It's worse than that Richard. I've read of at least one investment firm that is issuing it's own corporate debt to buy Bitcoin. Debt being used to pump up the Bitcoin price is akin to the debt used to push up stock prices in 1929.
Banks create money (Currency) when they create a loan contract. If it is not repaid, then that loss appears on the bank's P&L accounts. If their ratio of loans to customer's cash goes above a certain ratio (10:1), then the government "bails out the bank" by helping reduce that ratio. They GIVE government bonds to them, to prop them up. This adds to National Debt, that taxpayers must fund. The minimum interest rate of 2% is supposed to be there, so that banks have some money to keep the doors open. When Central banks went below that, some went bust. Privatise the Profits - Socialise the Losses.
Nop, the commercial banks create the money when they "lend"...no the Central Banks. CB create M0 money...that is pure drugs....but commercial banks may create money as well (as M1, M2, not pure drug ) this money is digital.
It really makes me laugh. I have tried to explain this to people over dinner and they simply cannot get theirs heads around it. Remarkably well educated people don't understand the basic tenets of our financial system. It is astonishing that 98% of people who have used money to buy things probably from the age of 4yrs. old, have absolutely no idea what money is, where it comes from and where it goes. When our current financial system has run its course (and I am sure at some point it will) what will/can replace it?
Oh yes, it's going to happen again (it's guaranteed) especially since they got rid of the banker's bonus cap. And us ordinary people are made to pay much more and much longer. Even Alistair Darling actually said that when the crash happens, the government always make us little people pay for it.
I'm 51yrs old. $40,000 weekly and *I'm retired, this video have inspired me greatly in many ways that I remember my past of how I struggled with many things in life to be where I am today!!!!* ❤️
Same here waking up every 14th of each month to 210,000 dollars it's a blessing to l and my family... I can now retire knowing that I have a steady income❤️Big gratitude to Maria Frances Hanlon
The continuity of work on your channel is very useful in understanding the difference between money and capital assets in regards to our everyday lives and the choices that we have made or need to make in the future.
The rich also got richer after the crash, as much of the newly-created money flowed in their directions through loans to buy up assets, which they rent back to us at extortionate rates. Gary Stevenson explains this in his videos.
I like what Gary had to say at the start. However, he can't seem to have a conversation without saying how well off he is.. Considering how he made his money, betting against the odds, it's almost as if he's bragging.
It’s not £85,000 per bank - it’s £85,000 per bank group. As you know lots of smaller banks are part of a larger banking group. So say the person you mentioned with £50k at 10 banks was in fact only at 2 bank groups, they wouldn’t get 500k back, but 100k. Very few people know that and it’s a horrible loophole created by bankers for bankers.
In a crisis the myths rapidly collapse. During the 2008 crisis one ,at least, of the banks in the UK was signed off as "a going concern" by the auditors when in fact it was bankrupt. When asked afterwards why they had signed it off as a going concern the auditors said because they knew the govt would bail it out. A reasonable question was why did they receive huge audit fees to give the going concern stamp of approval when according to them the bank concerned would be a going concern under any circumstances. Ernst and Young did not get off so lightly over their dealings with Lehmann Bros.
@@billB101 No they don’t, quite true ,but we should listen to a wide range of opinion and make a rough guess like everyone else. It might affect our decisions about mortgages, savings spending ,business plans etc.
Not all money is debt. Hard currency - silver and gold - are real and also have real world uses. No government need ever be short of money. No nation ever lost a war because it ran out of money.
Silver and gold are not currencies. They are commodities. And the amount in circulation is dwarfed so many times over by the amount of ledger money, because precious metals are illiquid and less efficient as the basis of a globalised financial system. If they were really useful, poor old Zimbabwe would be less of the economic failure it is.
It’s always that something is worth what someone is prepared to pay for it. When house prices crashed in the 80s they dropped in value because no one wanted to buy. This is the problem with house prices up until recently. House prices rose in the Blair era because they let banks lend as much as they wanted to. Houses are worth what banks will agree to lend you. So that coupled to the lack of council house building and private landlords buying up properties they created the housing inflation.
Ive always viewed this as the ultimate fix for inflation. Everyone dumps their extra money into stocks/assets/crypto and the value evaporates and the money they thought they had blinks out of existence.
'Money can simply disapper, because it is not real, it is merly the promise to pay a dept' -so true! Thats the reason why in times of crisis, people invest in a harder currency, like noble metals or other valuable assets, instead of stocks or cash. Sure, in a crash, that will still lose potentially a lot of its value too, but not everything at least.
No, money is gold and silver, you are talking about our fiat currency which intrinsically has next to zero value and is only a promise to pay ie it is debt.
@@sarahann530 Gold and silver both have industrial uses which gives them value. The making of jewellery also gives value coupled with the inherent scarcity also contributes to the value. "it is worth what the market decides it's worth" this is how we define value by the market price! The only thing with inherent value if we exclude all commodity's is a human or animal that can do work. I personally do not want to go back to a slave type system that you appear to be proposing.
When a buyer pays the seller for an asset, the payment transaction realises the monetary value of the asset. As the market value of the asset changes, the perceived monetary value changes accordingly but that value hasn't been realised in a tangible form yet. Thus, we cannot say that the money has disappeared. It would be more accurate to say that it just hasn't come into existence yet.
Oh, stop being such a wimp. Grow some balls and get out there and fight like the rest of us. It is what it is. Educate yourself and become a winner, rather than a victim.
Did you know Gary was the best trader in the world (despite only doing it for a few years) but gave it all in to fight for poor people and the revolution. He’s an amazing guy (or so he says).
Not quite. It an exposé of how international money markets work, and how the dealer banks trading in it make their money. It's really an exposé of the global financial payment system works. Not banking specifically. There is a difference, because the Lehman Brothers and JP Morgan, etc are investment banks and not retail ones. And retail ones are your high street bank for the public. Whereas the investment banks make their money trading financial assets, and operating in the wholesale financial markets, where the minimum transaction is in the millions of pounds. So most ordinary people will know very little about this and the Offshore finance markets. Those were the assets Gary was trading during his time in the City.
The problem comes from people trying to reduce their apparent risk to zero, which is impossible and has the effect of producing much greater systematic risk because all the risk is concentrated on a few organisations - banks - and if they fail everything else goes down. If everyone got 5% less wealthy there isn't much of a problem, but if done people get 200% less wealthy there are problems.
