Mostly in my guise as Little Nicky Machiavelli, Ive pointed out for years that banks create money out of thin air. With many economics pundits predicting another, bigger than 2008, financial crash as ustable currency floods the world it has now finally struck mainstream media that our money is worthless, the only thing underpinning it is debt, your debt, your neighbours debt, Old Uncle tom Cobbleigh’s debt, George Osborne’s debt my … oops; I have no debts, repugnantly sensible person that I am, I saw it coming. The outcome is inevitable when loans come first and then deposits FOLLOW.
In fact the money you borrow is bundled with the debts of others and used as collateral by your bank to secure loans from investment banks which will be used to make further loans to punters like you. If you think this sonds a lot like creating money from air, it is exactly that. The global economy is a giant Ponzi scheme, thanks to ‘liberal’ and ‘socialist’ (for both read corporatist) politicians and fuckwit economists with the intelligence of turnips perverting Keynesian economics to justify the infinite public spending oligarchic collectivism requires.
This is the most important secret about modern banking because it demolishes one of the biggest myths preventing a true economic recovery, challenges one of the main pork barrel profit centers for big banks. If finance ministers heed to common sense brigade and ignore the siren song of academics, running a national economy is just like managing a household budget but with much bigger sums involved and thus much bigger economic catastrophes as the consequence of continually spending more that your income opens up incredible opportunities for a prosperous economy.
This undeniable truth which stands conventional wisdom on its head has now gone mainstream, with not just bloggers like myself, financial market pundits like Tyler Durden of Zero Hedge and the Financial Times Martin Wolf one of the worlds most influential mainstream financial writers says that, since banks create money out of thin air, they should be stripped of this power, and limited to normal depository functions.
In other words they should not be able to lend money that is not underwritten by deposits or substantial assets, a bundle of debts is not a substantial asset, it is an effing debt, money owed which carries a risk that it will not be repaid. For example, The Deutschebank’s $75 trillion holdings of debt derivatives is worth absolutely eff all until people repay their debts. Simples. Or maybe not if you consider it amounts to 20 times Germany’s GDP.
Wolf indicates the centrality and importance of the issue with his subtitle: The giant hole at the heart of our market economies needs to be plugged.
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