critique of loon theories around banking/money creation/the federal reserve
- Thread starter SpineyNorman
- Start date
TruXta
tired
That's what social skills are (to a large extent) - transactional skills rather than substantive knowledge about the mores of a particular social group.
cesare
shady's dreams ♥
When I said "behaviours" I wasn't referring to whether or not they're prone to dressing up in space uniformi dunno i reckon a convention of star treks geeks might have slightly different ideas about what social skills were than a group of mates from your work going down the pub lol
could be wrong though!
cesare
shady's dreams ♥
Exactly. You can be sociable without even knowing the language being spoken.
butchersapron
Bring back hanging
What about Marx then? Pretty good at the abstract stuff, loved nothing better than a good night down the boozer with his mates.
cesare
shady's dreams ♥
Hygiene's a good one! Even though crusty lifestylists pretend otherwise.
Eye contact (but not too much)
Smiling
Non threatening demeanour including not standing too close/far away
Enough knowledge of day to day goings on to keep up a conversation
Listening skills so that if you don't know the subject, at least you can ask meaningful questions
Etc
cesare
shady's dreams ♥
Good communicator etc
TruXta
tired
And he shagged around.
sihhi
Tyranny, like hell, is not easily conquered
Jazzz is also clued in on American politics beyond 9/11 such as Obama:
and John Kennedy "No Blood" at Oswald shooting claims photographer
Jazzz also analyses geography:
The union jack represents a pyramid as viewed from above. This is why the UK is just not going to let Northern Ireland go: it is the fourth side of the pyramid! You will observe that the first letter of each country represents a point of the compass,England, Scotland, Wales, Northern Irelandcoincidence?
More Conspiracism to erase the difference between fascism and anti-fascism - defending David Icke as not racist.
This is what Jazzz used to defend Icke from antisemitism charges
Jazzz didn't link to Icke's actual newsletter some of it here:
What's driving these real agendas - it's the 13 Illuminati bloodlines (possibly transfused with extraterrestrial contact thousands of years ago)
Not a word of this is racist according to Jazzz. Many of those posting on this thread are Illuminati (real fascist) dupes given your indifference as to whether Britain as a nation state is destroyed or not.
Re accepting basic reality, google changes indexing for a site - conspiracism at work.
love detective
there's no love too small
You've had me fooled then.
Yeah but finding something challenging or difficult doesn't mean you can't become adequate at it through effort/persistence (especially if you realise the importance of it) - doesn't mean you find it easy or 'natural' to do. I approach abstract thinking in a very concrete/rigid manner for example (although i suppose that is how it should be)
But yes, thinking about it more I should have said (as cesare touched on above) if you have a tendency towards the extremes of either end of the concrete/abstract spectrum then that can result, amongst other things, in shit social skills - but that's starting to just become a banality i guess. But I think a good balance of abstract & concrete thinking leads to better emotional intelligence and sense of self awareness which are probably better drivers of social skills than looking at abstract or concrete thinking alone (although I do think people who tend towards the abstract find it difficult to find the language to express themselves adequately which can be seen as a shit social skill, and this isn't so much the case the other way round where there is a tendency towards the concrete where there's less of a gap between the thinking and the language used to express them)
Just have time for one post right now.
'Liabilities funding assets' though, as LD claims, that is just plain bonkers, as I pointed out earlier.
Oh I think she does. Please point out where it is that she does not.
OMG, Hallelujah. That makes sense, doesn't it? Assets generally do fund liabilities. How else are you going to pay for them? I can't say I have a problem with that. Things that you owe get settled from things you have.
'Liabilities funding assets' though, as LD claims, that is just plain bonkers, as I pointed out earlier.
THE EMPEROR'S NEW CLOTHES
Hans Christian Andersen
Many years ago, there was an Emperor, who was so excessively fond of new clothes, that he spent all his money in dress. He did not trouble himself in the least about his soldiers; nor did he care to go either to the theatre or the chase, except for the opportunities then afforded him for displaying his new clothes. He had a different suit for each hour of the day; and as of any other king or emperor , one is accustomed to say, "he is sitting in council," it was always said of him, "The Emperor is sitting in his wardrobe."
