A commentator on this blog said this morning:
I don't know a lot about banking, but I do know that banks can't simply magic money out of nowhere.
For a UK bank to lend money to a business, it has to have that money available to it in some form, does it not?
And if that money is available, then surely there is an opportunity cost associated with lending it to one company rather than doing something else?
Oh dear, there's enough person suffering the delusion that money is created by government and banks have to wait for a pound to come in before they can lend a pound out. This is just not true, and so it seems appropriate to give a blog I've used twice before another airing. I first wrote the blog reproduced below in September 2007: Northern Rock was falling over at the time and needed bailing out but it's just as relevant today. The point is a simple one and is that the reality is that confidence is all there is to money because it literally comes out of thin air:
“It amazes me that most people think that money is printed. It isn't. Only 3% of all money in the UK is created by the government. The rest is created by banks.
How does a bank create money? The honest answer is out of thin air. It happens whenever they create a loan.
Most people think when they ask a bank for a loan money paid in by one person is paid on to them. That's not true. Not true at all, in fact.
Instead what the bank does is a conjuring trick. They agree to give you a loan. They do it by opening two accounts for you. One is a current account (for ease, let's assume you haven't already got one). The other is a loan account. If you borrow £10,000 they mark your current account as having £10,000 in it. You're now free to spend that however you like.
They also mark your loan account as having £10,000 in it. You now owe that to the bank.
Add the two together and they add up to nothing. One you apparently own (the current account) and one you apparently owe (the loan account). But if you decided to cancel the deal you could straight away repay the loan using the current account and there would be nothing left. Which is why I mean they add up to nothing.
Note there's no cash involved in this process at all. It's just an accounting trick. Nothing more.
And now the bank charge you interest for the benefit of having created that money. Even though there is no money as such, even though you think there is, because you can spend what's in the current account as if it were money. Which is what I mean about the banks creating that money. You can see why they make so much profit, can't you? They make money out of nothing and then charge you to use it.
Of course they need some cash. That's necessary to ensure that if anyone does want their money back in straightforward cash they can pay it to them. That's why they need part of that 3% of money created by the government.
And of course they can't repeat this lending trick forever because if they did people would realise there was no substance behind the promise they made to you when you agreed to pay them back a loan. That promise is that the money in your current account can be used to pay other people — a promise that is only as good as the bank on which the cheque is written on.
But that's the confidence part of the rick. So long as people believe the banks will pay they don't need money. They can just pretend they have it. When people don't have that confidence they do need money. Trouble is, they always lend far more money than they actually have. That's the risk in a ‘run on the bank' of the sort Northern Rock has suffered.
But now that risk has been taken away. The government has said it will cover it. So the banks can lend more money at limited risk to themselves. And so make more interest on something they have created out of thin air. Are you surprised that banks are the biggest companies in the world? After all, their basic product really does not cost them anything to make. Amazing, isn't it?
You don't believe me? Actually, you wouldn't be alone. When explaining this the second greatest economist of the last century (J. K Galbraith) said:
The process by which banks create money is so simple that the mind is repelled
(John K. Galbraith, in “Money: Whence it came, where it went”, p. 29.)
He was right, because it's true: the process is so simple that we're repelled by the idea that we pay for it.”
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Buy me a coffee!
You go as far as creating the loan. What happens when the borrower tries to use some of the money in that account?
When I ask my bank to pay someone else’s bank for goods or services, what happens? My bank owes the other one some money. Or, in other words, it has taken on a debt. Its ability to do so is limited by the funds which other banks are prepared to lend to it.
If they’re prepared to lend, then well and good, but except in a really bullish market that’s not a magic money tree.
But the point we were discussing was how much profit the bank makes on lending money out. I assert that either the bank has a cap on the amount it can lend, in which case lending to me means not lending to someone else; or it does not, in which case lending to me means borrowing from someone else.
Debiting a debtor ultimately means you either credit another debtor, or credit a creditor. Unless banks use single-entry accounting, of course.
The money is deposited by someone else
The system balances
So the system balances because there is another deposit?
The bank can safely give me money because someone else will give them money?
How is that relying only on thin air? You just ridiculed the suggestion that banks can only lend out of deposits… 🙂
That was rather a straw man of your own creation, though. All I’m saying is that any lending a bank does means incurring a liability somewhere, and the cost of that liability off-sets the benefit of the loan. They’ll make a turn on it, yes, but the interest return isn’t free, as you seem to suggest.
