What is money? Where does our money come from?

[new_trader]

Ducky,

In response to NT who quoted Ron Paul saying "when government is granted an unlimited power to create money out of thin air as the Federal Reserve has, that power is always abused." I made the following points:

1. I have argued that they are both just money systems and both workable. It is not the fiat system itself that is at fault, but the ABUSE of it.

Did you agree with the bank bailouts?

2. Now you may argue that a gold system cannot be abused, but can't it? After all, you could fiddle the books if you were so minded and never have enough gold in the vaults to meet the promises on your notes.

But the Government cannot debase the gold you have in your possession. Can you not understand this point? If you don't hold bank notes but instead redeem your gold and keep it in your own safe it will maintain its purchasing power. If you did the same thing with fiat money you will lose your purchasing power over time.

Right now a merchant has the right to refuse credit cards or personal cheques and demand cash. Under a specie standard a merchant will have the right to refuse bank notes and only accept specie...not trust required. Even if that isn't the case, as duc pointed out, if people started to lose faith in bank notes they can redeem them.

3. You may similarly argue that abuse is inherent in a fiat system, but is it? After all you can provide accounting checks and balances if you are prepared to obey them.

I wonder if you would care to comment on each point?

jon

Jon, if abuse wasn't present

1) HOW do you explain inflation?

2) How do you explain the decline in UK manufacturing when you said earlier that Government facilitated productivity.

Now it's time for you to provide facts and figures to convince us that fiat money isn't being over issued.

 

[barjon]

Jon,

Your argument is really that 'money' is a workable system. Agreed. You then seek to introduce through the back-door as it were, that gold and fiat are equivalent, thus if money is a viable proposition, then, both gold and fiat are workable.

This is an illegitimate argument for the following reason. The argument rests on the truth of the following statement: an apple is an orange. Clearly this is false, in the same way as gold is not fiat. They are different, as different as an apple & orange. Both are fruit, or money, but they are nonetheless different.

It is these differences in properties that constitute the differences in function.

This is an important point: a gold based money system cannot be abused.

Why?

Simply because if a bank, or any depositary institution, were to fail in providing upon demand the gold, due to fraud, the institution would endure a 'bank run' which would bankrupt and liquidate the institution.

Only 'honest' banks, or institutions would survive and thus be under constant and unrelenting scrutiny by the market.

Accounting checks & balances. You must have heard the joke about the 3 accountants. I can find within, oh, about 10mins, the public financial statements of any US Corporation that utilizes aggressive accounting, that while strictly speaking are legal, are designed to mislead.

Let me provide one example immediately. US Corporations are allowed to prepare two sets of financial statements, legally: the first goes to IRS, and are designed to minimise income, and hence reduce tax liable.

The second are the financial statements released to the financial markets, which, of course maximise income, so as to create increased multiples on the earnings.

The market, with gold, needs no rules, regulations, or financial releases. All that is required is that 'demand deposits' are fully paid upon demand. Nothing could be easier.


My pleasure old chap.

jog on
duc

Thank you, ducky.

Yes, I start from the common ground that "money" is workable. Using your analogy the common ground is "food". Apples and oranges may be different in properties, but they both meet the objective of providing sustenence to those who eat them.

You say that a gold system cannot be abused because if people demanded their promised gold and the institution could not provide it the institution would go bust. The key word here is "if". Since you seem to regard the State as a thieving vagabond set on robbing its citizens under cover of darkness it seems highly likely that such a State would seek to hoodwink its citizens by printing money without the gold to back it up, taking the chance that people trust the money enough not to be demanding their gold - Ponzi schemes spring to mind.

Should it be found out by "market scrutiny" - er, how I wonder short of physically weighing all the gold in the vaults given your apparent distrust of accounts - it would, of course, bring the whole system crashing down.

In your third answer you scorn the pictures painted by accounts. Fair enough, but I didn't say that. What I said was that a State could bind itself to a transparent set of accounting rules which, if obeyed, would prevent abuse of the system. Once again "if" (obeyed) is the operative word, but I daresay that your "market scrutiny" would cope with that.

cheers

jon

 

[barjon]

Did you agree with the bank bailouts?

A difficult one. In principle, no. Pragmatically, yes

But the Government cannot debase the gold you have in your possession. Can you not understand this point? If you don't hold bank notes but instead redeem your gold and keep it in your own safe it will maintain its purchasing power. If you did the same thing with fiat money you will lose your purchasing power over time.

I may be wrong, but don't I recall that under the gold standard system it was illegal for private citizens to hold gold?