It does depend on what type of debt, if it is unsecured then there is only the legal recourse, if it’s secured against something directly so it will be removed from you. This is something that the MMT tend to scoot around.
Banks used to depend on people to function - they could only lend what their customers put in. There were many banks, and one going under might screw a town, but its reach was limited. Now people depend on the banks to function - they create money out of the ether, so they are not dependent on people or their deposits. We now have 5 big banks that are too big to fail, any one going under would cause countrywide catastrophe, so the government is forced to bail them out upon failure.
Yes... I always had a feeling that bitcoin would be used to make promises disappear by their inherit nature of high fluctuation value... with an illusion that virtual property is finite and unique. Ai and other super computers all think that in about five to 10 years, they can solve encrypted block chain. I am not sure if this is true, but I am still surprised how block chain is still a thing with the trust that the founder of Bitcoin would not suddenly increase supply and rug pull them.
Quantum computing can potentially break BTC. However that would destroy conventional banking too, so it's not a big deal if that actually happens (in grand scheme of things). However Google said they have quantum machine with 105 quibits and BTC can resist up to 1M in current state. Also new quantum computer resisting algorithms exist and it is possible to migrate to them as need arises. None of this however seems a problem for next one or two decades and it is problem that can be solved. Which is important for both BTC and conventional banking that also depends on encryption. AI has nothing to do with this.
You are mixing ideology/theory with reality, in reality money is absolutely real. It is a reward for work = it is real because someone spent the time to work or whatever to received compensation for their effort with money.
Yes the bank can come and take your property even though they produced the currency for the mortgage out of thin air. If your holding gold it matters not if the bank crashes you have no third party liability. The bankers don't want you holding gold it is their cryptonite
Never heard of Gold certificates? Doh. Not true. Gold isn't their kryptonite, otherwise Putin would not be trying to launder gold purchases through the banking system. This is not 1914.
Austerity was never about saving money in the sense of putting money aside in a savings account like an individual would do. It was about balancing the books against government debt. I.e., reduce public spending so that government revenue (tax) can be used to repay the debt (and its interest of course!) instead of, you know, do what governments are supposed to do and pay for decent public services. Do note that austerity is one way of dealing with sovereign debt and as such is a political choice. A choice which puts the pressure on the poorest in our society. Another possible way is for the government to raise taxes on the very rich (I'm talking over £10M net worth, not high-income). They are not currently paying a fair share (effectively 25% instead of almost 50% like the rest of us plebs) but they should. They can afford it, they recently became even richer thanks to all the COVID cash stimuli.
Hello 👋 how do you make such weekly amount?? I'm a born Christian and sometimes I feel so down of myself because of low finance but I still believe in God's.
Elizabeth Regina has really set the standard for others to follow, we love her here in the UK as she has been really helpful and changed lots of life's with her crypto experience.
Unfortunately, not all of us were financially literate early. I was 35 when I finally educated myself and started taking steps. I went from $176,000 in debt with zero savings or retirement to now, 2 years later, fully debt-free and over $1000,000 net worth. I know that doesn't SOUND like a lot, but I'm incredibly proud of it. Now I'm fast-tracking my wealth building (investing $400,000 annually) and don't owe a dime to anyone. It's a good feeling!
Value disappears not money. Government guarantee is "net of liquidation" expenses! Bank deposits and profits depend on customers holding their money with them. Banks securities can diminish overnight and by more the Bank had allowed for in its loan! Asset pumping by QE was another way to save Banks. In Iceland they let them fail then intervened for the Public Good and negotiated paying off Foreign creditors and ensured Banks now work for Society not for their own desires.Not enough attention paid to how much the UK provides its basic consumption buyt rely on finance to each the globe for products. When this fails we cannot replace it!!
Depends on the type of money, I think that should be specified. While modern fiat currency fits the description, some modern digital money, and some ancient money, don't. Putting aside the fact that Bitcoin and Gold are not a good money because they aren't good for most payments, a modern fixed supply digital money that is good for payments doesn't require debt, banks, government issuer, or the ability to vanish. Granted these new fixed supply monies are a tiny fraction of the economy, with only a few dozen people currently living on them, but they might catch on with enough time.
Richard, could you explain to me/us what would happen if there was a debt Jubilee where all debt was written off, as suggested by American economist Michael Hudson (and history). Is this a possibility in the modern economy? Fingers crossed!
I find it incredulous that bit coin created to pass institutions like banks can have an effect on those banks if bit coin, which by its nature is volatile crashes. Or have I missed something.
It goes without saying that the traditional and unimaginative thinkers in the Westminster political class would ever want to concede ground to the intangibility theory of money. It would leave them like musketeers with no gunpowder.
When it comes to a stock crash, and people have money in held in the account with an investment platform (rather than actively invested), would you say that is protected during a crash provided the platform doesn't go bust?
If I create a private limited company with 1,000,000 shares and sell one of the shares for £10 then on paper the company is worth £10,000,000 while having £10 in assets. It's similar with stock, all shares are valued at the latest seen price but it's not possible to ever sell all shares at this price unless the company makes profit and buys them back.
Not a very good explanation. A mortgage is not what it seems. The borrower is the lender's tenant for the duration of the loan. What is labelled "interest " is in reality RENT. The process involves the creation of money, at negligible cost, for the purchase of the asset by the lender. In reality the process involves the purchase of land and buildings. From this perspective a crash is the collapse of a speculative land price bubble. The lenders are land speculators. Prices of land rise faster than the rent which supports that price, from a sustainable 20 times to an unstable 30 or more, and eventually the system breaks, as in 1974, 1992 and 2010. The next thing is a wave of defaults and the lenders are stuck with a pile of vacant property. There is a reluctance to dispose of this property as this world crystallise the loss. They therefore hold on to it, which keeps it off the market, creates a shortage and prevents the real economy from functioning. The damage is then aggravated by a general shortage of the credit which is needed for the economy to function.
8 ชั่วโมงที่ผ่านมา +1
😂are you a landlord? No your thesis is, sorry, bollocks!
Please point out the flaw(s) in my thesis. It isn't "my" thesis, incidentally. I am not smart enough to be able to make up such a thing. "My" thesis has been around for nearly 150 years.
