Select to expand quote

Paddles B'mere said..
I would believe that pretty much all crashes are caused by a drop in investor confidence causing the investor to dump the investment and erode consumer confidence even more, it's totally a mind game. How else an you explain things like the great depression, how can an apple be worth $2 one day and then only 50c the next day, it's the same apple on a different day. The answer is in the mind of the investor, what price is he/she willing to pay to get in and what price is he/she willing to accept to dump it and get out? Some investors can ride it out and stay rich or get richer, some will fall. It's very psychological and the market is very fickle.

No one can argue against the lack of investor confidence will see a drop in the value of all goods and services.

Just as no one would argue that increased investor confidence (on a personal and collective scale) will see a rise in what one will pay for any good and service.

But it is the free flow or restriction of available credit that drives or is the cause of the investors state of mind, that is confidence. This is the root cause.

So so what causes the ebb and flow of credit. Well many things but the most predominant cause of credit expansion and contraction is the credit produced by fractional reserve lending practises of banks.... and the credit created by this leveraged lending is mainly centred on mortgages over land/ property. There are others but all economic gains produced by the productive sector of the economy eventually find their way into the value of the land.

Especially as we allow land gains (economic rent) to be traded as a commodity through private ownership laws.

Always remember a mortgage is consider an asset on a banks ledger. They can then lend out multiples of this mortgage asset value depending on the type of banking institution and goverment regulations (although as we see time and time again they can get around most of these anyway).

Credit flows into an economy and investor confidence increases. Eventually the bulls take hold Of the market (all markets) and the value of good and services reach a point where the primary productive economy cannot support these prices. Also interest rates have risen to try and mitigate the resulting inflation before this point.

Then values start to fall and eventually drop below the asset value the credit was multiplied upon in the first place.

Credit squeezes and banks start calling in loans. The productive economy starts the feel it. Investor psychology THEN starts the reverse. Add in the high Interest rates, highly leveraged individuals, companies and of course the biggest lenders - the goverment... eventually the can cannot be kicked down road anymore and the markets have devastating corrections.

Thing is if you go back enough ... like 2-300 years you will see that it doesn't matter what economic structures were involved ... apart from the effect of the two great wars .. this cycle of bust and boom always occurs and with incredible regulatory.

Timed regulatory.

So given that we have to consider the underlying human psychology of course.

But also the effect of credit credit creation and contraction that drives the basic human instincts of greed and fear in the economic space.

But the entire structure (private ownership of land and the ability to trade the gains) will ensure a historical repeat regardless of the particular economic variables at play.

Do yourself a favour ... study history from a banking and land perspective. It will show you the underlying root causes. The rest is just localised smoke and mirrors. These always change but the underlying cause never has... to date.

And the elite know this.. they have for centuries. it's how they get and keep their wealth at the expense of the greater good.

Want to understand the real reason behind the rich and poor gap. Then study land and role banking has.

Otherwise you are dribbling naive sh1t.

Ps leveraged fractional reserve lending is a relatively new approach (perfect way to transfer wealth back to the top 1 percent ) but banks have always lent against land. But now the effects are going to be felt far more acutely.

Select to expand quote

eppo said..

Paddles B'mere said..
I would believe that pretty much all crashes are caused by a drop in investor confidence causing the investor to dump the investment and erode consumer confidence even more, it's totally a mind game. How else an you explain things like the great depression, how can an apple be worth $2 one day and then only 50c the next day, it's the same apple on a different day. The answer is in the mind of the investor, what price is he/she willing to pay to get in and what price is he/she willing to accept to dump it and get out? Some investors can ride it out and stay rich or get richer, some will fall. It's very psychological and the market is very fickle.

No one can argue against the lack of investor confidence will see a drop in the value of all goods and services.

Just as no one would argue that increased investor confidence (on a personal and collective scale) will see a rise in what one will pay for any good and service.

But it is the free flow or restriction of available credit that drives or is the cause of the investors state of mind, that is confidence. This is the root cause.

So so what causes the ebb and flow of credit. Well many things but the most predominant cause of credit expansion and contraction is the credit produced by fractional reserve lending practises of banks.... and the credit created by this leveraged lending is mainly centred on mortgages over land/ property. There are others but all economic gains produced by the productive sector of the economy eventually find their way into the value of the land.

Especially as we allow land gains (economic rent) to be traded as a commodity through private ownership laws.

Always remember a mortgage is consider an asset on a banks ledger. They can then lend out multiples of this mortgage asset value depending on the type of banking institution and goverment regulations (although as we see time and time again they can get around most of these anyway).

Credit flows into an economy and investor confidence increases. Eventually the bulls take hold Of the market (all markets) and the value of good and services reach a point where the primary productive economy cannot support these prices. Also interest rates have risen to try and mitigate the resulting inflation before this point.

Then values start to fall and eventually drop below the asset value the credit was multiplied upon in the first place.

Credit squeezes and banks start calling in loans. The productive economy starts the feel it. Investor psychology THEN starts the reverse. Add in the high Interest rates, highly leveraged individuals, companies and of course the biggest lenders - the goverment... eventually the can cannot be kicked down road anymore and the markets have devastating corrections.

Thing is if you go back enough ... like 2-300 years you will see that it doesn't matter what economic structures were involved ... apart from the effect of the two great wars .. this cycle of bust and boom always occurs and with incredible regulatory.

Timed regulatory.

So given that we have to consider the underlying human psychology of course.

But also the effect of credit credit creation and contraction that drives the basic human instincts of greed and fear in the economic space.

But the entire structure (private ownership of land and the ability to trade the gains) will ensure a historical repeat regardless of the particular economic variables at play.

