How is money brought into circulation ????

[DomainManagement]

i am going to sound really daft now ( which is not unusual for me )

as this i think this the the root of all the problems

who charges who for the creation of money ?

and how is it created and brought into the government balance sheets

Is the proccess transparent ? ( i dont think so) who owns the bank of England

Are the share holders names made public or are the covered by some secret

Act , beneficial owners must be reported in companies how come not so

When the bank of England is involved,

They say follow the money ,and you get your answers

Does anybody really know how much the state gets charged

Or does it go straight in as a loan that attract`s interest , that is paid by

tax payers hmmmm and if so why

if the government was allowed to print its own money then the country would

be in a much more healthy state and better still with no interest to pay

So does anyone know the real numbers of what we get charged

i think Queenie get a nice cut after all she does endorse it

so instead of becks getting lets say £5 million for endorsing nike or whatever

i wonder what the queen is paid to front the £ i bet there is a fee somewhere

well lets see what answers we get

 

[mat]

You should read up on the petrodollar.

Basicly showing how America try and keep all the world oil traded in dollars as not only are they printing off their own money to pay for it, but the oil owners bank their dollars in the American system...

Infact the oil owners in most cases would make more money by trading in Euros. Saddam was going to or did do this and look how that ended up

If oil was traded in euros America would have to trade to get the euros to buy the oil...

 

[GreyWing]

America are screwed if it ever happens, but thing is it can't happen. Even China don't want to see it happen as 80%+ of their reserves are in Dollars.

It will happen eventually though, America will be as poor as some failed African state when it does, in fact looking at their national debt, they are already there.

Agreed Mat, that was Saddam's big mistake. I heard Iran were thinking of doing it aswell

 

[accelerator]

I was going to try and answer your questions but there are quite a few and it's late, so how about buying some books on the subject. Some economics text books and those on the Bank of England should give you some insight, e.g.:

http://www.amazon.co.uk/dp/0198289529/?tag=acorn06-21

Rgds

 

[mat]

Yes, Money used to be backed up by gold but that got scrapped.

Money was always ment to be "IOU", you were basicly saying IOU x amount of gold. Now its just a over printed piece of paper...

Gold and Silver was also actualy used in coin currency to add real value to the IOU and trading process but that no longer happens. It was pretty much a universal currency through trading ships and travellers as it was backed up by its scrap value.

 

[DomainManagement]

matt have you ever taken a luck at worldreports.org

poor guy was poisoned by the looney toones in the states

and yes your right re petrodollars

is that why they hate iraq as it likes to trade in euro`s

and also north Korea too wont allow the dollar in use there

and hated it so much they forged the super dollar

money is the weapon of mass destruction these days

 

[GreyWing]

Someone was telling me that the Irish bailout was to devalue the Euro, if that doesn't work they are going to bailout Portugal to devalue it some more. So they can be competitive, they don't need the cash just yet but using them as an excuse.

Someone posted a realy good thread on here a while back about how banks print more according to the cash they hold, basically how banks started to lend, it was a cartoon kind of thing. Don't know if anyone can find it but it was interesting to watch.

 

[mat]

I have been buying gold and silver bullion bars/coins for the very reason that its value is so strong now that world currency is in turmoil. Gold has gone from about $800 an ounce to $1400 an ounce in a few years. Silver is a very wise investment right now and rather cheap compared to gold!

America are shifting record amounts of their $1 silver eagle coins at the moment, which shows how people are moving to precious metals over standard currency at the moment.

 

[GreyWing]

The Euro is ultimately a doomed currency and the only ones who are doing well from it are Germany. They're by far the largest manufacturing economy in Europe and they're able to sell to all the others in the Eurozone at parity which means they're exports are going through the roof while countries like Greece and Ireland are sinking unable to stem the flow of German goods.

Agreed it is doomed, ironically probably because the German politicians aren't able to tell the German people what you just wrote.

All the German people will see is bailout after bailout using their money. Wonder how it will all break apart though, be interesting to watch, just hope it's peaceful.

