8 ms·

You can call it populist if you want, it's just mechanically true. For money to be lent out it's coming from somewhere where the money is existing or the risk c

by cmehdy 6y ago

You can call it populist if you want, it's just mechanically true. For money to be lent out it's coming from somewhere where the money is existing or the risk can be handled, and in both of those cases where money exists or risk can be handled you're typically looking at richer rather than poorer. If you're a shareholder, you are more able to afford risk than if you're just throwing your money at paying the bills. If you're in that situation and borrowing from a bank, the bank's shareholders mechanically are benefiting from your activity. You're borrowing to get by and people who have a better cushion are doing better for it, I don't see what's so shameful to point out. Your explanation doesn't explain anything away but to try and put some sort of weird blame on poorer people for borrowing, it's just as usual of a narrative as the populist thing to be infantilizing poorer people. There's however a pretty big difference between borrowing at your limit or sometimes beyond because you're trying to get through a pandemic or have a place to live, and borrowing at high risk because you're playing with huge sums and can in fact afford the loss. The latter as a group made more money during the pandemic from any possible source you could look at, the former as a group lost money and jobs. I won't insult you by throwing Oxfam reports at the situation, especially since you might be keen on calling it populist too and calling it a day.

diegoholiveira 6y ago
> For money to be lent out it's coming from somewhere where the money is existing Not true. Governments around the world are just using money that doesn't exists, an example is the new economic rescue package. This kind of money, is great to made rich people richer.
- cmehdy 6y ago
  That's the whole discussion around money itself, isn't it. As soon as you do something other than exchange an apple for a goat (and even then, really), you're potentially creating money in one person's eye and not in the others. While I understand your point about the money not existing, if you're making it happen in the system you're putting something of yourself in the system to convert to money. In governments' case it is their "reputation" and ability to operate in the world, as shown with the Greece situation in the recent past. Ultimately it just wasn't in bills but it was indeed paid in the government's loss of abilities (as well as the price to the population) and made money in other places where it was due. And that exactly what governments do when they deal with currency: any adjustment isn't creating energy out of nothingness, it's just that the layers of our system make it pretty hard to figure just where the debt is paid and it ultimately ends up being paid by those least able to see it coming & to avoid it. Not to hammer the point again, but those people tend to be again on the end of the spectrum that has "poorer" written on it.
- sudosysgen 6y ago
  That just makes the actual value come from people that need to buy real assets or non-invested money. In both cases it mostly comes out of the common man and makes rich people richer. But it's not as bad as a total market failure. This system sucks.
PragmaticPulp 6y ago
The economy isn’t a zero-sum game. We’re not simply distributing finite amounts of wealth among the population. Consider what happens with high interest rates: The people with money are incentivized to put it in the bank and sit on it, while the people without money are forced to pay exorbitant interest rates for the privilege of borrowing that money to start businesses, buy cars they need to get to work, and so on. Low interest rates are a forcing function to force the wealthy to deploy capital somewhere other than letting it sit in a bank. > The latter as a group made more money during the pandemic from any possible source you could look at Stock prices are up because we literally stimulated the economy by giving the average person free money to spend and subsidizing their jobs. The headlines comparing net worth of wealthy people at the lowest point of the pandemic to the highest point are outrage porn. They didn’t make money by funneling it out of the poor and into their bank accounts.
- dominotw 6y ago
  > The economy isn’t a zero-sum game. We’re not simply distributing finite amounts of wealth among the population. How though? There are only limited amounts of land to own, water to drink, desirable places to live ect. How can everyone simultaneously get rich. It is obviously a zero sum game. Over last year my FAANG friends had their stocks increase by insane amounts which they sold and bought second homes, beach houses, ski condos. I am not a FAANG employee or owner or TSLA stock, we want to buy a house but we are priced out of most places. We have to move away from our family to the farthest suburbs to even be in the competition.
  - zemvpferreira 6y ago
    Efficiency improvements and technology make the economy non-zero-sum. It's a trope to say that most of us live lives of a comfort that no Roman emperor could afford, but it's still true, and not because we have more wealth. Every year lots of things get cheaper compared to the money we make, and lots of new things are invented that replace much more expensive alternatives. We used to bring blocks of ice into the cities from the north (inside ships wrapped in hay I think) to act as refrigerators, for goodness sake. That said lots of markets are close to zero-sum on a near-term basis. Real estate in very scarce locations is a good example for sure.
jonplackett 6y ago
Money lent out does not exist until lent out. Money for mortgages is created by the bank. That’s why they can do such low interest rates. They don’t even need to have the money to lend to you. They are legally allowed to just make it up and then charge interest on it.
- cmehdy 6y ago
  And when they fail and the money that didn't exist needs to exist, we save them with real money. It's not because we're allowing a lot of risks to be taken with regards to money that those risks don't have a value, i.e. a real cost.
  - ClumsyPilot 6y ago
    You are not getting it - there is no real money. All money in bank accounts is debt or fake money, all 99% of the economy. The only 'real' money is cash and central bank reserves. Banks create money, thats their role in the economy. Thats what banking license is for. You don't need banking licence to lend out money you already have. www.bankofengland.co.uk › ...PDF Web results Money creation in the modern economy - Bank of England
    - cmehdy 6y ago
      It's the same point over and over again. A bank can give out a loan because it is operating in a place where the government (a.k.a people) give it a place to operate, in a system of currency regulated by governments, and ultimately has to answer to governments when it runs into the limits of its smoke screens. What this inevitably means is that when it fucks up and doesn't juggle fast enough or people all change their expectations (like if everybody wants to suddenly pull money out of their accounts), then the money that doesn't exist has to end up existing one way or another - and governments foot the bill directly and/or indirectly. In less "agitated" times, that "fake" money being created is a direct measure of the value that banks are agreeing to see in the people they loan the money out to (and in fact they see a higher value over the exact same horizon of time and at any given value of t, otherwise they wouldn't loan the money out unless regulations force them to). In both cases, money that circulates at any moment in time is money that exists in the system (yes it's a tautology), with money that exists at t+1 being paid one way or another by the system. If everybody takes out their money right now and that's more than what the banks have, governments step in and the impact over the financial system is the value of money itself falling, with the cost being that everybody having relied on money now has less value out of it. It's not because it's not using the term "dollar" that it isn't a cost, just like on the other end of the system where we bet on humans creating value the humans in question aren't magically producing fully-formed dollar bills. Both ends of the system aren't formulated in dollars in and of themselves, because dollars are only the medium to 'illustrate' or represent the value, not the value itself. Ceci n'est pas une pipe, etc.
Layke1123 6y ago
Uhhh, 2008 didn't happen because banks were lending money out responsibly...

