It is, therefore, readily apparent that if growth is to be the objective (and I question that), then positive rates of interest provide a massive disincentive for that to happen.
That’s the point at which he should stop and consider. Because that result is barking. If we have negative real interest rates then consumption now makes more sense than saving. Which leads to lower investment and so loiwer growth.
But it’s ever thus. He just never does stop and think, cross-correlate.
Then you have to stand back and realise that all this interest is paid for the use of money which literally costs nothing for a bank to produce, and what you then appreciate is that this whole hierarchy of charging for a wholly artificial commodity created as a human construct to exercise power within an economy is morally repugnant. Hardly surprisingly, the great, wisdom traditions all condemned the charging of interest. They were right to do so. We have, however, let those with power ignore this at cost to all the rest of us. The price for doing so has already been far too high. It looks as if it will get much higher still because the Bank England wants us to have long term high positive interest rates, and that is economic madness.
Howling at the Moon.
If a mentalist like Karl Marx had written that, he would have paused, thought for a moment and then screwed up the sheet of paper and chucked it in the round filing cabinet. “Engels, ” he would have said, “let’s take the day off. I must be having a blonde day to have written something quite that fucking stupid.”
If I lend somebody my lawn mower, I expect something in return. If I lend somebody my shop, I expect something in return. If I lend somebody my money, I expect something in return. Hell, if I lend somebody my labour, I expect something in return. He’s arguing for slavery.
Let’s be kind and put it down to the hot weather.
“the great, wisdom traditions”.
Is he turning to religious-based arguments now? If so, one could pretty much counter anything he argues for with the the 8th and 10th commandments.
I would argue that departing from the time preference* rate is the root of all the current shit.
*Look it up.
Just like Jesus he rages against the money changers.
Behold – the second coming is amongst us. The messiah of Ely
Boddiker, cannot resist: “He’s not the Messiah, he’s a very naughty boy”.
Murphy seems to have forgotten that Balance Sheets must, by law not just by definition, balance. Bank loans can only be made by using cash from deposits or the remainder of shareholders’ funds (after deducting the value of fixed capital and net working capital and the reserves that must be held at the BoE or in cash).
Are deposits cost-free? Not in this day and age. Is shareholders’ capital cost-free? Well, perhaps – but if it is the bank will not be able to raise any more with which to finance new lending.
Is Murphy that stupid? I find it difficult to believe … so what, then?
Is Murphy that stupid? I find it difficult to believe
I vote yes, he is that stupid. He also has perfect scores on the leftist triangle of dysfunction: idiocy, madness and malice, which exaggerates his stupidity.
Its all down to his (and lots of others) refusal to accept that money isn’t of value in and of itself, its value purely lies in its claim on resources, which are real. More money does not equal more resources, so if you print more money that does not print more resources.
Interest is a one step removed payment for having the use of scarce resources. If you have printed so much money that it can no longer deploy any resources then interest is irrelevant anyway. If the State printed and gave everyone £1m then no-one would have to pay interest but they’d not be able to buy anything with it either as the currency would be worthless. They’d still have to pay something (using a different medium of exchange with a real claim on resources) for the use of those assets, which is back to interest again.
I don’t think it’s a reluctance to understand, Jim. It’s an ability to understand. It’s not exactly uncommon. It seems to be shared by your political class & the tossers at the BoE. People are so accustomed to using money they don’t understand what it rests on. No doubt you do, because you’re directly involved in producing value. How many other people in a modern economy are? Mostly they’re several steps away from either production or consumption. How likely is an accountant to be? The profession’s just a product of the system. In itself, it produces nothing of value.
Maybe he’s trying to cosy up to Sharia law, though that might be a bit forward thinking for him
Behold – the second coming is amongst us. The messiah of Ely
Behold – the second spoiled orgasm is amongst us. The messiah of Ely
FIFY
@ bis
your spellchecker has converted “inability” into “an ability” …
Made sense in context when I wrote it, John. But whatever.