But the deposit is made out of thin air
So yes, it is all a confidence trick
There is literally no “money” behind the number on your bank statement
And no loan comes from a deposit
I have explained how and you abide by what Galbraith predicted
Oh, I’m not “repelled”. I’m quite happy that large balances can be created at the stroke of a pen.
All I’m saying is that there’s a cost to doing so, and banks can’t ignore that cost.
You seem to be ignoring the consequences of what banks can do, and focusing only on the fact that they can do it.
Simple illustration: I lend you a million pounds, and you lend me a million pounds. We can quite happily do that, no problem at all.
Then I go and try to buy a house using the credit facility I have with you. How do you fund my purchase?
I don’t
I’m not a bank
It is very likely that your knowledge is limited. But with the complexity and variability of the present plus the extensive flows, it is unlikely that there are people who do know a lot. In the country of the blind the one eyed man is King.
“They do it by opening two accounts for you. One is a current account (for ease, let’s assume you haven’t already got one). The other is a loan account. If you borrow £10,000 they mark your current account as having £10,000 in it. You’re now free to spend that however you like.
They also mark your loan account as having £10,000 in it. You now owe that to the bank.”
Really, when I got my mortgage, the bank didn’t create a deposit account for me, given I don’t bank here. When I spend on my credit card, the bank doesn’t create a deposit account for me. When I spend on my over draft, my bank does suddenly open two accounts for me.
While a bank can do exactly what you say, most lending does not occur in that way at all. And even in your example, the bank has to have free assets (i.e previously existing funding that exceeds lending) otherwise it cannot settle any attempt by the person who has got the loan to actually spend it.
That banks just magically create all the money that they lend is as big a myth as the three generation of unemployed.
So sometimes the accounts aren’t owned by the same people. So what? I simplified
But the reality remains: all money is made out of thin air
There is only 3% cash
And yes the bank needs free assets – less than 3% normally in the past. But remember how few runs there have been. That’s because people did and do believe banks will pay. When they stop believing they collapse, almost immediately. That belief is all they trade on
It’s made out of trust, which is very different from thin air.
If Northern Rock financed its mortgages just by creating the money then why did it issue £45 billion of Granite bonds?
That it did issue £45 billion of such bonds shows that it had to fund its lending by doing more than just an accounting trick and opening two accounts. That is, it had to go and find real money from somewhere to fund those loans.
Many to most bank lending is funded by hte depoists that others have made into hte same bank. But some, like Rock, fund through bond issues and or the overnight markets. But the very existence of these markets and bonds shows that banks don’t just simply invent the money they lend. Not after 4 pm on the day of the loan at least, the time by which they must balance their books.
Oh dear Tim
I really thought you might understand money
Clearly not
Granite sold loans already created
It did not borrow to make loans
Look at its issue prospectuses
I’m puzzled.
If Northern Rock could just create money, why didn’t they create some to prevent a bank run taking place?
Maybe they forgot?
Because by then no one trusted them – the confidence trick was over
“Granite sold loans already created
It did not borrow to make loans”
Sure. Granite borrowed to cover loans already made. I both know that and have said so many a time.
But if a bank makes loans purely by inventing money then why would a bank need to sell bonds to fund loans already made?
I think I do see where we’re disagreeing though.
“If you borrow £10,000 they mark your current account as having £10,000 in it. You’re now free to spend that however you like.
They also mark your loan account as having £10,000 in it. You now owe that to the bank.”
That’s true up until 4 pm on the day the loan is made. Intra-day, yes, banks just simply invent whatever money they desire to lend out. But at 4 pm they must balance their books. They must have assets equal to their liabilities (plus capital but let’s not complicate matters).
This is why the overnight markets exist: so that banks can borrow what they need to fund the loans they made that day. Why the bond market and securitisation markets exist: so that banks can fund the loans that they have made in the past.
Those that they don’t fund from their own deposits of course.
Your “banks just invent money for loans” is true, but only on that day of the loan being made. It simply isn’t true for any longer than that.
If it were, then all those scuritisations etc would not exist, for there would be no need to gain such funding, would there?
And that’s because the deposits made are not always in the banks that made the cash
So they agree to even the situation out each night
Real money? All money’s a social fiction – have you read Marx’s Capital, Chapter One, Section One?
It’s all as real as any other social fiction. Its social power is as great as that of god – anybody’s god, now or any other time – another fiction. I’d call it the secular substance of the class structure. Physical energy accounting would deal with actual matter in motion – but this is socially real, and its substance is no more physically real than cat money.
