Banking - the greatest scam on earth?

[Tysonboss1]

Tyson, I understand what you're saying in terms of us all having apparent equal opportunity.

But in reality, it's not so. We are simply not all born equal. We do not receive equal upbringing, both as regards the wisdom of our parents, and the socio-economic circumstances we're born into.

We do not all have similar IQ levels, nor have we all absorbed social skills as we grow up.

Many of us here have had great backgrounds. Some of us have done well because we've had the privilege of being born with a decent level of intelligence, our parents have modelled and taught us personal, social and financial skills, and we've gone to good schools then been encouraged into tertiary study.

Or some of us have not been born into such fortunate circumstances, but have taken - by force of their strong character - adverse circumstances as a child to determine that they will grow up to be absolutely different.

If you're a creature of a multi-generational family on welfare where there is no expectation that any member of that family will ever be anything but a loser, it's pretty damn hard to break out of that mentality, especially if you have poor intellectual and physical capacity.

I'm also with Mr Magoo in being utterly sick of all the bank bashing.
Bob Brown's latest suggestion that banks don't receive the 1% tax cut that goes to all other business is yet another indication of this crap socialist propaganda.

I agree Julia, but at the end of the day it all comes back to personal responsibilty, and they can always start making changes, rather than making excuses.

 

[Julia]

No it's not.

Compare the two

Example 1- A hippy named Rainbow works 7 days a week in his little organic vege garden and produces 100Kg of carrats each year which he sells at a local co-op.

Example 2 - A Famer called Dave works seven days a week also, He Borrowed $3,000,000 from a Bank and buys a large block of fertile ground and large pieces of comercial scale farm equipment and associated packing sheds, He works seven days a week ploughing and planting, and his large scale intensive farming operation produces 100 tonnes of carrats per year which he ships nation wide.

Obviously, the farmer Dave is going to earn more because he has produced more.

We all earn according to the value we produce, not simply hours worked.

Great summary. Little to do with hours worked.

There are some people who are genuinely disadvantaged and whom we should be helping much more than we do now, but there are others who claim disadvantage to disguise laziness and a sense of entitlement that it's up to others to look after them.

An example of this is the adverse effect decades of passive welfare have had on some remote aboriginal communities. Noel Pearson - in his persistent attempts to have his people weaned off this and into adopting an attitude of personal responsibility - is meeting with ignorant resistance from The Left who keep banging on that aboriginal people should be regarded as victims. Tell someone often enough that they're a victim and they'll sure as hell accept that and behave accordingly.

On the other hand, if people are given some responsibility with the expectation that they will succeed, usually they will do so.

 

[nomore4s]

Thats not inequality.

Everyone in Australia has a chance to succeed and enjoy life. Just because some peoples life choices have made them poor does not at all mean that the society enforced that upon them or that they had no chance to change their own future, or that the people that did succeed and got wealthy had some intrinsic advantage.

There is inequality though.

A baby (baby A) born into a poor uneducated family is starting behind the eight ball when compared to a baby (baby B) born into a rich well educated family.

While there is nothing stopping baby A from becoming a successful, wealthy individual they will have to break down a lot more barriers and probably work twice as hard at it as baby B. Baby B will certainly have more doors open to them from the start and no doubt have a major head start in life over baby A, that is inequality through no fault of either baby, just the way the world works. To suggest we all start life on equal footing is a bit naive imo.

Anyone who has had anything to do with the lower end of the social ladder will understand just how hard it is to break the cycle.

 

[Tysonboss1]

True, but their is nothing structual in our society that holds people back. The is no cast system.

Even people with disabilities can live long quality lives, 10,000 years ago they would have been some animals lunch, or the tribe would have thrown them in the river.

 

[Tyler Durden]

It would be inequality if we lived in a society that said you can't earn the same as me because you are black or because you are white or gay or jewish.

But if I earn more money that you because i spent years working towards a goal that took untold hours of study, years of above average hours of work and effort and the deployment of personal at risk capital into a business, then thats not equality.

To expect that you should earn the same as me without putting in the same personal effort, risks, sacrifices and time would be inequality.

You seem to be equating efforts put in with rewards achieved as an output. Although in the perfect world that should be the case, it is not because we do not live in a perfect world.

A truck driver in mining is probably earning a tonne more than a truck driver for Woolies.

There is inequality in the world, as much some of us would hate to admit it. nomore4s gave the perfect example, I'm not sure what you mean by "cast system". But IMO there is something "structural" in our society holding people back. Look at the big employers and see whether they prefer someone from a private school who went to Syd U, or someone who went to Mt Druitt Public and UWS.

For women, it is even harder as their appearance dictates a lot about their earning capacity. An attractive woman can be a model OR a business woman. A not so attractive woman can be a business woman, but never a model.

 

[cynic]

True, but their is nothing structual in our society that holds people back. The is no cast system.

Even people with disabilities can live long quality lives, 10,000 years ago they would have been some animals lunch, or the tribe would have thrown them in the river.

Whilst I recognise that we do happen to live in a society that has demonstrated a more inclusive approach to the accommodation of the disabled amongst us, I have also noticed certain practices being encouraged within our society that indicate an opposite viewpoint.

One example is the practice of recommending termination of a foetus subsequent to the identification of certain genetic maladies/disorders. This could be seen as somewhat akin to the practice of throwing the diseased/disabled in the river. It seems that with technological advancement, mankind has simply become more sophisticated in the performance of age old practices.

Anyway, just to get myself back onto the topic, much as I am concerned about the ethical conduct of the finance industry (and believe significant regulatory enhancements are now long overdue), I am extremely grateful for the existence of the banks as I know that without them (and the finance they provided me) I would almost certainly be homeless and very probably deceased.

