going on in the world around you to check that your interpretation of the world through your theories matches up to what is going on in reality. You don't care about validating your theories by reference to real world events. You live in a closed off environment where you merely make up what is happening in the world to fit in with and be consistent with your fuckwitted theories
Anyone with even a smidgen of understanding as to what is going on around them would never in a million years suggest that new lending of thirty trillion euros were made during the middle of the worst downturn since the great depression. That you had to give this answer to keep consistency with your fuck witted theories shows just how fit for purpose they are as explanatory tools to what goes on around us
love detective
there's no love too small
Indeed, and the only reason love detective ltd has it, is because the owners of love detective ltd allow the equity to remain within the company
if they didn't, love detective limited wouldn't have those assets anymore
the equity of the business allows for (or funds) the continued existence of those assets in the company
TruXta
tired
Jazzz - have a look at this page (just an example) and explain to us why they bother with funding at all. https://www.db.com/ir/en/content/funding.htm
littlebabyjesus
one of Maxwell's demons
But if you wish to bizarrely claim that your equity funded your assets, by your creation of the company, then you may be my guest, because - drum roll - you would be saying that £100,000 has been 'funded' out of thin air.
Well, 'Love detective ltd' has been created out of thin air, so this isn't so surprising. And just as with the creation of money, the balance sheet has two sides to it.
love detective
there's no love too small
love detective limited might have been created out of thin air (well through legal documentation and incorporation) - but that in itself is just a shell entity with nothing in it
the activity which resulted in the eventual assets & equity of the love detective limited however weren't created out of thin air
the activity which resulted in the eventual assets & equity of the love detective limited however weren't created out of thin air
Idaho
blah blah blah
This is called "the argument from authority". It's a logical fallacy. Just because someone has impressive sounding credentials doesn't give extra weight to their argument.
cesare
shady's dreams ♥
I suspect that Jazz will only accept the existence of tangible assets obtained by the barter of precious metals or gemstones.
what like purple gold as fashioned by his bezzie mate the Jew hater Nick Kollerstrom?
http://www.levity.com/alchemy/kollerstrom_purple_gold.html
cesare
shady's dreams ♥
That's why they do it, y'see. There's not enough gold to bring global economy back to full reserve banking, so they have to invent it. And they might as well make it a pretty colour to differentiate it from your common or garden gold. Keeps the likes of Kollerstrom gainfully employed.
love detective
there's no love too small
It's worth pointing out at this stage what a massive and conscious derailment Jazz is engineering from the original point
He's taken refuge in a long drawn out but 'safe' cul-de-sac argument over what the 'equity' of a business is, whether it should be considered a liability and so on
The original point that started this off however is my correct point that the liabilities of a business fund (or allow for the existence) of the assets of that business
The equity component of any bank's balance sheet is a tiny fraction of its overall assets, so it's really an immaterial discussion in this context as to whether equity should be viewed as a liability of a company (for the record though it should, and is, viewed as a liability, but in the context of a discussion on bank's it's pretty much irrelevant given how small it is)
To take us back to the origina point - here is the summarised balance sheet of Norther Rock again
The liabilities (which include the equity component, which as pointed out is a tiny amount anyway) are all different categories and types of funding that fund and allow for the continued existence of the assets of the company. Even smaller non market funding type liabilities like tax liabilities, property cost liabilities, wages due etc.. are things which allow short term funding for the company. As to the extent that a company has not paid off a liability, they can use the liquid assets that they would have used to pay them for other purposes (or the continued existence of those liabilities allow the company to avoid having to find the liquid resources to pay them at that point in time). So even these play a role in the funding of a business
I've asked Jazz countless times why companies take on this funding and the liabilities associated with them if, according to him, they do not need them. He's never once even attempted to answer that question. Truxta has asked the same question again just now and I can guarantee that it will be impossible for Jazz to answer this question correctly without contradicting his previous nonsense.