Do yourself a favour ... study history from a banking and land perspective. It will show you the underlying root causes. The rest is just localised smoke and mirrors. These always change but the underlying cause never has... to date.

And the elite know this.. they have for centuries. it's how they get and keep their wealth at the expense of the greater good.

Want to understand the real reason behind the rich and poor gap. Then study land and role banking has.

Otherwise you are dribbling naive sh1t.

Ps leveraged fractional reserve lending is a relatively new approach (perfect way to transfer wealth back to the top 1 percent ) but banks have always lent against land. But now the effects are going to be felt far more acutely.

I agree. And in this day and age, it is important to consider those with wealth in multiple zones/regions/countries where economic factors are not aligned, have immense benefit in the transfer of funds which may be used for real estate purchase at opportune moments, blurring the cycles which affect the rest of us.

Is "the ebb and flow of credit" influenced by investor "confidence" (or acceptance of the risks for the right amount of reward) as well? I mean, there's investors right the way up the tree. The bank has investors that invest their capital with them so they in turn can invest the money with borrowers who invest with purchases that hopefully increase in value. All these people are making investment decisions based on the risk and the marginal gains and are increasing/reducing their exposure to risk accordingly. Surely this influences the ebb and flow of available capital.

Select to expand quote

Paddles B'mere said..
Is "the ebb and flow of credit" influenced by investor "confidence" (or acceptance of the risks for the right amount of reward) as well? I mean, there's investors right the way up the tree. The bank has investors that invest their capital with them so they in turn can invest the money with borrowers who invest with purchases that hopefully increase in value. All these people are making investment decisions based on the risk and the marginal gains and are increasing/reducing their exposure to risk accordingly. Surely this influences the ebb and flow of available capital.

Yeh good points. Chicken or the egg syndrome. One influences the other of course really. Then you have to overlay the overall macro state of affairs and localised variations.

Also this include the incessant interference of governments (through policy / law ) changes dictated by their elite puppet masters. (If you think this is just conspiracy theory then one can either surmise you haven't lived enough, have been living under a rock or you just don't have the IQ to grasp this).

The inherent investor psychology of greed and fear most definetly has the greatest influence running up and near the peak and also during and after the major correction.

Takes credit restriction to ease (credit to start flowing once banks begin to fix their balance sheets by off loading bad debts - this will take time) to thaw out then warm up the bulls again. Once the tap is really turned fully open then the bulls are off and running until they stampede right over the edge.

Greed and fear. It's in all of us if you watch closely enough.

So they are both crucial really.

Select to expand quote

eppo said..

Paddles B'mere said..
Is "the ebb and flow of credit" influenced by investor "confidence" (or acceptance of the risks for the right amount of reward) as well? I mean, there's investors right the way up the tree. The bank has investors that invest their capital with them so they in turn can invest the money with borrowers who invest with purchases that hopefully increase in value. All these people are making investment decisions based on the risk and the marginal gains and are increasing/reducing their exposure to risk accordingly. Surely this influences the ebb and flow of available capital.

Yeh good points. Chicken or the egg syndrome. One influences the other of course really. Then you have to overlay the overall macro state of affairs and localised variations.

Also this include the incessant interference of governments (through policy / law ) changes dictated by their elite puppet masters. (If you think this is just conspiracy theory then one can either surmise you haven't lived enough, have been living under a rock or you just don't have the IQ to grasp this).

The inherent investor psychology of greed and fear most definetly has the greatest influence running up and near the peak and also during and after the major correction.

Takes credit restriction to ease (credit to start flowing once banks begin to fix their balance sheets by off loading bad debts - this will take time) to thaw out then warm up the bulls again. Once the tap is really turned fully open then the bulls are off and running until they stampede right over the edge.

Greed and fear. It's in all of us if you watch closely enough.

So they are both crucial really.

hey eppo genuine question - who are these "elite puppet masters" of whom you speak? couple of names will do.

I do agree our govt and most globally will do all they can to avoid a severe bubble pop as the economy wide destruction is obvious for all to see but just like the gfc the one to worry about is the one that gets beyond their control. In the GFC we were basically a bees dick away from that in the US and EU. Taxpayers came to the rescue. They cant be tapped to anywhere near the same degree next time so what have these elites you speak of got left in the gun?

theconversation.com/class-on-a-global-scale-the-emerging-transnational-capitalists-22940


I should speak for myself, but i'm not sure most of us can even comprehend the type and levels of finance nor ability to cross geographical borders that the top of the pyramid are really involved in

My sister was telling me tonight how her unit in Cannington Perth is only worth around 300k from its previous high of 370k

Her identical neighbours unit is currently on the marker for 290k

Then a friend of hers bought a unit in Rivervale a few years ago for 370k and the units are are now selling for only 280K.

That is around a 20-25 percent drop from the peak price.

My prediction a few years back of a two thirds drop in prices from their peak is not out of the question.

Select to expand quote

petermac33 said..
My sister was telling me tonight how her unit in Cannington Perth is only worth around 300k from its previous high of 370k

Her identical neighbours unit is currently on the marker for 290k

Then a friend of hers bought a unit in Rivervale a few years ago for 370k and the units are are now selling for only 280K.

That is around a 20-25 percent drop from the peak price.

My prediction a few years back of a two thirds drop in prices from their peak is not out of the question.

That is Perth. Property prices were lifted up by the resources boom and have fallen when that finished. Didn't those prices fall a couple of years ago and have been hovering since, maybe falling slightly each year?

A 20 percent drop is a long way from a 66% drop. Sure its not out of the question, but if it does happen there are going to be major problems for the economy, and not just in house values.

