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.

IS THIS BANK EXTORTION CRIMINAL ?

I just thought this story about how the Consumer Action Group was started was quite interesting – read on and judge for yourselves.

The Consumer Action Group – About Us

One day in 2004 I found that my career was going nowhere and I decided to change job.

I found a job that would enable me to follow a career path that was better suited to me and more ‘future proof’. It did, however mean a small cut in pay.

To cut a long story short, when I arrived at my new job, I found that although the contract of employment stated that I would be paid on a given date by ‘direct transfer’ the translation into English went along these lines:

“We’ll pay you around that date if we can be bothered and by cheque – usually on a Friday afternoon at 17.30, so no hope of receiving the money for another 4-5 days.”

I had, of course, upon receipt of my new employment contract, changed my Direct Debits and Standing Orders to leave my account a couple of days after the new pay day.

This meant that I was charged £32 for each of the 12 Direct Debits I had set up on my account – as the bank simply refused to cancel them – I was charged £15 for a late payment to a loan I had at the time – I was charged £30 for NOT paying a Standing Order for £3 to the Children’s Society, and £32 a few days later for paying it. And the £20 fine for not paying my Barclaycard on time as well.

Total: £481

I mentioned this to my new employer who replied “tell them you’re not paying!”.

Very constructive. For a variety of reasons I left this firm after a short period – just before they went bust in fact – hence I couldn’t go after them for the money.

The £481 taken from my account of course left me £461 down the following month – again this caused a host of DD’s to bounce etc… including one to my partners account for ‘housekeeping’, and for taking the kids out etc… In turn this meant that DD’s from her account were ‘bouncing’ too.

Over a period of 13 months, Abbey took nearly £5000 from our accounts, and the loan company about £500.

The final straw came once I had borrowed, saved(???) and generally fought to pay off these charges so we could get back on our feet.

My eldest daughter needed new shoes (their feet grow fast you know), and of course when I checked my balance it seemed Abbey (despite my pleading with them, begging, and trying a variety of ways to stop the charges and/or Direct Debit payments etc…) STILL wanted a final £120. So no shoes for my little girl then. So long as the shareholders are happy – that’s all that matters.

Again, although I knew the form by now, I phoned them, and asked that they do not take it – could they not see that I have struggled hard to pay their charges in the past and was making a HUGE effort to get back on my feet?

No, of course not. They wanted cash and didn’t care if people got hurt in the pursuit of it.

I told the lady on the phone, politely, that I WOULD be getting that money back, and not just that either – everything they had ever taken from me – somehow!

At the same time, I was being harassed by the loan company – 6-7 phone calls a day and a letter from them every other day. I went to see them in their branch – they suggested taking a secured loan to pay of the existing loan (of course they did) – They threatened legal action unless “I do SOMETHING” – I reluctantly completed the Secured Loan application form and was told it would be processed. I was told by their adviser not to worry about paying the existing loan payment as a note would be made on the account about the outstanding loan application.

I continued to be harassed by the loan firm – the people on the phone seemed to have no idea about a secured loan application. They promised to update their records so I wouldn’t be called any more. In fact, they all did – all 6-7 phone calls per day.

After 7 weeks, I was told that due to the charges incurred for late payments on the account my application for the secured loan had been turned down (thank God for small mercy).

I wrote to the company and informed them that now I had incurred extra interest due to being informed NOT to pay the monthly payment – AND, of course charged a further 30 odd quid.

After 8 weeks, I had heard nothing, and so I wrote to the Financial Ombudsman. They wrote to the loan company and duly, I received a reply stating that they had read my letter (in which I had a line pertaining to the legalities of forcing me into more debt – I had no idea of the legal position at the time and this was pure guesswork) and in light of the ‘misunderstanding’ they would credit the account with the full amount taken in charges over my period of difficulty.

Well, that was a turn up for the books. I must have hit the nail on the head!

I re-read the letter that I had sent them, and the only bit I found that could have been responsible for them returning the charges was the line about the legalities of such charging/forcing into debt. I started to research the law regarding penalties.

The letter from the loan company asked me to inform the Ombudsman that the matter was closed.

I didn’t. Not yet.