I know that you won’t agree with the god analogy, Richard, but I put it forward without deference.
Richard, I was astonished to read Tim Worstall’s comment above. This exhibits a total misunderstanding of the Mortgage-backed security process – the very process which triggered the banking collapse in 2008. The link below, written in 2008, gives a simplified account of how it was then assumed that the system would work.
Later it became apparent that the process was little more than an elaborate scam.
http://www.thisismoney.co.uk/money/markets/article-1620633/Granite-Northern-Rocks-money-making-vehicle.html
“And that’s because the deposits made are not always in the banks that made the cash
So they agree to even the situation out each night”
Therefore we come back to what everyone agrees does happen. The banking system as a whole does indeed create credit. But individual banks do not create money out of thin air. Not past 4 pm they don’t.
As ever Tim – you so spectacularly miss the point it’s ludicrous
So what is the point? That for a bank to lend £100m to someone costs them nothing at all, and all the interest on that £100m is pure profit?
I pointed out you were wrong – there is no need for a deposit to make a loan
Loans make deposits
You need to listen from 29 minutes to Lord Adair Turner here:
http://www.positivemoney.org/2013/04/adair-turners-keynote-speech-at-inet-conference/
He describes money creation as that in this blog – and asserts that without realising that banks create money you cannot understand banking at all.
Precisely
The positivemoney website really is the place to go to understand all of this – lots of handy videos ranging from ‘guide for dummies’ level to stuff that’s a bit more complicated.
http://www.positivemoney.org/
Matt
This is simple fractional banking which has been around for 100 years or so. It works fine unless there is a run on the bank like NR. What’s the big deal? The bank’s “reputation” and people belief that the bank will honour its obligations is what makes the system go round.
But is this really news to anyone?
Yes, unfortunately it is
Correction: several hundred years
Interesting 4 minute video! I’m just starting to read about these issues and try to slowly educate myself which I’m finding challenging. I’m reading the Galbraith book Richard quotes from. Galbraith is very dismissive of the ‘mystique’ that is created around economics. This video seems to say that the Central Banks (Bank of England, Federal Reserve) are not behind the money creation – but wasn’t the idea that they were final guarantors in some way? In the past it was redeemable specie – but what now? It seems amazing that banks can get into this mess. The seed of digital money creation must be a big factor?
There is no guarantee
If you ask the Bank of England to honour the promise on a bak note it will do so – by giving you another one to replace the one you give it
I just watched the 4 minute film recommended above. it seems to say that our central bank, the Bank of England does no money creation? Is this true? In the past it had ‘specie’ to back things up and controlled the money supply – I must confess my ignorance here. Is it that digital technology has aided this creation of money out of ‘nothing’? perhaps we need Islamic banking where making money out of money is haram?
I think not quite true
It prints cash
And can create QE (but that’s a new phenomena)
But its regulation of money supply is by regulating commercial banks who actually create the vast majority of money
This has had me running around in circles to understand, but I think I am there now … the perfect Friday afternoon (and evening) brainteaser.
To understand it I had to conjure up a really simple scenario …
In the ‘shire’ there are ten people each with a gold coin. There is one bank which each of the shire residents have decided to deposit with. (for simplicity there is no interest or fees involved). At this stage the bank has the Liability of 10 coins and assets (kept in the backroom cupboard) of 10 coins. Everything balances, everyone is happy.
One day Mr Baggins (a shire resident) decides he has a brilliant plan for breeding chickens, his neighbour has the chickens he requires and will sell them to him for 2 gold coins. Mr Baggins goes to the bank for a loan. Mr Baggins being very credit worthy is offered a loan of 2 coins which he draws immediately in exchange for a promise to repay the 2 gold coins in a month.
The bank (at this point) has liabilities of 10 gold coins to the original depositors and assets of 8 gold coins (still in the backroom cupboard) and a promise to repay 2 gold coins from Mr Baggins. Everything still balances.
Mr Baggins buys his chickens from his neighbour. His neighbour being a depositor at ‘The Bank’ then deposits the 2 gold coins with the bank.
The banks balance sheet now has liabilities of 12 Gold coins and assets of 10 gold coins and a promise to repay 2 gold coins.
…… Now to me this makes sense and I can see where the notion of ‘Money’ creation comes from BUT there are still only 10 real Gold coins in the Shire.