Lulz You upset a homebuyer stuck with dream they they are losing sleep over. Domestic home purchasing, on the never never, is most succesful psyop ever.... A dream payed for with nightmares. Even if the home is paid for in cash, it is not owned what is owned is a registered title that taxes get first bite of if unpaid. Secondly all registeredvtitles are subject to compulsory pu😅rchase at the whim of anything bewteen local town all and the (supposedly) elected. government. Far better to get a Trust to buy the property and rent it out to trust owner to gain maximum rebates and a legal fiction to keep debtors at the trust office address? @@physiocrat7143
@@physiocrat7143 You are not the tenant of the lender, you are the tenant of the crown estate as all property titles are held by the crown. You can only buy the beneficial use of the property, you can never buy the title so even when the mortgage is paid off you are still the tenant.
When you buy a car with our money , can the car just disapear?So the money I bought the STOCK with can just disapear, I would call it THEFT on an unbelievable scale. It just goes to show you are not buying the actual shares in a PLC company on the Stock Market, you are buying dividens, and gambling on the price Shares cannot suddenly DISAPEAR.
Hi Richard just a quick Question, I thought that FSA guarantee was for 3 separate accounts only and must not be accounts from a bank in the same group i.e. Halifax and Bank of Scotland only one is covered. I am I wrong??
Thank you. It is indescribably difficult to make a huge proportion of the public grasp that 'money' is fundamentally an idea. Bits of metal and paper are representative of 'money', but 'money' itself does not exist. Try explaining that the infamous Wall Street crash a century ago made some people very, very rich. What was lost by some was gained by others. I tried valiantly before brexit to explain that this loss/gain was inevitable. I swear I actually lost weight doing so. My frustration was epic. Alas, people stupid enough to vote for brexit were too stupid to understand financial pain was inevitable.
Welcome to the wavy cycle of capitalist economy: it rises and falls randomly from crash to boom and back to crash. Capitalism cannot fail as long as you simply declare a crash to be not the failure of the system, but just something that sometimes happens which there is nothing to do against...
Patience is a virtue you clearly lack. The last lot had 14 years and materialised nothing but further poverty and division. Perhaps we should give them a bit longer than a few months.
Actually dollars leave the universe all the time. What we, the people, perceive as money is mostly bank deposits. These deposits are originally created by banks by lending. The act of lending creates a liability (debt) and an asset (deposit) for the borrower. Thus, money has been created. Conversely, when the debt is paid, the deposit disappears. Money leaves the universe...
This is fundamentally flawed because it only describes half of the situation. Likely this is a deliberate fake truth to hide the real issue. Say, in the sub prime crises, a given house was sold and somebody walked away with that proceeds after selling the house. Those people have to put the money somewhere in the financial system (and not under their mattress). The new owner not being able to repay the loan is one thing, the old owner laughing with the cash should still be laughing with the same cash. That's what I don't understand. Likewise, the mortage bank might now be in crises because people can't repay their loans. But in many cases such loans were sold and securitised, keeping the banks away from the blast zone. For all those securitised fake AAA derivatives from sub-prime loans were purchased with real money and the seller were again laughing with cash, which did NOT vapourise. It is only the buyer tricked into buying those fake AAA derivative products that have their value vaopurised. The seller of those fake AAA derivative products have already received their proceeds and are laughing. SO WHY ARE YOU PUTTING AN INVISIBLE CLOAK ON THEM? YOU ARE NOT EXPLANING THE SITUATION. YOU ARE HIDING THE TRUTH!
For us simple minded you should have talked about the money which is coined and printed on actual paper which obviously doesn't just disappear and still around somewhere in a attic or a warehouse. Fine iou notes are reduced in a crash but physical money, however much, is still around somewhere. So how much physical notes or coins are out there that government has minted over the years. And can we say that physical money is enough for us plebs to support our basic needs and electronic or ether money is for the rich to inflate their assets.
Satoshi Nakamoto who created Bitcoin holds 1 million of them. All Satoshi Nakamoto has to do is sell them. Sure they'll be rich, but Bitcoin will crash. Nobody knows who Satoshi Nakamoto is, it could be a person, a company, a government, or the CIA. Many other ideas have been floated too.
why dont governments create money in bad times but not crisis instead of creating political mayhem by taxing people to death. I was hoping that this labour government would be more MMT than traditional tax and spend.
@@blackbulldog4897 the government can put money in to circulation in a no. of different ways 1. buy goods and services.2. employ people. 3. give it directly to people I.E. benefits.
And yet after all that money was created in QE it didnt lead directly to inflation, which according to some is a tenet of creating money from nothing. I still dont get it.
QE first caused asset price inflation (property and stocks are easy to check) which then led to general inflation when people start trying to spend their capitol gains. Taxation is the cure for inflation but putting up the tax on fags, beer and fuel is not the right target.
People make up reasons to own it, but no one understands bitcoin. It's got more in common with a collectable like an art piece people are bidding on just because it's rare. They need as many people bidding on it as possible to give it as much value as possible.
If the bulk of our population understood this, there would be the mother and father of rushes on the banks. What you kept calling money is not money it is currency. Money in its truest sense is physical gold or silver both of which have been recognized as such for thousands of years and indeed CB's class gold as a tier one asset.
No, in these discussions "money" is debt. You can't define "money in its truest sense". This is a discussion tht requires you and me to accept the definitions being used. Richard Murphy makes this quite clear.
@@helenheenan3447 I think he is referring to gold and silver which is money, cash has no interest attached, all digital currency is created via loans and is debt and has interest attached. I also think he means frangible not tangible.
@helenheenan3447 no I mean gold, bitcoin (theoretically), other precious metals, land. Notes/coins and whatever shows on a banks leger is not money, it's currency that has no intrinsic value, other than what is agreed, and enforced legally and militarily
You forgot to point out that only leaving the Euro-zone gave the BofE the right to print the necessary money, otherwise your monetary system is at the mercy of Brussels.. Also, as you point out pounds and dollars get their value from the issuing government's guarantee, bitcoins are like fine art, both get their value from the one more fool theory. Also, money is infrastructure created by the government to facilitate barter or fractions thereof between people who will never meet or speak. The amount must be geared to the economy. Some money isn't available for transactions, parked in the stock market for instance, and doesn't need to be replaced in a falling stock market. A dropping stock market doesn't remove transactional money from the economy unless transactional money was borrowed to buy stocks. Please keep up the good work, but I'd rather see you speaking than some irrelevant photo.
