Attachments: The Rabbit Hole

The Rabbit Hole

#9,601
Sep 26, 2017 6:19pm Sep 26, 2017 6:19pm

verv
Joined Jan 2015 | Status: Trader | 1,995 Posts

Quoting Stu Effex

Disliked

{quote} I understand but don't understand why go through the motions if it is at par ? This is why I'm a sceptical bastard.

Ignored

You are right to be skeptical for it is a trick.

The government is buying its' own debt by printing money, it is a way to fund spending without increasing taxes. It's ingenious.

That's the purpose of the trick but what is the cost?

On the face of it there is no cost because the money is lent out, to be paid back at par, and the profits from interest payments are then sent back to the treasury. But did we really pay nothing? That's not the full story.

We pay for it through inflation via the multiplier effect of the government spending money, it's a stealth tax paid by everyone through the erosion of our purchasing power.

That's the trick, a stealth tax by inflation.

Calling the 'Bank of England' a 'bank' and 'independent' helps to maintain the illusion. So does the 'lending' money to the government, just to be paid back again.

Milton Friedman says it much more succinctly than I can:
https://m.youtube.com/watch?v=qmndhS-Qf20

#9,602
Sep 27, 2017 2:02am Sep 27, 2017 2:02am

nbfx
| Joined Oct 2010 | Status: Trader | 1,788 Posts

Quoting verv

Disliked

{quote} You are right to be skeptical for it is a trick. The government is buying its' own debt by printing money, it is a way to fund spending without increasing taxes. It's ingenious. That's the purpose of the trick but what is the cost? On the face of it there is no cost because the money is lent out, to be paid back at par, and the profits from interest payments are then sent back to the treasury. But did we really pay nothing? That's not the full story. We pay for it through inflation via the multiplier effect of the government spending money,...

Ignored

Now I seem to have a vague recollection that the national debt was started and the Bank of England founded in the time of William of Orange and Queen Mary when Sir Isaac Newton was master of the Royal Mint (a hugely prestigious job at the time far exceeding that of the current Governor of BOE). I believe that William Paterson (a Scot) came up with the idea of the Bank of England to finance some war or another that William of Orange was pursuing, and it basically meant that the country's money (gold/silver) would be held by the bank and the government would then borrow against the security of that gold to a value greater than the security as required, thus enabling them to spend what they had more than once. We have had a structural debt ever since.

Now I also recall the name Montague in association with this but I'm not sure how he's connected.

#9,603
Sep 27, 2017 2:24am Sep 27, 2017 2:24am

DrManhatten
Joined Feb 2017 | Status: Trader | 1,662 Posts

Quoting jen101

Disliked

{quote} Ah, lots of brawn but no brains.

Ignored

Not all but most!

The blowback continues though, so it is fun to watch this sorry group of losers shoot themselves in the foot by attacking the very base that pays their salaries!

#9,604
Sep 27, 2017 2:25am Sep 27, 2017 2:25am

DrManhatten
Joined Feb 2017 | Status: Trader | 1,662 Posts

Quoting verv

Disliked

{quote} You are right to be skeptical for it is a trick. The government is buying its' own debt by printing money, it is a way to fund spending without increasing taxes. It's ingenious. That's the purpose of the trick but what is the cost? On the face of it there is no cost because the money is lent out, to be paid back at par, and the profits from interest payments are then sent back to the treasury. But did we really pay nothing? That's not the full story. We pay for it through inflation via the multiplier effect of the government spending money,...

Ignored

Well...
Include the FED on that list!

#9,605
Sep 27, 2017 2:29am Sep 27, 2017 2:29am

Stu Effex
| Membership Revoked | Joined Nov 2010 | 3,324 Posts

Quoting verv

Disliked

{quote} You are right to be skeptical for it is a trick. The government is buying its' own debt by printing money, it is a way to fund spending without increasing taxes. It's ingenious. That's the purpose of the trick but what is the cost? On the face of it there is no cost because the money is lent out, to be paid back at par, and the profits from interest payments are then sent back to the treasury. But did we really pay nothing? That's not the full story. We pay for it through inflation via the multiplier effect of the government spending money,...

Ignored

Yeah I understand Verv but my scepticism is with regard to ownership, whatever deal was done in 1946 for nationalisation it appears we couldn't pay the shareholders the tab (Rothschilds etc), so what are we still on the hook for, what is/ was the payoff ? So nationalised on paper but who really controls what ?
Anyway as you say think it's safe to say at it's core it's all a scam to try and perpetuate debt to as many of us as possible and for as long as possible.

Once You See, You Can't Unsee But You Will Get The Odd Poke In The Eye

#9,606
Sep 27, 2017 2:52am Sep 27, 2017 2:52am

verv
Joined Jan 2015 | Status: Trader | 1,995 Posts

Quoting Stu Effex

Disliked

{quote} Yeah I understand Verv but my scepticism is with regard to ownership, whatever deal was done in 1946 for nationalisation it appears we couldn't pay the shareholders the tab (Rothschilds etc), so what are we still on the hook for, what is/ was the payoff ? So nationalised on paper but who really controls what ? Anyway as you say think it's safe to say at it's core it's all a scam to try and perpetuate debt to as many of us as possible and for as long as possible.

