I mean, would we rather have had that money used for health care, or to deal with some of the environmental issues or to reduce poverty, or to make houses more expensive, so none of us can afford to live in a house. You can see it as a subsidy, a special super subsidy to the banks, for the right to create money, which should be for the benefit of the public and spent through a democratic process.
After independence, these instruments were applied for financing expansion. Why was such a small country able to hold its own against so much bigger countries, for example Spain and Portugal, that had the benefits of their empires for over a century in respect of the Netherlands?
Financial instruments. What we've seen since the 1970s is a dramatic increase in a series of phenomena that have had a stimulative effect on the changes in the financial system that have brought us to the gleaming and shiny metal and steel business that's over there.
As more of the country's resources and industries are privatised, the private sector takes on more debt. As a result, more money is created and there is a boom. Some private equity companies have taken this theory to the extreme, engaging in a practice known as "a leveraged buyout", where a company is purchased at an often inflated price, and the purchase price is transferred to the business as a debt.
There are a lot of various financial organizations offering lending services, it is quite difficult to understand them. The priority criteria in choosing a bank for obtaining a loan of any type are its reliability and the terms of the loan.
On the first point, you can get information on the Internet on thematic portals or by studying the ratings of banks. It should be remembered that the organization issuing loans must necessarily have a license for this kind of activity. It is also worth paying attention to the assets of the institution. The smaller they are, the higher the risk of bank bankruptcy, while the debts from the borrower will not be written off.
The conditions for issuing the same loan may differ markedly from different service providers. First of all, you should carefully study the standard form of the contract, which can be obtained online by downloading from the bank's website. If the mandatory conditions state that it is unprofitable for the borrower or simply not necessary, it is better to look for a more suitable lender.
When a bank buys securities, such as a corporate or government bond it adds the bond to its assets and increases the company's bank deposits by the corresponding amount.
New commercial bank money enters circulation when people spend the credit that has been granted to them by banks.
I found that talking on the doorstep from August 2009 around to the general election, eight or nine months, I suppose, knocking on doors, is that when we tried to explain how the money system works, there's an almost in-built refusal of people to accept that such a bizarre situation could actually exist.
Ah no, it can't possibly. What do you mean? Banks don't create money out of thin air.
That's ridiculous. They can't do that. They lend out their depositors' money.
Most people have an idea of how money is.
This is why in the event of a crisis the risk is transferred to the taxpayer. But even during normal times banks receive numerous guarantees and benefits beyond the right to create money. Bill, by the way, I know the Bank of America is a very big bank, it happens that I have $32 there myself. Just between us, what assurance do I have that this money is safe? Well, all deposits up to $10,000 are insured by the Federal Government in Washington.