I still don't get it. Money is a peculiar thing. Anyway... You said the banks give a loan but the bank makes sure it's secured against an asset, ie a house. So the person who promises to pay for the house fails in their promise then the house can be recovered. In that sense there is no money that has disappeared. This is why I don't understand the sub prime loans that caused the American housing crisis. Did they not just get the house back from the (mainly poor) people and then they'd have have the asset, and any payments made on the house is a bonus? Some one may make a comment and I'm still gunna be none the wiser.
If the value of the asset, the house, or shares, has dropped, so that it isn't enough to cover the loan, then the bank cannot recover 100% of the loan. That's what happens in a crash.
They gave so many loans, more than they normally would to people less likely to be able to pay. This had 2 effects, the first one is simple, there were now more people chasing the same number of properties, this caused price inflation which affected the whole market not just the low cost homes. When the crash comes the value of the property reverts to a more reasonable one and the lender cant get their money even if the reposes and sell the property. The second is a bit harder to explain, no lender keeps the mortgage, they all sell them on to realise the value. A financial institution buys them and packages hundreds of thousands of them together as a mortgage backed security and they then sell these to pension firms. This is how the risk goes from one company to become systemic in the industry when people start failing to pay due to economic downturn or an interest rate increase.
I know one thing, bankers are back making a profit while the good old taxpayer foots the bill, again. It's the same thing every time, and we never seem to get rewarded.
Your explanation revolves around banks or at least banks play a large role in your explanation. But banks did not exist when money was first invented. Could you try again, without banks this time?
I don’t know about that last statement . Governments I believe should Not be the issuer of money, they may have manoeuvred themselves into that position over time as they grab more and more power. Just a thought.
Most people who come to YT for information are the lazy ones - for depending on audiovisual format just to be able to digest what could essentially come in the form of a written article with a few graphics, needing only a few KB of data, and being just as informative but requiring an attention span longer than that of a gnat
If you read Richard Murphy's blog yesterday you would know that he is ill, and his son, who makes the videos, advised him to make an audio only version.
It's worse than that Richard. I've read of at least one investment firm that is issuing it's own corporate debt to buy Bitcoin. Debt being used to pump up the Bitcoin price is akin to the debt used to push up stock prices in 1929.
And on a side note, Russia wants to buy huge amounts of Bitcoin!
Banks create money (Currency) when they create a loan contract. If it is not repaid, then that loss appears on the bank's P&L accounts. If their ratio of loans to customer's cash goes above a certain ratio (10:1), then the government "bails out the bank" by helping reduce that ratio. They GIVE government bonds to them, to prop them up. This adds to National Debt, that taxpayers must fund. The minimum interest rate of 2% is supposed to be there, so that banks have some money to keep the doors open. When Central banks went below that, some went bust. Privatise the Profits - Socialise the Losses.
Another example of socialism for the rich!
I think you'll find it is the central bank that creates the money, not the government.
@@halfdan_f The government owns the bank.
Nop, the commercial banks create the money when they "lend"...no the Central Banks. CB create M0 money...that is pure drugs....but commercial banks may create money as well (as M1, M2, not pure drug ) this money is digital.
It really makes me laugh. I have tried to explain this to people over dinner and they simply cannot get theirs heads around it. Remarkably well educated people don't understand the basic tenets of our financial system. It is astonishing that 98% of people who have used money to buy things probably from the age of 4yrs. old, have absolutely no idea what money is, where it comes from and where it goes. When our current financial system has run its course (and I am sure at some point it will) what will/can replace it?
Very clear explanation.
Great work. Education about money is essential in every areaof life.
Oh yes, it's going to happen again (it's guaranteed) especially since they got rid of the banker's bonus cap. And us ordinary people are made to pay much more and much longer. Even Alistair Darling actually said that when the crash happens, the government always make us little people pay for it.
It’s a full gone conclusion that There will be a crash once trump enacts his aggressive tariffs.
It is always happening again, the crash is an inherent part of our economic system
I'm 51yrs old. $40,000 weekly and *I'm retired, this video have inspired me greatly in many ways that I remember my past of how I struggled with many things in life to be where I am today!!!!* ❤️
Hello how do you make such?? I'm a born Christian and sometimes I feel so down myself because of low finance but I still believe in God
It's Maria Frances Hanlon doing, she's changed my life.
Same here
waking up every 14th of each
month to 210,000 dollars it's a blessing to l and my family... I can now retire knowing that I have a steady income❤️Big gratitude to
Maria Frances Hanlon
I do know Ms. Maria Frances Hanlon, I also have even become successful....
Absolutely! I've heard stories of people who started with little to no knowledge but made it out victoriously thanks to Ms. Maria Frances Hanlon.
The continuity of work on your channel is very useful in understanding the difference between money and capital assets in regards to our everyday lives and the choices that we have made or need to make in the future.
In other words, money is bollocks and it only exists because we all agree it does. I'll try to remember that next time the rent is due.
The rich also got richer after the crash, as much of the newly-created money flowed in their directions through loans to buy up assets, which they rent back to us at extortionate rates. Gary Stevenson explains this in his videos.
Yep. 👍
@@davidmcculloch8490 cheap QE money used in the trillions, literally,on share buybacks which boosted earnings per share and thereby executive bonuses
I like what Gary had to say at the start. However, he can't seem to have a conversation without saying how well off he is.. Considering how he made his money, betting against the odds, it's almost as if he's bragging.
It’s not £85,000 per bank - it’s £85,000 per bank group. As you know lots of smaller banks are part of a larger banking group. So say the person you mentioned with £50k at 10 banks was in fact only at 2 bank groups, they wouldn’t get 500k back, but 100k. Very few people know that and it’s a horrible loophole created by bankers for bankers.
Good content thanks Richard 👍🏻
That's a brilliant episode thank you! Let's hope the "slowly, then all at once" crash moment doesn't come any time soon.
