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| Thread ID: 138493 | 2014-12-08 12:59:00 | Is our cash safe | DeSade (984) | PC World Chat |
| Post ID | Timestamp | Content | User | ||
| 1389736 | 2014-12-09 21:04:00 | Time to do a little economics research for you, I think. Banks do NOT create money out of "thin air" for mortgages. Mortgage funds are (supposed to be) a percentage of the deposits held by that bank. The deposits (along with security over the properties that are mortgaged), secure the mortgages. If the inflow of deposits at a bank drop, then so does the money available for lending. The only 'bank' that can create money out of thin air is the Reserve Bank of NZ - and they are strictly regulated. Well, according to my economics research “Commercial [i.e. high-street] banks create money, in the form of bank deposits, by making new loans. When a bank makes a loan, for example to someone taking out a mortgage to buy a house, it does not typically do so by giving them thousands of pounds worth of banknotes. Instead, it credits their bank account with a bank deposit of the size of the mortgage. At that moment, new money is created. For this reason, some economists have referred to bank deposits as ‘fountain pen money’, created at the stroke of bankers’ pens when they approve loans." |
rumpty (2863) | ||
| 1389737 | 2014-12-10 00:51:00 | Well, according to my economics research “Commercial [i.e. high-street] banks create money, in the form of bank deposits, by making new loans. When a bank makes a loan, for example to someone taking out a mortgage to buy a house, it does not typically do so by giving them thousands of pounds worth of banknotes. Instead, it credits their bank account with a bank deposit of the size of the mortgage. At that moment, new money is created. For this reason, some economists have referred to bank deposits as ‘fountain pen money’, created at the stroke of bankers’ pens when they approve loans." I think your research is flawed - looking at how things are done in the UK won't necessarily help you understand the NZ setup. 1. NZ has been using dollars and cents since 10 July 1967, prior to this we had pounds, shillings and pence. :) 2. A mortgage does NOT have a CREDIT balance - check your bank statements. It's a debit balance. And interest on the mortgage is charged periodically. 3. *Banknotes* are only the physical form of a idea whereby a person can value a good or service and exchange for similar. As you say, they have nothing to do with mortgages 4. The Reserve Bank of NZ controls the 'creation' of money by tightening or loosening the OCR (Official Cash Rate - www.rbnz.govt.nz). The OCR determines the 'cost' of money to the banks and that in turn determines interest rates on both loans and deposits. 5. A bank with no deposits cannot lend money 6. Deposit interest is funded by interest on loans - so it is a fine line between having money to pay your customers for their deposits and charging/collecting interest on loans. Obviously, it's a bit more complex than that, but that is the simple view... |
johcar (6283) | ||
| 1389738 | 2014-12-10 03:49:00 | I think your research is flawed - looking at how things are done in the UK won't necessarily help you understand the NZ setup. 1. NZ has been using dollars and cents since 10 July 1967, prior to this we had pounds, shillings and pence. :) 2. A mortgage does NOT have a CREDIT balance - check your bank statements. It's a debit balance. And interest on the mortgage is charged periodically. 3. *Banknotes* are only the physical form of a idea whereby a person can value a good or service and exchange for similar. As you say, they have nothing to do with mortgages 4. The Reserve Bank of NZ controls the 'creation' of money by tightening or loosening the OCR (Official Cash Rate - www.rbnz.govt.nz). The OCR determines the 'cost' of money to the banks and that in turn determines interest rates on both loans and deposits. 5. A bank with no deposits cannot lend money 6. Deposit interest is funded by interest on loans - so it is a fine line between having money to pay your customers for their deposits and charging/collecting interest on loans. Obviously, it's a bit more complex than that, but that is the simple view... Well, in this globalised world it is a bit hard to believe that NZ banks, or their owners, Australian banks, use a different system to UK banks. especially when I read, on the PositiveMoney website, "Under New Zealand law the Treasury is the only issuer of notes and coins. But these laws haven't been updated to account for the fact that almost all money now is electronic. Because of this loophole, banks worldwide now have the power to create money, effectively out of nothing." |