 

[DomainManagement]

the tricky bit i am trying to understand is

how much do the rothchilds etc make from printing our money

not the actual cost i think thats approx 4 cents a note


they have a scam going on i wonder how big it is really how big trillions

the American federal reserve does not by a new law approx 10 yrs ago i think

have to publish its m3 money supply ( how much it has actually printed )

nice job if you can get it , they dont prob give the amount now

just the weight

no wonder they want to dumb us down have us all on 3 big macs a day

brushing our teeth with and drinking fluoxetine kind of like fluoride


who did we sell our gold reserves to ( at a big discount ) was it to the guy who left the printing machine on ;-) bush snr and greenspan

and one more who placed all the shorts on the new york stock exchange

before 9/11 and no it was not what's his beard

 

[philipp]

and how is money created?

I'll have a shot at that one, but I'm just an amateur on this stuff. It's a really interesting question though, and generally simpler than it sounds once you have stripped out the financial jargon. You'd probably enjoy the excellent TV series 'The Ascent of Money' - I expect you can get it somewhere.

Anyway there's a great quote from John Galbraith who said that 'the process by which money is created is so simple that the mind is repelled'.

Most 'money' doesn't exist in paper and coins, but rather on balance sheets. In short, money is loaned into existence. It is one half of a zero sum situation where the other side is debt.

Money cannot exist without debt, and banks create money by loaning it, based upon a borrower's promise to repay their debt.

It sounds crazy but that's how it works. I think.

P.

 

[DomainManagement]

Listen our trusty uk industry will be able to get us out of all this

imagine all the exports we will be able to off set our balance of payments with

were are so lucky to have such a great industrial manufacturing base here

Sorry i was day dreaming about when we actually made something here to export and not had our country hollowed out and sold off from beneath us

instead off haarp is this really owned/operated by British aerospace

you see we are clever we give the best weapons to the wanks sorry typo yanks

sorry i did not mean to slander the one handed brigade

 

[philipp]

We probably sell weapons rather than giving them. And weapons are a particularly destructive thing to buy (no pun intended). Imagine a cruise missile exploding. That thing costs millions of pounds, and a country will see little economic return from it going bang. Buying self-destructive weapons is a great way for a government to do some real damage to its own economy.

P.

 

[DomainManagement]

Most 'money' doesn't exist in paper and coins, but rather on balance sheets. In short, money is loaned into existence. It is one half of a zero sum situation where the other side is debt.

Money cannot exist without debt, and banks create money by loaning it, based upon a borrower's promise to repay their debt.

It sounds crazy but that's how it works. I think.

P.[/QUOTE]

so it enters the balance sheet as a loan for which we have to pay usery
interest

interest was considered so bad that did not most religion`s banned it

but now the problem is that money is a religion

"moral hazard" what a great term someone who takes money then not be held responsible for its safe keep

 

[philipp]

what a great term someone who takes money then not be held responsible for its safe keep

Actually, say you got a loan to buy a car. Your bank loaned you the cash, by creating it as a credit in your account (dependent upon the local government's loan-to-capital ratio regulations), and then you 'spent' it with a dealer.

Well actually when you spent it, that created money was transferred it to the dealer's bank account, who can use the deposit to permit more money creation under regulation.

The corollary of debt being the other side of a zero-sum situation, is that if there were no debt then we wouldn't have any money either. At least, not in our current system - it'll be different come the revolution eh

Any economists around? Did I get it right?

(I despise the system of powerful usury too, sucks doesn't it).

P.

 

[GreyWing]

Actually, say you got a loan to buy a car. Your bank loaned you the cash, by creating it as a credit in your account (dependent upon the local government's loan-to-capital ratio regulations), and then you 'spent' it with a dealer.

Well actually when you spent it, that created money was transferred it to the dealer's bank account, who can use the deposit to permit more money creation under regulation.

The corollary of debt being the other side of a zero-sum situation, is that if there were no debt then we wouldn't have any money either. At least, not in our current system - it'll be different come the revolution eh

Any economists around? Did I get it right?

(I despise the system of powerful usury too, sucks doesn't it).

P.

Knew I'd find it, here is the cartoon. It also is exactly what Philipp is saying.

It starts about the 3 min mark, but will answer all your questions.

http://video.google.com/videoplay?docid=5352106773770802849#

 

[crabfoot]

Yea, there are two agendas, the one on paper and the real one.

