Richard Murphy says:
June 11 2022 at 2:03 pm
There is no mention of 4.30 by the BoENor in their representation of a commercial bank balance sheet
The balance is the CBRA – which they made big enough to ensure the banks could nit fail
You have completely misread everything they say. It can only be deliberate
But the odd thing is, in the process you in many ways actually agree with me and don’t even seem to realise
I’d say ‘try again’ and see where the BoE refers to 4.30 or drop it
At what moment must a bank balance its books? When must it have deposits plus capital equal to loans? Why – perhaps did – the interbank market exist? Why repo? Why do banks actively go out to solicit deposits if they don’t need to have them?
Nothing about the banking industry – even the paying of interest on deposit accounts – makes any sense unless a bank has to have deposits in order to be able to finance – note, not make, but finance – loans.
And there’s some point in the day when this must be calculated. Traditionally in the UK it has been 4.30 pm. Shrug, that’s just the way it is.
Here’s a very useful, if brief, description of what banking is:
A bank uses liabilities to buy assets, which earns its income. By using liabilities, such as deposits or borrowings, to finance assets, such as loans to individuals or businesses, or to buy interest earning securities, the owners of the bank can leverage their bank capital to earn much more than would otherwise be possible using only the bank’s capital.
Think about the Murphy idea of banking. As money is just invested and created at the moment of loan and never, ever, does anything else have to be done about it, then why the Hell do banks take deposits?
He must work 24/7 on his twitter feed to judge from the stream of crap the he is emitting. Are the grants running out? Desperation?
Banks do End of Day processing. This could start at any time after the bank is closed, it could be 4:30 but often 6pm or later, and very nebulous when you are operating in multiple time zones. It takes time. The aim is to get it done by say 9AM which is defined as Start of Day. When Start of Day is delayed by IT issues the bank still opens even though it’s Start of Day position has not been established. I recall (not sure anymore) that the regulator needs to be notified.
Why would they take deposits *that they pay interest on* if they weren’t using them to make more money elsewhere?
If they were just keeping your money under a more secure mattress – or to make it more convenient for you to access – *they’d charge depositors*, not pay them.
Yeah official close of play. SE used to be 3:30. (Members could smoke after three) You could still deal after hours, but you were dealing for the next day. I presume bankers was 4:30 because bankers caught later morning trains than brokers. Bigger breakfasts?
You have to have a dividing line between one day & the next & it has to be a point in the working day so it can be observed to have passed. It couldn’t be at midnight because there’d be no one around to observe what happened before & what happened after.
He has to be the most idiotic commentator I have ever seen – not content with targeting peoples pensions and ISAS, he now heads after banking deposits and wants to expropriate them!
As Diogenes says, his financial situation is obviously desperate and as he is directly responsible for the inflation that is spiralling out of control across the country, he is casting around for anyone else to blame.
Lest we forget, there are six primary causes of inflation
– The War in Ukraine – which Murphy supports
– COVID Lockdowns – which Murphy advocates should still be in place
– The long term impact of QE, which Murphy agreed with and which he advocates Direct monetisation of
– Net Zero, which he is pushing for
– Unlimited immigration, which he agrees with
– EU intransigence and deceit over Brexit, and his attitude is EU right, UK wrong on any topic
So he directly supports all six main causes of inflation. Not sure if the Downham Market ban on pub entry extends to Ely but he’s going to need a hiding place soon I’d wager.
Could it be that he doesn’t understand balance sheets now? You would need to see a “before” and an “after” to see how the positions had been squared off.
BiS – I think it’s more that stockbrokers caught earlier trains home. Town clearing cheques, drawn on bank branches within the “walks” could be presented up to 3:30 for clearing the same day.
Here’s a mystery that’s always puzzled me: why do deposit accounts for companies always pay such low rates?
Whatever the level of available rates, the rate for personal deposit accounts always far exceeds what I can get for a company’s money.
Ar the moment, for example, as a person I can easily get 0.3%, but for my company I can only get 0.05%.
“Town clearing cheques, drawn on bank branches within the “walks” could be presented up to 3:30 for clearing the same day.”
My bank has closed the branch in my town. They tell me they have an arrangement with the post office for deposits and withdrawls. So, somebody had sent me a cheque to pay for something. I toddled down to the post office to deposit it.
It was like going back to the 1950s! Or maybe 1850s! I had to seal it in a special “cheque envelope” for dispatch to the cheque processing centre, and I wasn’t allowed to deposit cash in the same transaction.
I have a hazy memory of an episode of The Money Programme from the 1970’s, in which a banker called on the Bank of England and asked to borrow £30 million overnight, to which the reply was something like: “Certainly, how’s the Test going…?”
And weren’t there gentlemen in top hats running around London involved in such things too?
V-P: Good to see the causes set out so clearly. One slight quibble: immigration will have disinflationary effects too, but very largely at the expense of workers on lower incomes, so Murphy is still very much on the hook!
@TMB
” I think it’s more that stockbrokers caught earlier trains home.”
Nah. They were drinking in Birch’s until 7.
Nautical Nick
Ordinarily I’d agree with your comment on immigration and for legit workers coming in it’s 100% correct but these guys (and 90% plus are guys) coming in off the boats are being put up in hotels at taxpayers expense across the country. That would have to be inflationary given in effect they are not allowed to work or if they do it’s in the ‘Black economy’.