Ignored

Why do you think they couldn't pay it? The Bank of England website said that the total value of the capital stock at the time of nationalisation was only £14.7 million. Thats not a lot of money.

I used to think there were private owners of the Bank of England too but I always had a problem, why would the government allow it? Why would the government pay private owners billions for creating money and buying bonds when they could take that money themselves. That never made sense to me.

When I found out that all the profits of the BOE are sent back to the government I knew then the government were complicit. Even if there were private owners they had absolutely no power.

Milton Friedman squared the circle as to what was really going on. It's got nothing to do with private owners enriching themselves, no way government would allow that, and everything to do with the government operating a stealth tax.

The BOE provides other functions too such as interest rates, control inflation, regulation. Nobody seems to get the government uses it to tax people though.

#9,607
Sep 27, 2017 3:14am Sep 27, 2017 3:14am

Stu Effex
| Membership Revoked | Joined Nov 2010 | 3,324 Posts

Quoting verv

Disliked

{quote} Why do you think they couldn't pay it? The Bank of England website said that the total value of the capital stock at the time of nationalisation was only £14.7 million. Thats not a lot of money. I used to think there were private owners of the Bank of England too but I always had a problem, why would the government allow it? Why would the government pay private owners billions for creating money and buying bonds when they could take that money themselves. That never made sense to me. When I found out that all the profits of the BOE are sent...

Ignored

I read this article.....

http://markcocking.com/index.php/writings/bank-of-england/

Once You See, You Can't Unsee But You Will Get The Odd Poke In The Eye

#9,608
Sep 27, 2017 4:12am Sep 27, 2017 4:12am

verv
Joined Jan 2015 | Status: Trader | 1,995 Posts

Quoting nbfx

Disliked

{quote} Now I seem to have a vague recollection that the national debt was started and the Bank of England founded in the time of William of Orange and Queen Mary when Sir Isaac Newton was master of the Royal Mint (a hugely prestigious job at the time far exceeding that of the current Governor of BOE). I believe that William Paterson (a Scot) came up with the idea of the Bank of England to finance some war or another that William of Orange was pursuing, and it basically meant that the country's money (gold/silver) would be held by the bank and the...

Ignored

Might very well be the case, I don't know.

#9,609
Edited 5:39pm Sep 27, 2017 4:43am | Edited 5:39pm

verv
Joined Jan 2015 | Status: Trader | 1,995 Posts

Quoting Stu Effex

Disliked

{quote} I read this article..... http://markcocking.com/index.php/writings/bank-of-england/

Ignored

The basics of that is also my understanding of the scheme, but with a different conclusions because of some omission in the article.

The Treasury took the Banks capital stock under its control in 1946, and issued government stock that paid a 3% divided - essentially it was an unlimited bond to compensate the prior owners. In 2015 all that 'government stocks' aka bond were redeemed at par in full by Osborne. There is no outstanding 'government stock' anymore. The Bank is wholly owned by the Treasury.

The Bank handed over in 2012 all the 'profits' from QE that amounted to £35 billion. It continues to send each quarter all the 'profits' from QE to the treasury, this amounts to several billion a quarter.

What of the '£2.327 Billion' apparently unaccounted for in that article. This Bank's 2008 report says this: "The statements of account for the Issue Department (which are given on pages 92–94) show that the profits of the note issue were £2,327 million (2006/07: £1,653 million). These profits are all payable to HM Treasury. In accordance with the Currency and Bank Notes Act 1928, the assets of the Issue Department are sufficient to cover the fiduciary note issue". So these profits are accounted for, they belong to the Treasury.

Why does the Banks continue to keep the 50% of the profits, which amounts to something like a 100 million each year? I have no idea. But £100 million in the grand scheme of things is not a lot of money, and sure the BoE is owned by the government anyway.

The Bank of England Nominees is a strange institution, I agree, it could be private owners but far more likely (in my view) purposed for the government, for what I have no idea. Maybe the Royal estates or something.

The idea that the BoE is a shadowy banking cabal, I've given up on that. Too many things don't make sense for that to be true, the ownership structure, the fact that the BoE sends nearly everything to the Treasury, the fact that they have no power. If the bank was creaming of government the government would not stand for it.

The talk about power of the private bankers is hollow. What is their power, and how do they stop government from just taking them over? Real power is standing armies and the legislature.

References :

Bank of England sends all QE proceeds to bank and is sending the rest every quarter: http://www.bbc.co.uk/news/business-20268679

Osborne redeems in full 'government stock' of the BoE, which was actually a perpetual bond given to the BoE stock holders in 1946: https://www.gov.uk/government/news/debt-issued-to-fund-the-1946-nationalisation-of-the-bank-of-england-to-be-repaid

Here is the 2008 report your guy was talking about: http://www.bankofengland.co.uk/publications/Documents/annualreport/2008/2008report.pdf

#9,610
Sep 27, 2017 8:46am Sep 27, 2017 8:46am

jarhead
Joined Jan 2012 | Status: Gone | 1,570 Posts

[quote=Exodus;10329757]{quote} I wondered whether it is a ploy to some other planned 'accident'. {quote}

I suspect it will prove to be inept training, too few people doing the job and just plain dereliction of duty.