The second thing that banks do is borrow money. They borrow money from you. If you have what you call money in the bank, you have lent the bank that money. It’s no longer your money, by the way. It’s their money. You’ve lent it to them. They now own it. They owe it back to you. But you own that debt from the bank, not the money itself. It’s a very important point to remember, because banks can fail. But the important point is that banks borrow from you to provide them with what is called capital in the event that there’s a run on the bank and their creditors, who are other depositors, turn up and demand their money back.
No, it’s not capital. It’s a deposit. Abd deposits finance loans.
That’s why they borrow money.
They don’t borrow money to lend. We’ll get to that in a minute. They borrow to pay out creditors in the event of a panic.
Nope. Sigh. Completely a cretin:
I’ve made videos about this before, and no doubt I will make videos about this again, but when a bank creates a loan, it does not lend a depositor’s money to the person who gets the loan. They can’t because they still owe that money back to the person who deposited it with them. They can’t, therefore, lend it to somebody else without getting an agreement between the person who deposited it and the person who would borrow it, and there is no such agreement between those people. They’ve never spoken to each other. They don’t know who each other is.
But, above, we’re told:
They borrow money from you. If you have what you call money in the bank, you have lent the bank that money. It’s no longer your money, by the way. It’s their money. You’ve lent it to them. They now own it.
The bank owns the money. So it doesn’t require that agreement. Man’s a loon.
It would be bad manners to be an intellectual snob. Nonetheless I do wonder whether if Murph took an IQ test he’d manage a three-figure score.
It’s entirely possible that he would. His religiosity traps him within his narrative, so he squirms to try to resolve its glaring structural contradictions. He’s essentially a theologian counting angels on the head of a pin. Over the centuries some highly intelligent people have spent their lives doing that. They still haven’t produced the number.
Rather persuasive, Mr N. But I remind you that the number is 42.
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The sad thing is that the morons who know even less believe him. It’s like five year olds being told how a nuclear reactor works by a seven year old who is drawing the workings using a chunky crayon.
Yeah, the comments on leftyYouTube economics/politics videos are depressing. The politics of retarded envy.
This is why I say Spud is a pure grift. No one can be this stupid, and still be able to breathe. Its all just an act. He’s worked out there’s a market for this anti-capitalist shtick and is attempting to fulfill it. Its obvious he’s a grifter, look at all the various tangents he’s taken in an attempt to get on some gravy train or other. Tax reform, country by country reporting, economic advisor to every party of the left he could try and schmooze, setting up various non-profit type organisations, blogging, teaching at university. Now he’s reduced to trying to picking up the pennies in front of the youtube steamroller. He’s a grifter, just not a very good one.
“He’s worked out there’s a market for this anti-capitalist shtick”
Which I summarise as “telling losers that it’s someone else’s fault that they are a loser”.
Or virtue-signalling…
I think he’s genuine. He is a foolish fellow with delusions of grandeur and he sees himself as a prophet and a sage. In photographs, he looks to me to be obsessed, insecure, angry and paranoid – all of which are steadily taking their toll…
It’s possibly both. He wouldn’t need to grift if he wasn’t convinced he was some great overlooked genius above mere concerns like working for a living.
A bit like Karl Marx, then, who spent his life sponging off Engels, his family, and others.
Paul Larfargue (Marx’s son-in-law) also sponged off Engels.
Ferdinand Lassalle, founder of German social democracy, lived in luxury funded by a lifelong pension from Countess Sophie von Hatzfeldt. Bakunin sponged off Herzen. And Lenin off Savva Morozov…
Yes, grift is in there – because his personality traits make him (almost/entirely?) unemployable – but my point is that his motivation isn’t “pure grift”. He believes what he says – at least when he says it – and he aims to profit from grants, sinecures, YouTube and his roadshows.
He looks to me to be a superannuated student bedsit-dweller. Where’s his beret and Che picture?
No Che picture because his only hero is himself… In his mind and fantasies, he is the (as yet!) unacknowledged supreme economic prophet crying in the vast neo-liberal wilderness as the apostle of true MMT…
He’s Rik, 40 years later.
As was said by Norman on another recent thread:
Some people consciously create a persona, and then get trapped in it. Like an actor, not only typecast, but never able to step back into real life.
Sometimes the answer to whether someone is a fool or a rogue can be ‘both’.
Yes but the fool/rogue combos tend to be further down the evolutionary chain than Murphy. Robbing convenience stores on their own council estate and getting caught because everyone knows who they are, that sort of stuff. You don’t tend to get genuine idiots who manage to become accountants, and who can appear on TV and string sentences together in apparent coherence. Thats why I think he is putting on an act – he has to know a lot of what he’s saying is untrue, he just doesn’t care as long as it brings in some bunce.