In a crisis the myths rapidly collapse. During the 2008 crisis one ,at least, of the banks in the UK was signed off as "a going concern" by the auditors when in fact it was bankrupt. When asked afterwards why they had signed it off as a going concern the auditors said because they knew the govt would bail it out. A reasonable question was why did they receive huge audit fees to give the going concern stamp of approval when according to them the bank concerned would be a going concern under any circumstances. Ernst and Young did not get off so lightly over their dealings with Lehmann Bros.
I presume Richard Murphy is covering this subject at this point in time for a reason .
Trump is going to crash the global economy with trade wars apparently.
Yes, bitcoin. The latest asset bubble ready to burst.
@@helenheenan3447 No one knows this. Unless you have a crystal ball.
@@billB101 No they don’t, quite true ,but we should listen to a wide range of opinion and make a rough guess like everyone else. It might affect our decisions about mortgages, savings spending ,business plans etc.
@@SarahWalker-Smith There are no rough guesses when it comes to market crashes. That's why they crash.
A great video Richard;-) thanks for your work;-)
Back in the 90s I read Crashes by Robert Beckman, gave me a good dose of cynicism. Excess credit with overvalued assets.
Value disappears, and value is not money, it’s subjective.
Not all money is debt. Hard currency - silver and gold - are real and also have real world uses. No government need ever be short of money. No nation ever lost a war because it ran out of money.
Before we unlinked gold from our currency worldwide countries went bust as a result of war all the time.
Silver and gold are not currencies. They are commodities. And the amount in circulation is dwarfed so many times over by the amount of ledger money, because precious metals are illiquid and less efficient as the basis of a globalised financial system. If they were really useful, poor old Zimbabwe would be less of the economic failure it is.
I love the fact that when an organisation fails those owing them money are swiftly transferred but those lending loose their shirt
Privatise the gains, socialise the loses. Been like this for decades.
It’s always that something is worth what someone is prepared to pay for it. When house prices crashed in the 80s they dropped in value because no one wanted to buy.
This is the problem with house prices up until recently. House prices rose in the Blair era because they let banks lend as much as they wanted to. Houses are worth what banks will agree to lend you. So that coupled to the lack of council house building and private landlords buying up properties they created the housing inflation.
System of integrity🎉🎉🎉🎉🎉🎉🎉🎉🎉
Ive always viewed this as the ultimate fix for inflation. Everyone dumps their extra money into stocks/assets/crypto and the value evaporates and the money they thought they had blinks out of existence.
'Money can simply disapper, because it is not real, it is merly the promise to pay a dept' -so true! Thats the reason why in times of crisis, people invest in a harder currency, like noble metals or other valuable assets, instead of stocks or cash. Sure, in a crash, that will still lose potentially a lot of its value too, but not everything at least.
Money disappeared
They never existed in the first place
Tesla stocks 1000
True value 10
990 air balloon
It's not money, it's perceived value of an asset.
Very good FAQ for money savings debt & assets
Money is nothing but pretence that is destroyed by the smallest and simplest act of bad faith.
No, money is gold and silver, you are talking about our fiat currency which intrinsically has next to zero value and is only a promise to pay ie it is debt.
@MrHughk1 Gold and silver has no intrinsic value either , it is worth what the market decides it's worth
@@sarahann530 Gold and silver both have industrial uses which gives them value. The making of jewellery also gives value coupled with the inherent scarcity also contributes to the value. "it is worth what the market decides it's worth" this is how we define value by the market price!
The only thing with inherent value if we exclude all commodity's is a human or animal that can do work. I personally do not want to go back to a slave type system that you appear to be proposing.
@sarahann530
No, the market does nothing but reflects the human theatre around it. No Dan Hannon neoconisn here please.
How does metal fulfill its promise to pay?
When a buyer pays the seller for an asset, the payment transaction realises the monetary value of the asset. As the market value of the asset changes, the perceived monetary value changes accordingly but that value hasn't been realised in a tangible form yet. Thus, we cannot say that the money has disappeared. It would be more accurate to say that it just hasn't come into existence yet.
I had not realised people were being advanced credit against something as volatile as cryptocurrency.
The financial system is predatory ad oppressive.
Oh, stop being such a wimp. Grow some balls and get out there and fight like the rest of us. It is what it is. Educate yourself and become a winner, rather than a victim.
@ fight for what exactly?
Another very interesting video, thank you. Are Premium Bonds safe?
"The Trading Game" by Gary Stevenson is a great book with insight into one person's experience of the UK banking system.
Did you know Gary was the best trader in the world (despite only doing it for a few years) but gave it all in to fight for poor people and the revolution. He’s an amazing guy (or so he says).
Not quite. It an exposé of how international money markets work, and how the dealer banks trading in it make their money. It's really an exposé of the global financial payment system works. Not banking specifically. There is a difference, because the Lehman Brothers and JP Morgan, etc are investment banks and not retail ones. And retail ones are your high street bank for the public. Whereas the investment banks make their money trading financial assets, and operating in the wholesale financial markets, where the minimum transaction is in the millions of pounds. So most ordinary people will know very little about this and the Offshore finance markets. Those were the assets Gary was trading during his time in the City.
It's sobering to remember our entire economic edifice is based solely on something as nebulous as a promise which can so easily be broken.
The problem comes from people trying to reduce their apparent risk to zero, which is impossible and has the effect of producing much greater systematic risk because all the risk is concentrated on a few organisations - banks - and if they fail everything else goes down. If everyone got 5% less wealthy there isn't much of a problem, but if done people get 200% less wealthy there are problems.
It does depend on what type of debt, if it is unsecured then there is only the legal recourse, if it’s secured against something directly so it will be removed from you.
This is something that the MMT tend to scoot around.
a bit like a religion
@@Sujki19 Thanks. Gave me a chuckle.
@@davideyres955 Can you explain how MMT scoots around this?
Bitcoin is also much more liable to fraud and hacking. That tends to destroy the value much faster than a market crash
Kinda bypasses the idea that currency was once backed by gold.
Banks used to depend on people to function - they could only lend what their customers put in. There were many banks, and one going under might screw a town, but its reach was limited.
Now people depend on the banks to function - they create money out of the ether, so they are not dependent on people or their deposits. We now have 5 big banks that are too big to fail, any one going under would cause countrywide catastrophe, so the government is forced to bail them out upon failure.
Yes... I always had a feeling that bitcoin would be used to make promises disappear by their inherit nature of high fluctuation value... with an illusion that virtual property is finite and unique.