In hindsight and after a lot of head scratching today, I think that what catches people out when trying to understand this (myself included) is that people think of MONEY as wealth / Value which the bank does not create and this is what most people associate with the term money. What the bank is doing (in my very very simple scenario) is monetising economic / trading activity.
Richard, I would really appreciate a yay or nay as to whether I have grasped this (even at a really basic level). Please put me out of my misery 🙂
Your mistake is to assume there is money in the first place
There is none
Money is debt
It’s just an IOU
That’s all
We just think banks IOUs are better than most
There’s pretty widespread confusion about the monetary system, that’s for sure.
Private banks create credit when they spend, and when they lend, but the virtual credit Instrument (promissory note) is not an obligation of the bank.
It is the object of bank spending and lending, or that which is loaned.
These IOUs are in fact ‘look-alikes’ of the IOUs – essentially tax-prepayments – created by the Central Bank as a fiscal agent of the Treasury, and are completely indistinguishable. ie private banks are acting opaquely as fiscal sub-agents of the Treasury.
So undated demand deposits (reserves)and term (dated) deposits are in accounting terms completely separate animals. Demand deposits are in reality more akin to a form of equity rather than debt.
In order for their dated term obligations (assets and liabilities – or accounts receivable and payable) to balance, banks have to ‘fund’ their balance sheet with ‘term’ deposits which could have any duration down to overnight. They may acquire these deposits from retail depositors (increasingly difficult because of wealth inequality); wholesale depositors (even worse now the interbank market has sized up) and from the ‘lender of last resort’, the Central Bank.
In my analysis – contrary to Positive Money’s analysis – modern fiat money is NOT destroyed when bank loans are repaid. Only Central Banks – acting as fiscal agent for the Treasury – can destroy money, either by burning it at Debden, or through suitable entries on the memorandum account (a title registry for modern money) which they maintain for reserves.
Another consequence of this is that – contrary to the general perception – the Central Bank does NOT have a banking counter-party relationship with the Treasury in respect of credit/money creation, where a Treasury credit is reflected by a Bank of England debit and vice versa. It is in fact an agency relationship where a Bank of England credit equates to a Treasury credit.
The proof is (for instance) that a ‘greenback’ US Treasury Note (they still circulate in small numbers) and a US Federal Reserve Note spend precisely the same.
You might be interested in this UCL ISRS post (I’m a Senior Research Fellow) which mirrors a recent article of mine in the Glasgow Sunday Herald.
https://blogs.ucl.ac.uk/resilience/2013/03/11/the-myth-of-debt/
Interesting Chris
But I have to say, like your theory on LLPs, misplaced, I fear
The most serious aspect of the way money is created is the way in which it has forced the majority of ordinary people into debt peonage to the banks.
Deregulation created the economic bubble, whereby too much money was created for house mortgages, which inflated an essential need – housing. This gets passed on in high rents, as well as high mortgages.
Student loans, credit card debt, borrowing to buy clothes and food, has created a situation where people are paying the rich interest for the use of currency.
It is the new form of feudalism. Business debt is high as well.
The growing gap between rich and poor is obvious: it is caused by the monetary system.
I still do not know what the absolute best answer is. My feeling is that money should be created by the bank of England and given to government to spend.
If banks are allowed to create money to any extent, they should be heavily regulated and pay most of the interest back in tax, so that the benefits do not go to the top one percent.
At the moment I cannot see a way out of the private debt problems without debt jubilees for people in negative equity, and students. Helicopter money should be used to stimulate the economy, start new businesses through grants and start manufacturing again, and to revive the public services.
If there is some permanent money in the system which is not borrowed, it would surely help to relieve poverty and create more business and employment.
Growth was higher in the years 1945 to 1970, when the percentage of government created money was higher after the nationalisation of the bank of England (cash). Although of course, taxes were higher for the rich, which also helped.
A good answer, of course, would be a “jubilee”. After (say) 10 years all debts get written off.
That would have moderately significant effect on the mortgage market.
It’s hard enough to borrow enough over 25 years.
Richard, it’s true that banks can create offsetting loan and current accounts “out of thin air”. But it’s not true that they can then charge you interest for nothing. If you take the money out of your current account in cash they have to get the cash from somewhere. And if instead you write a cheque or use a debit card to pay money to someone else’s account at another bank, that creates a clearing balance which has to be settled out of the banks’ reserve account at the Bank of England. And the balance in that reserve account has to be maintained with money from somewhere – if the bank borrows it from another bank it will have to pay interest.
