strichener Posted August 9, 2014 Share Posted August 9, 2014 If we have to explain how a bank works then so be it. What banks do is take existing deposits and loan them out to make a profit. If that's all they did then at any given point if all of the customers in the bank demanded their money back it would be impossible for the bank to pay everyone because most of the money they have would be loaned out to someone else at that precise moment in time. That's why a "bank run" is so problematic - people start withdrawing their own money at such a rate that the bank can't cope and it goes out of business. It's what happens when people suddenly think that their savings aren't guaranteed and panic. The reason why banking works in the first place is that there's a guarantee that if you deposit your money in a bank you'll get it back. It's guaranteed ultimately by the bank having access to enough money that should the worst happen there's some guaranteed source of funding to fall back on. In the vast majority of cases "the worst" never happens, but banks still couldn't operate without that guarantee. Typing YOU SHOULD NOT NEED TO in capital letters is utterly irrelevant - the point is that nobody will deposit money in a bank which doesn't have this guarantee when you have perfectly normal operating banks elsewhere that do have that guarantee available (e.g. in foreign banks that do have a lender of last resort through a central bank). This isn't a debating point - we're not arguing against independence and it has nothing to do with Darling - we're describing the very basics of how a bank works and why sterlingisation would be worse than an independent currency. You will have to explain better than this. You fail to cover such things a leverage, re-insurance, CDOs etc. If banks were only lending money they had on deposit then they would never have liabilities exceeding deposits. The reality is much more complex than the 1800's banking that you describe. Link to comment Share on other sites More sharing options...
scothmist Posted August 9, 2014 Share Posted August 9, 2014 Who are you today? Scoth? Scotch? Bairn? Or Fanny? Today I am a one handed window cleaner in need of a wringer oot. You will suit nicely! Link to comment Share on other sites More sharing options...
Blaven Posted August 9, 2014 Share Posted August 9, 2014 Today I am a one handed window cleaner in need of a wringer oot. You will suit nicely! Fanny it is then. Link to comment Share on other sites More sharing options...
scothmist Posted August 9, 2014 Share Posted August 9, 2014 Fanny it is then. You live and you learn. In your case this is one of the more prevalent delusions. Link to comment Share on other sites More sharing options...
bunkmedal Posted August 9, 2014 Share Posted August 9, 2014 You will have to explain better than this. You fail to cover such things a leverage, re-insurance, CDOs etc. If banks were only lending money they had on deposit then they would never have liabilities exceeding deposits. The reality is much more complex than the 1800's banking that you describe. It's a basic explanation of why you need some guarantee on deposits for a bank to operate, not an attempt at writing a textbook. Link to comment Share on other sites More sharing options...
AUFC90 Posted August 9, 2014 Share Posted August 9, 2014 It's a basic explanation of why you need some guarantee on deposits for a bank to operate, not an attempt at writing a textbook.There are no guarantees. Finance is just one big con built on hee haw. The lender of last resort schtick is a total red herring. Link to comment Share on other sites More sharing options...
bendan Posted August 9, 2014 Share Posted August 9, 2014 It's a basic explanation of why you need some guarantee on deposits for a bank to operate, not an attempt at writing a textbook. Yes, but having a guarantee on deposits (with an upper limit) is a totally different thing to bailing banks out. Link to comment Share on other sites More sharing options...
git-intae-thum Posted August 9, 2014 Share Posted August 9, 2014 It's a basic explanation of why you need some guarantee on deposits for a bank to operate, not an attempt at writing a textbook. This is laughable. Who is guaranteeing the UK financial institutions? Link to comment Share on other sites More sharing options...
boabinoban Posted August 9, 2014 Share Posted August 9, 2014 Has anyone seen this? Found this quite interesting: http://www.bbc.co.uk/news/uk-scotland-28711320 Link to comment Share on other sites More sharing options...
Blaven Posted August 9, 2014 Share Posted August 9, 2014 Has anyone seen this? Found this quite interesting: http://www.bbc.co.uk/news/uk-scotland-28711320 Just watched it. Another BBC broadcast that you have to SEARCH for. Link to comment Share on other sites More sharing options...
boabinoban Posted August 9, 2014 Share Posted August 9, 2014 Just watched it. Another BBC broadcast that you have to SEARCH for. What did you make of it? I'm no financial expert but this all made sense to me. Link to comment Share on other sites More sharing options...
Blaven Posted August 9, 2014 Share Posted August 9, 2014 What did you make of it? I'm no financial expert but this all made sense to me.It makes nothing but sense. The trouble is that the voters that are DK don't understand it and the voters that are NO, don't want to listen to it. If the MSM wanted the people of Scotland to understand it, then this would get as much coverage as the " wits yet plan B then" sh*te that they love so much. Just to add to that, that these are arguments which you can really only get across if you are not constantly getting shouted over the top of, just as Salmond proved at FMQ on Thursday. Link to comment Share on other sites More sharing options...
itzdrk Posted August 10, 2014 Share Posted August 10, 2014 I want our own currency but i can see why cu makes sense immediately after independence. Within 10/20 years it would be an affront to still have it though. Link to comment Share on other sites More sharing options...
