I\’m Very Confused

And please stop laughing at the back there, yes, I kow, not an unusual situation.

Richard Murphy:

But what is clear is that in this case the banks, despite having a useful role for which they have been given the right to claim for themselves about 97% of all seignorage, worth about £45 billion a year for their profits, have declined to support Northern Rock even though it is, according to the Bark of England solvent and able to pay its way.

Hunh? Are bank profits in the UK actually £45 billion at all? I\’d be astonished if they were (note, profits from banking in the UK, not of global banks that happen to have their HQ here). The links gives me this:

That technical factor also points the way to monetary reform at the national level. Dematerialised non-cash money (i.e. electronic bank-created money held in bank accounts and transmitted between them by modern information and telecommunication technology) is now overwhelmingly important. About 97% of this country\’s money supply is created in that form by commercial banks, and only 3% as banknotes and coins issued by the Bank of England and the Royal Mint.

The commercial banks create the non-cash money out of thin air, calling it credit and writing it into their customers\’ current accounts as profit-making loans. That gives them over £20 billion a year in interest, while the taxpayer gets less than £3 billion a year from the issue of banknotes and coins. Stopping
commercial banks creating non-cash money, and transferring to the central bank responsibility for creating it and issuing it debt free to the government to spend into circulation, will result in extra public revenue of about £45 billion a year. This is the reform with which this book is specifically concerned.

Errm, is this just fractional reserve banking all over again? I think it is you know. Didn\’t know that Murphy hung out with the LaRouchies.

4 comments on “I\’m Very Confused

  1. Guy’s an idiot. If banks could make money out of thin air, why would they stop at a mere £45 billion?

  2. Guy’s an idiot (2). For every credit there is a debit. For every asset (source of income) there is a liability (leading to an expense). Banks’ net assets are minimal.

  3. The article says £3bn a year (which seems a bit high) for the government on the cash (which Mark says is £45bn), and the £45bn (in the article) is meant to be seignorage on all money, I guess M4 on the old definitions. But I’m not sure how it calculates that as interest is paid, and the concept seems a bit odd.

    Tim adds: “odd.”. Yes.

Leave a Reply

Name and email are required. Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.