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Re: What creates inflation?
Posted: Tue Jun 06, 2017 2:47 pm
by Philosophy Explorer
Londoner wrote: ↑Tue Jun 06, 2017 2:38 pm
Philosophy Explorer wrote: ↑Tue Jun 06, 2017 2:18 pm
It should be mentioned that banks create money through lending, that's the process they use.
Well, they increase the money
supply; they can create liquidity. But they are also constrained by the state of the economy generally. I can also create money in the sense of extending credit...but I am constrained by the worry I might not get paid back!
I would let the banks worry about that end of things.
PhilX
Re: What creates inflation?
Posted: Tue Jun 06, 2017 3:13 pm
by bobevenson
Londoner wrote: ↑Tue Jun 06, 2017 2:38 pm
Philosophy Explorer wrote: ↑Tue Jun 06, 2017 2:18 pm
It should be mentioned that banks create money through lending, that's the process they use.
Well, they increase the money
supply; they can create liquidity. But they are also constrained by the state of the economy generally. I can also create money in the sense of extending credit...but I am constrained by the worry I might not get paid back!
Sorry, lending money is not creating money, it is merely changing the terms of sale.
Re: What creates inflation?
Posted: Tue Jun 06, 2017 3:18 pm
by Philosophy Explorer
bobevenson wrote: ↑Tue Jun 06, 2017 3:13 pm
Londoner wrote: ↑Tue Jun 06, 2017 2:38 pm
Philosophy Explorer wrote: ↑Tue Jun 06, 2017 2:18 pm
It should be mentioned that banks create money through lending, that's the process they use.
Well, they increase the money
supply; they can create liquidity. But they are also constrained by the state of the economy generally. I can also create money in the sense of extending credit...but I am constrained by the worry I might not get paid back!
Sorry, lending money is not creating money, it is merely changing the terms of sale.
Wrong again. It increases the money supply fool which means money is being created. You're no authority.
PhilX
Re: What creates inflation?
Posted: Tue Jun 06, 2017 3:33 pm
by bobevenson
Sorry, it does not change the money supply, only the terms of sale. If you sell me something, and I tell you I'll pay you next month, you have not increased the money supply.
Re: What creates inflation?
Posted: Tue Jun 06, 2017 3:36 pm
by Philosophy Explorer
bobevenson wrote: ↑Tue Jun 06, 2017 3:33 pm
Sorry, it does not change the money supply, only the terms of sale. If you sell me something, and I tell you I'll pay you next month, you have not increased the money supply.
By definition the money supply has increased Wimpy.
PhilX
Re: What creates inflation?
Posted: Tue Jun 06, 2017 3:39 pm
by bobevenson
Jesus Christ, you don't know shit about money, I don't know how you pay your rent!
Re: What creates inflation?
Posted: Tue Jun 06, 2017 3:41 pm
by Philosophy Explorer
bobevenson wrote: ↑Tue Jun 06, 2017 3:39 pm
Jesus Christ, you don't know shit about money, I don't know how you pay your rent!
You don't know shit from Shinola Wimpy.
PhilX
Re: What creates inflation?
Posted: Tue Jun 06, 2017 4:11 pm
by Science Fan
People really don't get how banks operate. Yes, it is a fact of economics in the modern world that banks do indeed create money. Banks use a deposit for their reserve requirement, and they base their loans on these reserves, which means they create money, and a quite substantial amount. When central banks set their target rates for short-term interest rates, they have to take this money creation by private banks into account.
Re: What creates inflation?
Posted: Tue Jun 06, 2017 4:13 pm
by bobevenson
Philosophy Explorer wrote: ↑Tue Jun 06, 2017 3:41 pm
bobevenson wrote: ↑Tue Jun 06, 2017 3:39 pm
Jesus Christ, you don't know shit about money, I don't know how you pay your rent!
You don't know shit from Shinola Wimpy.
PhilX
You're going to have to start coming up with your own lines, pal.
Re: What creates inflation?
Posted: Tue Jun 06, 2017 4:16 pm
by Philosophy Explorer
bobevenson wrote: ↑Tue Jun 06, 2017 4:13 pm
Philosophy Explorer wrote: ↑Tue Jun 06, 2017 3:41 pm
bobevenson wrote: ↑Tue Jun 06, 2017 3:39 pm
Jesus Christ, you don't know shit about money, I don't know how you pay your rent!
You don't know shit from Shinola Wimpy.
PhilX
You're going to have to start coming up with your own lines, pal.
Better than your lines, dum dum.
PhilX
Re: What creates inflation?
Posted: Tue Jun 06, 2017 4:20 pm
by bobevenson
Please, those are my lines, and they're all copyrighted.
Re: What creates inflation?
Posted: Tue Jun 06, 2017 4:26 pm
by Philosophy Explorer
bobevenson wrote: ↑Tue Jun 06, 2017 4:20 pm
Please, those are my lines, and they're all copyrighted.
Baloney. Provide proof they're copyrighted.
PhilX
Re: What creates inflation?
Posted: Tue Jun 06, 2017 4:28 pm
by Londoner
bobevenson wrote: ↑Tue Jun 06, 2017 3:13 pm
Sorry, lending money is not creating money, it is merely changing the terms of sale.
I don't know what you mean by 'changing the terms of the sale', but it would help this discussion a great deal if we were clearer by what we mean by 'money'.
If the thread is about inflation, then lending money increases the amount of money
available for people to spend. That might or might not cause prices to rise; it would depend on other things.
For example, if all the banks decided they were going to offer lots of cheap mortgages you would expect inflation in the price of houses. On the other hand, if people were worried that they were going to lose their jobs and not be able to pay those mortgages, then they wouldn't take up those cheap loans. Or, if they expected deflation, they wouldn't buy houses now because they expected the price of houses to fall. Or maybe the increase in house prices would cause more houses to be built, thus the price of houses would return to where it was before....and so on.
So the banks are not free to just create/lend money, irrespective of what is happening in the economy. They are only one part of the system.
Re: What creates inflation?
Posted: Tue Jun 06, 2017 4:32 pm
by Philosophy Explorer
Londoner wrote: ↑Tue Jun 06, 2017 4:28 pm
bobevenson wrote: ↑Tue Jun 06, 2017 3:13 pm
Sorry, lending money is not creating money, it is merely changing the terms of sale.
I don't know what you mean by 'changing the terms of the sale', but it would help this discussion a great deal if we were clearer by what we mean by 'money'.
If the thread is about inflation, then lending money increases the amount of money
available for people to spend. That might or might not cause prices to rise; it would depend on other things.
For example, if all the banks decided they were going to offer lots of cheap mortgages you would expect inflation in the price of houses. On the other hand, if people were worried that they were going to lose their jobs and not be able to pay those mortgages, then they wouldn't take up those cheap loans. Or, if they expected deflation, they wouldn't buy houses now because they expected the price of houses to fall. Or maybe the increase in house prices would cause more houses to be built, thus the price of houses would return to where it was before....and so on.
So the banks are not free to just create/lend money, irrespective of what is happening in the economy. They are only one part of the system.
Bob is empty-headed for more than one reason. So what you say in one ear goes out the other.
PhilX
Re: What creates inflation?
Posted: Tue Jun 06, 2017 7:33 pm
by bobevenson
What a garbled-up response. First of all, inflation does not apply to an increase in the price of specific commodities, only to a general increase in prices. Secondly, money is legal tender backed by the government that issues it. Thirdly, terms of sale is when the money is due from the buyer to the seller. Class dismissed!