Select to expand quote

Bara said..

eppo said..

Paddles B'mere said..
Is "the ebb and flow of credit" influenced by investor "confidence" (or acceptance of the risks for the right amount of reward) as well? I mean, there's investors right the way up the tree. The bank has investors that invest their capital with them so they in turn can invest the money with borrowers who invest with purchases that hopefully increase in value. All these people are making investment decisions based on the risk and the marginal gains and are increasing/reducing their exposure to risk accordingly. Surely this influences the ebb and flow of available capital.

Yeh good points. Chicken or the egg syndrome. One influences the other of course really. Then you have to overlay the overall macro state of affairs and localised variations.

Also this include the incessant interference of governments (through policy / law ) changes dictated by their elite puppet masters. (If you think this is just conspiracy theory then one can either surmise you haven't lived enough, have been living under a rock or you just don't have the IQ to grasp this).

The inherent investor psychology of greed and fear most definetly has the greatest influence running up and near the peak and also during and after the major correction.

Takes credit restriction to ease (credit to start flowing once banks begin to fix their balance sheets by off loading bad debts - this will take time) to thaw out then warm up the bulls again. Once the tap is really turned fully open then the bulls are off and running until they stampede right over the edge.

Greed and fear. It's in all of us if you watch closely enough.

So they are both crucial really.

hey eppo genuine question - who are these "elite puppet masters" of whom you speak? couple of names will do.

I do agree our govt and most globally will do all they can to avoid a severe bubble pop as the economy wide destruction is obvious for all to see but just like the gfc the one to worry about is the one that gets beyond their control. In the GFC we were basically a bees dick away from that in the US and EU. Taxpayers came to the rescue. They cant be tapped to anywhere near the same degree next time so what have these elites you speak of got left in the gun?

Anyone one or entity that has strong financial and political influence...they have been around since day dot. The clever foxes that read and control the play.

Download this pdf, fantastic article on property and the role of the FIRE sector. Not pertaining to the puppet masters directly but enlightening never the less.

michael-hudson.com/wp-content/uploads/2010/03/RoadToSerfdom.pdf

Did you know fractional reserve lending was passed in the wee hours of the morning in America when the opposition had few members present to at least debate the issue...Not that I have a problem with increasing the liquidity of credit. That in itself keeps the wheels of the economy going and expanding and can unleash untapped potential.

But when it is used for land speculation (because we allow the economic rent - unearnt income above the actual worth to society as a whole to be traded) then you get the cyclic boom and bust and the resulting property and stock market capitulation. It HAS to happen, not it might, not it could, not "it is different this time" - a catch cry that has been said through many different cycles over history..it HAS HAS HAS to happen.

So instead of this credit being used to fund productive sectors of the economy, we just sell land to each other at higher and higher prices until the actual productive economy cannot support these prices. The banks asset column and resulting lending on these so called assets (remember a mortgage is an asset on a banks ledger, not yours! This allows them to lend against these so called assets at certain multiples.

But this is not producing anything of value! it is not adding true productive capacity, hence wealth to the countries economy. it creates a false wealth effect and people then lend and spend more money on these zero and ones... imaginary money...or more accurately, imaginary value. Then when things are truly in motion they leveraged this credit again to even higher multiples... and it all has no real, tangible basis.

And those that profit from this lobby governments to create policy and law to make sure this Ponzi racket is never diluted.

...yes we were hours away from major bank runs until the government stepped in and guaranteed deposits..lucky the coffers were full from the commodities boom driven by China. And the government got awards internationally for it!!! Using tax payers money to fund private institutions liquidity, even thought they allowed (and made huge profits) the credit to be lent in the first place.

So you want to know some of these elite movers and shakers start with these big banks that are apparently to big to fail!.

Private owners running private businesses make huge profits on creating and lending money (the RBA is NOT a government institution by the way!!), then when it all goes belly up, tax payers money is used (or more to the point we lend robbing the future generations of their wealth) to bail them out. Talk about robbing from the poor and middle class... they have just got more sophisticated and far better at doing it over history. Now they can also control a docile ipad generation with the 24/7 media cycle.

..and you think the game is not rigged!

wake the fck up.

Select to expand quote

eppo said..

Bara said..

eppo said..

Paddles B'mere said..
Is "the ebb and flow of credit" influenced by investor "confidence" (or acceptance of the risks for the right amount of reward) as well? I mean, there's investors right the way up the tree. The bank has investors that invest their capital with them so they in turn can invest the money with borrowers who invest with purchases that hopefully increase in value. All these people are making investment decisions based on the risk and the marginal gains and are increasing/reducing their exposure to risk accordingly. Surely this influences the ebb and flow of available capital.

Yeh good points. Chicken or the egg syndrome. One influences the other of course really. Then you have to overlay the overall macro state of affairs and localised variations.

Also this include the incessant interference of governments (through policy / law ) changes dictated by their elite puppet masters. (If you think this is just conspiracy theory then one can either surmise you haven't lived enough, have been living under a rock or you just don't have the IQ to grasp this).

The inherent investor psychology of greed and fear most definetly has the greatest influence running up and near the peak and also during and after the major correction.

Takes credit restriction to ease (credit to start flowing once banks begin to fix their balance sheets by off loading bad debts - this will take time) to thaw out then warm up the bulls again. Once the tap is really turned fully open then the bulls are off and running until they stampede right over the edge.

Greed and fear. It's in all of us if you watch closely enough.

So they are both crucial really.

hey eppo genuine question - who are these "elite puppet masters" of whom you speak? couple of names will do.

