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does money even mean anything? watch

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    governments spend so much money , countries are in debt that they will never be able to pay off, who is to say that we cannot go and spend 100 billion tomorrow? It wont change anything apart from say you invested 100 billion into infrastructure then there would be less poverty in places such as india, nigeria etc
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    It does mean a lot whether you like it or not, we use money to purchase pretty much everything so we don't have to operate a system of swaps or manual labour in exchange for things. Countries that are in debt are usually good places to live; the UK is in debt which is of course bad but we live a very privileged lifestyle here compared to some third world countries who have no debt.
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    You're 100% right.

    So why don't you take all that money, and give it to me :teeth:

    And, em, I'll just keep it for safe-keeping, shall I?
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    governments spend so much money because they can print them xax!(this will lead to inflation,though!)

    Furthermore, the money now does not mean anything. In the past the money were covered by gold, but now they are only paper..the Queen "promises to pay us..." . Kill me, but i don't believe in promises! xax

    dont get me wrong, I do not support the conspiracy bull****, most of it anyway!
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    money only holds value that people think it does.
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    (Original post by souman)
    governments spend so much money because they can print them xax!(this will lead to inflation,though!)

    Furthermore, the money now does not mean anything. In the past the money were covered by gold, but now they are only paper..the Queen "promises to pay us..." . Kill me, but i don't believe in promises! xax

    dont get me wrong, I do not support the conspiracy bull****, most of it anyway!
    It means a lot. There may not be a physical value on it, but it is effectively a complex system of "IOUs". If money didn't exist you would need to be trading items you have for anything you want to buy. Clearly something that could never work in a society such as ours.

    (Original post by GwrxVurfer)
    I've had people tell me that I "need" to go into small amounts of debt in order to build a credit report that will give me the "privilege" of being trapped in even more debt.

    However I don't sign-up to that regime. Debt is not necessary. I readily accept that it will take me years to afford luxuries like owning a car. It's not ideal, I would like luxuries, but there isn't any option short of earning the amount to pay for it beforehand.

    I only ever use banks for debit cards to make online purchases. Credit cards are unnecessary.
    They are only as unnecessary as you make them. Debit cards are "unnecessary" yet you have a use for them. I have a use for credit cards so use them.

    Very little in life is "necessary". Doesn't mean it isn't desirable or beneficial.
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    (Original post by GwrxVurfer)
    Actually it would work, it just wouldn't be practical.




    That's a fair comment. Perhaps what I should have said was that debt is unnecessary, therefore I personally don't subscribe to it. Others do, and it is their choice to make.
    It would not remotely work. There is no possible way anyone could run the vast array of services and products we have today by swapping objects. Money is absolutely essential.

    Fair enough. Although it must be inconvenient at times, I guess a debt-free lifestyle is a good thing to have.
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    (Original post by GwrxVurfer)
    Yes, it is a good thing to have, and essential I think.

    I am not upper class so, unless I win the lottery, it's fairly unlikely that I'll ever own my own home, but I accept this as being the hand that life has dealt me, leaving me with the only option of renting.

    Once you understand that banks create money out of thin air and loan it at interest, you will understand why I cannot even look at "mortgages" without feeling repulsed.
    It is in NO WAY essential. Virtually no-one does that so it clearly can't be essential... It's not the "hand that life has dealt you", it's the hand you have made for yourself.

    Well, the central banks will "make it out of thin air" as they manage the process - someone has to start it. The banks that lend it out don't just create it though.

    You're the one with the issue if the concept behind mortgages repulses you. Normal people recognise it as a means to get the money they need to buy what they want whereas you appear to have made some kind of dubious money trail.

    Just explain this then. The banks just "create money"? Why do they need to bother lending it out to make a profit then? If it really is as simple as you are saying, then they would just keep making their own money and have no need to actually do any banking...
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    >does money even mean anything?

    No. Not unless you are a materialistic piece of ****, like pretty much all pro-capitalists.
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    Nope, it's just pieces of paper and metal we humans put value into in order to make the economy function. It comes down to getting the best offer(s) for what you own I guess.
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    (Original post by 01010000 01001010)
    >does money even mean anything?

