Lord King WTAF

If we go back in time my understanding of banks and lending was to have some people who had money in reserve to put that into an account which paid interest whereby that money was lent out in a responsible way to people who wanted to develop their businesses etc in exchange for payment.
That got changed to something called the fractional reserve whereby for every pound the bank had invested or deposited by a customer the bank could lend that money out x 10. So if I put a pound in a bank account the bank could lend out 10 pounds. It then changed again whereby certain borrowings had to have the fractional reserve applied ie overdrafts but loans were exempt from this and banks didn’t have to hold any money deposited. Money printing had been going on throughout this.
In 2016 the fractional reserve was scrapped so the ratio of 1:10 did no longer apply they went onto the pyramid scheme where at the bottom of the triangle there was a layer of money but above that was basically printed money or electronic money which didn’t exist. Money lent out is just sent electronically as numbers on paper. When things look short at the bottom of the pyramid they print more which dilutes what there actually is. Money is made from debt not saving. Inflation erodes savings of cash. Hard to get your head around it. Lending out 10 x what’s invested dilutes it too.
Banks keep balance sheets and their assets are actually loans with interest charges which are put on their sheets as a plus or asset. These can be traded bought and sold for money, which is what caused most of the problem in 2009.
Money has no true value gold, silver ,oil, land has a true value. Look at crypto for example.
Personally I think that the boe and government have been keeping the value of sterling artificially high for the benefit of the financial system or bubble in London and they have kicked that can down the road for too many times now it’s not going much further before trouble appears.
Russia who has added to this problem seemed to know when to strike the western economies. They have a poor set of accounts but low borrowings and lower commitment to social welfare payments. They are rich in land minerals oil coal gas or let’s say energy. They are moving currency values away from artificial things to true values, hence what they are doing moving the dollar away from oil and moving their money in. They know half the American dollars in circulation are printed money probably a lot of the UKs are too.

Russia has an issue. They might have zero debt, a pile of diamonds, gas or oil to sell on the international markets. But A: they are under sanctions. All their money abroad is frozen. B: their currency is worthless. C: it's bad PR to be seen dealing with them. D: all their foreign investment has abandoned the place. They are fudged.

Raw materials/primary economy will only get you so far. You are totally at the mercy of world markets and you can't add any value. What is more there will always be someone out there able to sell it cheaper, either because they are better at it, have cheaper labour or are closer to the end user.

You mention the value of printed dollars- this is immaterial. The value of a dollar is decided by the international FOREX markets, and as much as this place likes to bicker about Uncle Sam, it is a relatively safe and straight forward place to put your money. Why do you think the Chinese are so keen to buy US debt?
 

robs1

Member
It doesn’t appear like anyone in the media has economic training anymore. It’s just an echo chamber for public short term moaning. The media were generally against removing furlough in September last year.
The media are generally against anything governments do or say it generates talking points and fills airtime or papers.
Imvho there isnt a news reporting media these days it's all about these organisations giving us their opinions,
 
so what would you do if you had a theoretical 1 million pounds in the bank thats worth 10% less every year ?

Invest it very carefully in stocks and shares in a broad portfolio. I have money invested in this form, not being managed by a mere mortal like me, and even after paying the fees, I am still ahead of the game and had useful growth. No, it is not comparable to property but I have none of the grief or worry involved in that.

Shoving money in the markets when they are flat on their back gets you more wodge for your cash.
 
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DaveGrohl

Member
Location
Cumbria
That’s not 100% true but is probably more than half true
If you look back at land values and use the inflation calculator it has gone up in value as well as the currency devaluation factored in
I think he meant money (fiat money and the concept of) rather than a specific currency. And he’s right. Same with every commodity. Decades of low interest rates (and money printing) was always going to result in this, it’s the timing that was the tricky bit.
 
I think he meant money (fiat money and the concept of) rather than a specific currency. And he’s right. Same with every commodity. Decades of low interest rates (and money printing) was always going to result in this, it’s the timing that was the tricky bit.

It doesn't matter though. Whether money is fiat or backed by actual gold, it's irrelevant. What determines that currency's worth is the world market. As with anything really. If consumers/investors have confidence in a nation's economy, government and money, the currency will be valuable. If not, it will be worthless. Currency has some advantages over physical commodities- it's liquid and you can store or transport it over a phone line. Try doing that with 1 tonne of gold.
 
I think he meant money (fiat money and the concept of) rather than a specific currency. And he’s right. Same with every commodity. Decades of low interest rates (and money printing) was always going to result in this, it’s the timing that was the tricky bit.
What I was basing my calculations on was land we had bought 25 years ago inflation linked still showed a substantial increase if it was sold now.
The question is which is something I often think about ‘why work to save money when they make it out of nothing?’
 