I do agree our govt and most globally will do all they can to avoid a severe bubble pop as the economy wide destruction is obvious for all to see but just like the gfc the one to worry about is the one that gets beyond their control. In the GFC we were basically a bees dick away from that in the US and EU. Taxpayers came to the rescue. They cant be tapped to anywhere near the same degree next time so what have these elites you speak of got left in the gun?

Anyone one or entity that has strong financial and political influence...they have been around since day dot. The clever foxes that read and control the play.

Download this pdf, fantastic article on property and the role of the FIRE sector. Not pertaining to the puppet masters directly but enlightening never the less.

michael-hudson.com/wp-content/uploads/2010/03/RoadToSerfdom.pdf

Did you know fractional reserve lending was passed in the wee hours of the morning in America when the opposition had few members present to at least debate the issue...Not that I have a problem with increasing the liquidity of credit. That in itself keeps the wheels of the economy going and expanding and can unleash untapped potential.

But when it is used for land speculation (because we allow the economic rent - unearnt income above the actual worth to society as a whole to be traded) then you get the cyclic boom and bust and the resulting property and stock market capitulation. It HAS to happen, not it might, not it could, not "it is different this time" - a catch cry that has been said through many different cycles over history..it HAS HAS HAS to happen.

So instead of this credit being used to fund productive sectors of the economy, we just sell land to each other at higher and higher prices until the actual productive economy cannot support these prices. The banks asset column and resulting lending on these so called assets (remember a mortgage is an asset on a banks ledger, not yours! This allows them to lend against these so called assets at certain multiples.

But this is not producing anything of value! it is not adding true productive capacity, hence wealth to the countries economy. it creates a false wealth effect and people then lend and spend more money on these zero and ones... imaginary money...or more accurately, imaginary value. Then when things are truly in motion they leveraged this credit again to even higher multiples... and it all has no real, tangible basis.

And those that profit from this lobby governments to create policy and law to make sure this Ponzi racket is never diluted.

...yes we were hours away from major bank runs until the government stepped in and guaranteed deposits..lucky the coffers were full from the commodities boom driven by China. And the government got awards internationally for it!!! Using tax payers money to fund private institutions liquidity, even thought they allowed (and made huge profits) the credit to be lent in the first place.

So you want to know some of these elite movers and shakers start with these big banks that are apparently to big to fail!.

Private owners running private businesses make huge profits on creating and lending money (the RBA is NOT a government institution by the way!!), then when it all goes belly up, tax payers money is used (or more to the point we lend robbing the future generations of their wealth) to bail them out. Talk about robbing from the poor and middle class... they have just got more sophisticated and far better at doing it over history. Now they can also control a docile ipad generation with the 24/7 media cycle.

..and you think the game is not rigged!

wake the fck up.

You make some good points there eppo particularly about the gross economic inefficiency of our facination with unproductive land speculation but like all conspiracy theorists you make the fatal flaw of giving far too much credit to these "elite" conspirators. Theres no agenda the likes of what you assert - the different players are far too diverse and self interested to coordinate a grand plan over any realistic time frame.

Except in times of crisis

What i agree does happen in times like the GFC is they get involved and try and protect their interests as best they can in hindsight and yes they can do it better than most particularly in the US. The pathetic theft of taxpayers funds to bail out the too big to failers from the US to Europe is proof of that. But there was no plan that hey we are going to create a GFC then we are going to bail ourselves out when it happens. Theres too many uncontrollable outcomes for starters.

The bail outs in part led to trumpism of course (and just as likely could have led to attempted socialism under sanders) but Australia IS different. The RBA IS a govt institution. We arent a republic so cant elect a populist president to "drain the swamp" and upset the applecart. We never really had our piece of the GFC.

Things are much more mundane here which is in its own way a bit scary as it means we will continue down the same old path of property speculation with successive govts of both persuasions and your elites propping it up until our economy shatters under its weight. On that we agree. But no one will be in control of this train wreck. When it happens the proverbial "debt can" will have been kicked so far down the road we will only have one way out - severe economy wide depression for maybe a decade or more. This time it IS different but not in a good way.

Those elites will be as farked on a relative basis as the rest of us at that point.

^^ very good.

Excerpt from the transcript of "97% Owned" a monetary reform documentary:

"I think a lot of people in the UK probably think that the government or the central bank is in control of most money in circulation and issues new money into circulation, but that's not the case.

It's private banks that create the vast majority of new money in circulation and also decide how it's allocated."

Most people have this quaint idea that the economy operates in a similar fashion to the way that they run their own finances.

Nothing could be further from the truth.

Select to expand quote

japie said..
It's private banks that create the vast majority of new money in circulation and also decide how it's allocated."

Most people have this quaint idea that the economy operates in a similar fashion to the way that they run their own finances.

Nothing could be further from the truth.

Of course they do - that's what they're for!

If people don't realise that, it's because they skipped high-school economics or just never stopped to think about it. That doesn't make it a sinister plot.

When you deposit your $100 note in a savings account, you exchange it for a promise from your bank to give it back on demand. That promise has as much value to you as the $100 note, but they have lent the $100 to someone else - it's not "in the bank", though you regard it as so. So the bank has created money - that's great! It's also completely fine - it works.

I don't know how televisions work - that doesn't mean the NWO are behind it.

The problem lies with the fact that banks are responsible for the lions share of the money supply.

There does not need to be a conspiracy about elites. Banks are probably the most profitable of all businesses so it follows that investment in banks would be dominated by the wealthiest people in society.

Where the problem lies is with the fact that banks can, and do, expand the money supply in order to make a profit. There is no social responsibility or altruistic goal here. Aus will argue that they provide a service. They do.

