ONLY ONE IN TEN MPs KNOW THAT MONEY IS CREATED AND DESTROYED BY THE BANKS

http://www.positivemoney.org/2014/08/7-10-mps-dont-know-creates-money-uk/

 

WRITTEN BY BEN DYSON (POSITIVE MONEY) ON AUGUST 19, 2014.

MPs lack basic knowledge about the fundamentals of money, leaving them ill-equipped to understand the impending dangers of another house price boom or a second credit bubble, according to an exclusive Dods Monitoring poll commissioned by Positive Money, the campaign body calling for fundamental reform of our money and banking system.

When asked questions about who creates the nation’s money in the UK, nearly three quarters got the wrong answer. 71% of MPs believed that only the government has the power to create money. In reality, the government now only creates coins and notes, which make up just 3% of all the money in the economy. The other 97% of money exists as bank deposits – the electronic numbers in your bank account). This type of money is created by high-street banks – not by the government.

Just over 1 in 10 MP accurately understood that banks create new money every time they make a loan, or that money is destroyed whenever individuals or businesses repay loans.

………….Read the rest of this interesting article from this lPositive Money website link  below

http://www.positivemoney.org/2014/08/7-10-mps-dont-know-creates-money-uk/

And I include just two of the comments here because they reveal some astonishing information about what banks get up to. (you can see the rest when you read the full article via the Positive Money website link above).

simonthorpe • a month ago
One way to illustrate the role played by banks is to look at the amount of Assets that Banks have relative to capital. It is commonly believed that banks can only lend around 10 times their capital. But the most recent figures show that while the 50 largest banks in the world have $67.6 trillion in assets, they only have $722 billion in capital – an overall ratio of about 88 to 1. Indeed, several banks have more than 1000 times more assets than capital (see http://simonthorpesideas.blogs…
How do they do it? Well, the Basel II and III rules say that when banks create money to lend to AAA to AA- rated governments, such loans have a risk weighting of 0% – meaning that they need no capital at all to make the loans. It’s not surprising that Europe’s governments now owe over $11.4 trillion to the financial system, and that last year European taxpayers paid €365 billion in interest payments, bringing the total amount of interest paid to €6.2 trillion since 1995. These are interest payments made to a financial sector that didn’t even have the money that they lent. (see http://simonthorpesideas.blogs… )
This insane situation is likely to continue while 7 out of 10 MPs have not understood that when the UK government borrows money from the markets, that money is created out of thin air. Well done Positive Money for showing how ignorant our leaders are.

 

bankster01 • a month ago
Robert Peston in his book “How do we fix this mess ?” on page 183 I think, says ” Only the bank of England can create money”. This book describes very well how the financial crisis occurred, I have not got to his proposed solutions, which probably mainly involves separating risky investment banks from boring retail banks. He is a top economist and journalist, but in his book he gives no adequate explanation as to how the UK money supply tripled in 10 years from 1997. He seems to imply that central banks created, then lent money at very low rates to the commercial banks who then lent it on to us. Some banks used securitisation, or sold on their existing loans so they could further increase their lending. I do not think over £1 trillion pounds was created in 10 years by the Bank of England for commercial banks to lend on, or a wall of foreign money was used by the commercial banks to increase lending either. The Bank of England has provided cheap credit for schemes like “Funding for lending”, in the hope that commercial banks would lend it on when the economy was on it’s knees, but it was not doing that in the boom years. It was simply all the banks increasing their lending in step, knowing that new deposits would then flow back to them, to support further lending. Peston writes a lot of good stuff, but he implies like a lot of economists that money is just “oil” for the economic machine, when really it is petrol, fuel for the fire.

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