Right now a merchant has the right to refuse credit cards or personal cheques and demand cash. Under a specie standard a merchant will have the right to refuse bank notes and only accept specie...not trust required. Even if that isn't the case, as duc pointed out, if people started to lose faith in bank notes they can redeem them.



Jon, if abuse wasn't present

I've never suggested that abuse wasn't present

1) HOW do you explain inflation?

There was inflation, too, when under the gold standard and there are more reasons than fiat money per se. The very heavy inflation in the late 70s had more to it than fiat money.

2) How do you explain the decline in UK manufacturing when you said earlier that Government facilitated productivity.

As I said earlier productivity wasn't my word - manufacturing is but one bit of the whole "productivity" basket. It's decline in UK is a natural result of capitalism on a world scale - within the capitalism equation we have shifted more towards the capital provider end

Now it's time for you to provide facts and figures to convince us that fiat money isn't being over issued.

I have never suggested that fiat money isn't being over-issued.

see red above

 

[new_trader]

I may be wrong, but don't I recall that under the gold standard system it was illegal for private citizens to hold gold?

Under the US constitution, only gold and silver was legal tender. However, you correctly state that in 1933 Franklin D Roosevelt, under Presidential Executive Order number 6102, confiscated all privately held Gold. Why did he do this if not to rob citizens of their wealth through devaluation? Remember, your argument is that Governments have no intention of robbing its citizens with fiat money. Now that there is no gold standard, Governments have no need to confiscate private gold holdings first before they inflate and devalue the currency, robbing citizens of their purchasing power.

There was inflation, too, when under the gold standard and there are more reasons than fiat money per se. The very heavy inflation in the late 70s had more to it than fiat money.

Inflation, always and everywhere, is primarily caused by an increase in the supply of money and credit. In fact, inflation is the increase in the supply of money and credit. If you turn to the American College Dictionary, for example, you will find the first definition of inflation given as follows: "Undue expansion or increase of the currency of a country, esp. by the issuing of paper money not redeemable in specie.

1. The Gold Coin Standard

The gold coin standard, although imperfectly adhered to, permitted startling economic growth combined with falling prices in the nineteenth century. In the 67 years since the abolition of the gold standard, the Consumer Price Index has gone up 625 percent. In the previous 67 years, under an imperfect gold coin standard, the CPI increased 10 percent."

Ron Paul - "Gold, Peace and Prosperity"

I have never suggested that fiat money isn't being over-issued.

Well Jon, you will have to give me your definition of abuse.

 

[new_trader]

As I said earlier productivity wasn't my word - manufacturing is but one bit of the whole "productivity" basket. It's decline in UK is a natural result of capitalism on a world scale - within the capitalism equation we have shifted more towards the capital provider end

What? That isn't an answer at all, it is a feeble attempt at deflecting a question. Natural result of Capitalism?

C'mon Jon, don't give me a "it's just one of those things" type answer...sheesh!

1) How do you explain China's enormous foreign reserve?
2) How do you explain China's enormous trade surplus?
3) How do you explain the USA's enormous gold reserves?

 

[barjon]

nt

You seem determined to spoil for an argument where none exists but putting words in my mouth that I did not utter

For a start I never said that the "undue expansion or increase of the currency of a country" was not a contributory factor to inflation, I merely said that it couldn't be laid solely at that door. The rampant inflation of the late seventies, for example, had much more to do with the "oil crisis" than fiat money.

That inflation is a result of "undue expansion or increase of the currency of a country" is, of course, absolutely true whilst you are operating wholly within the closed circle of your country. Once you start operating beyond the confines of those boundaries it becomes more complicated than that - the "oil crisis" being a case in point.

You want me to define abuse, well that's easy. It's the same as you - the over-issue of fiat money.

Why do I have to explain China's success? As far as I know they are not on a gold standard - although there are rumblings that they might move that way - so it seems to me that it is for YOU to explain how they can possibly be so successful when they have not been using "honest" money.

jon

 

[new_trader]

nt

You seem determined to spoil for an argument where none exists but putting words in my mouth that I did not utter

For a start I never said that the "undue expansion or increase of the currency of a country" was not a contributory factor to inflation, I merely said that it couldn't be laid solely at that door. The rampant inflation of the late seventies, for example, had much more to do with the "oil crisis" than fiat money.

Oil prices did not rise as spectacularly when priced in gold and silver. Therefore the only explantion is debasement of fiat money.

