Karnal wrote on Oct 23
rd, 2025 at 4:30pm:
TGD
To help disabuse you of your erroneous beliefs re money creation - beliefs which are the ultimate cause of the current crises of democracy around the world -
here is an easy to follow summary:
1. Money is created out of thin air.
2. A currency-issuer doesn't need to earn or borrow money;
you could prove it yourself.....but don't get caught.....
3. Therefore a legal currency-ISSUING government doesn't NEED
to tax or borrow from the private sector, or balance a budget (like you and I
must do - we are USERS of the currency); rather it needs to limit spending to what is available for purchase, to avoid inflation and devaluing the currency.
4. It's time for currency-issuing governments to assume control of the privilege of money creation from the private banks.
Over to you.... I see you persisting with slugging it out re the economy with the other equally indoctrinated posters on this board.
You make that sound like a bad thing, dear. In our country, banks create money. They check out your income and savings, create money on their computer and sell you a loan.
An intelligent comment at last (unlike the rest of the slug fest on this board).
Correct: in fact we can say the
sovereign government ie, the nation's legal currency-issuer, 'delegates' money creation powers to the private banks.
Therein lies the problem: governments need 'taxpayer money' to fund public services. See points #3 and #4 above.
Quote:You then go and invest in something nice, like a house. You pay the bank back, and in 20 years or so, the money's finally real, with extra cash for interest.
A vague statement: the borrower must pay the interest on the bank loan - which is certainly not "extra cash" for the borrower.
I will consider the rest of your post in the MMT thread later today, you have addressed many important issues from the viewpoint of mainstream economic orthodoxy - which as I say is the cause of the many crises of democracy (and indeed in China also) manifesting around the world.
Quote:We have an independent Reserve Bank that handles all the money creation. One of its jobs is to create money on their computer to pay all the government's wonderful employees and programs. In turn, they use the cash to pay off their loans to the bank, and there you have it, the economy in action - a vast spiral of activity, promises to pay, and time.
The march of compound interest, as
Walt Rostow called it. It's how our economy works, interest adding to economic growth and more money, always on the up and up. Once economies get into the swing of this, there's no going back - until you get a financial crisis, but by then, you should have the savings to weather it out.
To keep the whole thing going, you need an ever-increasing population, so we import people. Those people get in on the loan thing, the banks create more money to buy houses, and Australia stays afloat through the price of real estate.
Now, far be it from I to lecture the Chinese on population, but you need to get the fundamentals right. If you people can't get the same trick happening in your country, don't blame us. You can't trust the government and their friends in big business to plan everything. They're hopeless.
In Australia, you need to convince people first. You do this by creating desire. People have to
want to buy in. You create desire by finding sneaky ways to get them to want things.
Back in my day, the real estate part of the newspaper was always the biggest. The old print stalwart,
Domain, was once a form of property porn. It's now online, of course, and it's equally pornographic. Nearly every home auction I've been to had a journalist lurking around. When I bought my house, they put the story on Domain, can you believe it? Guy buys house. It was a boring story, so they sugared it up with how it was the best time to buy property.
Real estate ads were the print media's "rivers of gold". They were when the colony was first established, and still are today. The allegory of gold refers to the gold rush days, Australia's first population boom. Back then, anybody who wanted to come to Australia could - until the British racists kicked out the Chinese and established the White Australia Policy, but that's all by the by. Today, racists like that only exist online, so it's all good.
So, banks don't just create money out of thin air, dear, there's a bit of an art to it.
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