I'm still waiting for a mainstream UK news outlet or elected politician to discuss money creation and how it affects the economy. As I stated the current Coalition and Labour policies won't change anything, in fact they make things worse under a debt based economic system. There is NEVER enough money in circulation to pay off past debts, it has to increase continually or the system collapses as we are now finding out.

Politicians NEVER talk about decreasing government debt, only cutting the DEFICIT. Even doing this causes chaos to the system unless somebody else can be forced to take on more debt - Student Loans for example.

As for posting the same old stuff on here, if just one person who is oblivious to how money is created clicks on the thread, realises banks are screwing us over and thinks WTF! I have succeeded in my aim.

You may have to wait until one comes along with a religiously-motivated reason for promoting an alternative system. Or did the main thrust of the piece escape you?

Before the election, it was commonplace for Tory MPs to use the two terms interchangeably.

Yes it can. A pound coin is legal tender therefore falls under the definition of: 'Money that may be legally offered in payment of an obligation and that a creditor must accept'. A one pound coin is a pound, the two are completely equivalent, im not sure where the confusion lies.

If money is simply created by banks, as you seem to think, completely out of nothing, how is a run on a bank possible?

If tomorrow i go to any bank in the UK with a £1000 deposit, and i wish to buy a £100k house, and ask for a 200% mortgage (i want to buy a nice car and do up the house etc), they would say no. Why?

In your version of reality it costs them nothing to give me the mortgage, the money is created out of thin air. From their point of view absolute worst case scenario: the housing market crashes and the house becomes worthless, and i default on the very first repayment. They've still gained a free house and got paid £1000 for nothing. If in your world the worst case scenario for the bank is that they get £1000 for nothing, why in the real world wont they give me the mortgage?

Thought this was a thread about benefits in Hull

LeighGionaire wrote:I'm still waiting for a mainstream UK news outlet or elected politician to discuss money creation and how it affects the economy. Here you go. I think BBC News counts as a mainstream UK news outlet.

LeighGionaire wrote:I'm still waiting for a mainstream UK news outlet or elected politician to discuss money creation and how it affects the economy. Here you go. I think BBC News counts as a mainstream UK news outlet.

This guy had a plan

This guy had a plan

Accepting that banks create money out of nothing when they make a loan. What happens to the repayments on the loan?

Now part of the repayment will be covering the interest and so clearly that is profit for the bank (just like mark-up in a shop). However I'm unclear as to what happens to the part of the repayment that reduces the outstanding amount of the loan. Is part of the money which the bank created then destroyed so all of the repayment profit for the bank? Or does the repayment money cancel out the bank created money in some way?

I think the answer to your question is nothing. The bank could use the money to lend it out again. Once the money has been created it doesn't disappear and the money supply has been increased. The only way the money "disappears" is if the money supply contracts.

There is a thing called the "money multiplier" which is a ratio of how much money is created by bank lending based on how much the central bank deposits with the commercial banks and what percentage of that they must keep in reserve. If the commercial banks lend the money on then in theory it could increase the amount of money in the economy (the money supply) up to whatever the "money multiplier" says.

So if the aim is to decrease the money supply - destroy money if you like then the government and/or the BoE can do several things. It can increase how much the banks have to hold in reserve (so the money multiplier falls), sell government securities (so money flows back to the government) or put up the interest rates the B of E charges to banks who borrow from it.