House Prices

House rises are all well and good but unless you are downsizing or moving to a cheaper area/country, everything you make just goes on your next house. You could sell and rent I guess but that profit would soon be gone too.
 
Gaudion M said:
I read that - i'm not wrong. I work in a Bank. Massive resources are used to ensure that the books are balanced every day and that liquidity is available going forward. At all times the money lent out is covered. Its covered by a mix of deposits, money markets (banks / big corporates lending surplus money via a central market), bond issues, capital. Every single penny can be accounted for back to source. All Banks operate like this - none of them are making up money and lending it. Everything is 100% funded with contingency for deposit run off so in reality Banks have more than £1 for every £1 lent out.
Click to expand...

It’s a bit long so I’ve copied the conclusion


"This article has discussed how money is created in the modern
economy. Most of the money in circulation is created, not by
the printing presses of the Bank of England, but by the
commercial banks themselves: banks create money whenever
they lend to someone in the economy or buy an asset from
consumers. And in contrast to descriptions found in some
textbooks, the Bank of England does not directly control the
quantity of either base or broad money. The Bank of England
is nevertheless still able to influence the amount of money in
the economy. It does so in normal times by setting monetary
policy — through the interest rate that it pays on reserves held
by commercial banks with the Bank of England. More
recently, though, with Bank Rate constrained by the effective
lower bound, the Bank of England’s asset purchase programme
has sought to raise the quantity of broad money in circulation.
This in turn affects the prices and quantities of a range of
assets in the economy, including money"
 
jaseirai said:
It’s a bit long so I’ve copied the conclusion


"This article has discussed how money is created in the modern
economy. Most of the money in circulation is created, not by
the printing presses of the Bank of England, but by the
commercial banks themselves: banks create money whenever
they lend to someone in the economy or buy an asset from
consumers. And in contrast to descriptions found in some
textbooks, the Bank of England does not directly control the
quantity of either base or broad money. The Bank of England
is nevertheless still able to influence the amount of money in
the economy. It does so in normal times by setting monetary
policy — through the interest rate that it pays on reserves held
by commercial banks with the Bank of England. More
recently, though, with Bank Rate constrained by the effective
lower bound, the Bank of England’s asset purchase programme
has sought to raise the quantity of broad money in circulation.
This in turn affects the prices and quantities of a range of
assets in the economy, including money"
Click to expand...
It's bollox mate. Its fantasy theory pushed by lefty academics. Banks do not create money.
 
Gaudion M said:
It's bollox mate. Its fantasy theory pushed by lefty academics. Banks do not create money.
Click to expand...
It doesn't make sense. The theory says they actually create it by getting more highly geared, therefore getting in debt, which then suggests it isn't actually created. So my shallow understanding is they would owe it to institutional investors and the like, investing pensions etc, to other bond holders and each other in effect. I wasn't convinced with the thin air concept.
 
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