150928 Peter "Banks Debt Inequality" (plus PQE)


 

Date  28/09/15 Chairs Mike
Time    Secretaries Sue
Location  Quaker Meeting House  Type of meeting Talk

Attendees

(add yourself if missing)

23 present

 

Banks, Debt and Inequality (plus "People's Quantitative Easing")

Speaker: Peter Verity, coordinator of the Sheffield Group

 

Peter explained that the talk was really in two parts -

 

The slides of Peter's talk can be downloaded here > 150928 Peter - Banks Debt and Inequality - plus PQE.ppt

 

Discussion

Is the bank's profit just the interest or is it the principal as well? Where does it go, and where does it come from?

Only the interest is profit, and it goes to shareholders.  Banks have to create new money, in order for us to pay back the interest


Why do banks encourage us to save?

In reality - do they?  Surely they mainly encourage us to borrow!

 

Is it really a lie that the Government guarantees savers £85,000 if banks fail?

If this happened, where would the money come from - the government? it would be 'our' money which would be used to bail us out!

 

What is it about our culture that we are so heavily dependent on credit card borrowing, compared with the rest of Europe?

It could be because UK is so heavily dependent on financial services, as opposed to manufacturing.

 

Why don't banks just lend massive amounts to everyone who asks?

Because lending is a liability to the banks ... since the crash, they have become much more risk-averse.

 

Where would money come from in a Positive Money world?

An independent committee would decide.  But what it would be used for (eg infrastructure, tax cuts, etc) would be a political decision.

 

NB  House owners benefit from the current system mainly if they have more than one property.

 

What is the Positive Money attitude to gold bullion?

It's not money - it's just a commodity like any other.  Some people think we should return to the gold standard ... PM disagrees.

But gold has been used as money for many years.  It is both scarce and hoardable.  During WWII, when the rouble wasn't recognised, gold was used.  Gold is hard to extract, so does have a value - and it's kept its value. Money only works because people have confidence in it.

 

In the USA, during the sub-prime property debacle, banks decided to go bankrupt.  They didn't have to.

 

If the Government doesn't reform the money system, people should just create alternatives - eg bitcoin.

 

What about demurrage (money losing its value)?  This would stop people hoarding it!

inflation does the same thing. Some (left-leaning) economists think that the target should be 4% rather than 2%

 

Have banks always behaved as they do now, or was there a time when they did what we think they do (ie lending out deposits)?

It is possible the current practice had its roots with gold merchants, who started to use receipts for deposited gold as money, and worked out that not everyone wanted to collect the actual gold at the same time.

Not that long ago, most people were paid in cash - only the wealthy had bank accounts.

In around 1860, banks had to keep 20% in reserves, to protect against a 'run' on the banks.  Thatcher got rid of reserve ratios.

There has also been the rise of computers, and digital money.

When there was more cash in use, there used to be more seigniorage - indeed, enough to fund the NHS.

NB  Historically, both Lloyds & Barclays were originally Quaker organisations (with ethical principles)