RPRT – you are correct, there are lots of things I left out including things that banks do wrong..

Binners, you are correct on both counts. Its rather like certain institutions that derived large amount of their returns from helping companies to avoid UK taxation, later benefitting from UK taxpayers support.

It did – and the next phase is still to come.

Well not quite. They managed to stuff a load more money into it to just about keep it afloat. I often wonder whether it wouldn’t just be better to reset all the databases, create a load of new money and share it out again. It’d be like the matrix!

I do not believe the chain of thought you describe though. I have not read anywhere an analysis that says that the banking crisis was the fault of the public sector crippling us

it was sarcasm about who some seem to blame for the current scenario. State size is a political/philosophical point rather than an economic one tbh.

THM

But JY made a fairly clear point that banks lend money they don’t have.

You then went on to say that you agreed with him, but giving the misleading (your favourite word) impression, but alas the one that most people seem to have, that banks merely take money from depositors and then lend it out, when of course that is nothing like what they do.

OK RPRT – for sure, that is a simplification. The point being was merely to show that banks do not own the money they lend. Blimey getting on to fractional reserve banking was not something that i expected on STW.

But it is a very valid question and point. Made all the more interesting in that some of the most heated critics of the concept are actually the libertarian free marketers in Austria. There has to be some irony there.

I wonder how you would sell the concept of 100% reserve banking to Vince Cable. Ok, time for a quick ride to try and think of the answer. Thanks for the idea RPRT – apart from the aggro, there is always something that I get form your posts!! Just not sure about the Greece analysis.

all i will say is dont mention Elton John..he did once and nearly got away with it

THM

But JY made a fairly clear point that banks lend money they don’t have.

You then went on to say that you agreed with him, but giving the misleading (your favourite word) impression, but alas the one that most people seem to have, that banks merely take money from depositors and then lend it out, when of course that is nothing like what they do.

Of course banks lend money they don’t have, that’s the point? Is that bad, or is it just something you don’t understand and therefore feel is dangerous?

Fractional reserve banking conspiracies have replaced 9/11 conspiracies as far as I can tell.

So RPRT – the Martenson analysis is interesting and clearly put. I can’t see anything particularly controversial here though. What are your key take aways from it?

Fractional reserve banking conspiracies have replaced 9/11 conspiracies as far as I can tell.

It fits in nicely with Illuminati/Vatican/Jewish banker conspiracy theory. This time, though, it’s being given a megaphone by companies selling dodgy “collector” gold – see the links between Glenn Beck and mail order gold companies.

bainbridge,

Like many things, it’s bad in excess. And that is what we have had – runaway creation of money as debt. And now we’re in the sh1t.

Konabunny,

Please don’t try to lump fractional reserve banking in with all that other stuff. It is part of mainstream economics and its use/abuse has led to many of our current economic problems. You will find plenty of mainstream economists saying so.

THM,

The key “take away” (or point, as I prefer to term it) is that the economics that have “worked” since the war won’t work anymore as we reach the limits of population growth and resources such as agricultural land, fresh water, fish, timber etc.

Forgot also to mention the economic effects of of peak oil, which are/will be massive, but are still being ignored by the “business as usual” policies of governments around the world.

A good source of info on this phenomenon is:

The Oil Drum

(plenty of reading matter for you there THM)

Actually, just went to the oil drum to see what was new and came across this article, which talks about “peak debt” and ties it to peak oil. Also makes a few suggestions as to how the economy might be changed in order to create a more sustainable future (-ve interest anyone?):

Oil Drum Article

RPRT – perhaps we nearly agree for a change! I agree that the economics that have defined the post war period will need revising. I agree about the importance of understanding and delivering sustainable economics although I am less persuaded by some of the more Malthusian-type predictions.

But coming back to some of the discussion on this and other threads, I think that the most important point that Martenson makes comes right at the end. He asks people to “take responsibility” and to re-think the type of jobs that they are doing. Above all, do a job that gives quality of life not one that is merely for the money.

Whatever one’s political persuasion and wherever one stands with regard public sector pension rights there is one glaring fact facing all of us. We are going to have to accept lower returns, pay more for them and ultimately work for a lot longer than previous generations. In the face of that truism, we should stop hiding our heads in the sand about pensions and focus more on ensuring that we and more importantly our children do jobs that they actually enjoy. Because we are ALL going to have to them for a lot longer than we previously thought.