But their primary function is to provide their shareholders with as big a return as is possible. And therein lies the rub!

They will always push themselves to the limit, more so now than ever before now that they know they are "too big to fail".

And they will always look to provide finance where the returns are easiest. For example housing.

Which ensures that we will continue along the boom bust cycle until such time as enough people educate themselves as to what is going on and a majority bring about the provision of a money supply which does not rely on profit as a motive for its expansion.

It has been tried before successfully for a time but was subjected to counterfeiting. The technology did not exist to make it impossible.

It does now.

Hey Japie, when you say " banks are responsible for the lions share of the money supply " what's your definition of money supply ........... loans?

Money is pretty much 95% digital so most of the "money" exists on bank computers.

"It's basically an accounting trick..banks create money. They don't lend it .when a bank gives out what is called a loan, it basically pretends that you have deposited the money. it has to invent the liability. this is how the money supply is created." (Professor Richard Werner)

This is a timely read that succinctly sets out the problem by differentiating the "asset" created by banks that increases money supply( the mortgage) vs the interest repayment obligation ( the liability) that destroys future economic growth.

If future interest repayments exceed economic growth we are farked basically....

thewest.com.au/business/markets/gareth-costa-record-low-bond-yields-are-compounding-interest-problems-ng-b881159776z

Select to expand quote

Bara said..

eppo said..

Bara said..

eppo said..

Paddles B'mere said..
Is "the ebb and flow of credit" influenced by investor "confidence" (or acceptance of the risks for the right amount of reward) as well? I mean, there's investors right the way up the tree. The bank has investors that invest their capital with them so they in turn can invest the money with borrowers who invest with purchases that hopefully increase in value. All these people are making investment decisions based on the risk and the marginal gains and are increasing/reducing their exposure to risk accordingly. Surely this influences the ebb and flow of available capital.

Yeh good points. Chicken or the egg syndrome. One influences the other of course really. Then you have to overlay the overall macro state of affairs and localised variations.

Also this include the incessant interference of governments (through policy / law ) changes dictated by their elite puppet masters. (If you think this is just conspiracy theory then one can either surmise you haven't lived enough, have been living under a rock or you just don't have the IQ to grasp this).

The inherent investor psychology of greed and fear most definetly has the greatest influence running up and near the peak and also during and after the major correction.

Takes credit restriction to ease (credit to start flowing once banks begin to fix their balance sheets by off loading bad debts - this will take time) to thaw out then warm up the bulls again. Once the tap is really turned fully open then the bulls are off and running until they stampede right over the edge.

Greed and fear. It's in all of us if you watch closely enough.

So they are both crucial really.

hey eppo genuine question - who are these "elite puppet masters" of whom you speak? couple of names will do.

I do agree our govt and most globally will do all they can to avoid a severe bubble pop as the economy wide destruction is obvious for all to see but just like the gfc the one to worry about is the one that gets beyond their control. In the GFC we were basically a bees dick away from that in the US and EU. Taxpayers came to the rescue. They cant be tapped to anywhere near the same degree next time so what have these elites you speak of got left in the gun?

Anyone one or entity that has strong financial and political influence...they have been around since day dot. The clever foxes that read and control the play.

Download this pdf, fantastic article on property and the role of the FIRE sector. Not pertaining to the puppet masters directly but enlightening never the less.

michael-hudson.com/wp-content/uploads/2010/03/RoadToSerfdom.pdf

Did you know fractional reserve lending was passed in the wee hours of the morning in America when the opposition had few members present to at least debate the issue...Not that I have a problem with increasing the liquidity of credit. That in itself keeps the wheels of the economy going and expanding and can unleash untapped potential.

But when it is used for land speculation (because we allow the economic rent - unearnt income above the actual worth to society as a whole to be traded) then you get the cyclic boom and bust and the resulting property and stock market capitulation. It HAS to happen, not it might, not it could, not "it is different this time" - a catch cry that has been said through many different cycles over history..it HAS HAS HAS to happen.

So instead of this credit being used to fund productive sectors of the economy, we just sell land to each other at higher and higher prices until the actual productive economy cannot support these prices. The banks asset column and resulting lending on these so called assets (remember a mortgage is an asset on a banks ledger, not yours! This allows them to lend against these so called assets at certain multiples.

But this is not producing anything of value! it is not adding true productive capacity, hence wealth to the countries economy. it creates a false wealth effect and people then lend and spend more money on these zero and ones... imaginary money...or more accurately, imaginary value. Then when things are truly in motion they leveraged this credit again to even higher multiples... and it all has no real, tangible basis.

And those that profit from this lobby governments to create policy and law to make sure this Ponzi racket is never diluted.

...yes we were hours away from major bank runs until the government stepped in and guaranteed deposits..lucky the coffers were full from the commodities boom driven by China. And the government got awards internationally for it!!! Using tax payers money to fund private institutions liquidity, even thought they allowed (and made huge profits) the credit to be lent in the first place.

So you want to know some of these elite movers and shakers start with these big banks that are apparently to big to fail!.

Private owners running private businesses make huge profits on creating and lending money (the RBA is NOT a government institution by the way!!), then when it all goes belly up, tax payers money is used (or more to the point we lend robbing the future generations of their wealth) to bail them out. Talk about robbing from the poor and middle class... they have just got more sophisticated and far better at doing it over history. Now they can also control a docile ipad generation with the 24/7 media cycle.

..and you think the game is not rigged!

wake the fck up.

You make some good points there eppo particularly about the gross economic inefficiency of our facination with unproductive land speculation but like all conspiracy theorists you make the fatal flaw of giving far too much credit to these "elite" conspirators. Theres no agenda the likes of what you assert - the different players are far too diverse and self interested to coordinate a grand plan over any realistic time frame.

