Comments by "Maria" (@maria8809ttt) on "You have to tax wealth to grow an economy" video.
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In many cases the wage losses, redundancies and erosion of labour rights that have resulted from privatisation have exacerbated since the economic crisis of the private sector banks. This has helped to increase inequality. All in all, the evidence suggests that none of the transfers to private ownership have resulted in improvements to societies well being. Research by the IMF and European universities shows that there is no evedence that privertised firms are more efficient. In fact, in many cases privatised firms rely on higher public subsidies than they needed when they were in public hands. To add insult to injury, despite the rhetoric in favour of private management, many of the firms involved in the acquisition of privatised assets are, in fact, other countries' state owned companies : Chinese, German and French state owned companies, for example, own large stakes in Europe's formerly public utilities. Arguments that the public sector could fund enterprises more cheaply (both because it could borrow more cheaply and because it didn't need to generate profit) we're dismissed by proponents of privertisation. The privertisation lobby claimed that the difference in funding costs lay in the fact that the private sector would now explicitly assume the risk of the enterprise - a factor they said was buried in public accounts but was ultimately a liability to the 'taxpayer'. It was a lie. In many cases, the privatisation failed outright and the asset was returned to public ownership (Swissair, for example) because the state maintained the risk of the activity, despite the claims by proponents of privatisation to the contrary. The indelible fact is that in the case of large scale national infrastructures and systematically important industries - such as the financial sector - the risk can never be shifted from the public to the private domain. For these, private ownership amounts to little more than a case of privertisation of the profits and socialisation of the losses.
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Credit money in a modern economy, the causality actually works in reverse: when a private bank makes a new loan, it simply makes an entry into a ledger, Keynes called this 'fountain pen money'. Nowadays it usually involves tapping some numbers into a computer - and creates brand new money 'out of thin air', which it then deposits into the borrower's 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 positions after the fact. Reserves are only required to ensure all the cross-bank transactions on any day will be reconciled. Only if it has insufficient reserves does the commercial bank turn to the central bank, which is obliged to provide reserves on demand. Pre-existing deposits aren't even touched - or needed, for that matter. In short the money supply is endogenously demand driven and largely controlled by private banks, 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.
The BoE:
'The quantity of reserves is therefore a consequence, not a cause, of lending and money creation.'
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