Hilly

Member
What I was basing my calculations on was land we had bought 25 years ago inflation linked still showed a substantial increase if bought now.
The question is which is something I often think about ‘why work to save money when they make it out of nothing?’
Sadly we live in a era that debt pays , debt is tax free ! Proffits are taxed , debt spent on assets can make you wealthy debt spent on depreciating crap makes you poor .
 

DaveGrohl

Member
Location
Cumbria
Because it was:

A cheap.

B in the hands of private enterprise.


The government started down this path in the days of Thatcher. Blair then sealed that deal by giving the go ahead to yet more gas fired plants, knowing full well that production in the North Sea was beginning to tail off.
Difference being that in the Thatcher era a level of financial competence was deemed to exist in the people running things and it would look after itself. Heady days indeed.
 
Russia has an issue. They might have zero debt, a pile of diamonds, gas or oil to sell on the international markets. But A: they are under sanctions. All their money abroad is frozen. B: their currency is worthless. C: it's bad PR to be seen dealing with them. D: all their foreign investment has abandoned the place. They are fudged.

Raw materials/primary economy will only get you so far. You are totally at the mercy of world markets and you can't add any value. What is more there will always be someone out there able to sell it cheaper, either because they are better at it, have cheaper labour or are closer to the end user.

You mention the value of printed dollars- this is immaterial. The value of a dollar is decided by the international FOREX markets, and as much as this place likes to bicker about Uncle Sam, it is a relatively safe and straight forward place to put your money. Why do you think the Chinese are so keen to buy US debt?
Regardless of all that printed money fed into the system or quantitative easing whichever you like to call it will dilute the existing money.
Look at their debt clock it’s scary.
Russia knows what they are doing in my opinion they have been preparing themselves for a good few years now. Stockpiling gold to use as collateral which unlike any currency has a true value.
There’s only so much gold that’s what gives it its value maybe little bits added but generally there’s only so much of it.
Money is produced daily which dilutes its value daily. Corona and whatever else has accelerated this.
 

GeorgeK

Member
Location
Leicestershire
I think the danger is our government resorts to populist policies to stay in power. Fuel subsidies, welfare increases, tax cuts, low rates etc. This may keep people happy for a while but will mean more borrowing and a growing deficit. Investors and traders will see things are being run badly and the cost of government borrowing will go up, the £ will weaken, inflation will keep getting worse. I think we are approaching a tipping point and could easily end up another bankrupt country if a realistic and practical plan to rebuild our economy and financial stability isn't implemented.
 
I think the danger is our government resorts to populist policies to stay in power. Fuel subsidies, welfare increases, tax cuts, low rates etc. This may keep people happy for a while but will mean more borrowing and a growing deficit. Investors and traders will see things are being run badly and the cost of government borrowing will go up, the £ will weaken, inflation will keep getting worse. I think we are approaching a tipping point and could easily end up another bankrupt country if a realistic and practical plan to rebuild our economy and financial stability isn't implemented.
Unfortunately it’s the poorer folks that will take the most harm. Had some lads here helping me before lambing time saying they had told their Mrs’s to keep the heating off. I know looking at big feed fert and fuel bills takes more dealing with than a household which isn’t often considered in a business but when you are on a wage there’s only so much to go at and it’s not enough for many. I think this summer there will be protests at least about the cost of living which will cause trouble right to the top.
 

DaveGrohl

Member
Location
Cumbria
It doesn't matter though. Whether money is fiat or backed by actual gold, it's irrelevant. What determines that currency's worth is the world market. As with anything really. If consumers/investors have confidence in a nation's economy, government and money, the currency will be valuable. If not, it will be worthless. Currency has some advantages over physical commodities- it's liquid and you can store or transport it over a phone line. Try doing that with 1 tonne of gold.
So you haven’t noticed that gold has gone up against the dollar over the decades? You are trying to complicate. Simple point. If you print more money the value of it declines against real assets. It really is that simple and always has been. Money is necessary but it is what it is. The value of one currency against another is irrelevant to the simple point.
 

robs1

Member
I think what most ignore is the simple fact the there is far too much money around looking for a home, QE has made that many times worse. Too much money looking for an investment leads to asset inflation, that makes people feel good as they think they are richer but in reality they aren't, all it leads to is over valued assets from all the money from pensions and other investment products, you only have to look at the value of a companies' shares which in most cases are far higher than their assets actually amount to, the same with farmland, its price is way beyond its capacity to pay for itself.
Instead of all the ridiculous PFI agreements etc governments should have set up a fund to allow people to invest in new hospitals schools etc and earn interest on it, would have saved the government a fortune and given people a decent and guaranteed safe return plus boosted public services.
 