Time passed merrily in the large town which was his capital; strangers arrived every day at the court. One day, two rogues, calling themselves weavers, made their appearance. They gave out that they knew how to weave stuffs of the most beautiful colors and elaborate patterns, the clothes manufactured from which should have the wonderful property of remaining invisible to everyone who was unfit for the office he held, or who was extraordinarily simple in character.
"These must, indeed, be splendid clothes!" thought the Emperor. "Had I such a suit, I might at once find out what men in my realms are unfit for their office, and also be able to distinguish the wise from the foolish! This stuff must be woven for me immediately." And he caused large sums of money to be given to both the weavers in order that they might begin their work directly.
(cont.)
beesonthewhatnow
going deaf for a living
Oh for fucks sake.
SpineyNorman
Inappropriate content removed
I really am going to have to resist the temptation to click 'show ignored posts' in future.
I'm not going to trawl through that paper to find the parts that contradict your insane world view because frankly I've got more important things to fucking worry about than spoonfeeding you information that you'll only ignore anyway.
And can I assume then that when you posted this:
You actually meant this?
At last, something upon which I'm sure we can all agree.
I'm not going to trawl through that paper to find the parts that contradict your insane world view because frankly I've got more important things to fucking worry about than spoonfeeding you information that you'll only ignore anyway.
And can I assume then that when you posted this:
You actually meant this?
At last, something upon which I'm sure we can all agree.
SpineyNorman
Inappropriate content removed
I find it hard to understand why someone who is so impressed by the antisemitic emperor's new clothes, so much so that he comes on messageboards that are hostile to the emperor's tailor and his wares in order to extoll their twoofy virtues, would want to go around posting that.
OMG, are you for real?
Surely you can understand that
"assets are funded by liabilities" is equivalent to "liabilities fund assets"
(love-detective)
whereas
"assets fund liabilities" has the subject and object the other way around?
(SpineyNorman)
I know money creation is highly confusing, but this is ridiculous.
"Better to remain silent and be thought a fool than to speak out and remove all doubt"
Abraham Lincoln
ps I don't like quotes made up/messed around with
littlebabyjesus
one of Maxwell's demons
It's both, though, Jazzz.
The assets fund the liabilities in a direct way - those lending to the banks need to see evidence of assets before they will lend.
The liabilities fund the assets in a slightly different way - in that the banks are legally obliged to submit books that show a balance, that show that they have not been making loans without backing those loans up with equivalent liabilities, which would legally be fraud, I believe. In theory, a bank could just make the loans without backing them up - if they weren't accountable to external authorities - effectively only expanding one side of the balance sheet. But they are accountable to external authorities. And tbh, it is that external accountability that gives their loans credence - nobody would believe in currency that had been unfunded, it would lead to collapse in confidence rather quickly, because it would not matter one jot to the bank if the loan were not repaid. That's why, while it can be instructive to think of the banking system as one big bank to see certain aspects of its dynamics (to the system as a whole, it doesn't matter if a loan isn't repaid), it is imperative to look at the situation of the individual banks within that system to see how things actually work, and what those individual banks can and can't do (to the individual bank, it matters rather a lot that the loan should be repaid).
The one thing banks are not required to do is to fund their assets with liabilities of the same time frame - they can borrow from me for one week and lend to you for one year, quite legally, and then refinance that year-long loan by borrowing from me for another week. Etc. That's the banks' business. That's where their margin lies.
But liabilities fund assets. That really is the case.
The assets fund the liabilities in a direct way - those lending to the banks need to see evidence of assets before they will lend.
