peterms Posted October 7, 2011 Share Posted October 7, 2011 It is no longer linked to gold anymore so the phrase is now more historical but the concept of the note being worth an equivalent to something else still remains. Though if you went to a bank and asked them to exchange it, if you didn't wish to accept some other notes they would be at a loss as to what to do. Link to comment Share on other sites More sharing options...
TheDon Posted October 7, 2011 Share Posted October 7, 2011 It is no longer linked to gold anymore so the phrase is now more historical but the concept of the note being worth an equivalent to something else still remains. Though if you went to a bank and asked them to exchange it, if you didn't wish to accept some other notes they would be at a loss as to what to do. No they wouldn't, they'd politely tell you to go away (or maybe not even politely). The wording means nothing any more, your options are exchange it for another worthless note, or some not quite as worthless coins. Link to comment Share on other sites More sharing options...
mjmooney Posted October 7, 2011 VT Supporter Share Posted October 7, 2011 All true, but the principle holds that the paper money is supposed to represent some actual assets (whatever form they might take). Simply printing more of it doesn't make you richer. Link to comment Share on other sites More sharing options...
mjmooney Posted October 7, 2011 VT Supporter Share Posted October 7, 2011 “As a general rule, nobody has money who ought to have it.” — Benjamin Disraeli Link to comment Share on other sites More sharing options...
peterms Posted October 7, 2011 Share Posted October 7, 2011 All true, but the principle holds that the paper money is supposed to represent some actual assets (whatever form they might take). Simply printing more of it doesn't make you richer. What assets does it represent, now we're off the gold standard? The BoE has just created £75bn. What assets are represented by that? Link to comment Share on other sites More sharing options...
LondonLax Posted October 7, 2011 Share Posted October 7, 2011 It is no longer linked to gold anymore so the phrase is now more historical but the concept of the note being worth an equivalent to something else still remains. Though if you went to a bank and asked them to exchange it, if you didn't wish to accept some other notes they would be at a loss as to what to do. The promise on the note is made by the Bank of England, not a high st bank. If you took the note to your local Lloyds branch they'd probably ask you to take your query up with the BoE. Link to comment Share on other sites More sharing options...
peterms Posted October 7, 2011 Share Posted October 7, 2011 It is no longer linked to gold anymore so the phrase is now more historical but the concept of the note being worth an equivalent to something else still remains. Though if you went to a bank and asked them to exchange it, if you didn't wish to accept some other notes they would be at a loss as to what to do. The promise on the note is made by the Bank of England, not a high st bank. If you took the note to your local Lloyds branch they'd probably ask you to take your query up with the BoE. ...and the BoE would probably have you sectioned... Link to comment Share on other sites More sharing options...
LondonLax Posted October 7, 2011 Share Posted October 7, 2011 All true, but the principle holds that the paper money is supposed to represent some actual assets (whatever form they might take). Simply printing more of it doesn't make you richer. What assets does it represent, now we're off the gold standard? The BoE has just created £75bn. What assets are represented by that? It represents the confidence someone has in it. On or off the gold standard it doesn't matter, the value of gold doesn't represent its usefulness to society either. If people have confidence in a concept they will accept it in exchange for assets they have. EDIT: This is the problem Greece will have if it tries to introduce a new currency in the current state it's in. No one will accept it is worth anything so no one will take it in payment unless they have no choice. Link to comment Share on other sites More sharing options...
snowychap Posted October 7, 2011 Share Posted October 7, 2011 I'd be willing to accept restrictions, e.g. can only be spent on British goods, etc. Protectionism is in the post anyway, imo. I agree. To be followed by conflict. ;-) Link to comment Share on other sites More sharing options...
snowychap Posted October 7, 2011 Share Posted October 7, 2011 If all the money spent on QE was instead distributed to the population, we'd all have had over 4 grand. Which is going to improve the economy more? Relying on banks to trickle down the money all the way to the bottom, or giving everyone 4k to blow on whatever they want? I'm thinking the 4k would myself, rather than relying on the people that created the problem to solve it. Though would it be spent, saved or used to reduce household debt? Link to comment Share on other sites More sharing options...
mjmooney Posted October 7, 2011 VT Supporter Share Posted October 7, 2011 If all the money spent on QE was instead distributed to the population, we'd all have had over 4 grand. Which is going to improve the economy more? Relying on banks to trickle down the money all the way to the bottom, or giving everyone 4k to blow on whatever they want? I'm thinking the 4k would myself, rather than relying on the people that created the problem to solve it. Though would it be spent, saved or used to reduce household debt?That would be the proviso - you have to spend it. Link to comment Share on other sites More sharing options...