The loan company phoned me. I said that I wasn’t prepared to do so unless they wiped the WHOLE debt out – about £500. I was pushing my luck, and I had no real basis for doing so apart from being mis-informed about the payments – i.e. I was told NOT to pay it and was nearly forced into securing a loan against our home.

They replied that they would ‘knock off’ an extra £50 as a ‘goodwill’ gesture.

I refused. They ‘knocked-off’ an extra £100.

I was on a roll.

Eventually they agreed to write the whole debt off and to remove the records of late payments with the credit agencies if I sent them a cheque for £100!!

Seven weeks later, I received another phone call from them asking when the cheque would be sent. I told them it would be in another 2 weeks time. They asked why it would be taking so long.

I told them that they had taken 9 weeks to reply to my letter – I would be taking the same amount of time to reply to theirs.

I sent the cheque.

I heard no more from them.

By this time I had found lots of case law where punitive charges were not upheld for a breach of contract.

I wrote to Abbey asking a full refund of the charges.

They refused. I took action through the county court.

They acknowledged my claim, and eventually (at the last minute allowed) entered a defence, claiming that their charges were legal and a true reflection of their costs.

Shortly after this, I received a letter from an externally appointed solicitors firm saying, in essence, “stop suing us and we will agree not to pursue you for our legal costs.”

I replied stating that it was extremely unlikely I would lose, and therefore not liable for their costs, and that in the unlikely event that I did lose, it would have to be an extreme case for a judge to award them costs as the amount was less than £5000 and therefore likely to be heard in the Small Claim Court.

I also told them that if they wrote off my overdraft (the exact amount they had charged me) and sent me a cheque for my court costs so far, that I would then stop suing them.

The next letter from their appointed solicitor agreed to this and requested confidentiality. I refused unless they were intending to pay for this extra ‘service’ that I would be providing their client. They refused and they did not mention the condifentiality again.

A week later, I received a cheque for the full court costs and a letter explaining that my account had been closed.

We then started legal action for my partner – Abbey settled out of court for the full amount claimed plus interest and the court costs incurred so far.

I was then featured in the Money section of the Guardian newspaper and on BBC2’s ‘Working Lunch’.

I was inundated with emails from people in a similar position, and soon realised that this was abuse on a national scale.

I, and a like minded individual (BankFodder to forum users), then started this site to bring this information to the masses and with a mission to bring down this unlawful charging.

Dave.

The Banks’ Abuse of the Credit Register

The banks have traded on their reputation for integrity to foist their penalty charges onto an acquiescent public. Most people consider that “Yes, I did overspend, therefore I do deserve this slap on the wrist. I’ll try harder not to get it wrong next time.”

But the truth is that these penalty charges are unlawful

UK High Street Banks profit out of the ordinary British bank customers sense of decency and moral responsibility. The ordinary British Bank Customer believes that this sense of moral decency is characterised by mutuality.

How wrong we all are.

Retaliatory action by the banks includes peremptory account closure, immediate demand for repayment of overdraft and defaulting the customer on the credit register. This creates a credit ‘Hell’ for the customer for the next 6 years.

A default on the credit register means that your life becomes extremely difficult for at least 6 years – and yet very often the default is placed on the register precisely because the customer could not pay the banks own unlawful charges!

You might ask yourself if there isn’t something fundamentally corrupt when a bank has the right to default a customer FOR ITS OWN PURPOSES without any court action and with no control.

If someone owed you money and didn’t pay you, could you go and put a default entry in the credit register? No of course you couldn’t. You would need a court judgment to do it.

The banks have a privileged access to the default register which they abuse. There is no scrutiny and there is no control.

When the scandal of the banks’ abuse of their dominant and fiduciary position is brought to an end, watch out for the defamation actions – Lots of them.

WEASELY DISHONEST BANK CHARGES

LETTER TO A  BANK

Dear Sirs,

On July 30th you charged me £15 because my rent standing order for £850 on June 28th was not paid because I was short of about 79 pence in my account.

First of all, I would say that it is incredible that you would not make that payment and simply allow the account to go into the red by that 79 pence. When I first started using banks  many years ago it would have been unthinkable for any bank to have not made such a standing order for the want of just 79 pence.

I could write a thesis on all the why’s & wherefores of just why it would be the right thing to do to make such a payment and allow such a tiny ‘overdraft’, but   I hope you have the good sense to see the point without suffocating me in the mindless bureaucratic gibberish spewed out by computers to justify every bit of  extraordinary behaviour inflicted by banks on consumers in modern times.

