tag:blogger.com,1999:blog-8764541874043694159.post1846073210642044496..comments2024-03-29T10:48:38.142+00:00Comments on Coppola Comment: Who pulled the switch?Frances Coppolahttp://www.blogger.com/profile/09399390283774592713noreply@blogger.comBlogger27125tag:blogger.com,1999:blog-8764541874043694159.post-21428314904642898472015-01-04T12:59:15.216+00:002015-01-04T12:59:15.216+00:00If an avalanche happens because a little rabbit ru...If an avalanche happens because a little rabbit runs across the snow, it is wrong to hold the rabbit responsible for the whole destruction of the town that follows. The same is true in finance. There will always be some trigger that sets off the chain reaction, but really it was the people that setup the dominoes and not the kid that tipped one over that caused things. If the trigger you found had not happened some other trigger would have. If you could go back in time and somehow stop that one it would not have prevented the collapse, just delayed it a few days.Vincent Catehttps://www.blogger.com/profile/06502618776820144289noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-35561566144402480532015-01-04T12:54:58.213+00:002015-01-04T12:54:58.213+00:00In nature when things happen fast, like volcanoes,...In nature when things happen fast, like volcanoes, avalanches, forest fires, there is some long time where conditions are building up that make a chain reaction possible. Then the positive feedback loop starts and things happen fast. The same seems to be true in finance.<br /><br />http://howfiatdies.blogspot.com/2014/08/positive-feedback-theory-of.html<br />Vincent Catehttps://www.blogger.com/profile/06502618776820144289noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-22731705303621014482013-05-18T18:02:41.458+01:002013-05-18T18:02:41.458+01:00Thinking in terms of possible solutions to the cri...Thinking in terms of possible solutions to the crisis:<br />1) Pyramid schemes and bubbles based on expansion of money do not work well in the long run - because the expansion cannot continue ad infinitum. Its just simple math and not a political point. Unfortunately - I really wish it would 'work', but math truths would prevent it. So what does work mathematically? see number 2)<br /><br />2) If we want to increase demand and supply in a more stable way then the math answer would be to create (print) a lump sum and re-circulate that same sum rather than add more and more as in a bubble or ponzi. The math works a treat because the supply of money does not go up and up.<br /><br />So, if supply of goods can be increased and demand can match it then the lump sum circulating can be increased proportionately until one of them falters, then stop printing immediately or disaster.<br />If demand falls because consumers simply do not want the goods, then the lump sum must be again be halted or decreased - then the math equation balances.<br /><br /><br /><br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-55513987163808531272012-12-22T02:05:31.913+00:002012-12-22T02:05:31.913+00:00Anonymous.
I have asked you to confine yourself t...Anonymous.<br /><br />I have asked you to confine yourself to the topic of this post, and I warned you that I would not publish any more off topic comments. The comment you have just made is off topic and therefore deleted. If you wish to comment, please abide by the rules of this blogsite, which are:<br /><br />- confine your comments to the subject of the post<br />- be polite and refrain from personal attacks.<br /><br />This blogsite is not the place to promote your personal ideology. Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-76235151303608032942012-12-22T01:54:41.835+00:002012-12-22T01:54:41.835+00:00This comment has been removed by a blog administrator.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-25425340415591182542012-12-21T16:53:05.773+00:002012-12-21T16:53:05.773+00:00It is necessary for there to be a group of people ...It is necessary for there to be a group of people whose job it is to make and enforce law. The only law that is created and enforced by individuals is the law of the jungle - or of those abandoning ship: when individualism rules, "every man for himself" is the law. That may be appropriate in an existential crisis, but as a blueprint for a social order it is destructive.<br /><br />However, this post is not about the law, nor about any of the other subjects you raise. You appear to be using this blogsite to grandstand your own ideology rather than discussing the subject of the post. While I welcome constructive discussion on my posts, I do expect people to abide by my rules, which are:<br /><br />- please restrict your comments to the subject of the post<br /><br />- please be polite and refrain from personal attacks on me or on any other commenters here. <br /><br />I am happy to post comments from you that address the subject of this post, but I will not publish any more off-topic comments. Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-5655321921888428422012-12-21T15:57:27.341+00:002012-12-21T15:57:27.341+00:00The rule of law is a function of individuals (who ...The rule of law is a function of individuals (who can, of course, be employed by a government). Not all people are required to work for the government, are they? After all, if every one was a public servant, what would happen to the public? There would be no one for us to serve - a room full of butlers all staring at each other in perplexity! You assure yourself with the word "properly" as if one needs to argue the point that nature is proper. No, my dear, we can all agree on that, but to say that nature intended for a particular group of individuals to hold monopoly over law making does seem a bit outdated. The divine right of kings, remember, was not that popular, you know, John Locke and everything. <br /><br />You can not prevent competition in banking even if you want to, that's the point. Like legal jurisdictions competing against each other for corporate clients in a global market, so to do central banks compete against each other. <br /><br />I am not sure you can show us any historical evidence of anything (in nature) that is perfectly stable. Neither do I wish to suggest that inelastic monetary orders have been or would be perfect. Indeed, the precise point of maintaining the idea of 'perfection' as an idea in ones own head is only given practical meaning because it is not attainable. Perfection is a subject idea that is not physically attainable. <br /><br />Swapping the people from the BOE into HSBC is not likely to solve much, unfortunately. <br /><br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-78453730894871561842012-12-21T15:20:02.934+00:002012-12-21T15:20:02.934+00:00The rule of law is a function of government. I do ...The rule of law is a function of government. I do not prevent competition in banking - I applaud and encourage it. But the law itself is a natural monopoly which properly belongs to government. <br /><br />The historical evidence is that completely private banking systems are subject to destabilising runs and frequent crises. That's why we have central banks - or rather it is why the function of central banks changed from financing governments to propping up banks. People's livelihoods, people's savings, people's prosperity depend on there being a stable financial system. Maintaining that is therefore also a proper function of government. That the financial system has not been stable in recent years is an indictment of governments that have been only to happy to allow financial institutions to self-regulate. <br /><br />No specie money system has ever lasted either. It is in the nature of money systems that they are affected by politics and therefore do not last. When empires collapse so do currencies, and it doesn't matter what they are made of. <br /><br />Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-69390666523119450222012-12-21T14:07:55.192+00:002012-12-21T14:07:55.192+00:00I am pleading for you to allow competition based o...I am pleading for you to allow competition based on the rule of law, based upon contract between consenting adults. Passion is a (beautiful) part of human nature, but it is not limited to only producing positive outcomes, and with elastic forms of money, no matter how smart or well intentioned the monopoly board is, things fall apart. <br /><br />No paper money system has ever lasted in the history of humanity. <br /><br />Charlie Rose already makes the point to George Osborne that you will require a new exchange to list "public property" on for sale (http://www.charlierose.com/view/interview/12702). But that's ok. That's a contract between parties to produce as positive a result as is possible. The idea of a "French" company or a "British" company or a "Chinese" company is old thinking. Businesses are owned by people, not entire populations. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-17961077987874961632012-12-21T08:03:03.207+00:002012-12-21T08:03:03.207+00:00You are calling for a completely private monetary ...You are calling for a completely private monetary system and hard money? Why do you think that would improve things?<br /><br />Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-14162055049694180262012-12-21T08:00:35.060+00:002012-12-21T08:00:35.060+00:00Not "in theory". In fact and in practice...Not "in theory". In fact and in practice. Central bank is simply an arm of government. In most countries the central bank is wholly owned by the state. In the US it is not, but it is still controlled and supported by the state. Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-34147824449327749882012-12-21T06:26:50.443+00:002012-12-21T06:26:50.443+00:00Global demands for a monetary order that cannot be...Global demands for a monetary order that cannot be used to bail out banks, fund government, raise money for war and defraud savers and protect debtors will overwhelm resistance to short term pain. Long term gain, short term pain. The BoE, the actual, physical property, will be sold to the highest bidder. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-5161842448919362402012-12-21T02:16:36.815+00:002012-12-21T02:16:36.815+00:00"In theory""In theory"Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-88153097575828009762012-12-20T19:11:48.458+00:002012-12-20T19:11:48.458+00:00Banks do not license central banks. Governments do...Banks do not license central banks. Governments do. Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-31001200644330757872012-12-20T19:08:18.443+00:002012-12-20T19:08:18.443+00:00You don't understand how lending works.