Collectively, the banks make money out of the difference between the interest they charge on loans and the interest they pay on deposits, net of the cost to them of defaults. But, because of the default risk and maturity mismatch they take on, it is not money for nothing.
It is undeniable reserves are needed – 3% was more than enough
And the new deposit is the cash just withdrawn
So the loan creates the deposit which you now argue permits the loan
It is always that way – loans create deposit, and not vice versa
This is not just a question of having a fractional reserve. When a cheque clears, money is taken out of the bank’s reserve account to cover the withdrawal. The bank has to replenish the account with actual money.
A loan creates new money in the banking system – it increases the broad money supply – but it does not create money for the lending bank.
But the cash with drawn does not vaporise
It is re-deposited by someone else
So the system still balances
Why is it so hard to get that?
I’ve had several posts this week so I need to issue my self a self denying ordinance ( like Cromwell-except he issued it for others MPs -in fact)
I would like to make the point that this subject challenges not just a theoretical understanding but entrenched vested interests. First they will try to ignore you, then they will attack your credibility and make out that you don’t understand the system.
Then they will argue you are a dangerous radical and your ideas will undermine the whole wealth of the country. At this point it may become necessary to censor you-in the interest of the economy, of course.
I think it’s important for all of us who agree with this page’s theme to also spread the word e.g. by mentioning it on on-line newspaper comments threads or phone-in programmes.
They’ve tried most of those things!
The Today programme barred TJN at one time as an anti business organisations we asked people to pay tax
They’ve got over that now
“The Today Programme barred TJN at one time as an anti-business organisation”
That’s extraordinary! Does BBC News have some kind of ban on anti-business organisations? I knew the editorial line was often biased to the right but it didn’t realise this was codified in their actual operating guidelines. Things are worse than I thought…
We were told this in 2007 and 2008
It’s easier to get on these days
I work in a bank. You are so wrong. In fact you are so dumb I do not know where to start.
A bank cannot lend out more than it has on deposit or has borrowed by issuing its own debt.
It is as simple as that. You are an idiot.
Just because you believe something does not make it true.
The mind boggles.
I would agree – many bankers think as you do
But they’re wrong
Completely wrong
“Even more than the unprecedented financial crisis of 2008, however, recent events in Cyprus may have struck the mortal blow to fractional-reserve banking. For fractional-reserve banking can only exist for as long as the depositors have complete confidence that regardless of the financial woes that befall the bank entrusted with their “deposits,” they will always be able to withdraw them on demand at par in currency, the ultimate cash of any banking system”
http://www.marketoracle.co.uk/Article39713.html
“The standard story about how banks create money, and how reserves work, is the “Money Multiplier Model”. Money creation starts with the government injecting “fiat money” into the economy — say by giving a welfare recipient $100 in cash. That recipient then deposits the cash in a bank, which hangs on to a government-mandated fraction of it (the “Reserve Requirement”) — say 10 per cent or $10 — and lends out the rest to a borrower. The borrower then deposits that $90 in another bank, which does the same thing — hangs onto 10 per cent of the $90 or $9, and lends out another $81 to another borrower.
The process repeats ad infinitum, and in the end a total of $1,000 is brought into existence: the original $100 in cash, plus $900 in credit money created by the private banking sector (matched, of course, by $900 in debt)”
http://www.businessspectator.com.au/article/2012/10/22/commodities/myth-money-multiplier?OpenDocument=&emcontent_spectators=
Hilarious… but hardly a better way to demonstrate the point.
No you are wrong Frederick. To understand why, may I recommend this work by fellow-banker Warren Mosler…
“SEVEN DEADLY INNOCENT FRAUDS OF ECONOMIC POLICY”
http://moslereconomics.com/wp-content/powerpoints/7DIF.pdf
NB: It is US-biased, but equally applies to the UK. Also it covers central bank operations and it’s relationship to private bank loans
Frederick
I love your post. Since you work in a bank why don’t you look at the a/cs of the bank you work in?
Having done so, assuming that you understand accounting, you will understand that Richard is right, on this as on so many issues.
So what has happened to all the gold that was stashed up to give the whole thing some underlying credibility? Lots of gold was shipped from Europe to America to pay for thee First World War – where is it and what function does it have as , I assume, we no longer have a gold standard?
Gold. that’s another story, and one that will run and run..
Is it there at all ?