This charge of £15 is doubly offensive because the lack of funds was not actually my fault and I thought there was at least an additional credit of about £162 in the account at the time – in which case was there would not have been a shortfall of 79 pence and there would have been sufficient funds to pay the standing order.

The sole cause of the lack of funds was that Spark Energy, an entirely dishonest energy supplier (subject to an OFGEM complaint about a lot of appalling behaviour) , had increased my direct debit of £100 monthly to them by 54% without any justification and without telling me.

This matter was dealt with by you when I contacted you about it and several months of that direct debit clawed back according to the rules relating to direct debits.

According to normal principles of law and logic this means that there would therefore have been sufficient funds available to pay my rent standing order of £850 and I am amazed that you have appeared to have dismissed this and gone ahead and just charged me £15 anyway.

And in addition to all the above, I cannot fathom why it is that banks make charges for things like this which have incurred absolutely no cost whatever to your selves as it is simply an automated  computer generated figure out of an account and back again to indicate a non payment.

Or, rather, I know that banks make these charges to make extra profit; but what is just so grossly offensive  is the high handed pomposity of the concept of ‘penalty’ charges  inflicted on customers and treating them as though they were delinquent idiots when it is entirely inappropriate.

It is also the case that this ghastly energy company, Spark Energy, have also had the cheek to charge me £15 for my having to stop the direct debit by which they were fraudulently milking me of unauthorised funds they were not entitled to. If this charge of £15  by Spark Energy isn’t an act of sheer arrogant fraud that has not the slightest shred of justification, I would be completely at a loss as to how else to describe it.

Consequently I find it really, really offensive that I have to waste time writing to you and to Spark Energy to recoup this total of £30 weaseled out of me by the entirely dishonest and fraudulent nature of the aggressively unpleasant and bullying, thug like behaviour of many commercial organisations these days.

There is no justification whatever for treating people like this. And it is this mindlessly greedy pursuit of profit which the financial industry has constructed in recent times which has directly led to the worldwide collapse of the financial system, economic chaos and  tens of millions of people losing their jobs.

HOW MONEY IS CREATED

October 7th 2011

This is copied from the POSITIVE MONEY website at http://www.positivemoney.org.uk/

How Money is Created: A bank is able to extend more money than it actually has in its reserves. That means, that if you want to borrow £10,000, the bank can write those digital numbers into your account even though it doesn’t actually have £10,000. What it does have is faith that you will pay £10,000 back…in real money…that you’ve worked for.

Now if you don’t pay it back, if you default, then the bank has to mark that £10,000 down as a real loss. So there is a risk there! The bank can create money that doesn’t exist, but if you don’t pay it back then the amount will represent a very real loss for the banks. That is what has been happening in the last few years. Banks making big losses on bad loans.

This new money, created by the banks, exists simply as electronic digits in your account. Today, around 97% exists only in electronic format.

Created and lent electronically – in an intangible way – and spent largely with plastic cards.

Banks have created all this new money, out of nothing, and loaned it into society, but they have done so imprudently, and now they are feeling the pain as the defaults start rolling in…and the banks have to account for them as real losses.

Consequently, they are afraid to lend out (effectively create) any more.

So…to recap…banks can extend more money than they have in reserves – and this means they effectively create new money every time they make a loan…and they enjoy the privilege, profit and power which comes from creating the national money supply in this way. Every time banks extend new credit, they are effectively creating new money.

Are you sceptical of that claim?

Well, here is Martin Wolf, Chief Economics Editor at the Financial Times. He says, “The essence of the contemporary monetary system is creation of money, out of nothing, by private banks’ often foolish lending.” (The Financial Times, 9 November 2010.)

Here is President Obama: “…the truth is that a dollar of capital in a bank can actually result in $8 or $10 of loans to families and businesses. So that’s a multiplier effect…” (President Barack Obama, “Remarks by the President on the Economy”, Georgetown University, Washington, D.C., April 14, 2009.

Britain’s money supply is not, contrary to popular belief, created by the Bank of England.

It is created overwhelmingly by the High Street banks, every time they make new loans…by multiplying upon the basis of their actual real reserves.