When...You don't understand how lending works. <br /><br />When a loan is made, it is not just a loan - it is also a deposit. The bank records the loan as a debit to my loan account, and it credits my current account with a new deposit for the amount of the loan. That deposit is created "ex nihilo", but it is real money that can really be spent on real products. I can buy you a beer with money that the bank has kindly put into my current account just as easily as I can with money I put in my current account myself. Deposits created as part of lending and deposits made by customers are indistinguishable. <br /><br />Even if the loan is granted as a credit line such as an overdraft, so recorded as a credit limit rather than an actual deposit into an account, when it is drawn money is really paid to another real person who really puts it in their real bank account. That money is also created "ex nihilo".<br /><br />Balances on deposit accounts (including current accounts) are included in in broad money measures, regardless of whether those balances are created by banks making loans or customers depositing money (which itself could be the product of lending). Therefore lending inflates broad money. That's how bank lending works. Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-64168046230916504822012-12-20T16:31:51.596+00:002012-12-20T16:31:51.596+00:00Is the interest really the problem?Is the interest really the problem?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-19327810076899592982012-12-20T15:58:34.953+00:002012-12-20T15:58:34.953+00:00Think Einstein was the one who said that:
"E...Think Einstein was the one who said that:<br /><br />"Everything should be made as simple as possible, <br />but not simpler"<br /><br />http://i46.tinypic.com/33vlxcp.jpg<br /><br />Oh, look. A group photo from the BOE!<br /><br />http://i46.tinypic.com/21b6n0h.jpgAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-82953831535534593402012-12-20T15:36:19.007+00:002012-12-20T15:36:19.007+00:00So what happens when a group of banks decide to wi...So what happens when a group of banks decide to withdraw license from a particular central bank because their contract was broken? Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-53614200827435103302012-12-20T14:43:58.588+00:002012-12-20T14:43:58.588+00:00OK, so we instead agree upon "credit" th...OK, so we instead agree upon "credit" then? Or perhaps "loans"?<br /><br />Still <b>money</b> wasn't created. More and more of it, however, was <b>owed</b>.<br /><br />I agree people seem to believe loans are the same thing as money, despite the plain fact they are not. Even the Bank of England would have us all believe "loans" = "(broad) money". Do they really believe it, or are they just laughing?<br /><br />A loan is a loan is a loan. If I loan you my pen, it doesn't suddenly grow a sibling and call that a "broad pen"? Even if you did choose to call it (the one pen that actually exists) a broad pen while you have the use of it, you will still need to return a "narrow pen" to me later. Which is fine, as long as you retained my pen so you have it to give back. But people don't tend to borrow money so they can write something down real quick with it and then give it straight back?<br /><br />Maybe I just keep telling you to keep the pen on loan for a bit longer every time it is due back to me. And we agree among ourselves that we won't call it a gift. After all, some day I might surprise you by saying <a href="http://www.youtube.com/watch?v=ZomwVcGt0LE" rel="nofollow">where's my pen man?</a> Maybe I just decide on a whim it's nice to be the one with a pen for a change, I don't know.<br /><br />This is not to suggest that you don't already personally see it the same way I do. But almost nobody else does.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-47890172668913308612012-12-20T13:43:23.932+00:002012-12-20T13:43:23.932+00:00No, it wasn't just bonds. Broad money (M3 in t...No, it wasn't just bonds. Broad money (M3 in the US, M4 in the UK) rocketed in the run-up to the financial crisis. <br /><br />However, I did say that this is a BELIEF. And I also said that it is not true. Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-57824706388075860002012-12-20T13:41:21.962+00:002012-12-20T13:41:21.962+00:00As shadow banks are by definition unlicensed and (...As shadow banks are by definition unlicensed and (in theory) unsupported by government, it is nonsensical to include central banks in "shadow banking". However, central banks can be forced to support shadow banks in a financial crisis: we saw this with the Fed's support for shadow banks in 2008 after the fall of Lehman, but it's also worth remembering the Bank of England's bailout of about 60 unlicensed savings & loan banks in the Secondary Banking Crisis of 1973-4.Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-82536489144615039622012-12-20T09:18:33.066+00:002012-12-20T09:18:33.066+00:00In the run-up to the financial crisis, the prevail...<i>In the run-up to the financial crisis, the prevailing belief was "We will never run out of money", and more and more of it was created to satisfy demand.</i><br /><br />Or was it? Bonds are not money, but aren't they mostly what was created to satisfy demand?<br /><br />Perhaps what ran out in 2007 was not so much money, but people willing to <a href="http://www.freedomsphoenix.com/Uploads/Graphics/102/07/102-0708115538-Ponzi-Scheme.jpg" rel="nofollow">hand their money back and wait for a little more later</a>?<br /><br />But where does it come from later?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-33482792226791607882012-12-20T06:04:38.490+00:002012-12-20T06:04:38.490+00:00What makes you think that central banks are exclud...What makes you think that central banks are excluded from the shadow banking system?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-10783784436703330912012-12-17T00:11:27.296+00:002012-12-17T00:11:27.296+00:00Another excellent post...
Or to continue with Orw...Another excellent post...<br /><br />Or to continue with Orwell's Animal Farm (w.r.t "switch" back in 2007)<br /><br />“Mr Jones, of Manor Farm, had locked the hen-houses for the night, but was too drunk to remember to SHUT the POP-HOLES” The Cheshire Cathttps://www.blogger.com/profile/08619547396220504593noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-44096275479747159612012-12-16T22:25:12.974+00:002012-12-16T22:25:12.974+00:00Steve Keen also links it to the BNP Parisbas decis...Steve Keen also links it to the BNP Parisbas decision.Anonymousnoreply@blogger.com