And why are an increasing amount of countries seeking to “repatriate”their gold from places like the US and UK ?
According to “informed” sources some 10%+ of the gold reserves could be gold-plated tungsten !
“According to “informed” sources some 10%+ of the gold reserves could be gold-plated tungsten !”
As someone who works in the metals industry no, just no, this story is not true. It is indeed theoretically possible to drill out a gold bar and replace some of the weight with tungsten. It would be very difficult to do but it is theoretically possible. As the two metals have almost exactly the same density then the volume and weight of the “gold” bar would be correct.
So, if you weighed the bars you would not discover it.
However, a sufficiently large number of bars are recycled every year that if this had happened on any large scale at all then it would have been found by the smelters.
There was a fun story about this a year or two back. Someone had found such a bar and was showing photos of it. I tracked the story back to the Swiss gold dealer who was alleged to have found it and they knew nothing at all about the story. The whole thing was entirely made up.
It is, as I say, theoretically possible. There’s just no evidence at all that it has happened: and lots of very good evidence that it hasn’t. Namely, that people have been melting gold bars for decades and never come across an example of this.
Must be a lot of stories then..of course it could not happen now, but:
http://gold-quote.net/en/articles/fake-tungsten-gold-bars.php
And, of course:
http://www.zerohedge.com/news/2012-09-23/gold-counterfeiting-goes-viral-10-tungsten-filled-gold-bars-are-discovered-manhattan
I do, of course, defer to your greater knowledge.
So what does qualitative easing do? If the boe is creating money electronically to buy stuffwl
why bother when the banks can do this effortlessly themselves?
QE is the BoE making money because the banks won’t lend and so if there was no QE there’d be a shortage of money in the economy
which wouldn’t, necessarily, be a bad idea.
Isn’t it about time that all of us started reducing our consumption?
Richard,
I still find this very difficult to understand, but perhaps it relates to a question that has been defeating me for the last five years. When the crash occurred in 2007-2008, where did the money go? If we are almost all poorer, is someone sitting on a great pile of money? Or did the money just disappear? If banks can create money out of thin air, perhaps money can just disappear into thin air.
This is how I am trying to think about it.
Forty years ago, we bought our house for about £20,000. We paid off the mortgage years ago, and it is now worth say £400,000. We also have say £100,000 cash in the bank, so our net worth is £500,000. If there is a housing crash and our house drops in value to £200,000, our net worth is now £300,000. £200,000 has just disappeared. We still own the same house and have the same number of pounds in the bank but £200,000 has gone and nobody else has it.
If this is a valid model for 2007-2008, it has an interesting consequence. What happened was a massive overall decrease in the value of assets, relative to cash. This is the formal equivalent of catastrophic deflation. For which austerity is hardly the answer?
Richard would say the banks created magic money. This was used to inflate the price of assets. When the bubble burst, the magic money simply disappeared, like Leprechaun gold in Harry Potter.
I don’t know if this makes any sense, but if it does, it might suggest some different ways of sorting the current mess.
When a loan is repaid the money disappears
The last time I looked UK money supply is down about 12% during the crash
“But the cash with drawn does not vaporise
It is re-deposited by someone else
So the system still balances
Why is it so hard to get that?”
We’re not saying that the system doesn’t balance. We’re saying that one individual bank cannot create as much money as it likes.
Think of it this way, a point you love to make. Sure, household economics work one way. And the total economy is made up of households. But the rules for the total economy are different from those for individual households.
So it is with money/credit and the banking system. What is true for the system as a whole is not true for each and every participant.
Why is it so hard to get that?
I’m glad you have now conceded the point.
And you think banking is not a coordinated system rather than a pack of unrelated entities?
Now all you have to do is stop your naive belief that banks would never, ever cooperate with each other and then your realisation will be complete
Just came accross this from Josiah Stamp:
‘”Banking was conceived in iniquity and was born in sin. The bankers own the earth. Take it away from them, but leave them the power to create money, and with the flick of the pen they will create enough deposits to buy it back again. However, take away from them the power to create money and all the great fortunes like mine will disappear and they ought to disappear, for this would be a happier and better world to live in. But, if you wish to remain the slaves of bankers and pay the cost of your own slavery, let them continue to create money.” (Said to be from an informal talk at the University of Texas in the 1920s, but as yet unverified.)[12]’
The image of paying for one’s own slavery is rather powerful and, it seems to me, applicable to the mortgage-millstone.