He's taken refuge in a long drawn out but 'safe' cul-de-sac argument over what the 'equity' of a business is, whether it should be considered a liability and so on
The original point that started this off however is my correct point that the liabilities of a business fund (or allow for the existence) of the assets of that business
The equity component of any bank's balance sheet is a tiny fraction of its overall assets, so it's really an immaterial discussion in this context as to whether equity should be viewed as a liability of a company (for the record though it should, and is, viewed as a liability, but in the context of a discussion on bank's it's pretty much irrelevant given how small it is)
To take us back to the origina point - here is the summarised balance sheet of Norther Rock again
The liabilities (which include the equity component, which as pointed out is a tiny amount anyway) are all different categories and types of funding that fund and allow for the continued existence of the assets of the company. Even smaller non market funding type liabilities like tax liabilities, property cost liabilities, wages due etc.. are things which allow short term funding for the company. As to the extent that a company has not paid off a liability, they can use the liquid assets that they would have used to pay them for other purposes (or the continued existence of those liabilities allow the company to avoid having to find the liquid resources to pay them at that point in time). So even these play a role in the funding of a business
I've asked Jazz countless times why companies take on this funding and the liabilities associated with them if, according to him, they do not need them. He's never once even attempted to answer that question. Truxta has asked the same question again just now and I can guarantee that it will be impossible for Jazz to answer this question correctly without contradicting his previous nonsense.
TruXta
tired
If nothing else love detective, you've reminded us all (cept Jazzz of course) of the fundamentals, can't really hurt. Cheers guv.
butchersapron
Bring back hanging
Must be really frustrating though to know that you have jazzz trapped but that he's too dim to realise it and won't attempt to answer the question and so snap the trap shut.
TruXta
tired
Is it dimness tho? It's more like cognitive capture, to coin a poor phrase - he's trapped inside a closed paradigm much like a religious creed.
love detective
there's no love too small
I think he's bright enough to realise he's been trapped though, that's why he steadfastly refuses to answer the key questions and hides in the cul de sacs to give the impression (to others who are skim reading) that he's still engaging with the substantive points
cesare
shady's dreams ♥
I think he realises he's been trapped but has insufficient knowledge to feel confident/able to answer the key questions - knowing that if he does so, he'll flounder. He's learnt this stuff by rote so that's why he can't deviate from it.
TruXta
tired
I'm not so sure. He reminds me a lot of religious fundamentalists (of which there are several in my close family) - they simply refuse to engage on the same terms as you do, which allows them (in their own minds) to walk out victorious from a debate that you're sure you've won by appealing to data and common sense.
love detective
there's no love too small
What I also find revealing is his inability to talk about any other topics other than those that are packaged up and canned out to him by fellow CT's - so it's all speculation about 9/11, money, silver, immunisations etc..
You never see him on any threads talking about real life events as he has no framework in which to interpret the world as it really is - all he can do is wait for the line to be handed down on particular narrow issues then parrot them back - he can't engage on any topics that are not packaged up and delivered to him by the CT community (which fits in with what cesare says as he knows about stuff only to the extent of which they've been packaged up and delivered to him/them rote - if they are tested too vigoursly his 'pack' doesn't have the tools do deal with it)
And he's never a bad word to be said about wage-labour
You never see him on any threads talking about real life events as he has no framework in which to interpret the world as it really is - all he can do is wait for the line to be handed down on particular narrow issues then parrot them back - he can't engage on any topics that are not packaged up and delivered to him by the CT community (which fits in with what cesare says as he knows about stuff only to the extent of which they've been packaged up and delivered to him/them rote - if they are tested too vigoursly his 'pack' doesn't have the tools do deal with it)
And he's never a bad word to be said about wage-labour
frogwoman
No amount of cajolery...
Whenever I've (or you or butchers or anyone) has ever mentioned class or capitalism or labour to him he's just completely ignored it
cesare
shady's dreams ♥
There's much safety/security to be had within a tightly defined ideological structure - especially if you're a person that also finds safety in detail rather than conceptual thinking. I could also speculate about confidence/self esteem expressed in other ways e.g. engaging with the social world via the medium of puppetry, together with more than average talent in certain areas eg piano playing and chess.
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