The liabilities fund the assets in a slightly different way - in that the banks are legally obliged to submit books that show a balance, that show that they have not been making loans without backing those loans up with equivalent liabilities, which would legally be fraud, I believe. In theory, a bank could just make the loans without backing them up - if they weren't accountable to external authorities - effectively only expanding one side of the balance sheet. But they are accountable to external authorities. And tbh, it is that external accountability that gives their loans credence - nobody would believe in currency that had been unfunded, it would lead to collapse in confidence rather quickly, because it would not matter one jot to the bank if the loan were not repaid. That's why, while it can be instructive to think of the banking system as one big bank to see certain aspects of its dynamics (to the system as a whole, it doesn't matter if a loan isn't repaid), it is imperative to look at the situation of the individual banks within that system to see how things actually work, and what those individual banks can and can't do (to the individual bank, it matters rather a lot that the loan should be repaid).
The one thing banks are not required to do is to fund their assets with liabilities of the same time frame - they can borrow from me for one week and lend to you for one year, quite legally, and then refinance that year-long loan by borrowing from me for another week. Etc. That's the banks' business. That's where their margin lies.
But liabilities fund assets. That really is the case.
ymu
Niall Ferguson's deep-cover sock-puppet
I'm skimming this thread because I still haven't got through all the homework love detective and SpineyNorman set me in the more advanced modules
and I haven't got time to check this one thoroughly, but I'm not sure Pettifor is making the argument you think she is making here, Jazzz. I think the title refers to their ability to create fictional capital (if I am using that term correctly) through, for example valuing stocks compared to each other (rather than with reference to the fundamentals underlying value, aka "ketchup economics") and the conflict of interests amongst the ratings agencies which means complex instruments are essentially rated according to the wishes of the client rather than by reference to their true 'value' to the purchaser.
Bit confused here again. This is why I am only concerned with the basics, what actually happens when a bank makes a loan? This is the crux of the matter, and there's really not point much attempting to get onto anything else while there is disagreement over this.
When a bank makes a loan, it expands both sides of its balance sheet (as I've quoted Paul Tucker, and Modern Money Mechanics (FRB Chicago).
Most importantly, it credits the borrower's bank account. As I have previously explained, it's not actually 'your' account, it is the bank's (liability) account. THIS IS THE MONEY. The way most of our money exists in circulation is in the form of digits in our bank accounts, and we 'pay' people by shuffling bank liability. Bank transfers shuffle it between banks and customers, and at the higher part of the tree, the banks with the Bank of England. Of course, cash transactions shuffle liability with the Bank of England as that is what the notes represent.
So I don't understand what you mean when you say that loans have to backed up with equivalent liabilities. The liability IS the loan. The bank MUST record it as such, as otherwise how will they know to give you cash when you want to take it out?
On the asset side of the equation, if the bank doesn't record the asset (reflecting your promise to repay the loan) then they are giving away the loan. They COULD do that, but they are not in the business of giving away their wealth, of course they would not last very long doing that.
So when loans are paid back effectively the reverse process happens - the balance sheets contract, except the interest means the bank are better off than when they started.
So given that banks create money out of nothing by simply expanding both sides of the balance sheet (just playing around with numbers!) what is it that 'backs' the loans? Well as I am so much at pains to point out, they only need a fraction of cash reserves at any time to meet their demand liabilities. In fact, as things currently stand, they don't even need that. We have no reserve requirement here in the UK.
http://en.wikipedia.org/wiki/Reserve_requirement
I do wish to get away from this idea that banks are acting as intermediaries between savers and borrowers. I try to accommodate it but I don't think that anyone can really get their heads around the thing with it.
From Ann Pettifor's link, concerning Schumpeter (1883-1950)
All the bank needs to do to 'back up their loans' is hold enough in cash reserves so that the fraction (amount withdrawn from cash reserves - amount introduced to cash reserves) is expected to be covered over any time frame.
I wouldn't say that. Liabilities are debts, assets are the things you have. I also think that we need strict definitions.
But let's seek to agree in case that we can.