    No. Not unless you are a materialistic piece of ****, like pretty much all pro-capitalists.
    You don't have to be capitalist to want to buy something...

    I assume you occasionally use money yourself? If you do you must accept it has a meaning and a value.
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    No, it doesnt mean anything.
    Let me PM you my details so that you can send all of it to me. Dont worry, I'll destroy it
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    (Original post by GwrxVurfer)
    My issue is with banks lending out money they do not have. If a bank would only lend out the money it actually had, I would be fine with it.
    Bank with the co-op if it bothers you that much.
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    (Original post by GwrxVurfer)
    It's common sense. I was not born into a lot of money, therefore I won't be able to afford owning my own home, and will instead have to rent. What's so difficult to understand?

    If someone has compiled a credit report file on me, it is empty, as I have never borrowed money. I find people who tell me that I "have" to borrow money so that I can qualify for the "privilege" of gaining even more debt rather odd, and find it alarming they actually believe such rubbish.



    Correct, central banks also create new money. And as all new money is created as a debt "at interest", there will always be more debt than money, thus the "National Debt" remains impossible to pay off. But we're talking about private debts.



    My issue is with banks lending out money they do not have. If a bank would only lend out the money it actually had, I would be fine with it.



    No, they are only allowed to "create" new money through the process of lending. It sounds complex, and indeed it is, but in it's very basic form it means that for every £1 you deposit with a bank, they can loan out £10. In other words they "create" nine more Pounds Sterling, which the borrower pays back to them, plus interest.
    It is not common sense in the slightest - it's your warped logic. As I said, living debt free can be good, but I go in and out of debt and my life has drastically improved because of it. What do you find so difficult to understand?

    Credit reporting is not "odd" in the slightest. By having a record showing you are capable of paying back what you owe on time, they are more confident in your reliability so will let you have more debt. They believe "such rubbish" because it's a fact. Your issue if you have a pathological hatred of borrowing full stop.

    I must admit your last issue confuses me. Is your issue with this imaginary 90% money the banks have (you could be right but it sounds ridiculous to me - have you got anything to prove that they are allowed to make their own money?) or just them acting as a middleman by borrowing money then re-lending it to you at a higher price? If it's the latter I assume you also refuse to use shops?
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    Only to fools.
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    (Original post by GwrxVurfer)
    Yes, you take a gamble every time you go into debt and if you are able to pay it back, then your life can improve. You obviously examined the risk-reward factor, and determined it was worth risking in order to get money to improve your life.

    I have never borrowed money at all, therefore I have shown myself capable of handling debt (by not getting into it in the first place) and yet that rates me as "high risk" in credit reports.

    I am 100% for banks lending out money they actually have, at interest. Are you?



    They create the money from thin air, and then loan it out. For sake of argument, let's say you borrow £1000 from a bank, and they only have £100 on deposit. They simply electronically input the digits "1000" into your bank account if you have one, and you spend this money. You eventually pay them back £1000, plus interest. The end result is that the bank makes just over £1000 from an original deposit of £100, and then continue the cycle.

    Shops do not loan money, they collect and spend money that already exists in circulation.
    Exactly. Obviously the potential is there for you to get into trouble, but your claim it's "essential" to live a debt-free lifestyle is absurd.

    No you haven't demonstrated that you are capable of handling debt as you've never had any. The people who have had debt and handled it well have proven they are capable. You have shown absolutely nothing to the bank so they have to guess whether you can handle it or not - hence high risk.

    Yes I am 100% for that. But you have yet to show me evidence that the banks just make money. If it is simply a case of putting digits in the system, what happens when you spend that money? What happens when you transfer it to another bank? My understanding is the loans book operated by banks isn't as big as their savings/loans they've taken book. Your argument that they just "type into a screen that they have money" makes no sense which is why I'm finding it hard to believe. As I said, maybe you are right - but if you are you should be able to find me a source saying that.
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    (Original post by GwrxVurfer)
    Are you suggesting that someone with a perfect history i.e no debt, is more of a financial risk than a person with a history of NOT paying back debts?



    You have got that the wrong way round. There loan books are much bigger than their deposit books, they loan out far more money than they actually have.

