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Samizdata quote of the day – Tossery built upon ignorance Cash savings are not dead money – they’re the deposits that finance the banks’ loan books.
Tossery built upon ignorance. Richard Murphy – that Sage of Ely – is one of the few people in the country able to proffer up budget ideas even worse than the ones we’re going to get from Rachel this week.
– Tim Worstall
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I wish cash savings were the only source of bank lending – sadly Credit Money expansion (Credit Bubble blowing) is the vast majority of it.
However, I agree with Tim Worstall, the idea that savings are “dead money” is utterly false, Richard Murphy has managed to observe the current situation, which is horrific, and come up with a way of making it even WORSE.
Richard Murphy, the BBC’s go to financial expert. You really couldn’t make it up.
If one can magic up money out of thin air, cash savings really are for chumps. I mean they shouldn’t be, but cash savings are this thing that get devaluated every time the government waves its “cash does grow on trees” magic wand. I guess it is always better to be a wizard than a muggle if you can, especially if Voldemort is on the prowl.
Fraser Orr – sadly so, good point Sir.
But for many people a bit of cash savings is all they have.
Government or BANKS (and other such financial institutions).
“Free Banking” is a lie – as when the banker Credit Bubble bursts (which it inevitably does), the banks scream for a “suspension of cash payments”.
It was ever thus – for example even in Scotland in the 1700s (the so called golden age of “free banking”) whenever there was a bust (again – busts are inevitable if there is Credit Expansion) the compliant courts ruled that the banks did NOT have to hand over the gold and silver (the cash) that they were contractually obliged to hand over – so, in effect, the contracts were not worth the paper they were written on.
But nor does Central Banking work – as was shown in Britain in 1931 (94 years of waiting for “I promise to pay…”) and even more in 1933 in the United States – where not only were people cheated of the gold they (supposedly) had in the banks, the government also demanded (on the threat of imprisonment) that people hand over any monetary gold they had in their own homes – they were allowed to keep their wedding rings and other such. When the United States government cheated other governments of their gold in 1971 (another “temporary emergency” that has lasted 54 years) “one would have to had a heart of stone – not to LAUGH” (criminals being cheated by other criminals).
If there was any doubt, such actions confirmed that the “modern economy” is a criminal enterprise – with banks and other such corporations joined at the hip with governments.
So “the left are half right” – although their “alternative” is even more criminal.
Far more criminal.
Interesting.
What do you think that “Free Banking” means, as it’s formally used in economic circles?
Related: what do you think that “Free Money” means, with the same caveats?
“Free Banking” is supposed to mean banking with government involvement – but, even if there is no Central Bank, as soon as banks use the compliant courts to get out of their contractual obligations to pay cash-on-demand to depositors, with “suspension of cash payments” being allowed by the said compliant courts, it is no longer “free banking” – it has become a lie.
If I deposit grain in a grain silo on condition that I will be given it on demand – that is a contract.
Ditto if I deposit gold or silver (or any other commodity) in a bank – if the condition was that I have the gold (or silver – or whatever was agreed) on demand, they must hand it over, or go “bank-rupt”.
No “suspension of cash payments” by compliant courts.
By the way….. Western “gold markets” and “silver markets” and so on, are “dodgy” to say the least – as much of what is traded DOES NOT EXIST.
If you buy gold, or anything else, and you can not put your hand on it – you do NOT have it (you have been sold the contents of an empty bag).
Silly me – I meant to type “Free Banking is supposed to mean banking WITHOUT government involvement”.
As soon as the bankers go to the courts asking for a “suspension of cash payments” then “Free Banking” is exposed as a lie.
The 19th century had a saying for this “free trade in banking is free trade in swindling” – but, and what is often forgotten, adding a Central Bank does NOT make the system more honest – on the contrary, a Central Bank makes the system even more dishonest.
Somebody’s using that money. Otherwise, you wouldn’t be getting interest on it.
“sadly Credit Money expansion (Credit Bubble blowing) is the vast majority of it.”
That’s the logical outcome of fiat currency; otherwise, the banks would bankrupt each other whilst clearing checks.
Steve D – if Credit Bubble blowing is the logical outcome of fiat money (and you may well be correct) that shows how evil (yes – evil, a moral evil – as well as an economic harm) that fiat money is.
Back before the creation of the Federal Reserve, Mr J.P. Morgan used to lend out three “Dollars” for every Dollar of physical gold he had in his physical possession (in his vaults) – he was considered a rogue (and perhaps he was) – but by modern standards he was a saint.
By the way – even back then (the early 1900s) the London bankers were a lot looser (not more honest – less honest) than Mr Morgan = their Credit Bubbles were much bigger, and were (de facto) backed by the Bank of England – which has never deserved its good reputation.