Comments by "Maria" (@maria8809ttt) on "The Bank of England is driving the UK economy into recession" video.

  1. A liquidaty crunch, then the BoE will step in.
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  2. I would spread it around if it is over the banks insurance level. For those with bigger savings, in the event that a bank or building society went bust, the golden rule is not to put more than £85,000 in any one financial institution. Spread your savings around a number of accounts. Otherwise your money is completely safe. The BoE backs private banks insurance. This is no matter what the economy is like.
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  3. In the UK tax is not a prerequisite for state expenditure, it's needed in other ways but not to finance government. Social spending by the government reduces the need for personal and household debt as well as increasing the health and wellbeing of its workforce. This then gives rise to enabling spending in other areas of the economy, local shops etc. Lower rents can be achieved as the state doesn't need to make a profit. Cheaper water, as the state doesn't need to make a profit. Cheaper energy, as the state doesn't need to make a profit etc All these things free up household income to spend within the economy. France is in a different position as it uses the Euro and therefore is relient on taxation. Unless the ECB steps in. Why any country would give up its right to self determination financially when it had its own powerful central bank is beyond me.
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  4. Hyperinflation is caused through natural disasters, a huge losses in the means of production, or health/death due to disease depleting the workforce. Global sanctions can also produce hyperinflation. Sanctions don't work so much if the monetary sovereign is running a Fiat currency that holds no intrinsic value, such as the UK. All private bank loans are new money.
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  5. In the UK every single pound is Fiat that holds no intrinsic value.
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  6. The same for the US.
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  7. Monetarily sovereign (or currency - issuing) governments, which nowadays include most governments are never revenue constrained because they issue their own currency by legislative Fiat. It wasn't always this way. Under the Bretton Woods System of fixed exchange rates and gold convertibilty that was in place ptior to 1971, governments were indeed limited in their spending capacity by the value of gold held by the central bank. This was because the outstanding stock of money that the central bank would issue was proportional to its gold reserves, if a government wanted to spend more, it had to reduce the money held by the non-government sector using taxation and/or bond sales. Clearly, the decision to enter into this type of monetary system (the Gold Standard) was voluntary, but once the decision had been taken, the government was bound to operate in that manner. Institutional machinery was then established to facilitate the issuing of bonds to the private markets, although central banks could still purchase government debt. In some periods, central banks purchased significant amounts of government debt. That system came to an end in August 1971, when US President Nixon abandoned gold convertibilty and ended the system of fixed exchange rates. Once governments started to adopt so called Fiat currency monetary systems and flexible exchange rate in the 1970s, all the spending caps and debt limits that had some operational significance under the Bretton Woods System became irrelevant.
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  8. From the Latin word Fiat ('it shall be') because there is no promise made by the government to redeem for precious metal or anything else. Fiat has no intrinsic value.
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  9. This is all monetarily sovereign (or currency-issuing) governments, that issue their own currency by legislative Fiat. These central banks can never run out of money or become insolvent. Such as Australia, Britain, Japan and the US. This fundamental principle was spelled out in a recent Deutsche Bank report : It reads-Unlike any corporate, government or household, a central bank has no reason to be bound by it's balance sheet or income statement. It can simply create money out of thin air (named a liability) and buy an asset or give the liability created (money) out for free. Deutsche Bank, Helicopters 101: Your Guide to Monetary Financing, April 2016.
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  10. The Bank of England on private banking. "The quantity of reserves is therefore a consequence, not a cause, of lending and money creation. The bank therefore creates its own funding, deposits, in the act of lending, in a transaction that involves no intermediation whatsoever, .... The fact that banks technically face no limits to increasing the stock of loans and deposits instantaneously and discontinuously does not, of cause, mean they do not face other limits to doing so. " The limitations private banks have are set by government on the level of risk that a potential customer carries before a loan and attached interest can be created and gained. The level of risk allowed has just been increased. Private banks make their own assessment of the implications of new lending for their profitability and solvency. Keynes called this fountain pen money, nowadays it really is tapping some numbers into a computer that creates brand new money out of thin air, which it then deposits into the borrowers account. Instead of deposits leading to loans, it actually works the opposite way: it is the loans that lead to newly created deposits. Banks worry about their reserve position after the fact. Reserves are only required to ensure all the cross-banking transactions on any day will be reconciled or, to put it more obviously, that cheques don't bounce. Only if it has insufficient reserves does the commercial bank turn to the central bank, which is obliged to privide reserves on demand. Pre-existing deposits aren't even touched or needed, for that matter. In short, the money supply is endogenously damand driven and largely controlled by private banks, under government legislation not central banks. At best, central banks can only hope to influence the money supply indirectly, by adjusting their key interest rates or by influencing the market interest rate through open market operations. Social spending by governments reduces the potential for people to require loans and therefore pay interest that in turn becomes profit.