That inflation is a result of "undue expansion or increase of the currency of a country" is, of course, absolutely true whilst you are operating wholly within the closed circle of your country. Once you start operating beyond the confines of those boundaries it becomes more complicated than that - the "oil crisis" being a case in point.

Again, prices rose significantly because commodities are priced in $US which is the worlds reserve currency and it was being inflated, therefore it lost value relative to commodities.

Why do I have to explain China's success? As far as I know they are not on a gold standard - although there are rumblings that they might move that way - so it seems to me that it is for YOU to explain how they can possibly be so successful when they have not been using "honest" money.

jon

I am going to the gym soon,so I'll give an abbreviated answer:

The only way a country can settle its trade deficit is with exports. The only reason a country exports things it manufactures is so that it can import something it cannot make locally as efficiently. This allows specialization. Much like you don't manufacture everything you use in your life. A simple example:- A shoemaker doesn't make his own leather, hammer, nails, thread etc and a hammer maker doesn't make his own shoes, clothes...you get the picture?

During the gold standard of the 20th Century, the USA was the worlds leading manufacturer and exporter of goods, countries that didn't have anything to export back to the USA had to settle their accounts in gold. That is how the USA accumulated such huge gold reserves. Since leaving the gold standard, the USA's major export is Federal Reserve notes, but it wouldn't have been able to achieve this had it not been for its reserve currency status.

more to come later..

 

[barjon]

Oil prices did not rise as spectacularly when priced in gold and silver. Therefore the only explantion is debasement of fiat money.

only? blimey that's a stretch. The "oil crisis" was all about the Middle East turning off the tap and extorting massive price increases, which had precious little to do with money debasement. (

Again, prices rose significantly because commodities are priced in $US which is the worlds reserve currency and it was being inflated, therefore it lost value relative to commodities.

no, it all happened almost overnight when the ME turned off the tap etc

I am going to the gym soon,so I'll give an abbreviated answer:

The only way a country can settle its trade deficit is with exports. The only reason a country exports things it manufactures is so that it can import something it cannot make locally as efficiently. This allows specialization. Much like you don't manufacture everything you use in your life. A simple example:- A shoemaker doesn't make his own leather, hammer, nails, thread etc and a hammer maker doesn't make his own shoes, clothes...you get the picture?

During the gold standard of the 20th Century, the USA was the worlds leading manufacturer and exporter of goods, countries that didn't have anything to export back to the USA had to settle their accounts in gold. That is how the USA accumulated such huge gold reserves. Since leaving the gold standard, the USA's major export is Federal Reserve notes, but it wouldn't have been able to achieve this had it not been for its reserve currency status.

...and? How does any of that explain China's success whilst not having an "honest" money system in place?

more to come later..

look forward to that

in red again

 

[new_trader]

in red again

I have given you countless examples throughout history, facts and figures you can reasearch yet you want to focus on one tiny example in the 1970's? C'mon Jon...In the 1970's Gold went from $41.17 Oz to almost $800Oz in 1980. Volcker's Fed is widely credited with ending the United States' stagflation crisis of the 1970s. Inflation, which peaked at 13.5% in 1981, was successfully lowered to 3.2% by 1983. Volcker raised the federal funds rate, which had averaged 11.2% in 1979, to a peak of 20% in June 1981. The prime rate rose to 21.5% in 1981 as well. You think the oil crisis is to blame? How can Volcker fix that with interest rates?

Average annual gold price:

Gold/$USoz

1971- $41.17
1972- $59.00
1973- $97.84
1974- $158.96
1975- $160.91
1976- $124.71
1977- $147.78
1978- $193.39
1979- $304.83
1980- $614.61


Previous to that:

Gold/$USoz

1934- $35.00
1935- $35.00
1936- $35.00
1937- $35.00
1938- $35.00
1939- $35.00
1940- $35.00
1941- $35.00
1942- $35.00
1943- $35.00
1944- $35.00
1945- $35.00
1946- $35.00
1947- $35.00
1948- $35.00
1949- $35.00
1950- $35.00
1951- $35.00
1952- $35.00
1953- $35.00
1954- $35.00
1955- $35.00
1956- $35.00
1957- $35.00
1958- $35.00
1959- $35.00
1960- $35.00
1961- $35.00
1962- $35.00
1963- $35.00
1964- $35.00
1965- $35.00
1966- $35.00
1967- $35.00
1968- $38.94
1969- $40.76
1970- $36.07


I actually want to stop and rewind here for a moment because I have actually lost track of what your position is. Every time I state what I think your position is you say that I am inferring or putting words in your mouth.

