Monday, December 08, 2008

Mainstream Conspiraloons #256 - Guess who

Try and guess where I just read this...

" and investments are not made as a result primarily of savings or deposits held by banks, or on the basis of those savings or deposits. On the contrary: it is loans that create deposits.

Loans are not a necessarily a gift from a saver setting aside a portion of their income in a savings account or lent on the international capital markets. Banks do not have to have savings or "reserves" to extend credit to others, and charge interest. Why? Because of another fundamental: that money for a bank loan does not exist until we, the customers, apply for credit. All that the bank needs to hold is the collateral (e.g. a guarantee against a property) to secure a loan.

In other words, far from the bank starting with a deposit or reserves, and then lending out money, the bank starts with our application for a loan (eg £300,000); the asset against which we guarantee or secure repayment, such as our property, and the promise to repay with interest. A clerk then enters the number into a ledger. Hey presto, £300,000 is deposited into the banking system!"

Nope, not on some Multicoloured Multifonted ReactoLoon Survivalist web site but in the fecking Guardian of all places

Jeremy Clarkson predicting the apocalyptic end of capitalism last week and a mainstream British newspaper trying to explain the debt-based money system this week. At this rate the Conspiraloon Alliance, like Woolworths, is going to be out of business before Christmas

Strange, strange times...



Anonymous said...

I fuckin hate the Guardian,,except (Steve Bell):They must have watched the documentary "money as debt" on Google or Bill Still´s "the money masters."

Stef said...

Polly 'Two Villas' Toynbee is miles funnier than Steve Bell

She does this really great impression of a hypocritical champagne socialist kissing totalitarian government bumhole that cracks me up every time

Anonymous said...

Is this the same thing as fractional reserve banking, or is it something else?

Anonymous said...

Fractional reserve banking allows for banks to lend more than they hold as deposits\reserve, hence 'fractional'. This figure can be up to 100 times the latter in some cases...

Stef said...

Part of the same thing

A fraction of the money made-up in the way described in the article has to held by the bank in cash as a reserve

Stef said...

oh dear, Martha Lane Fox, Nancy Dell'Olio and a Priest are on tele as I type talking about how we should live less consumerist lifestyles in the wake of the credit crunch and its impact on the 'real' economy

I don't feel at all well

Anonymous said...

Sorry to keep poking at this, but the reserve is fabricated too? I thought the whole point of a reserve requirement was to limit the amount of lending. Can you recommend an overview?

Stef said...

Money as Debt - the video

Stef said...

The reserve requirement does limit the amount of lending but the percentage reserve requirement can be as tiny as the central bankers like

On top of fractional reserve banking it's also worth remembering that there are now all sorts of other interesting ways in which financial institutions can inflate markets and generally fuck things up

Derivatives can be tremendous fun for example and there are a few hundred trillion dollars of those in play. In theory they mostly net each other off. Assuming everyone settles up

Ho Ho

paul said...

At this rate the Conspiraloon Alliance, like Woolworths, is going to be out of business before Christmas

Well we did say we'd win, though I would have been happier to remain a wrong headed crank for as long as possible.

Stef said...


Anonymous said...

whaddya think?

What are the Greek riots really about?

We've been told that the ongoing riots in Greece were prosecuted by anarchists as a reaction to the Greek police's shooting of a 15 year old boy on Saturday.

But is this really what lies behind such an outpouring of civil unrest? Is the official reason for the rioting just a cover to paper over some real problems facing the Greek government? Take a look at the common thread in all of these reports:

Associated Press: Burning barricades stretched across streets in the capital Athens. And as night fell, gangs again torched stores and smashed bank branches in the city center, and clashes broke out in the streets near Parliament.... Violence often breaks out between riot police and anarchists during demonstrations in Greece. Anarchist groups are also blamed for late-night firebombings of targets such as banks and diplomatic vehicles.

Xinhua: Fires were burnt in the center of Athens and hundreds of people were wandering through the streets, some attacking banks, businesses and vehicles.

Reuters: Protesters angry at the boy's shooting late on Saturday clashed with police and rampaged through Athens, destroying banks, shops and torching cars. There was no official estimate of the damage, expected to come to millions of euros.

Torching banks? Clashes near Parliament? Attacking diplomatic vehicles? Yesterday, I heard that ten banks had been attacked, and it seems strange that all of this is happening solely over last Saturday's shooting. Indeed, it is a perfect pretext for the Greek authorities and the media - not to mention their counterparts over here - who fear that their cosy relationship with the international clique of banking criminals may result in them hanging from shiny lamp-posts from Washington to Dublin to Sydney.

The funny thing is that the recent headlines in Greece are similar to those in Ireland:

All of Greece's major Greek lenders will participate in the government's bank support plan aimed at ensuring the continued flow of credit to the economy, the country's finance minister said on Thursday.

"It was confirmed that all large banks will participate in the plan fully," Finance Minister George Alogoskoufis told reporters after a meeting with major bank CEOs and the central banker.

Parabellum said...

[Ann Pettifor] is best known for her leadership of a world-wide campaign to cancel approximately $100 billion of debts owed by 42 of the poorest countries.

Quite clearly a loon trying to implode our economic system as it exists in all its glory today.