Banks creating this electronic money out of nothing…has become the way in which virtually all money is supplied to our economy.
 
Now that has consequences for us all.

The first is a democratic consequence! 

The natural state of our economy is to be held hostage to the banks!

The health of our economy is utterly dependent upon the health of the banking sector.

When the banks go down, as a consequence of their “often foolish lending”, they take us with them. 

When the banks fail to lend, because they have decided they need to be more prudent…then – while that may be a sensible business decision for them, as companies – it means, for us, that no money comes into society! 

Our economy goes into recession because there is no new money being created and entering society. 

As a society we have no control over the financial decisions of these private companies. Now, if banks were like all other private companies, then that would not, necessarily, matter so much…but when these companies represent the creators of our very means of exchange, the very life blood that our economy needs to function, then that is a serious problem.

We have allowed them to be in a position where they can turn the tap on and off depending upon their own business decisions.

Fine for them as private companies, but bad for us as a society.

It is a premise of the Positive Money proposal that we should not, as a society, be so dependent upon these companies in this way. In short, the Money Supply is a democratic issue.

Let’s be clear…the Positive Money proposal here is not to nationalise the banks (that wouldn’t make any difference at all if we kept the system as it otherwise is), the proposal is to “nationalise” – which is so say, bring under public control – the money supply…and we have a fully worked out plan which will do exactly that…which I’ll get to.

And of course there are other consequences. The Positive Money website does a very good job of listing these. At present it is engaged in a research project which is detailing many of these…
 
So three questions arise:

1. Is there some way that the national money supply can be publicly-owned by the people and for the people – rather than by the banks and for the banks?  In effect, this means, is there some way that it can be operated by a national institution owned by the public? 

2. Is there some way this money supply process can be made subject to democratic control and accountability, which in effect means through the mechanism of elected politicians and Parliament – unlike at present where there is no democratic control over the unaccountable corporations which create the money supply as a private, profit-making venture; and

3. Is there some way that we, the people, can enjoy the profit from creating the national money supply. In effect that means some way in which the profits can go directly to the public purse at the Treasury – rather than at present where the corporate banking system enjoys the privilege and profit of that power?
 
And the answer, you’ll be pleased to hear…is yes, there is a way! 

Let’s summarise it in two steps… 

Step 1. Commercial banks to be forbidden from creating money out of nothing. All money to be created by a national institution accountable to us democratically through Parliament.

This money will be created “debt-free”, and accounted as such. That means, it will be created and simply spent into society by Parliament in the usual way, via spending in the public and private sectors.

That money will then circulate in society. 

Step 2. The commercial banks will then compete with themselves to attract that money so created, into their savings accounts, and lend out only that money which they have acquired in that manner.

This will not result in inflation since the banks will be unable to multiply up new loans on the basis of any new money they receive.

Our economy will be safe from the consequences of bank failure because we will no longer be relying upon the commercial health of the private banking sector for our national money supply.

In time, it is possible that overall levels of personal and national debt may decrease, rather than rise exponentially as they do at present.
 
Furthermore, Positive Money, as a consequence of 2 years careful work, has assembled this reform in proper legislative format, as a potential draft Westminster Bill, which they have entitled “The Bank of England (Creation of Currency) Bill”. It is an astonishing piece of work, which represents the collective work of many dedicated people, and hard copies of this 60 page A4 Manual are available for a donation to Positive Money.

It can also be read on the Positive Money website here

Banks DID Cause Global Economic Meltdown – Because They Have Stranglehold Over Money Creation

AND, crucially, the wholesale reduction of the money supply which is now causing a Worldwide shortage of money which is resulting in Governments in many countries being forced to reduce spending, throw people out of jobs & reduce welfare benefits, NHS spending and all the rest.

In other words, the sheer corrupt greed of the banks has produced Wordwide poverty for millions of people.

“It is astonishing that the banks, having cost the country £68bn in bailouts plus an additional £850bn in loan guarantees, asset protection schemes and enhanced liquidity, have not been reformed in any way in structure, pay, bonuses or lending”, MP Michael Meacher says.