Ai and other super computers all think that in about five to 10 years, they can solve encrypted block chain.
I am not sure if this is true, but I am still surprised how block chain is still a thing with the trust that the founder of Bitcoin would not suddenly increase supply and rug pull them.
Quantum computing can potentially break BTC. However that would destroy conventional banking too, so it's not a big deal if that actually happens (in grand scheme of things). However Google said they have quantum machine with 105 quibits and BTC can resist up to 1M in current state. Also new quantum computer resisting algorithms exist and it is possible to migrate to them as need arises. None of this however seems a problem for next one or two decades and it is problem that can be solved. Which is important for both BTC and conventional banking that also depends on encryption. AI has nothing to do with this.
Thank you. Money does not exist.
You are mixing ideology/theory with reality, in reality money is absolutely real. It is a reward for work = it is real because someone spent the time to work or whatever to received compensation for their effort with money.
@@drscopeify You are both confusing money with currency. We have no money in our economic system, only promises to pay which are debt.
@@MrHughk1 Absolutely correct. A lot of confusion in these comments, with people making their own definitions of money, cash, currency.
It's amazing how accurate AI voices have got.
Just like bots. Lol. I tell you a trick. Go and Google Richard J Murphy and see what you find. I know if we googled you, what we would find. Nothing.
Erm Gold has been money for five thousand years, it doesn't disappear.
It is so pleasant being broke, no worries about crashes
Yes the bank can come and take your property even though they produced the currency for the mortgage out of thin air. If your holding gold it matters not if the bank crashes you have no third party liability. The bankers don't want you holding gold it is their cryptonite
banks cannot create money only the government can.
Never heard of Gold certificates? Doh. Not true. Gold isn't their kryptonite, otherwise Putin would not be trying to launder gold purchases through the banking system. This is not 1914.
Where is all the money that austerity was supposed to have saved?
Wiped out by the cost of furlough I imagine.
@rob5944
That's what the economy is for: in any crisis to help rather than abandon people ... who - Michelle Mone?
It shrank the economy and created more debt.
Austerity was never about saving money in the sense of putting money aside in a savings account like an individual would do. It was about balancing the books against government debt. I.e., reduce public spending so that government revenue (tax) can be used to repay the debt (and its interest of course!) instead of, you know, do what governments are supposed to do and pay for decent public services. Do note that austerity is one way of dealing with sovereign debt and as such is a political choice. A choice which puts the pressure on the poorest in our society. Another possible way is for the government to raise taxes on the very rich (I'm talking over £10M net worth, not high-income). They are not currently paying a fair share (effectively 25% instead of almost 50% like the rest of us plebs) but they should. They can afford it, they recently became even richer thanks to all the COVID cash stimuli.
Austerity was and is a scam. The Tory’s added 2 trillion to the debt while making the public believe they were doing the opposite.
How do the BRRD bail-In powers fit in to any fresh crisis we might/will see?
I'm glad you made this video it reminds me of my transformation from a nobody to good home, $34k monthly and a good daughter full of love..
Hello 👋 how do you make such weekly amount?? I'm a born Christian and sometimes I feel so down of myself because of low finance but I still believe in God's.
Yes,Thanks to Mrs Elizabeth Regina Nelson's time in my life,which had a profound impact on me.
Wow! I'm kind of in shock that you mentioned the expert, Elizabeth Regina Nelsen. What a coincidence!!
Elizabeth Regina has really set the standard for others to follow, we love her here in the UK as she has been really helpful and changed lots of life's with her crypto experience.
Unfortunately, not all of us were financially literate early. I was 35 when I finally educated myself and started taking steps. I went from $176,000 in debt with zero savings or retirement to now, 2 years later, fully debt-free and over $1000,000 net worth. I know that doesn't SOUND like a lot, but I'm incredibly proud of it. Now I'm fast-tracking my wealth building (investing $400,000 annually) and don't owe a dime to anyone. It's a good feeling!
Value disappears not money. Government guarantee is "net of liquidation" expenses! Bank deposits and profits depend on customers holding their money with them. Banks securities can diminish overnight and by more the Bank had allowed for in its loan! Asset pumping by QE was another way to save Banks. In Iceland they let them fail then intervened for the Public Good and negotiated paying off Foreign creditors and ensured Banks now work for Society not for their own desires.Not enough attention paid to how much the UK provides its basic consumption buyt rely on finance to each the globe for products. When this fails we cannot replace it!!
Depends on the type of money, I think that should be specified. While modern fiat currency fits the description, some modern digital money, and some ancient money, don't. Putting aside the fact that Bitcoin and Gold are not a good money because they aren't good for most payments, a modern fixed supply digital money that is good for payments doesn't require debt, banks, government issuer, or the ability to vanish. Granted these new fixed supply monies are a tiny fraction of the economy, with only a few dozen people currently living on them, but they might catch on with enough time.
Richard, could you explain to me/us what would happen if there was a debt Jubilee where all debt was written off, as suggested by American economist Michael Hudson (and history). Is this a possibility in the modern economy? Fingers crossed!
You gotta have faith, faith, faith....
I find it incredulous that bit coin created to pass institutions like banks can have an effect on those banks if bit coin, which by its nature is volatile crashes. Or have I missed something.
It goes without saying that the traditional and unimaginative thinkers in the Westminster political class would ever want to concede ground to the intangibility theory of money. It would leave them like musketeers with no gunpowder.
When it comes to a stock crash, and people have money in held in the account with an investment platform (rather than actively invested), would you say that is protected during a crash provided the platform doesn't go bust?
The puzzle for me is if money is a promise to pay it begs the question pay with what? Another promise to pay? And so on. Help..
The government owned Bank f England created the money withwhich to pay.
If cash can vanish how the corporation balance the book?
If I create a private limited company with 1,000,000 shares and sell one of the shares for £10 then on paper the company is worth £10,000,000 while having £10 in assets.
It's similar with stock, all shares are valued at the latest seen price but it's not possible to ever sell all shares at this price unless the company makes profit and buys them back.
MMT to the rescue, they hope!
Yes. The government then is responsible for the inflation too.
Not a very good explanation. A mortgage is not what it seems. The borrower is the lender's tenant for the duration of the loan. What is labelled "interest " is in reality RENT.
The process involves the creation of money, at negligible cost, for the purchase of the asset by the lender.