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  11. Laughing would be an appropriate description.
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  12. It is a sad state of affairs really.
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  13. The UK is also in part Basel III, an internationally agreed set of measures developed by the Basel Committee on Banking Supervision in response to the financial crisis of 2007-09. The measures aim to strengthen the regulation, supervision and risk management of banks. These regulations do not consider the level of personal and household debt within shadow banking. So from a macroeconomic viewpoint household and personal debt level data is insufficient . The arrogance on the data being correct is astounding.
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  14. All private bank loans are classified as new money. The only bank that can enable that is the central bank. Where do you think this accounting sits on the books.
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  15. How modern money is created. The BoE link. Every private bank loan is new money, reserves are never touched. The ability of attaining a loan is running the economy. The private banks are profit seeking so have no interest in how the economy grows such as health and education unless it can profit seek. https://youtu.be/CvRAqR2pAgw?si=3ULPKDvktjyaF_6n
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  16. Blair followed the Capitalist Neoliberal Doctrine, the same as all governments in the UK for years. There is still no change.
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  17. An interesting video. Quantitative Easing (QE) versus Temporary Quantitative Easing (TQE). It's worth looking up the difference (tag the search with Scholarly articles Macroeconomics.) Their choice in 2008 was Temp Quantative Easing. This unconventional monatery policy choice was rediculous. They could have used OMF (Overt Monetary Financing. That would have been non-interest bearing.) To hold the banking system above water. (As banking is a needed public service . (Therefor classified as a public good use.) The banks high risk speculation that failed spectacularly and was bailed by our BoE as well as other advanced centeral banks globally are coming to term. After governments kicking this can to the end of the road. On top of that the central bank has overdone interest rates, that actually does nothing to bring down inflationary pressure. They are crashing social spending in favour of private capital. Austerity of needed serviceses and employment will be the next choice, social spending will be devastated. Other advanced centeral banks are having similar problems preforming Quantative Tightening. The Capitalist Neoliberal Doctrine needs to be replaced in favor of direct increased social spending and has done for years. The economy is collapsing. This will take time but the direction is nailed on if this political doctrine is kept in place. Economic stupidity at the very least in my opinion. When people default, buisnesses fail. Few will have the funds to ride this out over time, sadly many will not.
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  18. The Government's assets count. Government assets such as the NHS can actually reduce the taxation level. https://youtu.be/rPlSu1B9Dog?si=r3g-Lmaq6aMBqbnK
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  19. No it isn't. The BoE is public an arm of government. The UK Central bank.
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  20. It increases the need of loans within the general public. Dental for example, with the decreasing amount of NHS dentistry, people are having to find other avenues for this needed service at higher pricing levels, just as an example. Increased loan demand increases bank profit. Insurance also profits from less government social spending.
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  21. The Bank of England is nationalised. When the Bank was nationalised in 1946, it meant that it was now owned by the Government rather than by private stockholders. This gave the Government the power to appoint the Bank's governors and directors, and to issue directions to the Bank. This is stated in the BoE history section. Titled: History / Bank of England. The government sets the economic parameters for the bank to follow. At this time the set of policies that are in place make up the Capitalist Neoliberal Doctrine.