Baxter Parp Posted August 10, 2014 Share Posted August 10, 2014 We being the Scottish people who wanted a Devo Max option?They lost. Link to comment Share on other sites More sharing options...
Fotbawmad Posted August 10, 2014 Share Posted August 10, 2014 If Scotland is going Independent: Why do they need to hang on to the pound? Why do they have to rely on the Bank of England to bail them out if the shit hits the fan? Why is Currency Union in the best interests of the rest of the United Kingdom? Why can't they take-up the Euro? I thought Scotland was ready for independence? 1. For the short to medium term this is the best solution. The Euro is a no go area and implementing our own currency would take some time. In the long term, using our own currency would be the best route. 2. In 2008 it was the Federal Reserve that bailed out all the European banks. The reason RBS was bailed out by the Americans was due the destabilization it would cause in their economy. Personally, I'd rather do away with central banking. Banks need central banks. Not people or governments. 3. Scotland has a strong export industry and the pound would be severely weakened in the rest of the UK. 4. Who do you think really runs Greece, Spain, Ireland and Portugal? The last thing I'd want is for my countries affairs to be dictated to by a bunch of Nazi bankers. The Euro was always going to fail and the ones who were involved in the inner workings of it knew full well it would, but they did it in the hope countries would give up their sovereignty in order to keep the project alive. However, even doing that would be just kicking the can down the road. Although few understand it (including high level politicians), austerity is a self defeating policy, because by it's nature it's deflationary. You and I can live within our means, but it's impossible for a government to. Which is why they continually must issue new bonds. 5. No country that's gone independent in the last 100 or so years has wanted to go back, and many of those countries have been smaller and poorer than us. It just takes a bit of research and seeing past all the fear and negativity that the BT campaign know they must use. There is not one positive argument BT have produced for staying in the Union other than emotional and sentimental ones. If it wasn't for a biased media I'd be very confident of getting a Yes vote within the next 5 weeks, but right now it looks 50/50 Link to comment Share on other sites More sharing options...
Confidemus Posted August 10, 2014 Share Posted August 10, 2014 You know the major problem here? BTUKOKNOTHANKS and the MSM have convinced people that the CU issue is a far bigger deal than it actually is. At the end of the day, as I said elsewhere, regardless of what currency we use and in which format, no one will die. The sky won't collapse. We won't be consumed by a tsunami. A super volcano won't erupt below Holyrood. But No voters being the impressionable sheep that they are have been convinced by the MSM wringing every drop of juice out of it that they can that it's a massive deal breaker and THE single biggest issue. Is it f**k. Foodbanks, austerity, Trident, the welfare system and protection of our NHS are more important to me. And I'm quite sure that some sheep will attempt to tell me the above are dependent on us using the £. Are they f**k. It's all a moot point anyway. We WILL have a currency union if we want it. But I don't give too much of a f**k about it. Link to comment Share on other sites More sharing options...
Tonsilitis Posted August 10, 2014 Share Posted August 10, 2014 The problem with the Euro is that the economies of Southern Europe are much weaker than the industrial North, especially Germany. As a consequence Greece, Portugal, et al cannot cope with having a currency on a par with those much stronger economies. Traditionally that problem would have be solved by devaluing the drachma or the escudo so that your exports became cheaper for foreign buyers and at the same time, foreign goods got less affordable at home. The effect is to reduce your balance of trade deficit. Because that is not available, you have to cover any balance of trade deficit through borrowing and taxation and when the ability to borrow dries up you are left with public spending cuts and taxation = austerity. There is no such economic imbalance between Scotland and RUK. If anything, our economy is stronger than RUK and so the only thing preventing a currency union is political tactics. The danger to us if we had our own currency would be that it would float upwards giving us the problem of making our exports more expensive. Link to comment Share on other sites More sharing options...
Blaven Posted August 10, 2014 Share Posted August 10, 2014 What would happen if the Scottish economy was the stronger economy within a CU? Would Scotland control the " lender of last resort "? Link to comment Share on other sites More sharing options...
Tonsilitis Posted August 10, 2014 Share Posted August 10, 2014 What would happen if the Scottish economy was the stronger economy within a CU? Would Scotland control the " lender of last resort "? No. The Bank of England is in theory independent and its monetary policy unit sets interest rates. If we were in a currency union with the stronger economy, we would enjoy the same benefits as Germany do with the Euro in that our exports would be more affordable than with a separate currency free to float upwards. Link to comment Share on other sites More sharing options...
Blaven Posted August 10, 2014 Share Posted August 10, 2014 No. The Bank of England is in theory independent and its monetary policy unit sets interest rates. If we were in a currency union with the stronger economy, we would enjoy the same benefits as Germany do with the Euro in that our exports would be more affordable than with a separate currency free to float upwards. Interesting. Very interesting. Link to comment Share on other sites More sharing options...
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