You can pay for things by decreasing an asset
You can pay for things by increasing a liability
Perhaps we can agree on that.
What quotes give you that impression?I'm skimming this thread because I still haven't got through all the homework love detective and SpineyNorman set me in the more advanced modules
ymu
Niall Ferguson's deep-cover sock-puppet
I've not got time to read the whole thing at the moment Jazzz, it's 30 pages long. It's 30 pages long because there is 26 pages worth of exposition for her argument. I've come across her being a bit odd at times, but I didn't have her pegged as one of the gold standard nuts, which is why I will do her the courtesy of reading it properly before commenting more. I really don't think it says what you think it says, and if it does it does not lend support to your arguments. In case you hadn't noticed, lots of economists have been getting it wrong for a while now.
andysays
Love and solidarity
I think that's a cue for everyone to put him on ignore...
love detective
there's no love too small
This is absolutely correct, yet you don't realise that this is yet another example of the case of liabilities funding assets
An asset is a 'thing' you can acquire by paying for it (for example a house)
You can take on (or increase) a liability in order to be able to pay for it (for example a mortgage)
The mortgage (a liability) funds the ability to buy the house (an asset)
Liabilities fund assets
As you yourself admit in this post:-
Jazzz said:
Your mortgage is a debt and the house is a thing you have. And the only reason you have the thing that you have is because you have taken on a debt to get it. Liabilities fund assets
It's exactly the same for businesses - the liabilities (and equity if you want to be semantic/pedantic) fund the acquisition and continued existence of the assets of the company. Liabilities fund assets
The liabilities are debts of the business and assets are the things, tangible & intangible, that they own (which are all ultimately funded by the liabilities)
Total outrage man. Not even Hitler banned people for calling him a Nazi.
cesare
shady's dreams ♥
littlebabyjesus
one of Maxwell's demons
We are inching towards agreement, but also going around in circles. I agree with the above account. But the following bit isn't correct:
They keep, as you say, around 3 percent of their demand liabilities in the liquid form of cash. But they must also 'back' the other 97 percent, and they do this with the assets. And those assets must be believed to be worth what they are said to be worth - they must be credible loans that give those holding the demand liabilities the confidence not to demand their liabilities back all at once. And this is the bit where we're going in circles, as this is exactly what happened to Northern Rock. This is also where the time difference between assets and liabilities is important - banks must constantly be acquiring new short-term liabilities to fund their long-term assets, and at each point where they seek new liabilities, their assets must be believed to be credible by those lending to them: people must believe that the bank will be able to pay them back. You get this, but don't seem to get its importance to the process.
So, again as has already been said, when the person borrowing the money wants to do something with that money (and given that they're paying interest on it, this moment is invariably 'right away'!), what they are doing is leaving their debt with the bank (the asset - the loan), but withdrawing their demand liability - calling up the liability and demanding that it be paid. As soon as they do that, the bank must replace the money by taking out another liability - in the form of a deposit or a loan from another bank. That's what ld means by 'liabilities fund assets'. And yes, you are right that the loan has also created the deposit within the system (you are right that this process is a process of money creation, and that paying back the loan is a process of money destruction) - but moving that deposit from bank to bank requires the banks to also move money in the opposite direction to cover themselves. That's the bit whose importance to the process you don't seem to get. Without that bit, there is no process - the money just sits there, and money that just sits there isn't really money at all; it's just equal and opposite numbers written down on a piece of paper. For it to become 'money', those numbers need to be separated, so that a different person/institution is providing the liability side of it. Remember that people only take out loans in order to spend the money they get from the loan - that is the only reason anybody ever takes out a loan.
I'll leave you there, I think. You need to get your head around the above before you can go any further with this. You're stuck at the moment. You get each individual bit, I think, but can't quite piece them all together.
No he didn't, fool.
Someone who thinks Marx "shagged around" is about as knowledgeable as someone who thinks Calvin "was well into usury."
Oh wait...
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