    Let's say a bank starts up with a deposit of £100. You come into that bank wanting a loan of £1000. The bank loans you the £1000, by typing the digits "1000" into a bank account (if you have one). You can then make a purchase online perhaps of £900, and 900 will be subtracted from the 1000 digits entered into the account. The bank only ever had £100 on deposit, but they loaned out £1000 on the strength of your £100, because the law allows them to have a 10:1 ratio.

    When you understand this system, you won't need to ask why I have no respect for any bank operating this system. Banks who only loan out up to and including 100% of the money they actually have are fine however.
    Having no debt is NOT a perfect credit history. It tells the bank absolutely nothing whatsoever about your ability to pay it back. Why are you finding this so hard to understand? I know it goes against your philosophy and you don't agree with it, but why can't you just accept their reasoning? The bank wants to see proof that you've managed debt and paid it back in the past. FOR THE LAST TIME - never having debt before does NOT show ANY PROOF WHATSOEVER that you can manage it.

    No I am not saying a bad credit history is better than a non-existent history. I am saying a good (i.e. you have had debt before and pay it off ontime - not your weird definition) credit history is far better than a non-existent credit history.

    You keep saying this but refuse to provide one scrap of proof despite me repeatedly requesting it. Stop explaining it - I fully understand what you are saying and have done since the beginning. I am disputing that it actually takes place, not the concept.

    Not that it makes that much sense to me. You spend £900 online so the "digits on a computer are changed"? The company you paid is likely with another bank - why would the second bank accept 3 digits on a computer screen as payment?
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    (Original post by GwrxVurfer)
    Source 1
    Source 2

    Those two deal with the American monetary system, which is the same in all but name with the British monetary system.

    Given your complete unwillingness to accept the reality that banks do participate in Fractional Reserve Lending, perhaps you should go to your local bank and ask them them for documents outlining their policy on Fractional-Reserve Lending. The law permits banks to lend £10 for every £1 they have on deposit, but it's up to the individual banks whether they do lend out this amount. There is no point in me producing documents from one bank as they may be irrelevant to the bank that you work for, due to the two banks having different policies. For instance, one of the banks might operate on a 1:5 ratio, while the other uses the full 1:10 ratio allowed.




    Have you ever made a credit card purchase to a different bank? If so, that bank have accepted the digits/money in your credit card account as payment.

    The second bank will get a notification saying that Customer A (you) wants to spend £900 on an item and would now like to pay. The second bank checks the account number and sort code provided and discover that you have 4 "digits" in your account (£1000), and they debit 900.

    Why do they accept it as payment? Because even electronic money, or "digits" as you've called them, in bank accounts, are regarded as legal tender (otherwise there would be no credit and debit card system).
    Those were dreadful sources - they appear to be blogs commenting on financial matters - not a link explaining this "creation of money". Given that you've finally given me a name for this practise, I looked it up myself. From what I can gather it involves the bank lending out depositors money, and it's reserves aren't enough to cover the amount those depositors have put in. I couldn't see any steps where money has technically been created?

    Effectively, by saving with a bank you are giving them a loan. They then loan that money to someone else. That doesn't mean it's new money being made - the balance in your account is simply the amount they owe you - there isn't simultaneously money sitting in your account and money being lent out - it's not actually in your account at all.

    The central bank/commercial bank bit seems to be the bit that looks like new money is created by the banks - but to me it just looks like it's converted from "central bank money" to "commercial bank money" over time. Wikipedia (not the best source I know, but nowhere near as unreliable as people think) actually states "no new money is physically created". I'm only reading this for the first time though, so if you have a source explaining it I'd happily reconsider.
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    (Original post by GwrxVurfer)
    The first source I gave you directly addresses the issue of money creation.

    (directly quoted from Source 1)
    "where does their money come from? The answer is they make the money up out of thin air and then have the audacity to loan it to us. The interest that the government has to pay is where our income taxes go. "

    Now, on to Fractional Reserve Lending. The new money is created through the 1:10 ratio. Banks can "create" up to ten times the amount of money they have on deposit. The history of this started with goldsmiths who, after realizing that hardly anyone wanted to withdraw their gold, create paper money "receipts" for gold that did not exist. The governments eventually caught on, but felt it was best to regulate it in a ratio system rather than drive it underground. The ratio selected at this time is 1:10. So for instance, if I deposit £1 to a bank, they can create £10 in addition to what they currently have. £9 of "new" money, and the £1 of money that I deposited. The net result is that £9 has been created.