Whatever the apparent state of affairs, we live in a rich country, but nobody is going to admit it. because it is embarrassing. Not only that, but if we did admit it, we would have to give a lot of it to the strugglers of the EU, because our politicians would have trouble negociating our right to own snorkels if we were all drowning.

Yes, the governments are generating imaginary money - but that is IN REALITY secured on the mineral resources of the countries involved.

There's a lot of oil wells in the Middle East. The Western world buys that oil, and is hoping it will run out one day, then they can fully exploit their reserves that the Arabs don't know about - but The Arabs are not thick, so they keep the price up and make hay while the sun shines.

Britain has a lot of mineral resources which have not been exploited. Underneath Cornwall there is more uranium than anywhere on earth. There are houses in Cornwall that you can't sell to people with children, they are so radioactive that only sale to adults is allowed! Dig it up and exploit the potential in power stations, and we have to share that with the rest of Europe - at the moment.

The Falkland Islands are surrounded by oil fields. Exploit that oil and, once again, we would have to share it with the rest of Europe (and those Arabs in the Middle East).

When we stopped mining coal, it was because it cost us £30 to get a ton out of the ground, and we could buy coal for £20 a ton, delivered, from other nations. What is left is still down there, and the price is rising.

The Chinese are very short of lucrative holes in the ground - a mineralogically deficient nation with reference to the population density. The rest of the world would not give China any credit for mineral wealth.
Even if UK has dug out most of its metallic wealth, we can still make money from energy. We used to export ores to Sweden because they converted them to metals cheaper by hydroelectric power. We can get that technology ...


The UK politicians are waiting for the EU to become a "level playing field" at the least cost to the nation, and the Middle East to get depleted of oil, then the Uk can start back on the track of being the major player. Make more money than anyone else in the EU, and we have to share it. Keep on (apparently) bumbling on, with (apparently) bumbling politicians, and the UK will be the best place to live - for your children's children's children.

Me, I got no kids and no chance ...

 

[gandalf]

Here is how money is created:

Firstly the government asks the central bank for some money, lets say £1 billion. The central bank creates the money out of thin air - in the old days they printed it but these days they just type it into a computer. Hey presto £1 billion of new money has been created out of thin air. This is then LENT to the government at interest, generally by the government giving £1 billion in interest bearing bonds to the central bank. Nice swap for the central bank - thin air for bonds that will pay perhaps £50 million/ yr in interest. The government could create its own money out of this air, but they ermm... don't.

Now, this £1 billion then goes into the economy. The government might use it to pay wages, to buy property leases etc. The money therefore ends up in the commercial banking system. But since the banks operate using fractional reserve banking (http://en.wikipedia.org/wiki/Fractional-reserve_banking) which means they can effectively lend £10 for every £1 they have on deposit, the commercial banks now have an extra £10 billion that they can lend out at interest to you and me. They will have to pay interest on the £1 billion, but they get to lend out £10 billion at a higher rate of interest!

So there we have it. £10 billion got created out of thin air. The government got to borrow £1 billion of it at interest for its spending programs. The central bank got ongoing interest on a £1 billion loan in return for nothing. And the banks got the lions share of the deal by getting ongoing interest on £9 billion worth of loans in return for nothing!

But wait, there's more... we all got fleeced twice into the bargain. Firstly our taxes get used up paying the interest on the goverment's loan when the government could have created the money out of thin air itself and pay no interest.

Secondly, every time new money is created, it dilutes all the existing money in the money supply. So our money becomes worth less than before. If there was £100 billion in the economy and they create an extra £10 billion, prices will go up 10% so our savings will be worth 10% less. This is the real reason for inflation, but it's funny we never seem to get told that by the economics correspondants on TV.

The bottom line is it's an arrangement to suit the bankers and the politicians. The politicians get money on tap from the loans so they can spend much more than they receive in tax revenue, yet this method really is a hidden tax because the inflation devalues the population's buying power and savings. Instead of taking so many extra pounds off you through higher taxes, you get to keep those pounds but they become worth less. Hardly anyone can figure out what has happened so they blame shops for putting prices up, their employer for not giving them a raise etc. As the decades roll on, the bankers get untold trillions out of it. Thats why keeping the banks happy is more important to the government than keeping the the electorate happy!

