Their printing press ran out of inkOriginally Posted by Muddy Retriever
Their printing press ran out of ink
Richard Taylor
"William Tell could take an apple off your head. Taylor could take out a processed pea."
Sid Waddell
For the obvious reason bank liquidity is so thin, any amount of default keels the banks. With the securitisation of loan book, that process was put on steroids.
We ain’t seen nothing yet, worlds governments dumping the problem on private sector and banks, as though shutting the economy ever made sense, will see most banks insolvent.
Last edited by Oracle; 21-04-2020 at 01:17 PM.
They invested in non viable mortgages and financial products - property was over-valued, mortgages of too high a % of the property value were given to people who never had a hope of paying them back, and these doomed mortgages were converted into a "fool proof" investment. Too much of Northern Rock's business was based on mortgages.
Or to put in in straight forward terms, they took the deposits of their savers, and instead of lending on responsible and safe terms, they gambled with their savers money.
They didn't print money.
If I give you £1, and you buy a Premium Bond that's sensible, but low margin. Put it on red or black and you can double your money or lose it.
Richard Taylor
"William Tell could take an apple off your head. Taylor could take out a processed pea."
Sid Waddell
But Mike, I'm confused. You said this yesterday:
"No need to borrow, just print it - this is how we buy houses - the money is created by the bank/building society - it does not come from the savings of the bank's customers - as long as inflation does not "ramp up' - I hate that expression - it is not an issue."
So if the bank has just created this money out of thin air to lend in the first place, why is it a big problem if they don't get paid back? Why do we ever need to bail the banks out, they can just create more money, right?
These fellas sum it up :-
https://www.azlyrics.com/lyrics/pinkfloyd/money.html
Last edited by JohnK; 21-04-2020 at 07:44 PM.
The money printing trick only works with strict controls/conditions. If you don't have to pay the bank back it does not matter what you paid for the house - property prices would be infinite in no time.
After a war there is usually a very limited supply of goods and workers - if you print money prices shoot up - big mistake. If interest rates are low and a country needs basic infrastructure, printing money can improve the economy generally without significant inflation. We have wasted 10 years.
Out of interest, where has printing money to fiance spending (as opposed to QE) been tried and worked and not ended up causing inflation?
Will the general public ever get tested for the virus?
From Ann Pettifor's "The production of Money" - pages 16 -22: ...a loan to AIG of $85 billion ...it was transferred in just an instant after all 11 numbers had been tapped into the computer ... It is what banks do every day ... the spending is created out of thin air ... savings do not fund ... if well managed, there need never be a shortage of money for society's most urgent projects.
Peston, in WTF, calls QE creating money, just to show that some economists think that way - the sum? £535 billion in 2009 - yes, billion.
I would strongly recommend Pettifor's book.
