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Geek Culture / Debt free money anyone?

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Libervurto
18
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Joined: 30th Jun 2006
Location: On Toast
Posted: 28th Sep 2011 20:52
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Quote: "And what about the fact that EVERY country owes gigantic amounts of money - amounts that have never existed and never will - to SOMEONE, but NOBODY tells you WHO IS THAT GROUP OR PERSON?

Well actually i have a guess for the guy's nationality. Be offended at your own risk, i didn't say it. (interesting that all of us think the same?)"

All the money isn't owed to one person, that's silly!
It's owed to companies within the country who are contracted to build hospitals and roads and all kinds of things like that.

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Matty H
16
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Joined: 7th Oct 2008
Location: England
Posted: 28th Sep 2011 21:22
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Quote: "There's no such thing as "over inflated prices". Prices are set by supply and demand, simple as that. The only way prices can be "over inflated" is if a single company has a monopoly (ie. has complete control over supply). Which is illegal."


Banks have control over the supply of money. They also have control over the supply of loans. I personally feel that the housing bubble could have been avoided with a more prudent system.


Quote: "Just out of curiosity, and this is a going a little off the subject but feeling the way you do, do you think the government should step in and regulate how the banks make loans, or should it be up to the banks to make their own rules?"


I have only become interested in economics over the last six months so I can only tell you what my instincts and common sense are telling me

Banks having the power to create money equates to a massive subsidy to the tune of many billions, our money supply is privatised.

I believe if we took this power away from the banks as well as the safety net that we will bail them out as they are 'too big to fail' then the regulation would only need to be minimal, if any.

I believe in private business and banking, but I believe that the money supply should be public.

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Diggsey
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Joined: 24th Apr 2006
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Posted: 28th Sep 2011 21:26 Edited at: 28th Sep 2011 21:30
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The government should only regulate banks by making sensible laws to prevent things from going catastrophically wrong. Telling them to (for example) "lend more" is just stupid.

The whole point of government is to make laws such that it's in everybody's interest to keep everything running smoothly. If it benefits some people to be greedy at the cost of everyone else, then it's just as much a problem with the system as it is with those people.

Quote: "Banks have control over the supply of money. They also have control over the supply of loans. I personally feel that the housing bubble could have been avoided with a more prudent system."


No, banks do not have "control" over the supply of loans. Banking is a competitive business. The supply of loans like everything else is controlled by supply and demand. If one bank raises the price of loans, it just means they will lose business.

As for the supply of money, that's controlled by the government (in the UK through the Bank of England)

[b]
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Matty H
16
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Joined: 7th Oct 2008
Location: England
Posted: 28th Sep 2011 21:27
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Quote: "It's owed to companies within the country who are contracted to build hospitals and roads and all kinds of things like that."


Most of UK debt is owed to insurance companies, pension funds and the like. Government debt is seen as a safe investment and is used by insurance companies as people near retirement age and a safer and more stable investment is needed.

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xplosys
19
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Joined: 5th Jan 2006
Playing: FPSC Multiplayer Games
Posted: 28th Sep 2011 21:31
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Quote: "I believe in private business and banking, but I believe that the money supply should be public."


Just for the sake of clarity, when you say "public", do you mean government?

Brian.

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Matty H
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Posted: 28th Sep 2011 21:38
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Quote: "Just for the sake of clarity, when you say "public", do you mean government?"


Not really, I mean a money supply which is controlled by people without their own conflicting interests.

The 'positive money' point of view is that money creation could not be left in the hands of politicians as they would just print more money coming up to an election

They propose the Bank of England could do it while being regulated by another body. This is how most people presume it works already. It would mean ending fractional reserve banking.

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xplosys
19
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Posted: 28th Sep 2011 21:45
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Quote: "They propose the Bank of England could do it while being regulated by another body. This is how most people presume it works already. It would mean ending fractional reserve banking."


And who do they propose that this "other body" would be?

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Matty H
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Location: England
Posted: 28th Sep 2011 22:10
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From the website:

Quote: "The Bank of England would then take over the role of creating the new money that the economy requires each year to run smoothly, in line with inflation targets set by the government. In order to meet these targets, the decision on how much or little money needs to be created would be taken by the Monetary Policy Committee. To maintain international credibility and avoid ‘economic electioneering’, the MPC would be completely separate and insulated from any kind of political control or influence - in other words, the elected government would not be able to specify the quantity of money that should be created."


More here

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xplosys
19
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Posted: 28th Sep 2011 22:16
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Quote: " the MPC would be completely separate and insulated from any kind of political control or influence - in other words, the elected government would not be able to specify the quantity of money that should be created.""


How is that possible. Would they elect themselves? lol I want to do it.

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Matty H
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Location: England
Posted: 28th Sep 2011 23:06
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Quote: "Telling them to (for example) "lend more" is just stupid."


Stupid yes, but it is required under the current system. Although we are never going to agree about any of this if we disagree where money comes from

Quote: "How is that possible. Would they elect themselves? lol I want to do it."


Many institutions are currently regulated by independent bodies, this should not be an issue. I would prefer you did it too rather than someone who makes money every time they create money

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Jeku
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21
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Joined: 4th Jul 2003
Location: Vancouver, British Columbia, Canada
Posted: 29th Sep 2011 01:52 Edited at: 29th Sep 2011 01:53
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Quote: "The whole debt thing... it doesn't help that banks not so long ago recommended getting a 100% mortgage. Sure it's the fault of the people for getting themselves in debt, but it doesn't help when those that lend money give bad advice."


I almost got a 100% mortgage a few years back, but they've since completely removed them from Canada. There *are* still 95% mortgages, though. After all, the average house price in Vancouver is $1 million, so a 5% down payment is $50k. That's still a lot of money, and you're not *that* much better of by getting a 95% as opposed to a 100%. I would be happy with having a no-down payment mortgage just to get in the race, but alas I'm glad I didn't do that yet or I'd be stuck in Canada.


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