So, if you wouldn’t mind, can you lay out (in simple point form if you wish) the pros and cons of fiat money Vs sound money?

One other thing I would like you to explain is what you think productivity is. If the government employs someone to dig a hole in the ground and another person to fill it in again and pays them both with newly printed money, has the government facilitated productivity? Is society richer, poorer or no different afterwards?

 

[ducati998]

Thank you, ducky.

Yes, I start from the common ground that "money" is workable. Using your analogy the common ground is "food". Apples and oranges may be different in properties, but they both meet the objective of providing sustenence to those who eat them.

Incorrect.

The purchasing power of fiat money is so nutritionally empty, that you would have starved to death long ago had you not multiplied your calorie intake by 100.

You say that a gold system cannot be abused because if people demanded their promised gold and the institution could not provide it the institution would go bust.

Correct. That is the purpose of a 100% reserved demand deposit.

The key word here is "if".

Nonsense.

The 'bank' either holds your deposit of gold, or it doesn't. If it does not, the bank is subjected to a run, if it does, it continues in business.

Since you seem to regard the State as a thieving vagabond set on robbing its citizens under cover of darkness it seems highly likely that such a State would seek to hoodwink its citizens by printing money without the gold to back it up, taking the chance that people trust the money enough not to be demanding their gold - Ponzi schemes spring to mind.

Which is exactly what the US government did. It required Nixon to default on the US obligation to redeem US dollars for the gold the dollars were supposed to be exchangeable for.

NT has already mentioned FDR's default in the 1931-32 re-valuation.

Should it be found out by "market scrutiny" - er, how I wonder short of physically weighing all the gold in the vaults given your apparent distrust of accounts - it would, of course, bring the whole system crashing down.

No need to weigh the gold. Simply redeem on demand dollars for gold. Better still, eliminate paper receipts [dollars] altogether, and simply return to gold coins as money. All liabilities settled in gold.

In your third answer you scorn the pictures painted by accounts. Fair enough, but I didn't say that. What I said was that a State could bind itself to a transparent set of accounting rules which, if obeyed, would prevent abuse of the system. Once again "if" (obeyed) is the operative word, but I daresay that your "market scrutiny" would cope with that.

First, with gold as money there is no requirement for rules, regulations or the monitoring in order to catch any cheats.

Second, when the State, who already holds the legislative monopoly, is also granted the money monopoly, the 'Rule of Law' is violated. There will always in a rules based system, be bureaucrats, like yourself, who argue apples are actually oranges.

jog on
duc

 

[ducati998]

For a start I never said that the "undue expansion or increase of the currency of a country" was not a contributory factor to inflation, I merely said that it couldn't be laid solely at that door. The rampant inflation of the late seventies, for example, had much more to do with the "oil crisis" than fiat money.

Incorrect.

Observe the two time series. To argue causation, for oil, is simply untenable.

That inflation is a result of "undue expansion or increase of the currency of a country" is, of course, absolutely true

Correct.

whilst you are operating wholly within the closed circle of your country. Once you start operating beyond the confines of those boundaries it becomes more complicated than that - the "oil crisis" being a case in point.

Incorrect.

Your 'home' currency exchanges against commodities/goods/services, wherever their origin. As such, it is the purchasing power of your currency that is pertinent. If you have inflated, and devalued your purchasing power, then old chap, you pay more in nominal currency to pay the market price in real terms.

You want me to define abuse, well that's easy. It's the same as you - the over-issue of fiat money.

Why do I have to explain China's success? As far as I know they are not on a gold standard - although there are rumblings that they might move that way - so it seems to me that it is for YOU to explain how they can possibly be so successful when they have not been using "honest" money.

Two primary reasons: their inflation is far higher than the US or any developed economies and [ii] any country that is still developing, has access to existing technology, thus the economy through utilising existing technology, can progress far faster than the innovator.

jog on
duc

 

[barjon]

nt


You have argued ad nauseum that the huge economic growth - in the terms that you have described it - in the more halcyon days of the US was down to the fact the during that time their money system was the Gold Standard system, or "honest" money as you term it. You appear to have drawn the conclusion that "honest" money is therefore a necessary precursor to such growth and that "fiat" money acts against it.

However, you cannot - or will not - explain how China has achieved similar success in recent years without them having an "honest" money system (although I see duc's just had a go). Perhaps the conclusion to be drawn is that "honest" money is not the necessary precursor that you seem to think it is.

Anyway, my position is simple and I have repeated it time and again. I do not seek to argue the relative merits of one system over another.

