rhino wrote on Apr 29
th, 2021 at 7:43pm:
aquascoot wrote on Apr 29
th, 2021 at 6:32pm:
i think its you that doesnt understand it.
please explain how the big four banks in australia are able to finance the most expensive property bubble on the planet?
are they lending out depositors funds
.
explain how that model is not hugely risky but the chinese model is
Any completely empty cities you have noticed around Australia lately?
well the gold coast has been a largely empty city for 12 months.
but you miss the point.
all western governments have decided to run their economies by getting central banks to drive interest rates to zero (QE) and then get the central banks to create money which is essentially free for the government as they pay no interest to their own central bank.
they used to raise taxes but taxes are a correct form of redistribution whilst money printing seems like it hurts no one but of course its a ponzi scheme.
the consequence of interest rates at 0 is that (private) banks can just open their ledger
write a loan to anyone and the books are balanced because the loan is both an asset and a liability.
so the private banks can now essentially create money for free,
the scarey part is that in the west , for every dollar of money creation by, say scomo, to pay for , say, covid, there is $30 of money creation by the banks.
they are creating debt at 30 x the rate of the federal government
,
and who do they give this money to.
in china , Xi and his mates run the banks and they can demand it be given to business which actually does productive things.
you should check out , for instance, chinas electric car production.
the biggest in the world and growing exponentially.
but Xi can also demand it be used for infrastructure and entrepreneurs (unicorn companies) etc.
in Oz , scomo has no say and what is easiest for our private banks?
to lend it all to property speculators and the share speculators,
that actually does very little for productivity.
our rate of lending to small innovative business is non existant.
its simply too hard to work that out.
interestingly the two countries with BY FAR the biggest lending to small business are china and germany.
the concept of "small champion companies" is worth understanding.
these are small companies that are world leaders but in a small area,
they might be world leaders in just one technology but they need money to innovate.
germany has 1000's of smallbanks who lend directly to these guys.
china got experts in to revamp their banking system and they too have 1000's of small banks who only lend to innovators.
austrlai has none.
without banks specifically giving capital to small businesses, our ideas wither on the vine.
our banks only lend to james packer, gerry harvey and rio tinto.
its why chinese debt is far more strategic then austrelain debt
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