Liberal Forum

peepee » 06 Nov 2017, 12:34 am » wrote: ↑

06 Nov 2017, 12:34 am

...first, 'liberal forum' is to be applauded for the 'no holds barred political forum'....i've tried numerous times on other sites to expose monetary ignorance/ignoramuses but i've ALWAYS been banned, etc., by the [stoooooopid **** republicrat] mods...thanks to lf, hopefully, we are all going to learn something about 'money' and some of us are going to have some wicked good fun exposing the loud republicrat numbskulls who frequently work their gaping pie holes about 'the illion dollar economy' absent an honest clue as to the hideous origin and nature of even one dollar...[heads up, radio republicans!]

..e sector. What the Bank of England admitted this week is that none of this is really true. To quote from its own initial summary: "Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits" … "In normal times, the central bank does not fix the amount of money in circulation, nor is central bank money 'multiplied up' into more loans and deposits."

In other words, everything we know is not just wrong – it's backwards. When banks make loans, they create money. This is because money is really just an IOU. The role of the central bank is to preside over a legal order that effectively grants banks the exclusive right to create IOUs of a certain kind, ones that the government will recognise as legal tender by its willingness to accept them in payment of taxes. There's really no limit on how much banks could create, provided they can find someone willing to borrow it.e paper does admit, if you read it carefully, that the central bank does fund the government after all). So there's no question of public spending "crowding out" private investment. It's exactly the opposite.

Why did the Bank of England suddenly admit all this? Well, one reason is because it's obviously true. The Bank's job is to actually run the system, and of late, the system has not been running especially well. It's possible that it decided that maintaining the fantasy-land version of economics that has proved so convenient to the rich is simply a luxury it can no longer afford.

But politically, this is taking an enormous risk. Just consider what might happen if mortgage holders realised the money the bank lent them is not, really, the life savings of some thrifty pensioner, but something the bank just whisked into existence through its possession of a magic wand which we, the public, handed over to it.

Historically, the Bank of England has tended to be a bellwether, staking out seeming radical positions that ultimately become new orthodoxies. If that's what's happening here, we might soon be in a position to learn if Henry Ford was right."