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  22. Thin air. Fiat in the UK has nothing it is pegged too. The only constraint Fiat has is running out of things to buy available for sale in its own currency. Taxes make sure you need to use the currency, therefore keeping the need of the Fiat curency viable. Taxation has other uses but is not required to fund the UK Fiat currency. It is a political choice to choose to 'balance the books.' The term is political from a set of policies that make up the Capitalist Neoliberal Doctrine that is in place. Worry about the size of numbers on a keyboard is a waist of time and energy. The thing that shows you the real economic health of a nation is the level of personal and household debts and default levels. The level of inequality. The level of government owned assets and services. The UK is in trouble but it is all self inflicted considering the UK is a monetarily sovereign nation that floats its currency. It faces no solventcy constraint precisely because it faces no revenue constraint. This is the exact opposite of what most students learn in mainstream macroeconomic textbooks, which typically use a flawed analogy between the household budget and the sovereign government budget and to argue that the same principles that constrain the former apply to the government. The erroneous understanding that a student will gain from a typical macroeconomics course is that 'the role of taxation and bond sales is to transfer financial resources from households and businesses (as if transferring actual actual Pound notes or coins) to the government, where they are re-spent) This is true for local governments and states that do not issue the currency. It is also not too far from the truth for nations that adopt a foreign currency or peg their own to gold or foreign currencies. Such as EU countries that use the Euro but not the European central bank as the ECB is the currency issuer. However as mentioned this is not the case for governments that issue their own sovereign currency without a promise to convert at a fixed value to or a foreign currency. The UK is not revenue constrained. This slight of hand in text books helps to hold the Capitalist Neoliberal Doctrine in place needs addressing. While the exact institutional details can vary from nation to nation governments typically spend by drawing on a bank account they have at the Central bank - which, in itself, is a creature of the state and irrespective of legal status, is effectively part of government. An instruction is sent to the Central bank from the treasury to transfer some funds out of this account into an account in the private sector, which is held by the recipient of the public spending. Similarly, when the tax department receives revenue it asks the central bank to record the receipt in its central bank account. The private banking sector facilities a transaction that reduces the funds available in the bank account of the taxpayer. Computer operators in the central bank and the private banks just type numbers that are recorded by the electronic accounting system in the various banks to specify how much the government wishes to spend and or how much it has received. This is a very orderly process and goes on hour by hour, day by day and year by year. All government spending is enacted in this way. The numbers are just government accounting, nothing to do with taxation level constraints. Also, why would the UK government that owns and creates its own Fiat currency, the very currency within the private sector, need to borrow the money it can create and pay interest to those rich enough to be able to buy it?
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  23. I don't see banks worried about the new money creation when they are interest seeking, only when it comes to social government spending on needed serviceses. I wander why that is. Every private bank loan is new money, the reserves aren't even touched.
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  24. https://youtu.be/CvRAqR2pAgw?si=pYnOK7q4KaBM70US The BoE on new money creation.
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  25. It's how they expand the UK Monetary Base and why that counts and builds a secure and healthy economy.
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  26. Private banks are underpinned by the central bank. The central bank has responsibility for every Fiat £ produced for loans when in default. The interest paid stays private. Do you think the general public understand this.
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  27. Why would you need to balance the books when using a Fiat currency with no intrinsic value where all government spending is new money including private bank loans.
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  28. These are self inflicted political restrictions. Part of a set of policies that make up the Capitalist Neoliberal Doctrine. All UK governments for years have worked within these policies. Look them up, you will recognise them.
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  29. https://youtu.be/CvRAqR2pAgw?si=gQY3UHLcc0gkvJjk
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  30. Write this into a search. When did the BoE become socialised and an arm of government macroeconomics. It should bring up The Bank of England history page. The BoE is not a private bank, it is the UK Central bank an arm of the UK government.