If it were only a grift then he would not be sticking with such a losing streak of grifts.
*Real* grifters drop losing grifts and jump on winning bandwagons. You are only this consistent if your are a true believer.
Has he ever “explained” why banks pay interest on deposits that they don’t need?
You’ve lent it to them. They now own it.
Those two sentences can’t both be true. If I’ve lent the bank my money then they’ve borrowed it. If they own my money, then I’d have to have given it to them.
Well, it depends on what you call “ownership”. If by that you mean control over the resource, then the bank does indeed “own” your money because the bank is deciding how it is to be allocated. All you “own” is a promise from the bank to pay you back, plus, one hopes, interest.
You think you’ve lent it, but try getting any substantial quantity of it back from them without being ordered to explain what you want it for.
Possession being 9/10ths of the law.
depends on the terms, if for example it was a term deposit, then they MUST hand that back at the end of the term unless you agree to reinvest. nd they cannot demand that you justify said repayment. Money laundering rules though force them to ask about withdrawals over a certain limit, they don’t want to know, but are forced to find out…
“…. banks borrow from you to provide them with what is called capital in the event that there’s a run on the bank and their creditors, who are other depositors, turn up and demand their money back”
Marvelous. The banks borrow money from creditors so that if the creditors turn up wanting their money back the bank will have the money to give back to them. Were that to be the sole purpose of borrowing the money most people could come up with the rather easy optimization of not taking those customer deposits in the first place.
Perhaps one day he will ponder on the fundamental finance concept of “Borrow Sort, Lend Long”.
I think it was the peerless Van Patten who analogised Murphy’s comments on finance as about as useful as a caveman’s explanation of how an iPad worked.
OT: a girl in California has been awarded $3m in damages by a court as her social media addiction was caused by google and meta. I don’t know the details, but I’m guessing the vast majority of google and meta users are not addicted, and a vaster majority are not addicted harmfully, and if anyone is harmfully addicted those who love her could have stopped it. So something else has caused this girl to be an outlier.
I’m betting which side of the judgement Spud will side with
She gets $3 million of which $900,000 to $1,200,000 will go to to her lawyers. On top of that we can add legions of “me too” claimants with a million dollar cut for the lawyers each.
Me too! I mean, look at me wasting my life here! Is there a lawyer in the house? Get me $3m and you can have half….
The essential rule for lawyers in this line of work is to only go after rich firms with deep pockets. The choice of client is rather less important.
more like $2,999,500 will go to the lawyers…
Oh dear, Solanum-Logic again. This pathetic and sad excuse for a humanoid has an uncanny ability to be wrong about everything. We could count the days he’s been right (done it, it’d be 0)
Stick to running trains in your attic – economics are beyond you.
Amazing really that he can be so incoherent, so self contradictory, and yet so SURE. I guess that is the way with the genuinely insane.
lend does not equal own. Try that when your car is repossessed because you didn’t keep up the payments and see how far you get!
What? That is utter nonsense even by Murphy’s standards.
There’s a Paddington Bear story where Paddington withdraws money from his account, and then thinks he’s been defrauded because, on checking the serial numbers, he discovers he didn’t get back the same banknotes that he paid in.
Murphy’s argument here is on that level of understanding of the banking system.
He’s framing it this way so that when he proposes that the state take the money from the bank he can say “The money is being taken from the bank, not the depositors”.
It’s a stupid lie, and his stupidity is that he thinks people will believe it. Some of that is that he refuses to listen (blocks) anyone who tries to point this out on any of his comment sections.
The scary part is that there are other people who look at this and think “Oh, that’s true.”
It’s not hard stuff… you give the bank some money and they give you an IOU. Just as in a private loan, if they don’t give the money back when you want it you can send in the bailiffs to get it. The promise to pay is literally written on all bank so should be obvious this is a fundamental part of our money system. And capital is the stuff without a liability… an IOU is definitely a liability for a bank.
It’s pretty hard to be more wrong, so pretty impressive.
Wait.
He says *banks do not need deposits to make loans* – so why are they loaning out deposits?
Why would they need deposits to pay out creditors? They can just make more money, right? They just make more of the money they made to loan out.
Also, who are their creditors? Not the people the bank *loaned money to*. Is the bank *taking out loans*? Why? They can just make money out of nothing and lend it to themselves. He already says that when you do this you don’t really have to pay it back.
Is it the depositors? Are these the people who banks are taking money from in order to have it on hand in case they demand it back?