This is how all the money has been created for centuries, all the money in the economy has been created as a debt. Every pound in your pocket, someone somewhere is paying interest on. Every pound in your savings account. What's more, because all the money has been created as a debt, the amount of money in the economy can only be sufficent to pay back the principal of the debts. So there's not enough money available to pay the principal + the interest!

So where does the money for the interest come from? New loans need to be taken out to pay the interest on the old ones. We have to keep getting deeper and deeper in debt to keep putting off an economic collapse. But because every year the bankers own a bit more of EVERYTHING from the year's extra interest, and because we own a bit less of EVERYTHING because inflation means each year's loans have to be that much bigger to cover the the old loans and the extra interest for this year, it means eventually EVERYTHING will be owned by the banks.

Bizarre though it may seem, because all money has been created as debt, if all the loans in the economy were to be paid back, there would be no money in circulation at all!

 

[Nigel]

Great first post gandalf. Seems the best explanation so far - are you in financial services or banking? or was this part of your economics thesis

Here is how money is created:

Firstly the government asks the central bank for some money, lets say £1 billion. The central bank creates the money out of thin air - in the old days they printed it but these days they just type it into a computer. Hey presto £1 billion of new money has been created out of thin air. This is then LENT to the government at interest, generally by the government giving £1 billion in interest bearing bonds to the central bank. Nice swap for the central bank - thin air for bonds that will pay perhaps £50 million/ yr in interest. The government could create its own money out of this air, but they ermm... don't.

Now, this £1 billion then goes into the economy. The government might use it to pay wages, to buy property leases etc. The money therefore ends up in the commercial banking system. But since the banks operate using fractional reserve banking (http://en.wikipedia.org/wiki/Fractional-reserve_banking) which means they can effectively lend £10 for every £1 they have on deposit, the commercial banks now have an extra £10 billion that they can lend out at interest to you and me. They will have to pay interest on the £1 billion, but they get to lend out £10 billion at a higher rate of interest!

So there we have it. £10 billion got created out of thin air. The government got to borrow £1 billion of it at interest for its spending programs. The central bank got ongoing interest on a £1 billion loan in return for nothing. And the banks got the lions share of the deal by getting ongoing interest on £9 billion worth of loans in return for nothing!

But wait, there's more... we all got fleeced twice into the bargain. Firstly our taxes get used up paying the interest on the goverment's loan when the government could have created the money out of thin air itself and pay no interest.

Secondly, every time new money is created, it dilutes all the existing money in the money supply. So our money becomes worth less than before. If there was £100 billion in the economy and they create an extra £10 billion, prices will go up 10% so our savings will be worth 10% less. This is the real reason for inflation, but it's funny we never seem to get told that by the economics correspondants on TV.

The bottom line is it's an arrangement to suit the bankers and the politicians. The politicians get money on tap from the loans so they can spend much more than they receive in tax revenue, yet this method really is a hidden tax because the inflation devalues the population's buying power and savings. Instead of taking so many extra pounds off you through higher taxes, you get to keep those pounds but they become worth less. Hardly anyone can figure out what has happened so they blame shops for putting prices up, their employer for not giving them a raise etc. As the decades roll on, the bankers get untold trillions out of it. Thats why keeping the banks happy is more important to the government than keeping the the electorate happy!

This is how all the money has been created for centuries, all the money in the economy has been created as a debt. Every pound in your pocket, someone somewhere is paying interest on. Every pound in your savings account. What's more, because all the money has been created as a debt, the amount of money in the economy can only be sufficent to pay back the principal of the debts. So there's not enough money available to pay the principal + the interest!

So where does the money for the interest come from? New loans need to be taken out to pay the interest on the old ones. We have to keep getting deeper and deeper in debt to keep putting off an economic collapse. But because every year the bankers own a bit more of EVERYTHING from the year's extra interest, and because we own a bit less of EVERYTHING because inflation means each year's loans have to be that much bigger to cover the the old loans and the extra interest for this year, it means eventually EVERYTHING will be owned by the banks.

Bizarre though it may seem, because all money has been created as debt, if all the loans in the economy were to be paid back, there would be no money in circulation at all!

 

[accelerator]

Great first post gandalf. Seems the best explanation so far - are you in financial services or banking? or was this part of your economics thesis

I think he's mainly involved in Hobbit protection.

Anyway, definitely the best first post I've seen in a long time on Acorn.

Rgds