In reality the process involves the purchase of land and buildings.
From this perspective a crash is the collapse of a speculative land price bubble. The lenders are land speculators. Prices of land rise faster than the rent which supports that price, from a sustainable 20 times to an unstable 30 or more, and eventually the system breaks, as in 1974, 1992 and 2010.
The next thing is a wave of defaults and the lenders are stuck with a pile of vacant property. There is a reluctance to dispose of this property as this world crystallise the loss. They therefore hold on to it, which keeps it off the market, creates a shortage and prevents the real economy from functioning. The damage is then aggravated by a general shortage of the credit which is needed for the economy to function.
😂are you a landlord? No your thesis is, sorry, bollocks!
Please point out the flaw(s) in my thesis. It isn't "my" thesis, incidentally. I am not smart enough to be able to make up such a thing. "My" thesis has been around for nearly 150 years.
No reply came...
Lulz
You upset a homebuyer stuck with dream they they are losing sleep over.
Domestic home purchasing, on the never never, is most succesful psyop ever.... A dream payed for with nightmares.
Even if the home is paid for in cash, it is not owned what is owned is a registered title that taxes get first bite of if unpaid.
Secondly all registeredvtitles are subject to compulsory pu😅rchase at the whim of anything bewteen local town all and the (supposedly) elected.
government.
Far better to get a Trust to buy the property and rent it out to trust owner to gain maximum rebates and a legal fiction to keep debtors at the trust office address?
@@physiocrat7143
@@physiocrat7143 You are not the tenant of the lender, you are the tenant of the crown estate as all property titles are held by the crown. You can only buy the beneficial use of the property, you can never buy the title so even when the mortgage is paid off you are still the tenant.
When you buy a car with our money , can the car just disapear?So the money I bought the STOCK with can just disapear, I would call it THEFT on an unbelievable scale. It just goes to show you are not buying the actual shares in a PLC company on the Stock Market, you are buying dividens, and gambling on the price Shares cannot suddenly DISAPEAR.
Hi Richard just a quick Question, I thought that FSA guarantee was for 3 separate accounts only and must not be accounts from a bank in the same group i.e. Halifax and Bank of Scotland only one is covered. I am I wrong??
If you buy a car and crash it, it isn't difficult to see how money has 'disappeared', is it?
Thank you. It is indescribably difficult to make a huge proportion of the public grasp that 'money' is fundamentally an idea. Bits of metal and paper are representative of 'money', but 'money' itself does not exist.
Try explaining that the infamous Wall Street crash a century ago made some people very, very rich. What was lost by some was gained by others. I tried valiantly before brexit to explain that this loss/gain was inevitable. I swear I actually lost weight doing so. My frustration was epic. Alas, people stupid enough to vote for brexit were too stupid to understand financial pain was inevitable.
Some people were too stupid to realise that Brexit was about more than money.
Nope, it becomes assets for the rich, that's why they engineer crashes
How is a crash "engineered"?
@@physiocrat7143 Read Robert Beckmans book crashes or the downwave
It probably isn't, but over inflation of 5he housing market by unscrupulous investors and builders might be one way.
@@rob5944
The unscrupulous investors are the lenders and the borrowers.
@@physiocrat7143 shrinking the economy with austerity ?
Welcome to the wavy cycle of capitalist economy: it rises and falls randomly from crash to boom and back to crash. Capitalism cannot fail as long as you simply declare a crash to be not the failure of the system, but just something that sometimes happens which there is nothing to do against...
Think of money as one of Starmers pledges, they fail to materialise
Patience is a virtue you clearly lack. The last lot had 14 years and materialised nothing but further poverty and division. Perhaps we should give them a bit longer than a few months.
And much of it disappeared under the Tories.
Right then, Richard: is it worth investing in gold as some form of insurance?
How would you realise its value?
I would say the price of gold is volatile, and could fall in a crisis when people try and sell to create liquidity.
Most of the share money never existed musk seiis all his shares they are they worth anything?
a lost dollar doesnt leave the universe. they can only change hands.
Actually dollars leave the universe all the time.
What we, the people, perceive as money is mostly bank deposits. These deposits are originally created by banks by lending. The act of lending creates a liability (debt) and an asset (deposit) for the borrower. Thus, money has been created.
Conversely, when the debt is paid, the deposit disappears. Money leaves the universe...
Check your sofa, behind the cushions. That's where your lost dollar is.
@@velisvideos6208 its not money. that is currency.
@puppets.and.muppets Money? Cash? Currency? Check the definitions. Money is not cash.
@@helenheenan3447 cash is currency. abbreviated from cashier.
❤❤❤❤❤
And the government does not have their "money" - sorry currency;-)
So who guarantees the protection - the people;-)
a currency is backed by the strength of the economy and taxation.
@keithscothern3398 by the People's birth certificate;-)
This is fundamentally flawed because it only describes half of the situation. Likely this is a deliberate fake truth to hide the real issue. Say, in the sub prime crises, a given house was sold and somebody walked away with that proceeds after selling the house. Those people have to put the money somewhere in the financial system (and not under their mattress). The new owner not being able to repay the loan is one thing, the old owner laughing with the cash should still be laughing with the same cash. That's what I don't understand. Likewise, the mortage bank might now be in crises because people can't repay their loans. But in many cases such loans were sold and securitised, keeping the banks away from the blast zone. For all those securitised fake AAA derivatives from sub-prime loans were purchased with real money and the seller were again laughing with cash, which did NOT vapourise. It is only the buyer tricked into buying those fake AAA derivative products that have their value vaopurised. The seller of those fake AAA derivative products have already received their proceeds and are laughing. SO WHY ARE YOU PUTTING AN INVISIBLE CLOAK ON THEM? YOU ARE NOT EXPLANING THE SITUATION. YOU ARE HIDING THE TRUTH!
For us simple minded you should have talked about the money which is coined and printed on actual paper which obviously doesn't just disappear and still around somewhere in a attic or a warehouse. Fine iou notes are reduced in a crash but physical money, however much, is still around somewhere. So how much physical notes or coins are out there that government has minted over the years. And can we say that physical money is enough for us plebs to support our basic needs and electronic or ether money is for the rich to inflate their assets.
Actual cash - i.e. coins and notes, represent about 3% of money.