    The ambiguity of the Fractional-Reserve Lending laws has confused many into thinking that only 90% of their deposits can be loaned out. This is not the case. £9 of "new" money can be created for every £1 received on deposit, and that £1 itself can also be loaned, the net result being that banks can loan out £10 for every £1 received on deposit.



    Correct, but you can withdraw that money at any time you wish. Do you remember asking me why someone would accept the "digits" as payment? If you bought something from me and chose to pay with card, all I can debit from you is "digits" on a computer screen. But I can convert those "digits" into paper money any time I like. The digits essentially function as a high-tech IOU, which is why people more or less treat them the same as paper money.



    I already gave you two sources, and you missed the explanation of the money creation process in Source 1.

    New money is frequently created (Why do you think we have had years and years of consecutive inflation?). But you are right in that it's a very difficult subject to understand when first reading. I'll try to address your question. As I understand it, you are saying that you think no new money is ever created. I disagree. Back in 1694, when we changed to a monetary system controlled by the Bank of England, there wasn't £1 trillion in circulation. But now there is £1 trillion of Government debt. If there wasn't £1 trillion in existence back in 1694, how is it possible for the Government now have a debt of roughly £1 trillion if no new money is ever brought into existence?

    Also, if no new money is ever created, but the Government owe interest on all the money, how can they pay off the debt (which equals the money supply+interest)?

    Something else you might want to consider - Why don't the Government borrow the money they need at 0% interest?
    That isn't a proper source, it's just another statement by someone who I have no idea if I can trust and with no citations backing up their claims. If you were writing an academic report/essay, there is no way you could just cite the sources like you have. You need to give the exact page you got your information from - for example I have no idea where the quote you just gave from it came from.

    Ok, if that is the case, can you please give me an actual source (and not just the homepage of a blog somewhere) detailing that this is how it works. The wikipedia article on it seems to state that the banks lend out the money they have in savings, it makes no mention of them lending that out and then magically making more money to lend out as well.

    No I don't think (or to my knowledge say) money isn't created, I said I don't believe money is created by the likes of HSBC etc. - it's created by central banks like the Bank of England etc.
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    (Original post by GwrxVurfer)
    And there proves the futility of arguing with you - Any source that backs up my point, you will simply say you cannot "trust" it.

    People will see the quote if they check out the Source for themselves (which I advise).

    Direct link to the specific explanation of how the money is created

    Look for the phrase "where does their money come from? The answer is they make the money up out of thin air and then have the audacity to loan it to us. The interest that the government has to pay is where our income taxes go."




    I can't, because I don't know which bank you work for, nor am I likely to know their specific policies. As you've made clear you don't accept any sources (however clear) from me, I suggest you email your bank and ask the following questions.

    1. Do you participate in Fractional Reserve Lending?
    2. How much of the 1:10 ratio allowed does this bank use?

    If you really don't want to go the banks homepage, you could do this the old fashioned way by visiting the local branch in person, and asking the same questions.



    Partially right, it is created by both.


    Have you got an answer as to why the Government do not borrow the money the need at 0% interest?
    The Federal Reserve is America's central bank. I've never disputed the central banks make money - I even stated as much in my last post. I said the retail banks we save with/borrow from don't make their own money.

    I don't work for a bank and I don't know why you keep insisting I do. I have no loyalty to any of them, I go where I get the best deals - and as such have accounts with most of the major banks.

    I don't want a specific policy, I want a source stating that this actually happens. I don't care if different banks will do it to different extents, I only care about whether it actually exists. For you to know this you must have read it somewhere, or know the policy of 1 bank in the UK on the matter?

    Asking if they participate in "fractional reserve lending" won't do a lot considering we still dispute what it actually is. I have yet to see anything saying that it involves creating money out of nothing.

    No I haven't got an answer - what interest do they pay? I'd imagine it's some kind of inflationary measure.
 
 
 
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