by cmehdy 6y ago

diegoholiveira 6y ago

> For money to be lent out it's coming from somewhere where the money is existing Not true. Governments around the world are just using money that doesn't exists, an example is the new economic rescue package. This kind of money, is great to made rich people richer.

cmehdy 6y ago
That's the whole discussion around money itself, isn't it. As soon as you do something other than exchange an apple for a goat (and even then, really), you're potentially creating money in one person's eye and not in the others. While I understand your point about the money not existing, if you're making it happen in the system you're putting something of yourself in the system to convert to money. In governments' case it is their "reputation" and ability to operate in the world, as shown with the Greece situation in the recent past. Ultimately it just wasn't in bills but it was indeed paid in the government's loss of abilities (as well as the price to the population) and made money in other places where it was due. And that exactly what governments do when they deal with currency: any adjustment isn't creating energy out of nothingness, it's just that the layers of our system make it pretty hard to figure just where the debt is paid and it ultimately ends up being paid by those least able to see it coming & to avoid it. Not to hammer the point again, but those people tend to be again on the end of the spectrum that has "poorer" written on it.
sudosysgen 6y ago
That just makes the actual value come from people that need to buy real assets or non-invested money. In both cases it mostly comes out of the common man and makes rich people richer. But it's not as bad as a total market failure. This system sucks.