What I do say is that both are viable and workable systems and that any of the "negative" impacts you point to are the result of abuse of the system and not the fault of the system per se.

jon

 

[barjon]

Nonsense.

The 'bank' either holds your deposit of gold, or it doesn't. If it does not, the bank is subjected to a run, if it does, it continues in business.

Ah well, ducky, if you think so much is incorrect who am I to argue

Can't let the above one go though - the key word"if" wasn't about "if" the bank holds the gold or or not, it was about "if" people demanded their promised gold.

jon

 

[ducati998]

Ah well, ducky, if you think so much is incorrect who am I to argue

Can't let the above one go though - the key word"if" wasn't about "if" the bank holds the gold or or not, it was about "if" people demanded their promised gold.

jon

jog on
duc

 

[ducati998]

Real GDP is adjusted for inflation. What though is GDP = Gross Domestic Product That is to say the value of the goods and services produced.

CPI = Consumer Price Index: or, the price the consumer pays for the production. Thus, a high GDP and low CPI indicate that the consumer has more wealth. A high GDP and a high CPI indicates that the consumer has to spend a higher proportion of earnings/wages/savings to purchase the GDP.

Look again at the figures:

US
1980
to
2009
Consumer Price Index 3.36%
Real GDP per capita 1.74%
Population (millions) 1.04%

US
1940
to
1980
Consumer Price Index 4.52%
Real GDP per capita 2.70%
Population (millions) 1.37%

US
1860
to
1900
Consumer Price Index 0.02%
Real GDP per capita 1.91%
Population (millions) 2.23%

Still do not buy my argument? Ok then consider this:

From “A Monetary History of the United States” Friedman & Schwartz:

The highest decadal rate of [growth of real reproducible tangible wealth per head from 1805 to 1950] for periods of about ten years was apparently reached in the eighties with approximately 3.8%

That is the 1880′s old chap…

Wholesale Price Index [Now known as Producer Price Index]

Year……………………Index……………………%Change
1869……………………151………………………………
1879……………………90……………………..[-40.4%]
1889……………………81……………………..[-10.0%]

Consumer Price Index
1869……………………138……………………………….
1879……………………97…………………….[-28.8%]
1889……………………93…………………….[-4.2%]

Wages
1869……………………87………………………………..
1879……………………61…………………..[-29.8%]
1889……………………75…………………..+22.9%

The figures bear evidence to a remarkable period of economic history. Both consumer prices and nominal wages fell by about 30% during the last decade of greenbacks the fiat currency issued by government prior to the return to gold. But then, from 1879-1889, while prices kept falling, wages rose 23%. Therefore real wages, after taking the zero inflation rate into account, in effect rose 27.4%

At no point in US history has any decade produced such sustainable rises in real wages. There were no unions, no minimum wage laws, there was however a massive absence of government intervention and no government control over the money supply.

Real wages increase when three broad conditions are fulfilled:

*Absence of sustained inflation
*Rise in savings and capital formation
*Technological advancement

Interest Rates:

1878…………………..6.45%
1879…………………..5.98%
1889…………………..4.43%

With consumer prices approximately 7% lower in 1889, the rate of real return on these Railroad Bonds [AAA rated] were double digit.

Data:

Gross National Product [GNP]
1958 prices

………………………………….Total in $Billions…………Per Capita

Decade 1869-1878………………$23.1……………………$531
Decade 1879-1888………………$42.4……………………$774
Decade 1889-1898………………$49.1……………………$795

GDP:
…………………………………..1929 prices in $Billions

1869-1878……………………………….$11.6
1879-1888……………………………….$21.2

Labour Productivity

Manufacturing output per man hour. [1958 = 100]

1869…………………………………….14.7
1879…………………………………….16.2
1889…………………………………….20.5

Capital Formation:

Purchase of Structures & Equipment:

1870……………………………………$0.4
1880……………………………………$0.4
1890……………………………………$2.0

A 500% increase decade-on-decade increase has not even come in a country mile of being rivaled or reproduced. This is what gold money can allow in an economy. It prevents the depredations of government, it allows entreprenuers to flourish, when they flourish, the country and all of us gain.

jog on
duc

 

[new_trader]

nt

You have argued ad nauseum that the huge economic growth - in the terms that you have described it - in the more halcyon days of the US was down to the fact the during that time their money system was the Gold Standard system, or "honest" money as you term it. You appear to have drawn the conclusion that "honest" money is therefore a necessary precursor to such growth and that "fiat" money acts against it.