 

[tothemax6]

All money is money. If I take out a loan and buy a house with it, guess what that is money.

If its too much effort to address all of my questions, answer just these ones then:
If I write on a piece of paper "IOU $20", and use it to pay someone, have I created money? And, if so should this be illegal?
If not, why it is that banks should not be able to do this, but I can?
If so, by what possible moral principle?

 

[tothemax6]

Anyone who has had anything to do with the lower end of the social ladder will understand just how hard it is to break the cycle.

But life is hard.
I know of people who come from the poor class and have worked their whole lives to move up to middle class - and they have. If its not given to him, and for most men it can't be, he has to make his own way.

It is this activity that puts pressure on society to the upside. We all ride on the results of the industrial revolution.
The other alternative is the 'thief' alternative - in which a group (normally the government) steals the belongings of those who have made or inherited wealth from those who made etc, and gives it to those who have not yet. This puts pressure on society to the downside.

As always, its either Right and upward, or Left and downward.

 

[robusta]

This will explain it all, no wonder Australian banks have been such a great investment.

http://www.youtube.com/watch?v=M_3T-Af57Pg&feature=related

 

[tothemax6]

All money is money. If I take out a loan and buy a house with it, guess what that is money.

Still waiting, Startcraft,
If I write on a piece of paper "IOU $20", and use it to pay someone, have I created money?

 

[Tysonboss1]

Still waiting, Startcraft,
If I write on a piece of paper "IOU $20", and use it to pay someone, have I created money?

No it's not money. It may be an asset depending on your credit rating, but it's not legal tender, and it would be worth much less than $20.00.

 

[FxTrader]

Still waiting, Startcraft,
If I write on a piece of paper "IOU $20", and use it to pay someone, have I created money?

LOL, the U.S. and other governments do this every day! In the case of the U.S. your piece of paper is called a U.S. treasury bond and to pay you back they just print the $20, or to be more precise they just electronically create a deposit out of thin air to pay into your account.

Is that creating money? Of course it is.

 

[Tysonboss1]

LOL, the U.S. and other governments do this every day! In the case of the U.S. your piece of paper is called a U.S. treasury bond and to pay you back they just print the $20, or to be more precise they just electronically create a deposit out of thin air to pay into your account.

Is that creating money? Of course it is.

The $20 bill that they print is money, the treasury bill is not.

 

[Mr Z]

Actually the UST Bill is issued to create the new $20 bills. The US literally loans its money into existence and does not directly print currency. Treasury bills are very much a part of money in the US.

 

[Mr Z]

No it's not money. It may be an asset depending on your credit rating, but it's not legal tender, and it would be worth much less than $20.00.

Legal tender is currency, money is not always considered legal tender and legal tender does not always qualify as money. Money and legal tender are not equivalent, this is why you have trouble with the whole gold is money idea....

 

[FxTrader]

Actually the UST Bill is issued to create the new $20 bills. The US literally loans its money into existence and does not directly print currency. Treasury bills are very much a part of money in the US.

Correct, the $20 borrowed is used to pay current expenses and the $20 + interest due on the Tbill is created out of thin air when redeemed. This increases money supply and is quite clearly part of the money creation process.

 

[Punta]

There can only be two ways a monetary system works:

1. Expanding = this will lead to a complete destruction of the environment and an exponential rape of all the planet's natural resources until none are left.

2. Stable = In this monetary system, those who charge interest will inevitably end up with all the money.

I enjoyed reading this thread. I know nothing of economics, but to strike a more philosophical note, I would question this central tentet of Starcraft's argument. It is not necessarily true that endless growth is impossible. Furthermore, it is not necessarily true that a stable/static system is sustainable.

There is nothing static about the natural world - if an organism does not evolve it will be out competed and die. Hence the reason that the vast majority of all species that have ever lived are now extinct.

It is hard to imagine how exploiting finite resources can fuel growth indefinitely, but perhaps renewable/unlimited resources can be harnessed to fuel growth, or growth can be based on increasing services?

Also the practicality of a static system seems totally untenable. It would require that individuals and society accept a steady economic state in terms of their personal status/lot/postion, and that seems totally at odds with how humans behave.

 

[Tysonboss1]

Legal tender is currency, money is not always considered legal tender and legal tender does not always qualify as money. Money and legal tender are not equivalent, this is why you have trouble with the whole gold is money idea....

Correct, the $20 borrowed is used to pay current expenses and the $20 + interest due on the Tbill is created out of thin air when redeemed. This increases money supply and is quite clearly part of the money creation process.

The definition of money-

1.A current medium of exchange in the form of coins and banknotes; coins and banknotes collectively

In video Ben Bernake clearly stetes that Treasury Bills are not money.

 

[Happy]

I don’t have answers how to fix banking, but I think that money shuffling should not leave them that much money.

Same as Gates should not became one of the richest people alive in less than half the productive life.
Just amass so much money because somebody can, does not suit me and the gap between all sorts of hard working people.

My defence against massive charges and interests is have minimum possible loan (ZERO would be ideal)
Use banking facilities to avoid as many charges as possible.

Simple yet at times gives me great pleasure of how little I am gouged directly.

 

[Tysonboss1]

Same as Gates should not became one of the richest people alive in less than half the productive life.

IMHO That wealth has landed in a pretty good place.

Gate's and Buffet's fortunes are going to do a hell of a lot of good,

Gates is going to spend the seocond half of his productive life giving away the fortune in the most rational value for money way he can.