PragmaticPulp 6y ago

The economy isn’t a zero-sum game. We’re not simply distributing finite amounts of wealth among the population. Consider what happens with high interest rates: The people with money are incentivized to put it in the bank and sit on it, while the people without money are forced to pay exorbitant interest rates for the privilege of borrowing that money to start businesses, buy cars they need to get to work, and so on. Low interest rates are a forcing function to force the wealthy to deploy capital somewhere other than letting it sit in a bank. > The latter as a group made more money during the pandemic from any possible source you could look at Stock prices are up because we literally stimulated the economy by giving the average person free money to spend and subsidizing their jobs. The headlines comparing net worth of wealthy people at the lowest point of the pandemic to the highest point are outrage porn. They didn’t make money by funneling it out of the poor and into their bank accounts.

dominotw 6y ago
> The economy isn’t a zero-sum game. We’re not simply distributing finite amounts of wealth among the population. How though? There are only limited amounts of land to own, water to drink, desirable places to live ect. How can everyone simultaneously get rich. It is obviously a zero sum game. Over last year my FAANG friends had their stocks increase by insane amounts which they sold and bought second homes, beach houses, ski condos. I am not a FAANG employee or owner or TSLA stock, we want to buy a house but we are priced out of most places. We have to move away from our family to the farthest suburbs to even be in the competition.
- zemvpferreira 6y ago
  Efficiency improvements and technology make the economy non-zero-sum. It's a trope to say that most of us live lives of a comfort that no Roman emperor could afford, but it's still true, and not because we have more wealth. Every year lots of things get cheaper compared to the money we make, and lots of new things are invented that replace much more expensive alternatives. We used to bring blocks of ice into the cities from the north (inside ships wrapped in hay I think) to act as refrigerators, for goodness sake. That said lots of markets are close to zero-sum on a near-term basis. Real estate in very scarce locations is a good example for sure.

jonplackett 6y ago

Money lent out does not exist until lent out. Money for mortgages is created by the bank. That’s why they can do such low interest rates. They don’t even need to have the money to lend to you. They are legally allowed to just make it up and then charge interest on it.

cmehdy 6y ago
And when they fail and the money that didn't exist needs to exist, we save them with real money. It's not because we're allowing a lot of risks to be taken with regards to money that those risks don't have a value, i.e. a real cost.
- ClumsyPilot 6y ago
  You are not getting it - there is no real money. All money in bank accounts is debt or fake money, all 99% of the economy. The only 'real' money is cash and central bank reserves. Banks create money, thats their role in the economy. Thats what banking license is for. You don't need banking licence to lend out money you already have. www.bankofengland.co.uk › ...PDF Web results Money creation in the modern economy - Bank of England
  - cmehdy 6y ago
    It's the same point over and over again. A bank can give out a loan because it is operating in a place where the government (a.k.a people) give it a place to operate, in a system of currency regulated by governments, and ultimately has to answer to governments when it runs into the limits of its smoke screens. What this inevitably means is that when it fucks up and doesn't juggle fast enough or people all change their expectations (like if everybody wants to suddenly pull money out of their accounts), then the money that doesn't exist has to end up existing one way or another - and governments foot the bill directly and/or indirectly. In less "agitated" times, that "fake" money being created is a direct measure of the value that banks are agreeing to see in the people they loan the money out to (and in fact they see a higher value over the exact same horizon of time and at any given value of t, otherwise they wouldn't loan the money out unless regulations force them to). In both cases, money that circulates at any moment in time is money that exists in the system (yes it's a tautology), with money that exists at t+1 being paid one way or another by the system. If everybody takes out their money right now and that's more than what the banks have, governments step in and the impact over the financial system is the value of money itself falling, with the cost being that everybody having relied on money now has less value out of it. It's not because it's not using the term "dollar" that it isn't a cost, just like on the other end of the system where we bet on humans creating value the humans in question aren't magically producing fully-formed dollar bills. Both ends of the system aren't formulated in dollars in and of themselves, because dollars are only the medium to 'illustrate' or represent the value, not the value itself. Ceci n'est pas une pipe, etc.

Layke1123 6y ago

Uhhh, 2008 didn't happen because banks were lending money out responsibly...