DaveGrohl

Member
Location
Cumbria
Regardless of all that printed money fed into the system or quantitative easing whichever you like to call it will dilute the existing money.
Look at their debt clock it’s scary.
Russia knows what they are doing in my opinion they have been preparing themselves for a good few years now. Stockpiling gold to use as collateral which unlike any currency has a true value.
There’s only so much gold that’s what gives it its value maybe little bits added but generally there’s only so much of it.
Money is produced daily which dilutes its value daily. Corona and whatever else has accelerated this.
Specifically the actual value of all the gold in the world is tiny in relation to every other asset /debt in the world, but your point is a sound one.
 
And then, thanks to Gordon Brown and his removal of indexation allowance, when you come to sell your asset in 20 years time the govt will take away a large portion of your increase in value, thereby helping themselves to the inflation they’ve created, so you’ve basically lost a lot of money in real terms even though you thought you’d merely kept pace with inflation because your asset was appreciating.

The man was an utter scumbag of the highest order and a clever imbecile (if there is such a thing). What I can‘t work out is why no Tory has thought to remove this Brown legacy. Can only assume they understand that it’s a fabulous stealth tax that helps balance the books that are in a shocking state.
Yes are you on about the 40% capital gains tax?
Those of us who have worked hard to purchase some form of asset have become somehow unable to sell it due to this tax. I think you can claim euntrapunerial ( don’t know how to spell it) tax relief once in a lifetime but it’s only a discount on the original 40%. So anyone who is savvy just rolls it over into more property land or a business and sits there without banking it hence putting stress on the financial system that the same person uses more debt to run and develop their business. So it gets worse then the more borrowed on Joe bloggs books the less likely an interest rake hike will be feasible therefore the well off retired don’t get any interest on investment. Just a vicious circle
 

DaveGrohl

Member
Location
Cumbria
I think the danger is our government resorts to populist policies to stay in power. Fuel subsidies, welfare increases, tax cuts, low rates etc. This may keep people happy for a while but will mean more borrowing and a growing deficit. Investors and traders will see things are being run badly and the cost of government borrowing will go up, the £ will weaken, inflation will keep getting worse. I think we are approaching a tipping point and could easily end up another bankrupt country if a realistic and practical plan to rebuild our economy and financial stability isn't implemented.
And it seems like the populist notion of a windfall tax is gaining traction. How does that help the little people paying the money to these horrible companies? No one’s mentioned giving the tax back to the people.
 
Look at Luna terra crypto charts where one Luna was 90 cents at the top of its value now one Luna is 0.00023 of a cent. They printed millions of it lately as it started dropping when it’s value was detached from the dollar and folks started drawing it out
 
And it seems like the populist notion of a windfall tax is gaining traction. How does that help the little people paying the money to these horrible companies? No one’s mentioned giving the tax back to the people.
They don’t tax big companies now they give them tax relief. They tax the people that work for them. Think Tesla got 50 million or billion to put their car plant in Nevada so they could collect tax off staff.
Same happens with Amazon and such like
 

DaveGrohl

Member
Location
Cumbria
Yes are you on about the 40% capital gains tax?
Those of us who have worked hard to purchase some form of asset have become somehow unable to sell it due to this tax. I think you can claim euntrapunerial ( don’t know how to spell it) tax relief once in a lifetime but it’s only a discount on the original 40%. So anyone who is savvy just rolls it over into more property land or a business and sits there without banking it hence putting stress on the financial system that the same person uses more debt to run and develop their business. So it gets worse then the more borrowed on Joe bloggs books the less likely an interest rake hike will be feasible therefore the well off retired don’t get any interest on investment. Just a vicious circle
Yes to CGT. Not specifically 40%. It’s ok saying just roll it over into more land, that assumes Inheritance Tax rules stay the same (BIG gamble) and getting the farming exemption. For everyone else you’re just putting off the taxation as best you can. Indexation allowance was a fair and straightforward concept. It meant that if your asset merely kept pace with inflation then it retained its value. Brown stole from people without them realising, albeit he didn’t really get to play with the proceeds of his theft.
 

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Man fined £300 for bonfire-related waste offences

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Written by William Kellett from Agriland

court-640x360.jpg
A man has pleaded guilty at Newtownards Magistrates’ Court to waste offences relating to a bonfire next to the electrical sub-station on the Circular Road in Newtownards, Co. Down.

Gareth Gill (51) of Abbot’s Walk, Newtownards pleaded guilty to two charges under the Waste and Contaminated Land (Northern Ireland) Order 1997, for which he was fined £150 each and ordered to pay a £15 offender’s levy

On June 25, 2018, PSNI officers went to Gill’s yard, where they found a large amount of waste consisting of scrap wood, pallets, carpet and underlay.

Discussion with Northern Ireland Environment Agency (NIEA) officers confirmed the site...
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