rumpty (2863) | ||
| 1389739 | 2014-12-10 04:16:00 | The Wikipedia article on Fractional Reserve Banking is worth a read. Of interest to this discussion about whether your money is safe, and whether the money you have deposited actually belongs to you read this: "In most legal systems, a bank deposit is not a bailment. In other words, the funds deposited are no longer the property of the customer. The funds become the property of the bank, and the customer in turn receives an asset called a deposit account (a checking or savings account). That deposit account is a liability on the balance sheet of the bank. Each bank is legally authorized to issue credit up to a specified multiple of its reserves, so reserves available to satisfy payment of deposit liabilities are less than the total amount which the bank is obligated to pay in satisfaction of demand deposits." en.wikipedia.org |
Terry Porritt (14) | ||
| 1389740 | 2014-12-10 04:25:00 | The mattress is looking better and better.... | DeSade (984) | ||
| 1389741 | 2014-12-10 04:46:00 | The mattress is looking better and better.... And/or do as many of the French do....invest in gold and put it in your mattress.....the downside is the mattress gets a bit hard and uncomfortable. Edit: whatever you do do leave your gold with a company having a name like Goldcorp :) |
Terry Porritt (14) | ||
| 1389742 | 2014-12-10 05:25:00 | Yep , simple really . . . . . . if you dont get caught up in conspiracy tinfoil hat nonsense Its the Greek govt way (and many other countries) 1) you countries economy is a basket case . 2) govt keeps spending money they dont have, overspending huge amounts 3) the citizens expect a high standard of living that doesnt match where their economy is 4) the govt borrows even more, in order to keep up the prentence of standard of living & services the country cant afford 5) the borrowed money has to be paid back, that county cant afford to pay it back . Things go pair shaped & the govt panics , grabbing $ from wherever it can all this was bought about by various govts spending money they dont have, and having no real way to pay it back : same as NZ I got as far as reading this post, and had to give a big :thumbs: . The sad part is, we are generally speaking, a socialist country . Even the so-called centrist parties are socialistic in reality . We have a government (taxpayer) funded welfare system that costs us billions per year . Labour continue to increase the dependency, but when National get in, they cannot reverse the trend because it would upset too many freeloaders . And I don't blame them (the freeloaders) because many just use the system (Working for families etc . ) to try to get some of their hard earned money back that they paid in tax . Now here is the money and time waster - paying a tax to cycle it around bureaucrats and government departments, pay some of their wages, building rents/leases etc, then give a fraction of it back in the form of WFF . - Am I the only one who finds this wasteful and ridiculous? |
Krakka (17266) | ||
| 1389743 | 2014-12-10 05:42:00 | The sad part is, we are generally speaking, a socialist country. Even the so-called centrist parties are socialistic in reality. We have a government (taxpayer) funded welfare system that costs us billions per year. Labour continue to increase the dependency, but when National get in, they cannot reverse the trend because it would upset too many freeloaders. And I don't blame them (the freeloaders) because many just use the system (Working for families etc.) to try to get some of their hard earned money back that they paid in tax. Yup, like it or not we are by definition, Socialist. |
WalOne (4202) | ||
| 1389744 | 2014-12-10 05:52:00 | And/or do as many of the French do....invest in gold and put it in your mattress.....the downside is the mattress gets a bit hard and uncomfortable. Edit: whatever you do do leave your gold with a company having a name like Goldcorp :) What a bad typo.......whatever you do, do NOT leave your gold with a company having a name like Goldcorp :)[/QUOTE] |
Terry Porritt (14) | ||
| 1389745 | 2014-12-10 20:02:00 | Who actually has significant spare money in cash or deposits anyway. All I have is debt |
1101 (13337) | ||
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