Except in times of crisis

What i agree does happen in times like the GFC is they get involved and try and protect their interests as best they can in hindsight and yes they can do it better than most particularly in the US. The pathetic theft of taxpayers funds to bail out the too big to failers from the US to Europe is proof of that. But there was no plan that hey we are going to create a GFC then we are going to bail ourselves out when it happens. Theres too many uncontrollable outcomes for starters.

The bail outs in part led to trumpism of course (and just as likely could have led to attempted socialism under sanders) but Australia IS different. The RBA IS a govt institution. We arent a republic so cant elect a populist president to "drain the swamp" and upset the applecart. We never really had our piece of the GFC.

Things are much more mundane here which is in its own way a bit scary as it means we will continue down the same old path of property speculation with successive govts of both persuasions and your elites propping it up until our economy shatters under its weight. On that we agree. But no one will be in control of this train wreck. When it happens the proverbial "debt can" will have been kicked so far down the road we will only have one way out - severe economy wide depression for maybe a decade or more. This time it IS different but not in a good way.

Those elites will be as farked on a relative basis as the rest of us at that point.

Bara when did I say the crashes are purposeably created by the elite?

What i have said is not a conspiracy. Unless it's been running for over 300 years. But the elite do know their history and do their damndest to shape it, as anyone with money and power would. Of course some get caught in the crossfire and of course they hurt like everyone in a crash.

Its economic law. You allow unearned income to be traded on an open market and commoditised back into the price, and especially on land, then you will get the boom and bust cycle. It's has to happen.

There is no conspiracy about that, nor can their be any doubt that those with power and money will influence tothe point of dictate government policy. You would if you could. It's only natural.

So please people don't buy into conspiracy theories...just look at history and the numbers.

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AUS1111 said..

japie said..
It's private banks that create the vast majority of new money in circulation and also decide how it's allocated."

Most people have this quaint idea that the economy operates in a similar fashion to the way that they run their own finances.

Nothing could be further from the truth.

Of course they do - that's what they're for!

If people don't realise that, it's because they skipped high-school economics or just never stopped to think about it. That doesn't make it a sinister plot.

When you deposit your $100 note in a savings account, you exchange it for a promise from your bank to give it back on demand. That promise has as much value to you as the $100 note, but they have lent the $100 to someone else - it's not "in the bank", though you regard it as so. So the bank has created money - that's great! It's also completely fine - it works.

I don't know how televisions work - that doesn't mean the NWO are behind it.

It workS....!!! It works for who? Dear god man learn your true money supply theory and see where the benefit of productive wealth flows to... it works...god help us with that attitude. Fractional reserve lending and the further leveraging on this money Supply(which essentially robs the benefits of future production to keep the present Ponzi scheme afloat) should, could send the next cyclic crush into the a hole that may be just too damn hard to crawl out of this time. It works hey...2007 nearly saw the end of the facade.... but there was still some can kicking, Creative accounting and more money that could be produced out of thin air to keep it going..infact there is a far greater deal of instability in the system now from this...

you had better get further passed your high school economics I think... and try to study passed 1973... because what you described is more like what happens on th gold standard...even then you are wrong...because teh gold standard allowed multiples on deposits as well. What you describe is more like the early banks roles ...like 200 years ago,,,!, 100 bucks promise for 100 bucks deposit hey.... mate please...read some more before you write something so naive and juvenile.

it works... Jesus Christ. Yeh the world And the majority of its citizens are doing so well...it's works for the very few...and it allows inflation which is the ultimate sinister tax created to reduce overall debt owed.

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japie said..
Money is pretty much 95% digital so most of the "money" exists on bank computers.

"It's basically an accounting trick..banks create money. They don't lend it .when a bank gives out what is called a loan, it basically pretends that you have deposited the money. it has to invent the liability. this is how the money supply is created." (Professor Richard Werner)

Of course the process of creating money out of thin air is regulated by prudential regulators...for obvious reasons.

Read it from the conspiracy website, The Bank Of England.

www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy.pdf

LOLOLOLOL

"One common misconception is that banks act simply as intermediaries, lending out the deposits that savers place with them."
Bank Of England

This is otherwise known by many more astute economists as "fountain pen money". Money that's created out of thin air upon establishment of a loan.

It appears therefore that AUS is suffering from a common misconception still hanging on since his orthodox mis-schooling in university.

^^ Are you commenting without reading the thread?

Banks create money. When you deposit your money in the bank you exchange it for a promise from your bank, which is also money.

Flat-Earthers like yourself seem to think this is a conspiracy.

...and if you think it doesn't work, as Eppo seems to imply, then consider the alternative.

a) Yes I've read the thread. Obviously you haven't really digested what is being said and instead you are resorting to the usual garbage about conspiracies....you do seem quite obsessed by conspiracy theories after all...
b) Yes banks largely create money out of thin air when they create a loan. That's the whole point.
c) No I'm not a flat earther and nor do I think this is a conspiracy. Obviously if you think I'm a flat-earther you must not be reading threads or you can't string together a sentence without mentioning ridiculous un-related topics like flat earth conspiracy theories. How could the reality be a conspiracy?
d) You're operating under the illusion that what you learned in university about the money-multiplier lending model and reserve ratios etc being the reality, when in truth the way money is created is quite different. No one here is calling this a nefarious conspiracy. Simply what we're doing is pointing out that what banks do, unlike any other entity, is make money out of thin air.
e) Obviously you haven't comprehended what Eppo's saying. He's NOT saying it "doesn't work". He's saying it's a bloody rip off, because the bank is charging you interest on money it's just created out of thin air. You just don't see any issues with this, do you.....?

