That is because that regulatory definition does not recognise the economic reality of the situation to which I was referring, and will continue to refer, which is that whatever regulation says, a bank can treat its depositors as the providers of unsecured funding to it that can be put at risk by their trading activities and be lost by those depositors in the event of insolvency. The fact that this has not happened for 160 years is neither here nor there. The truth is, it could happen, and therefore, my suggestion that those funds rank in a broadly similar fashion to and are akin to the supposed equity capital of the bank is fair, most especially when parts of the shareholders’ funds of a bank are also capable of being withdrawn at short notice.
Because the Sage of Ely finds it useful to define it so.
Sigh.
…parts of the shareholders’ funds of a bank are also capable of being withdrawn at short notice.
Presumably he means windfall taxes imposed by the Outageous State.
Outageous is very appropriate, whether the r is missing on purpose or not. You should claim that one.
But there is also human capital, which represents the combined resources of those people who work for an organisation or who live in a country and who can apply their skills for the benefit of the company or society of which they are a part.
Then there is natural capital, which combines the environmental and other natural resources of a society, whether in a particular region or worldwide.
Environmental capital is a subset of natural capital.
Intellectual capital is also different from human capital because intellectual capital refers to knowledge, but human capital combines intellectual capital with wisdom, which is in itself another form of capital.
I recently heard a description of the difference between intellectual capital and wisdom. Intellectual capital embraces the knowledge that a tomato is a fruit. Wisdom makes it clear that tomatoes do not belong in fruit salad. The example is flippant, but the point is clear. These two forms of capital are not the same.
The Hitchhiker’s Guide to capital, by someone with the understanding of a mollusc. But wait, his authority extend further than that:
In that case I use a broad definition of capital for good reason. I believe in holistic management, whether at a micro or macro level. If that’s the right way to approach management, and I believe it is, then it is wrong to use narrow definitions of capital because what we need is this broad understanding that in our society there are many capitals that we must protect, nourish, invest in, develop, and preserve, and of all of these the one that might be least important is the concept to which those criticising me make reference, which is shareholder equity capital. That is because that cannot preserve our future or deliver our well-being. But the other forms of capital to which I refer most definitely can
In fairness, once disssected – the meaning is clear. Very clear – whatever ‘capital’ exists – human, equity, intellectual – belongs to the state (and Murphy) to direct and utilize as they see fit. It’s an identical vision to North Korea. Totalitarianism, as he has always been in favour of.
Just when you think he can’t get crazier, he gets crazier.
“But there is also human capital, which represents the combined resources of those people who work for an organisation or who live in a country and who can apply their skills for the benefit of the company or society of which they are a part.”
Gosh, has Murphy been reading Sir Pterry? Isn’t that a Moist von Lipwig speech (about collateralising golems, from memory)?
OK, so Sir Pterry put standard economics into Moist’s speeches (wasn’t the character’s name a play on Mises?).
But it’s always interesting to watch when Murphy picks up some new economics terms and tries to fit them into his worldview. The trouble is, as Van Patten says, because Murphy doesn’t know or understand the context, he turns everything into an argument for Moar State, Moar Tax. The only question is how he’s going to twist sense and logic to do so.
I believe in holistic management, whether at a micro or macro level.
Jeez. With or without the healing crystals? The details are important.
In my latest video, I explain why I know everything. Here is the transcript
Labour say there is no money left, but I can prove there is more money than that because economists don’t understand economics but I do. It’s outrageous that Rachel Reeves is announcing cutbacks when she could just print all the money she needs because MMT (which I invented) proves you don’t need to tax to spend and she could tax wealthy people to raise all she needs because there is £192 gazillion just waiting to be taxed (as I explain in my “taxing people who have had successful careers like I should have had but didn’t” report) and ISA savings could be diverted to build everything so she could have all the money she needs and that is three times the money she needs, all of which costs nothing anyway because it all comes back to the Government.
In my next video I will explain how I know the earth is shaped like a banana although politicians will tell you it is not.
wot, Northern Rock was 160 years ago?
Look, I lived in Hong Kong where we have runs on Cake Shops for chuffinell. I know a bank run when I see one.
@MurphyRichards,
my “taxing people who have had successful careers like I should have had but didn’t” report)
Welcome back! You win the internet!
What’s funny is that Richard Murphy is never bothered by the fact that absolutely nobody of any stature in economics, business or government pays the least bit of attention to what he says or writes.
Evidently the din from the voices in his head obscures this fact.
Dennis, The Sigmund Freud of Central Ohio said:
“What’s funny is that Richard Murphy is never bothered by the fact that absolutely nobody of any stature in economics, business or government pays the least bit of attention to what he says or writes.
“Evidently the din from the voices in his head obscures this fact.”
Also the chink of coins and the adulation of his small but vociferous band of followers.
So . . . is he saying, now, that deposits *do fund lending*?
Oi Spud!- “shareholder equity capital. That is because that cannot preserve our future or deliver our well-being.” -fuck off you retard -it’s certainly preserving my future and delivering well being (via dividends) to me. When i cash my shares in it will give me lots of well being. Just because you had to cash in your pensions in damages for libel don’t think we’re all in your boat. Some of us arent cunts and have got good pensions and capital. Now fuck off again.
I have read the judgement of my learned colleague moqifen and concur.
Like which “parts?” – I’ve been the senior accountant in a bank (okay, it was a small bank), and the auditor (okay, on the audit team) of another couple of banks. Sometimes there’s some sort of preferred equity that has a call or redemption provision – but the banks treat this as a tax-advantaged (from the investor’s point of view) bond. It’s not ‘equity’ in the capital stack – it’s ‘debt.’ In any event it’s tiny. The majority of the shareholder funds – the true equity – can never be ‘withdrawn.’ It may lose its value in the secondary market (a copmpletely different issue) – but it is never withdrawn.
The man is an obnoxious, fatuous, ignorant git. Not that I’m the first one to make the observation.
There are two ways shareholders’ fund can be withdrawn at short notice.
One – when the bank makes a horrendous loss on a loan that exceeds the ggregate profit on all the other loans that it has made [so never lend to Russia, China, any of their satellites, Donald Trump or cyber funds}.
Two confiscation by government.
Dividends paid out of capital can *never* be withdrawn at short notice because any AGM to approve payment of dividends requires formal notice (interim dividends may only be paid out of certified profits).
So what does Murphy *think* he is talking about?