I made the point to JY earlier (I think) about the best things that Unions can do for them members. It is not to pretend that they will be able to maintain the current employment and retirement structures – because this will ultimately fail. Much better is to prepare union members for the realities of life ahead, where as you say RPRT the economics that drive our life will be very different.

teamhurtmore

‘Whatever one’s political persuasion and wherever one stands with regard public sector pension rights there is one glaring fact facing all of us. We are going to have to accept lower returns, pay more for them and ultimately work for a lot longer than previous generations.’

I dont believe this should be the case at all….the scenario you outline above is applicable only if we as a society want to continue with a bloated state, subsidies for the banking industry etc etc….personally i felt the failing banks should’ve been allowed to fail….no point keeping a bankrupt business afloat with public money….we would have a much clearer view of how the land lies now if that had happened.
It all comes back to living within your means….and that goes for government too….if they dont have the tax receipts to implement their ideas then they shouldnt do it.
An irresponsible attitude to money has pervaded all areas of society recently….a friend went travelling for a year, had no intention of working….it was effectively a year long holiday.
He applied to put 30k on his mortgage to finance this, the flat he bought was purchased when prices were high anyway so the lender should’ve told him to poke it….but they didnt, they tagged 30k onto his mortgage and off he went for a pleasant 12 months….flat now cant be sold as he’s got huge negative equity and he regrets the 12 month holiday that is now going to cause him years of financial grief.

This story and others involving personal loans, credit cards etc can be repeated for millions up and down the country….what needs to change is peoples attitude to money and this pathetic ‘i must have it NOW’ approach to consumer goods.

I believe we should have a state funded education system, armed forces, police, NHS and a very basic benefits system which keeps food on the table for people between jobs….beyond those things government spending should be cut back in the most dramatic way….i reckon we could then afford a decent pension system for all and not have this pathetic hand wringing approach to politics where we feel the state has to be involved with every facet of people’s lives.

Deviant – I agree that this should not be the case, but fear that it will be! So better to be prepared.

Credit cards are an interesting one. A few years ago, John Varley (the then CEO of Barclays) was pilloried in the press for saying that borrowing off a credit card was a bad choice and a mistake that many were making. In essence he was saying its the last thing you should do. And the press, murdered him over it. For a change, a banker being honest!?!

don’t try to lump fractional reserve banking in with all that other stuff. It is part of mainstream economics

The principle is part of mainstream economics and there is no end of mainstream economists willing to tell other economists ur doin it rong.

However, the mouth-breathing conspiracy theory nonsense from inter cut & paste merchants is absolutely of the same stable as Jews/Lizards/Bilderberger rubbish. I see you’ve mentioned Peak Oil too. I reckon if you can just squeeze in some “freeman on the land” reference, you’ll have the whole set.

the economics that drive our life will be very different

I’ve been practising economic retraction ever since I graduated from university…

kb

However, the mouth-breathing conspiracy theory nonsense from inter cut & paste merchants is absolutely of the same stable as Jews/Lizards/Bilderberger rubbish. I see you’ve mentioned Peak Oil too. I reckon if you can just squeeze in some “freeman on the land” reference, you’ll have the whole set.

What do you suggest then? That people don’t talk about peak oil, because some people will use it as evidence of “conspiracy”.

We are going to have to accept lower returns, pay more for them and ultimately work for a lot longer than previous generations.

Don’t agree with this bit. In particular, the idea that we all need to work harder/longer.

Once you come to terms with the fact that you don’t need to replace your kitchen every 5 years, replace the car every 2 years, replace your phone every year etc etc. then you can get by on a lot less money than many people seem to think you need. Every time I don’t buy something I mentally celebrate the fact that I won’t have to earn the money to pay for it. We’re pretty lucky in that (IMO) we’re reasonably well off, but all around me I see people making lots more money than us who still seem to think that they aren’t well off and need to make more of it. What’s needed isn’t more work to afford the same lifestyle, but a more realistic view about what things are and aren’t important.

THM

I am less persuaded by some of the more Malthusian-type predictions.

Can you expand.

Sorry RPRT no scraps today. Too much work to do. Whatever lifestyle choices anyone makes they will have to work harder to achieve them. Better strategy than simple heads in sand or downsize type strategies.

On Malthusian stuff – hard to summarise – suffice to say that I find a lot of background science inconsistent and unconvincing. Climate change and it’s causes being an obvious example.

Climate change and it’s causes being an obvious example.

Oh dear… 😯

seems the labour party are now saying they wouldn’t reverse any of the cuts that the tories have put in. To me that’d suggest the cuts are necessary, not ‘ideologically motivated’ (if it was the latter, labour could reverse them, right?)

not at all 5lab – thats becuase the tory press have continually pushed the idea the cuts are necessary and Labour are too scared to go against them.
Its purely ideological.

Same as labour got into a “tougher cutter than you” position before the election.