The question is whether this is just. If you want to call it normal or right then sure that's your right.

I suppose the alternative is that we live in a world where we can build a future without bankers making squillions out of ordinary people for lending them money they don't actually in reality, have at the time of the loan.

It sounds a lot like this is alarming when in reality, this is just how banks create money out of thin air.

AUS you claimed that when someone deposits money in a bank and then the bank lends that to someone else that the bank has created money. This is simply false. What actually happens with fractional reserve lending is that far more money is lent than is kept in deposits or cash or investments like shares and physical assets.

^^ Makes sense. I've often wondered why people resort to labelling others as conspiracy theorists when they're describing reality....very interesting psychology. In truth banks don't make money out of thin air Adriano, they make it upon the hard work of ordinary workers and businesses.

Interest is really a form of bankers tax, levied on deposits created largely out of thin air. I guess that's why some people find it a distasteful arrangement.

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eppo said..

Bara said..

eppo said..

Paddles B'mere said..
Is "the ebb and flow of credit" influenced by investor "confidence" (or acceptance of the risks for the right amount of reward) as well? I mean, there's investors right the way up the tree. The bank has investors that invest their capital with them so they in turn can invest the money with borrowers who invest with purchases that hopefully increase in value. All these people are making investment decisions based on the risk and the marginal gains and are increasing/reducing their exposure to risk accordingly. Surely this influences the ebb and flow of available capital.

Yeh good points. Chicken or the egg syndrome. One influences the other of course really. Then you have to overlay the overall macro state of affairs and localised variations.

Also this include the incessant interference of governments (through policy / law ) changes dictated by their elite puppet masters. (If you think this is just conspiracy theory then one can either surmise you haven't lived enough, have been living under a rock or you just don't have the IQ to grasp this).

The inherent investor psychology of greed and fear most definetly has the greatest influence running up and near the peak and also during and after the major correction.

Takes credit restriction to ease (credit to start flowing once banks begin to fix their balance sheets by off loading bad debts - this will take time) to thaw out then warm up the bulls again. Once the tap is really turned fully open then the bulls are off and running until they stampede right over the edge.

Greed and fear. It's in all of us if you watch closely enough.

So they are both crucial really.

hey eppo genuine question - who are these "elite puppet masters" of whom you speak? couple of names will do.

I do agree our govt and most globally will do all they can to avoid a severe bubble pop as the economy wide destruction is obvious for all to see but just like the gfc the one to worry about is the one that gets beyond their control. In the GFC we were basically a bees dick away from that in the US and EU. Taxpayers came to the rescue. They cant be tapped to anywhere near the same degree next time so what have these elites you speak of got left in the gun?

Anyone one or entity that has strong financial and political influence...they have been around since day dot. The clever foxes that read and control the play.

Download this pdf, fantastic article on property and the role of the FIRE sector. Not pertaining to the puppet masters directly but enlightening never the less.

michael-hudson.com/wp-content/uploads/2010/03/RoadToSerfdom.pdf

Did you know fractional reserve lending was passed in the wee hours of the morning in America when the opposition had few members present to at least debate the issue...Not that I have a problem with increasing the liquidity of credit. That in itself keeps the wheels of the economy going and expanding and can unleash untapped potential.

But when it is used for land speculation (because we allow the economic rent - unearnt income above the actual worth to society as a whole to be traded) then you get the cyclic boom and bust and the resulting property and stock market capitulation. It HAS to happen, not it might, not it could, not "it is different this time" - a catch cry that has been said through many different cycles over history..it HAS HAS HAS to happen.

So instead of this credit being used to fund productive sectors of the economy, we just sell land to each other at higher and higher prices until the actual productive economy cannot support these prices. The banks asset column and resulting lending on these so called assets (remember a mortgage is an asset on a banks ledger, not yours! This allows them to lend against these so called assets at certain multiples.

But this is not producing anything of value! it is not adding true productive capacity, hence wealth to the countries economy. it creates a false wealth effect and people then lend and spend more money on these zero and ones... imaginary money...or more accurately, imaginary value. Then when things are truly in motion they leveraged this credit again to even higher multiples... and it all has no real, tangible basis.

And those that profit from this lobby governments to create policy and law to make sure this Ponzi racket is never diluted.

...yes we were hours away from major bank runs until the government stepped in and guaranteed deposits..lucky the coffers were full from the commodities boom driven by China. And the government got awards internationally for it!!! Using tax payers money to fund private institutions liquidity, even thought they allowed (and made huge profits) the credit to be lent in the first place.

So you want to know some of these elite movers and shakers start with these big banks that are apparently to big to fail!.

Private owners running private businesses make huge profits on creating and lending money (the RBA is NOT a government institution by the way!!), then when it all goes belly up, tax payers money is used (or more to the point we lend robbing the future generations of their wealth) to bail them out. Talk about robbing from the poor and middle class... they have just got more sophisticated and far better at doing it over history. Now they can also control a docile ipad generation with the 24/7 media cycle.

..and you think the game is not rigged!

wake the fck up.

Excellent solution.

/sarcasm
/devil's advocate.

Excellent posts Eppo. But what can we do about it? Vote in more politicians? Make our own money? LOL.

You might like to add that if you default on your loan , which is made out of non existent money then the banks take your assets..!

^ Conspiracy theorist!

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eppo said..

Bara when did I say the crashes are purposeably created by the elite?

What i have said is not a conspiracy. Unless it's been running for over 300 years. But the elite do know their history and do their damndest to shape it, as anyone with money and power would. Of course some get caught in the crossfire and of course they hurt like everyone in a crash.