Michael Meacher is the latest MP to speak out against fractional reserve banking. In his blog, he displayed his astonishment that no serious reform of the banking sector had taken place since the enormous taxpayer bailouts of the recent financial crisis, and praised the proposals put forward by Positive Money and the New Economics Foundation. He criticised the money creation abilities of the banks, influencing the money supply by encouraging more or less money creation, and the fact that customers have no control over where their money goes. Mr Meacher also called for the nationalisation of the money supply, rather than the banks, and said that the proposals would have “prevented the crash of 2007-8”.

You can read the article here

Gaining the support of MP’s such as Mr. Meacher is going to play a crucial part in the movement of fundamental banking reform into the political mainstream, why not contact your MP to see if they are aware of the issues and what their stance is on banking reform? You could do this through a tool we use for our One Good Cut campaign

Once you’ve written to your MP you could contact us if you’d like to get a group of you together to go and see your MP, either at your local surgery or in private – we can send out an email to people in your area if you’d like to do this.

Revealed: Reckless UK lending of Lehman arm

RECKLESS AND RUTHLESS: Files show how aggressive lenders peddled mortgages borrowers couldn’t afford and pursued them when they failed to meet payments

By Richard Dyson of the Daily Mail – This is Money

5 March 2011

Aggressive mortgage lending to high-risk borrowers by a British subsidiary of defunct US investment bank Lehman Brothers at the height of the property boom has been fully revealed for the first time in files obtained by Financial Mail.

These relate to almost 10,000 mortgages advanced in 2006 by Southern Pacific Mortgage Loans. The loans were quickly sold to investors.

This process, on a global scale, triggered Lehman’s collapse in September 2008 and was central to the banking crisis.

Investors were persuaded to buy mortgages because they would, supposedly, earn a regular income from the interest paid by borrowers, as well as have security over the property.

Even before the crisis, SPML raised eyebrows for its lax lending. But the scale of recklessness is made public here for the first time.

Our analysis of SPML’s 2006 lending has found that three out of five mortgages were ‘liar loans’ – offered on a ‘self-certified’ basis where borrowers were not required to prove their income. A third of the mortgages were interest-only, where capital does not have to be repaid until the end of the mortgage term.

One in five borrowers had court judgments against them for uncleared debt elsewhere, averaging £4,400, at the time the mortgages were lent. Mainstream lenders will not advance mortgages to someone with a court judgment who has not paid off the debt.

Two in five of the loans were for 80% of the property’s value or more, with some mortgages equating to as much as 95%. Compare this, for example, with a conservative lender such as Nationwide Building Society, whose average outstanding loan is for less than half the value of the property it is secured against.

The data also gives a shocking, if unsurprising, picture of how quickly SPML’s borrowers fell into difficulty.

By March 2009, of SPML’s mortgages originally lent in 2006 and still in force, 40% were three months or more in arrears. Almost 10% were over 12 months in arrears.



Silent: Acenden’s Amany Attia

Scores of mortgages had been in arrears for more than 24 months, indicating that some borrowers fell behind as soon as the money was lent. Citizens Advice describes this lending as ‘set up to fail’ – with lenders cynically advancing money in the knowledge that borrowers couldn’t afford the repayments.

Interest rates on remaining SPML mortgages dating from 2006 now average 7.09%, but some unlucky borrowers are paying more than 16%. Two in five borrowers pay 10% or higher.

The files also reveal how relentlessly SPML borrowers have been pursued through the courts, frequently losing their homes. Of borrowers-whose 2006 mortgages remain in force, almost 40% have had some form of litigation brought against them by the business that administers SPML’s remaining loans.

This business is called Acenden, but is better known – and reviled by borrowers – as Capstone, a name it ditched last year in a bid to reinvent itself. Capstone was owned by Lehman until the bank’s collapse.

Today, Acenden is profitable and managed, and part-owned, by former Lehman bankers who spearheaded the original lending. This includes Acenden chief executive Amany Attia, who came to Britain in 2001 to introduce Lehman’s discredited US mortgage lending processes in this country. She declined to comment.

The data that Financial Mail has analysed relates to just one tranche of SPML’s lending, but is representative of the billions of pounds lent by SPML and equivalent businesses. Acenden refuses to publish the numbers of repossessions it has secured relating to the mortgages it administers.

However, it is estimated by Citizens Advice, for instance, that such lenders seek ten times the number of repossessions sought by mainstream lenders, even though their share of the total mortgage market is about one twentieth.

Forgery victim’s five-year ordeal