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Now the money in he bank is subject to what is called the multiplier effect. If I have £100 and I put it in the bank, I still have £100, but so does the bank. The bank lends it to Jack so he has £100 as well. He wants it to buy a car, but can't find one to buy straight away so he puts it in different bank. Then that bank lends it to Tom. Now there is only one lot of £100, but actually five people have it and can all spend it. So there is £500 out there boosting the economy.
BUT - the important bit that you fail to mention - FOUR lots of interest to be paid back when all the loans are repaid!!!!!!
Having all of that money out there sloshing about in the economy is only affordable if the economy is growing fast. Once the economy stops growing faster than the interest is mounting, then the more times that the money has been "multiplied" (in your terms) the worse mess you are in.
Your solutions are not possible - there isn't enough wealth to pay down the debt - there will be defaults, but no one knows for sure where and to what extent.
it's not just a simple case of some greedy people screwing the rest of us.
It certainly was a case of greedy people screwing the rest of us.
The current debt crisis was spelled out (forecast) in great detail by plenty of people, years ago - but no one in power wanted to listen. The banks didn't care as they were raking in cash. Politicians, even if they knew what was coming didn't want to act because this is NOT a zero sum game. Politicians have been involved in a game of chicken and we have ended up in a head on crash.
I can recommend this book:
[url= http://www.amazon.co.uk/Coming-First-World-Debt-Crisis/dp/0230007848/ref=sr_1_1?ie=UTF8&qid=1322773904&sr=8-1 ]The Coming First World Debt Crisis - by Ann Petifor[/url] - published in [b]2006[/b]!!!
It is written for the lay person and lays out her [b]prediction[/b] of pretty much exactly what has happened over the last 3 years.
FTFYyossarian - Member
In the beginning.....The banks worked out they make shit loads more cash by lending more to people even though it was riskier
Governments allowed this to happen even though they knew it was risky [b]and they were getting massive amounts of tax from the banks in order to build hospitals, pay policemen, buy nuclear missiles etc etc etc[/b]
and they [b]also wanted to borrow[/b] massive amounts of [b]money[/b] from the banks in order to build hospitals, pay policemen, buy nuclear missiles etc etc etc
FTFYT
😆
Aye rightplacerighttime - that too 🙂
Your solutions are not possible - there isn't enough wealth to pay down the debt - there will be defaults, but no one knows for sure where and to what extent.
Yes, exactly.
No-one knows for sure what is best and no-one knows what will happen...
The current debt crisis was spelled out (forecast) in great detail by plenty of people, years ago - but no one in power wanted to listen
Every time something happens all the smart-arses go on about how so many people predicted it but no one wanted to listen, but now I'm the clever clogs because I'm pointing it out. However, people ALWAYS write books predicting impending doom and some of them get lucky.
Same happened in the dotcom boom. People saying 'oh I'm so clever I predicted this' well everyone knew it was coming, but no-one knew when and everyone also knew they could make tons of cash before it did go belly up.
The thing is, everyone wants to make money. The only difference between them and us is that they have more resources with which to do it.
I blame the governments. Starting with, but not limited to, Thatcher. However, you can't blame them too much because they need the economy to boom to get voted in.
You know what, actually.. I blame the electorate. Thick buggers who don't know sh*t from shinola when it comes to economics and government and yet we are the ones who have to be appeased.
Stupid, isn't it?
molgrips, you're wrong.
Every time something happens all the smart-arses go on about how so many people predicted it but no one wanted to listen, but now I'm the clever clogs because I'm pointing it out. However, people ALWAYS write books predicting impending doom and some of them get lucky.
To be honest, you din't need to be an economic genius to work out that all the easy credit and massive mortgages lifestyle on the never-never etc was going to lead to serious problems. People buying homes at the top of the market, then wondering why they've now got negative equity. People borrowing way more than they earned, then wondering why their TV/Car/Home is repossessed. People wanting the champagne lifestyle with only Babycham wages....
I blame the governments. Starting with, but not limited to, Thatcher. However, you can't blame them too much because they need the economy to boom to get voted in.
Erm no. When Thatcher got re-elected in 1983, the economy was most certainly not booming. In fact it was worse than it had been when she first got elected on '79.
Don't under estimate turkeys ability to vote for Christmas. Specially when the media tells them on a daily basis that it's good for them.