Its economic law. You allow unearned income to be traded on an open market and commoditised back into the price, and especially on land, then you will get the boom and bust cycle. It's has to happen.

There is no conspiracy about that, nor can their be any doubt that those with power and money will influence tothe point of dictate government policy. You would if you could. It's only natural.

So please people don't buy into conspiracy theories...just look at history and the numbers.

Just from your last couple posts mate -

"Also this include the incessant interference of governments (through policy / law ) changes dictated by their elite puppet masters. (If you think this is just conspiracy theory then one can either surmise you haven't lived enough, have been living under a rock or you just don't have the IQ to grasp this)"

"The clever foxes that read and control the play."

"Now they can also control a docile ipad generation with the 24/7 media cycle.

..and you think the game is not rigged!

wake the fck up."

Yeah fits a a conspiracy theory definition to me ie an idea that some elite group is collectively "controlling" the outcomes.

Like i said i pretty much agree with you on the outcome namely inevitable financial catastrophe from the debt time bomb we have created over the last 30 odd years but not on the cause being the result of controlling elite puppet masters or some inevitable flaw in our fundamental economic principles.

Where i think you lose the argument is on the diversity of desired outcomes from those attempting to control everything. For every "elite" wanting outcome A being in their best interests theres another 4 or 5 wanting outcomes B through F. That diversity falls away in a crisis like i said and we get what happened in the GFC and in its aftermath. That coordination will prove very costly to all of us but it wasnt controlled or coordinated - it was arse covering.

Likewise the embedding of your "unearned income" into an assets price ie the use of yield to determine asset price does not in itself cause the boom and bust cycle. Its just the mechanism.

Rather in modern finance its the access to easy credit that in turn crushes yields/ inflates prices that leads to an asset boom that must bust when credit eventually tightens one way or another. This is the economic law.

The various central bank elites dont ultimately control that credit by the way they just attempt to smooth it. Though since the GFC they have gone to another level and attempted smoothing on steroids.

Anyway it doesnt really matter how we are gonna get to where we are heading as i think its pretty much unavoidable now and on that we agree. The only thing left to do is try and identify when it happens. The central banks have bought time by bringing future consumption forward on an unprecedented scale which while delaying things has made the eventual crash multiples bigger. They will continue to try to do this but eventually they will fail spectacularly. I would rather talk about what bullets they might have left in the armoury which was my original question.

How to identify when? There will be signs but for 99% of us they will only be obvious in hindsight. Watch the bond markets - they are nervous - the recent US yield inversion is proof of that but just as quickly as it inverted it flipped back to parity. Some of the smarted most well connected people out there still cant agree on the when.

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Adriano said..
a) Yes I've read the thread. Obviously you haven't really digested what is being said and instead you are resorting to the usual garbage about conspiracies....you do seem quite obsessed by conspiracy theories after all...
b) Yes banks largely create money out of thin air when they create a loan. That's the whole point.
c) No I'm not a flat earther and nor do I think this is a conspiracy. Obviously if you think I'm a flat-earther you must not be reading threads or you can't string together a sentence without mentioning ridiculous un-related topics like flat earth conspiracy theories. How could the reality be a conspiracy?
d) You're operating under the illusion that what you learned in university about the money-multiplier lending model and reserve ratios etc being the reality, when in truth the way money is created is quite different. No one here is calling this a nefarious conspiracy. Simply what we're doing is pointing out that what banks do, unlike any other entity, is make money out of thin air.
e) Obviously you haven't comprehended what Eppo's saying. He's NOT saying it "doesn't work". He's saying it's a bloody rip off, because the bank is charging you interest on money it's just created out of thin air. You just don't see any issues with this, do you.....?

The question is whether this is just. If you want to call it normal or right then sure that's your right.

I suppose the alternative is that we live in a world where we can build a future without bankers making squillions out of ordinary people for lending them money they don't actually in reality, have at the time of the loan.

It sounds a lot like this is alarming when in reality, this is just how banks create money out of thin air.

AUS you claimed that when someone deposits money in a bank and then the bank lends that to someone else that the bank has created money. This is simply false. What actually happens with fractional reserve lending is that far more money is lent than is kept in deposits or cash or investments like shares and physical assets.

damn thats 20 mins i cant get back. Nothing new there but its completely misleading as its only showing one side of the equation in order to show "free money out of thin air" to try and bash the evil banks

There is another side which is made up of the future income of the people taking out the loans. Its legally owed to the bank. Thats the offsetting liablity to the asset on an economy wide basis. Debt. For every debit there is a credit.

The banks are merely facilitating our demand for debt. Our desire to bring forward our future income and spend it or speculate with it now. Should they have done it? clearly not on such a scale as history will show but was it some evil conspiracy on the part of evil bankers? no. No one made us take out these loans.

Our govt run central banks do have a culpability though. In dropping interest rates to negative real rates and keeping them there they made it all but impossible to say no to such cheap loans for the average punter.

The real problem is not the loans or even the amount of the leverage used on an economy wide scale - its the purpose of the loans. If the loans are for consumption or non productive investment ( eg land speculation) then that is the problem as it isnt matched with a commensurate increase in future income.

Again, it appears the only people to be talking about conspiracies are those arguing on the side of the "good banks".

The banks aren't 'making money', they are simply charging a commission for being an intermediary for a lot of loans, which means they are getting a % income from loans that use other people's money, not money that they've 'invented'. There's nothing magic or mystical going on.

In the end they are taking a % from a quantity of future wealth that various people have promised to transfer to one another. People call these promises 'money'.