TheDon Posted October 7, 2011 Share Posted October 7, 2011 If all the money spent on QE was instead distributed to the population, we'd all have had over 4 grand. Which is going to improve the economy more? Relying on banks to trickle down the money all the way to the bottom, or giving everyone 4k to blow on whatever they want? I'm thinking the 4k would myself, rather than relying on the people that created the problem to solve it. Though would it be spent, saved or used to reduce household debt? Wouldn't see the problem with it being used for any of those really. Link to comment Share on other sites More sharing options...
snowychap Posted October 7, 2011 Share Posted October 7, 2011 That would be the proviso - you have to spend it. The proviso would only apply to that money, though. People may save (or use for debt repayment) other money (that which they would otherwise have spent). Wouldn't see the problem with it being used for any of those really. In and of themselves, no. But the second and third options aren't going to add to aggregate demand, are they (unless the repaid/saved money is then invested which is back to the original problem)? Edited out an erroneous that. Link to comment Share on other sites More sharing options...
peterms Posted October 7, 2011 Share Posted October 7, 2011 That would be the proviso - you have to spend it. The proviso would only apply to that money, though. People may save (or use that for debt repayment) other money (that which they would otherwise have spent). Wouldn't see the problem with it being used for any of those really. In and of themselves, no. But the second and third options aren't going to add to aggregate demand, are they (unless the repaid/saved money is then invested which is back to the original problem)? Yes, that's a weakness. And even the first option isn't great - a one-off sudden input, which may well get spent on things like foreign cruises and imported goods. A sudden influx of money which probably pushes through into higher prices. Better than nothing, not as good as long-term, planned support for investment in things which produce long-term value and as much domestic employment as possible. Link to comment Share on other sites More sharing options...
wiganvillain Posted October 7, 2011 Share Posted October 7, 2011 Right then, Let's all agree - money is just a concept, it doesn't actually exist. Let's all offer to "conceptually" pay off our "conceptual" debt as a concept. Job done, but what do I then buy groceries (important things like wine, beer etc) with, I want actual wine not conceptual Damn it----- there's a flaw ---- can anyone reslove this for me Link to comment Share on other sites More sharing options...
peterms Posted October 7, 2011 Share Posted October 7, 2011 Right then, Let's all agree - money is just a concept, it doesn't actually exist. Let's all offer to "conceptually" pay off our "conceptual" debt as a concept. Job done, but what do I then buy groceries (important things like wine, beer etc) with, I want actual wine not conceptual Damn it----- there's a flaw ---- can anyone reslove this for me You want to get back to the real economy, not the world of finance. When you do a day's work for an agreed rate of pay, to me that's real money. When Goldman Sucks and their like invent some new "product" which neither they nor regulators understand, which is valued at unreal levels by corrupt ratings agencies, traded in the global casino, and we are invited to underwrite their losses because they are "too big to fail", that's fantasy. The role of government recently seems to be to persuade us, in many different countries, that we should take on responsibility for the paper losses made on theoretical assets which either never existed or were never worth what what they were claimed to be worth, and that's an attempt to push the liabilities of the fantasy world onto the real world. So your work goes to making them richer, for no good reason, instead of buying your groceries. We hear that the people of Belgium are to underwrite the debts of Dexia, which has a higher level of exposure than the gdp of, er, Belgium. I don't think so. Reject the conceptual debts, let most of the banks in the world collapse and their "assets" and "liabilities" evaporate with them, reinstate some proper banks doing what they should and not pissing about with CDOs and algorithms, regulate them, grow things, make them and trade them, don't issue debt to cover government spending, take back money creation to the government where it should always have stayed. But how to elect politicians who will have the slightest appetite for this? Link to comment Share on other sites More sharing options...
JulieB Posted October 7, 2011 Share Posted October 7, 2011 We could all barter our services if money goes belly up... eg.. I'll do your ironing for a months supply of eggs etc.... Notice the price of fuel is still creeping up again...... If you go to the Orkneys there always a queue of oil tankers sitting offshore in Scapa flow apparently crack from locals is that it's oil being kept out of circulation offshore until the price goes up sufficiently to sell. As the Sun accused JP Morgan Stanley of doing a couple of weeks ago. Link to comment Share on other sites More sharing options...
peterms Posted October 7, 2011 Share Posted October 7, 2011 We could all barter our services if money goes belly up... eg.. I'll do your ironing for a months supply of eggs etc.... OK, the ironing's on its way to you. I have a trade in egg futures which I confidently expect will net me a large profit before long, after all the market is selling more eggs than can be physically produced, and I'll pay you out of those imaginary eggs. All right? Just get the ironing done and returned pronto. Link to comment Share on other sites More sharing options...
JulieB Posted October 7, 2011 Share Posted October 7, 2011 I was being hypothetical Peter... I hate ironing... (although my friends has an ironing & cleaning business & she's always busy) I'll send you some home made cheese scones instead! :winkold: Link to comment Share on other sites More sharing options...
mockingbird_franklin Posted October 7, 2011 Share Posted October 7, 2011 If all the money spent on QE was instead distributed to the population, we'd all have had over 4 grand. Which is going to improve the economy more? Relying on banks to trickle down the money all the way to the bottom, or giving everyone 4k to blow on whatever they want? I'm thinking the 4k would myself, rather than relying on the people that created the problem to solve it. Though would it be spent, saved or used to reduce household debt?That would be the proviso - you have to spend it. The Australian Government did something similar a few years back, a payout to each taxpayer, from what I could tell, I think most of it was spent on imported TV's Pc's etc, caused a little price spike at the time followed by price reductions as demand slumped again after all the stimulus money was spent,iirc, Link to comment Share on other sites More sharing options...
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