Jon, almost all opponents of the gold standard argue that an economy cannot grow under a gold standard because the supply of gold is limited. I cite examples in history that prove conclusively that this is a fallacy.

However, you cannot - or will not - explain how China has achieved similar success in recent years without them having an "honest" money system (although I see duc's just had a go). Perhaps the conclusion to be drawn is that "honest" money is not the neccessary precursor that you seem to think it is.

I simply try to point out to you that money was not invented, it evolved from the free market as a useful commodity. When it is monopolized by Governments and especially after it becomes fiat it ceases to retain all the features that made it money in the first place.

How has China achieved success...now here is where I am battling against your faith in Government!

For a start,

Average savings rate in China - 30%
Europe - 11%
US - 4%

-China is nowhere near the welfare state that the U.K or the USA is.

-Why is U.K such a welfare state? You have to look at what politicians promise their voting public and how they fund it. I can assure you, it isn't with honest money.

As we saw with the Global Financial Crisis, This Government refuses to allow a recession to take place. But a recession is the economies way of rebalancing misallocated rescources and clearing out malinvestment.

The U.K has far too many non-productive jobs (mostly in Government) and not enough goods producing jobs in the private sector. However, as we saw in the GFC, when the economy tried to fix this problem, the Government turned to the printing press to prevent the necessary rebalancing from occuring.

One consequence of this is that the private sector ends up competeing with Government for rescources ie/Land, labour and capital. But the Government has a printing press. As a result, manufacturers (also because of excessive rules and regulations) have to move manufacturing abroad or go out of business.

The Government, again, in an effort to prop up the 'phony' economy, price fixes interest rates via Q.E. It would not be able to do this without fiat money. This keeps people employed in unproductive jobs. Ones that the economy, via a recession, has tried to eliminate. Politicians don't differentiate between jobs, all they care about is keeping the voting public 'employed'. if they can have someone digging a hole and someone else filling it in, both are emplyed in the eyes of the government.

Anyway, my position is simple and I have repeated it time and again. I do not seek to argue the relative merits of one system over another.

What I do say is that both are viable and workable systems and that any of the "negative" impacts you point to are the result of abuse of the system and not the fault of the system per se.

jon

Jon, the temptation of turning to the printing press is too great for 99.99% of Politicians to resist.

 

[counter_violent]

BBC iPlayer - Search :not the solution

Available soon on iplayer.

I did listen to it and although it was not a great programme, it did at least give a
general overview of US politics.

What was interesting. How govt tries to legitimise its very existence with first of all "soundbites", preparing the ground for things like "war on drugs" "war on terror". So next time you hear a government declaring "war on", think about what this actually means ! It's simply their way of justifying themselves to whoever will listen.

Now available
BBC iPlayer - Archive on 4: Government Is Not the Solution

 

[new_trader]

One consequence of this is that the private sector ends up competeing with Government for rescources ie/Land, labour and capital. But the Government has a printing press. As a result, manufacturers (also because of excessive rules and regulations) have to move manufacturing abroad or go out of business.

5% deposits bid to aid homebuyers - UK News - MSN News UK

The Government will stump up 5.5% of the value of a mortgage on a home worth up to £500,000 in England, while the housebuilder will put up 3.5% to help guarantee mortgage lenders against any losses and stimulate a wave of fresh lending.

The support of lenders is vital if the scheme is to succeed and there had been fears they would fail to put their weight behind it. It is hoped the initiative will not only help buyers struggling to raise the deposit required for a new home but will also create new work - and jobs - in the construction industry.


--------------------------------------------------------------------

Although the free market is clearly indicating that house prices are too high, the Government has decided it wants to create construction jobs and help the Banking industry by putting people into debt.

"Are there any other special interest groups that want money before we turn off the printing presses for the evening?"

Q.E.D!

 

[counter_violent]

Where's atilla, defender of the indefensible.

How is it that what is being discussed here is ignored by the majority...and yet it is all these dumb ass's who will be paying for it all. They ought to be livid.

Too many with vested interests.
There really is no hope !

 

[darktone]

Where's atilla, defender of the indefensible.

How is it that what is being discussed here is ignored by the majority...and yet it is all these dumb ass's who will be paying for it all. They ought to be livid.

Too many with vested interests.
There really is no hope !

People arnt taught this stuff, they simply dont know. Its also a repulsive subject imo. To accept what money is today you have to kind of admit that youve been mugged off. I think thats very hard for a lot of folks.

It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.
Henry Ford

Im inclined to agree.