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  31. BoE
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  32. If anyone would like to understand how Fiat works, this link below is of an easily followed debate on Fiat. https://youtu.be/cUTLCDBONok?si=0M9nwVJJGmxXJUUz
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  33. May I surgest a book on Macroeconomics, it explains alot about the global monetary system, how it actually works and options avaliable to governments, it's a story of our history to now, even the mistakes we have made along the way, it includes such as war to Brexit to Presidents. Anyway the Title is Reclaiming The State by Mitchell and Fazi. No matter what your polatics it's a good easy read. Also there is a free online blog by Professor William Mitchell, one of the world's leading heterodox macro economists. All information is worth reading even if you disregard it later. It would give you a rounded view into the world of the global monetary system. 🙂
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  34. We need direct social spending using OMF (Overt Monetary Financing.) This has no interest attached. No payback required and can sit on the governments books indefinitely as a public good investment. It will also generate government asset value, reducing the level of taxation. I doubt it will be done, as it has no interest for private sector banks.
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  35. The UK is running the Capitalist Neoliberal Doctrine, not a socialist policies set.
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  36. Washington Agreement on Gold. The first Central Bank Gold Agreement, also known as the Washington Agreement on Gold, was announced on 26th September 1999. It followed a period of increasing concern that uncoordinated central bank gold sales were destabilising the market, driving the gold price sharply down. The first Central Bank Gold Agreement, also known as the Washington Agreement on Gold, was announced on 26th September 1999. It followed a period of increasing concern that uncoordinated central bank gold sales were destabilising the market, driving the gold price sharply down. At the time, central banks held nearly a quarter of all the gold estimated to be above ground, equivalent to around 33,000 tonnes in September 1999, and had an enormously influential position in the gold markets. The central banks of Western Europe in particular held—and still hold—substantial stocks of gold in their reserves. Those in the Netherlands, Belgium, Austria, Switzerland and the UK, had already sold gold or announced their intent to do so. Others were taking advantage of rising demand for borrowed gold and increasing their use of lending, swaps and other derivative instruments. An increase in lending typically resulted in additional gold being sold, meaning that the trend was adding further supplies to the market. In response to these concerns, 15 European central banks—those of the then 11 Eurozone countries and of Sweden, Switzerland and the UK, as well as the European Central Bank—drew up the first Central Bank Gold Agreement, ‘CBGA1’. The agreement was signed in Washington DC, during the 1999 annual meetings of the International Monetary Fund. In it, they stated that gold would remain an important element of global monetary reserves, and agreed to limit their collective sales to 2,000 tonnes over the following five years, or around 400 tonnes a year. They also announced that their lending and use of derivatives would not increase over the same five-year period. The signatory banks later stated that the total amount of their gold they had out on lease in September 1999 was 2,119.32 tonnes.The signatory banks accounted for around 45 per cent of global gold reserves. In addition a number of other major holders—including the US, Japan, Australia, the IMF and the Bank for International Settlements—either informally associated themselves with the Agreement or announced at other times that they would not sell gold. The announcement of the agreement came as a major surprise to the market. It prompted a sharp spike in the price over the following days, but it also removed much of the uncertainty surrounding the intentions of the official sector. Once the markets had adapted to it, a major element of instability had been effectively removed with the introduction of greater transparency. The reason for the central bank gold sales were due to the introduction of permanent Fiat, that is backed by absolutely nothing. Modern money. The gold standard was ended in 1971. Permanent Fiat was well established globally and there was no longer any need for the expence of housing the gold. The proceeds of the sales were exchanged for foreign currency reserve holdings. Fiat allowed central banks freedom from a finite gold supply and the beholding to tax and spend, the sale of government bonds issuance, the old systems institutional machinery. Bond issuance these days usually involves a debt auction, which only a select number of banks or securities broker dealers (known as primary dealers) are permitted to participate in - and the private bank in turn credits the treasury's account at the Central bank with reserves of equal value. For a currency issuing government, such as the UK borrowing from the private sector is an accounting convention, not a necessity, and contributes nothing positive in terms of advancing what should be the primary goals of the UK government. Moreover, the issuence of treasury bonds effectively amount to a form of corporate welfare for the purchasers, who tend to be financial institutions, wealthy individuals and foreign governments. Why should they enjoy a risk free government annuity? Government debt is never the problem, it is private sector debt and default levels that give the real picture of economic health. 🙂
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  37. Every British £ is Fiat. UK Fiat has no intrinsic value.
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  38. The appearance of the separation of the BoE is doing what it was designed to do. Obscure where blame for policy outcome lies It splits opinion. .
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