Steve Keen's Debtwatch

Discussion (56) ¬

1. 
   June 14, 2012, 4:55 pm | #

   JS

   “Isn’t the customer’s debt, i.e. the bank’s asset, just a bit more than the deposit, in the amount of the total interest owed? How do these two amounts net to zero? Aren’t they BOTH financial assets to be traded around the financial system at increasingly disparate values?”

   ????

   Interest is another issue. As are bank fees etc. But all Warren was referring to here in this comment was the initial journal entry to set up the loan and bank deposit.

   The comment it nets to zero is unnecessary really as of course it does. But so many people are confused about very basic double entry book keeping.
2. 
   Glenn Stehle

   June 14, 2012, 11:00 pm | #

   Lyonwiss said:

   These comments apply to nearly everything you have quoted, even to those of Alan Holmes whose remarks are inaccurate, exaggerated to make a point, and have now been misintepreted, by those who have no first-hand experience to understand his remarks.

   So I suppose Steve Keen would have to be included amongst those “who have no first-hand experience to understand his remarks.”

   Your argument is of course the same old hackneyed argument the bankers and their mouthpieces have trotted out for years to defend their intellecual and moral morass. The message is quite clear: “We are the experts. We are the only ones who understand. We are the only ones who know. Anyone who doesn’t march in lockstep with us is ignorant and uninformed. Technocrats rule.”

   We currently see this spuriousness being invoked against the Occupy Wall Street movement. We saw it invoked against those attempting to rein in predatory sub-prime lending in Georgia back in 2002. The rather sordid tale begins here http://www.pbs.org/wgbh/pages/frontline/money-power-wall-street/ in Episode One at minute 26:30. The actual argument is made at minute 31:30:

   Financial Industry Lobbyist: None of these people have a clue of what’s going on. Nobody here understands the business….

   Gov. Roy Barnes: You would have though that I had recommended that we repeal the plan of salvation. And why were they so opposed to it? Money. Money.

   Financial Industry Lobbyist: This bill will cripple the mortgage business. It’s going to cripple real estate sales. It’s going to absolutely devastate the whole market in Georgia. I can guarantee you.

   Lyonwiss said:

   If you don’t like the rules of the game you have change them somehow. Exposing courruption is a start.

   Well I’m exposing corruption too. I’m trying to expose the kind of corruption you engage in.

   In Wealth and Democracy, Kevin Phillips notes that there are two types of corruption, “the hard and the soft.” Hard corruption includes things like bribery, embezzlement, fraud, swindling, and other “hard”—-criminal—-forms. But as Phillips goes on to explain:

   Less obtrusive but at least as important has been the corollary corruption of thinking and writing—-the distortions of ideas and value systems to favor wealth and the biases of “economic man.”

   It is this later type of corruption that you engage in, and I’m doing the best I can to point this out.

   Lyonwiss said:

   You are not someone I want to have a conversation with. Please terminate.

   Well if you can’t take the heat, then maybe you ought to think about getting out of the kitchen.
3. 
   alainton

   June 14, 2012, 11:37 pm | #

   RJ

   Why reply violently to a simple statement that a financial asset has to be liquid before it can be spent as money – try and go into a sweet shop with a CDS and see what response you get?
4. 
   TruthIsThereIsNoTruth

   June 15, 2012, 10:21 am | #

   mahaish,

   Whether banks are funded in advance or not does not imply whether credit growth is supply or demand driven…

   More theory first thinking, let’s not worry about the facts, let’s have a conclusion first and interpret the facts to fit.

   In the real world, quantity and price are in lock step, to say banks are price constrained is the same as saying they are quantity constrained. Credit demand is very much affected by price, which a lot of the time depends on supply. The precursor to the GFC was a flood of cheap credit flowing into the US.

   It is just as hard for me to get my head around why you would think lending first makes sense on any level, as it is for you that this is not the case. The only difference is that I’m basing what I say not on theory, belief, media or google searches but on pure expierence.
5. 
   Lyonwiss

   June 15, 2012, 10:22 am | #

   @ Glenn Stehle June 14, 2012 at 11:00 pm

   I criticize academic monetary theories as being unrealistic (money creation at will) with no considerations of default, loss or fraud, which are the real-world experience of risk management and regulation. Fraud is the failure of government regulation. You then accuse me somehow of being apologist or defender of fraud. Your accusation is absurd and your thinking corrupt. Say no more.
6. 
   TruthIsThereIsNoTruth

   June 15, 2012, 10:22 am | #

   facts are not being refuted here by other facts but on the basis that they undermine strongly held beliefs.