Satoshi Nakamoto who created Bitcoin holds 1 million of them. All Satoshi Nakamoto has to do is sell them. Sure they'll be rich, but Bitcoin will crash.
Nobody knows who Satoshi Nakamoto is, it could be a person, a company, a government, or the CIA. Many other ideas have been floated too.
why dont governments create money in bad times but not crisis instead of creating political mayhem by taxing people to death. I was hoping that this labour government would be more MMT than traditional tax and spend.
our government creates new £s every time it bus something/spends, that's every day.
@@blackbulldog4897 the government can put money in to circulation in a no. of different ways 1. buy goods and services.2. employ people. 3. give it directly to people I.E. benefits.
@@blackbulldog4897 yes but not the in the amounts needed. As they say Tax is to eliminate it from the system
so the taxpayer is the guarantor?
No, the government is the guarantor.
And yet after all that money was created in QE it didnt lead directly to inflation, which according to some is a tenet of creating money from nothing. I still dont get it.
QE first caused asset price inflation (property and stocks are easy to check) which then led to general inflation when people start trying to spend their capitol gains. Taxation is the cure for inflation but putting up the tax on fags, beer and fuel is not the right target.
QE is an asset swap, reserves for Gilts. It reverses the original transaction when the Gilt was issued and swapped for reserves.
@@blackbulldog4897 OK, So why is that supposed to lead to inflation?
I don't understand what bitcoin is or how it differs from money.
People make up reasons to own it, but no one understands bitcoin. It's got more in common with a collectable like an art piece people are bidding on just because it's rare. They need as many people bidding on it as possible to give it as much value as possible.
If the bulk of our population understood this, there would be the mother and father of rushes on the banks. What you kept calling money is not money it is currency. Money in its truest sense is physical gold or silver both of which have been recognized as such for thousands of years and indeed CB's class gold as a tier one asset.
No, in these discussions "money" is debt. You can't define "money in its truest sense". This is a discussion tht requires you and me to accept the definitions being used. Richard Murphy makes this quite clear.
Ah one of those religious economists. "All money is debt"
Excellent 👍+1.
Please don't call it money, it's currency, created by interest bearing debt, money has a finite supply and is preferably tangible.
No, you are referring to cash - notes and coins. That is not money.
@@helenheenan3447 I think he is referring to gold and silver which is money, cash has no interest attached, all digital currency is created via loans and is debt and has interest attached. I also think he means frangible not tangible.
@helenheenan3447 no I mean gold, bitcoin (theoretically), other precious metals, land. Notes/coins and whatever shows on a banks leger is not money, it's currency that has no intrinsic value, other than what is agreed, and enforced legally and militarily
@@cleanhit777 Currency gets most of its value from its ability to pay tax.
Money and state needs to be separated. Bitcoin is the tool that will do this and put humanity on the right path again.
I don't think I will be taking financial advice from you, thanks. 😀
You forgot to point out that only leaving the Euro-zone gave the BofE the right to print the necessary money, otherwise your monetary system is at the mercy of Brussels.. Also, as you point out pounds and dollars get their value from the issuing government's guarantee, bitcoins are like fine art, both get their value from the one more fool theory. Also, money is infrastructure created by the government to facilitate barter or fractions thereof between people who will never meet or speak. The amount must be geared to the economy. Some money isn't available for transactions, parked in the stock market for instance, and doesn't need to be replaced in a falling stock market. A dropping stock market doesn't remove transactional money from the economy unless transactional money was borrowed to buy stocks. Please keep up the good work, but I'd rather see you speaking than some irrelevant photo.
supporting giving the government absolute power over the monetary system is actually the stupidest thing about you people
"You people", are just trying to explain how the system works.
I still don't get it. Money is a peculiar thing. Anyway...
You said the banks give a loan but the bank makes sure it's secured against an asset, ie a house. So the person who promises to pay for the house fails in their promise then the house can be recovered. In that sense there is no money that has disappeared. This is why I don't understand the sub prime loans that caused the American housing crisis. Did they not just get the house back from the (mainly poor) people and then they'd have have the asset, and any payments made on the house is a bonus?
Some one may make a comment and I'm still gunna be none the wiser.
If the value of the asset, the house, or shares, has dropped, so that it isn't enough to cover the loan, then the bank cannot recover 100% of the loan. That's what happens in a crash.
They gave so many loans, more than they normally would to people less likely to be able to pay. This had 2 effects, the first one is simple, there were now more people chasing the same number of properties, this caused price inflation which affected the whole market not just the low cost homes. When the crash comes the value of the property reverts to a more reasonable one and the lender cant get their money even if the reposes and sell the property. The second is a bit harder to explain, no lender keeps the mortgage, they all sell them on to realise the value. A financial institution buys them and packages hundreds of thousands of them together as a mortgage backed security and they then sell these to pension firms. This is how the risk goes from one company to become systemic in the industry when people start failing to pay due to economic downturn or an interest rate increase.
The government rights the laws ..the government can change them...bring on the zombie apocalypse
The rich got richer and the poor got poorer, that's what happened
Absolutely
The rich act poor while the poor act rich. The rich only seem to be poor, the pretenders suffer a come down
I know one thing, bankers are back making a profit while the good old taxpayer foots the bill, again. It's the same thing every time, and we never seem to get rewarded.
The rich made the poor poorer, and that's a bottomless pit.
Same old, same old…
Bitcoin will evaporate, so will the name! You wanna play with make believe money? Good luck to you.
Your explanation revolves around banks or at least banks play a large role in your explanation.
But banks did not exist when money was first invented.
Could you try again, without banks this time?
Since all money in our economy is debt created by banks, that would be a waste of time. Why talk about a world that does not exist?
Hmmm does this mean that the background inflation rate in "calm" circumstances is us all breaking small promises across the country?
I don’t know about that last statement . Governments I believe should Not be the issuer of money, they may have manoeuvred themselves into that position over time as they grab more and more power. Just a thought.
Audio only YT videos are tedious. And lazy.
Most people who come to YT for information are the lazy ones - for depending on audiovisual format just to be able to digest what could essentially come in the form of a written article with a few graphics, needing only a few KB of data, and being just as informative but requiring an attention span longer than that of a gnat
If you read Richard Murphy's blog yesterday you would know that he is ill, and his son, who makes the videos, advised him to make an audio only version.