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There is nothing odd about this, by the way. That is literally how every single penny of new bank lending in the UK is funded. You never borrow someone else’s money when you tap your credit card on a card machine. New money is created by you and the bank every time you do that.

This is because all money is just debt, and all banks do is record the debts they owe to and from their customers. There is no money in a bank as such. There’s just a giant set of accounts that records money owing.
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This form of QE had one real purpose, although the government never admitted it at the time. The intention was to put a lot more cash on the balance sheets of UK banks to prevent them going bust, as Lloyds, Royal Bank of Scotland, Northern Rock and others had done in 2008.

How can banks go bust if they never need deposits to fund loans?

24 thoughts on “Twat”

  1. He never does consider that any debt will be expected to be repaid with tokens that can be exchanged for goods, services or assets, does he? That all money has to, at some point, touch down in the real world.

  2. I s’pose you could simplify by saying that every pound in existence will at some point be paying for someone’s dinner. So the question is, are they going to eat?

  3. “You never borrow someone else’s money when you tap your credit card on a card machine”

    Is today the day that he denies the existence of credit card debt?

  4. Twitchers may want to visit Ely to get a glimpse of the Bearded Student-Grant Bird preening itself.

    jack says:
    June 10 2022 at 10:03 am
    your wasted doing this.. why don’t you stand for office and get real influence or what not advise the Labour Party? who advises them on economics now? Didn’t it used to be Simon Wren-Lewis?

    Reply
    Richard Murphy says:
    June 10 2022 at 11:16 am
    They can call me if they like

    Reply

  5. Bloke in the Fourth Reich

    Aren’t a number of the problems we now face traceable, at least in part, to the 2008 decision that no bank would ever go bust again?

  6. Strange – i’ve seen a lot of films where bank robberies take place, and can’t remember ever hearing the robbers threatening the cashiers to “hand over their ledgers!”

  7. This is great:

    Bill Bryant says:
    June 10 2022 at 11:07 am
    So much rhetoric, inaccuracy and emotive language. Not really what you’d expected from a ‘professor’.

    Reply
    Richard Murphy says:
    June 10 2022 at 11:10 am
    If only more were like me then, the world would be a better place

  8. “Aren’t a number of the problems we now face traceable, at least in part, to the 2008 decision that no bank would ever go bust again?”

    Haven’t they made it very clear since the last systemic bank bailout that there wouldn’t be another one, and that so called bail-ins would be the order of the day? Ie the depositors take a haircut, as they did in Cyprus?

    https://www.bankofengland.co.uk/freedom-of-information/2021/questions-about-bail-in-and-customer-deposits

  9. He is lying.
    1. There is money (£notes, coins etc) in a bank: I went into a branch of Lloyds this morning and the cashier handed me some. Less pendantically and more relevantly, Lloyds has about £50 BILLION of shareholders’ funds to support its lending.
    2. Lloyds did not go bust. Bank of Scotland *would have* gone bust if Lloyds hadn’t rescued it to avoid embarrassment to Gordon Brown and his Chancellor, Alastair Darling, many of whose constituents worked at the Head Office of Bank of Scotland within walking distance of their homes.
    Lloyds subsequently/consequently had two Rights issues, first to increase# its capital to cover the unrevealed losses at BoS and then to increase its capital ratio to the higher level decreed by Darling after the rescue was completed.
    3. Northern Rock had positive net worth when “New Labour” stole it. The report by an accountant from a firm so insignificant that I (an investment professional) had never heard of it was riddled with “suggestio falsi” – such as the BoE defaulting on its statutory duty to act as “Lender of Last Resort”, tax relief not being available on losses, a “fire sale” of the mortgage book being at a further steep discount to the written down value that the auditors had determined to be realisable in the event of a “fire sale”, something that I have, by now, forgotten, and the star item: setting as a liability of Northern Rock shareholders the amount paid by HM Treasury to an investment bank to produce a report on Northern Rock.
    #Its capital was still positive but was in danger of falling below the required percentage of “risk-weighted assets”.

    @ Tim – the deposits fund the loans, the risk capital funds the bad debts (non-repayment of loans). In real life (unlike the Murphysphere) someone with a cheque drawn by someone with loan agreement can walk into a bank and ask for cash, not just a piece of paper: if there were no deposits (and no capital) there would be no cash to hand over.

  10. “There is no money in a bank as such.” Is he struggling towards the idea that a bank is not a vault? Or does he think his readers so stupid that he has to tell them? Pointless questions: reason plays little role in his life. Poor bugger’s mad.

    P.S. I shall be lunching in Ely soon. If I see him should I kick him up the arse?

    How would I recognise him? I’d hate to kick an innocent man.

  11. New money is created by you and the bank every time you do that.

    Yes, and every time a bell rings, an angel gets its wings.

  12. I’m guessing the bank I work for can simply fire all its Finance teams then as there’s simply no need for them to do any form of reconciliation or indeed even bother filing accounts.

    I’m not an accountant but is there no control over ICAEW membership whatsoever? This guy’s qualifications are clearly fraudulent – he literally does not appear to have even the vaguest level of financial understanding – I’d also say that the BBC is guilty of false representation by having him appear on any program whatsoever in the capacity of an expert. This kind of screed would embarrass someone of 13.

  13. He clearly talking nonsense.

    In one breath he claims:
    “The government was desperate to prevent any more banks failing. So it had to boost the amount on the central bank reserve accounts. It did that using QE. It bought back the government bonds I have already mentioned. It did it by using new money created by the Bank of England.”

    Fair enough, banks exchanged government bonds for cash, newly created by the BofE. That’s exchanging £xm of bond assets for £xm of cash.

    Then suddenly he claims:
    “The Bank of England then put that money in the central bank reserve accounts of the commercial banks. “

    No, the money was spent on buying the bonds. Where that money ended up was nothing to do with the BofE.

    Then this sentence which makes no sense;
    “As a result those banks then paid the people who previously owned those bonds that had been sold back to the government.”

    He’s now trying to claim that somehow the £900bn of QE was given / donated to the banks rather than the banks exchanging £900bn of government bonds for £900bn of cash.
    \

  14. @dearieme

    ‘How would I recognise him?’

    He’ll be wearing black footer bags and shouting out 12 point plans for the economy.

  15. @dearieme

    ‘How would I recognise him?’

    If you can stomach it, he has a picture on his website.

  16. Dearieme

    Regardless of the temptation, do nothing.

    It’s just another poor excuse for a human being, whose only difference from tens of millions more is that you happen to know its name and its deeds.

  17. Sometimes it’s worth posting on TRUK not because you think it will be published but because you know he’ll read it. Spud mentioned his YouTube cannel so I posted……

    “Yes, whatever happened to the YouTube channel? You haven’t posted for 5 months.

    It is a puzzle that it’s been 9 months since you got 1,000 views for a video whilst videos on such trivial subjects as golf, film reviews and chess get 500k views in a matter of days.

    Almost as if people are more interested in well presented, interesting topics with engaging hosts than some boring accountant droning on interminably about the same badly presented dull topics presented over and over again with all the charm of a walrus.

    I just don’t get it.”

  18. by his logic he just needs to lend himself all the money he wants and then he wouldn’t have to con the stupid and gullible to support him. various charities could spend their limited funds on someone worthwhile rather than this parasite.

  19. Pop in to any local hostelry, they have his photo on the wall. Where it says “Banned”.

  20. “There is no money in a bank as such.”

    Unless it’s in a “tax haven”, in which case there are untold billions locked there which, if only released to Murphy, would solve all the problems of the world.

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