You're confused, Peter Hume.

>>Pericles I thought you were in favour of licences to print money? Changed your mind?<<

Since I have never stated, anywhere, that I am in favour of "licences to print money", I cannot possibly have changed my mind.

My attitude to Bank profits, and their ability to pilfer thousands of dollars a year from the pocket of every Australian family, is unrelated to my views on the system within which they work.

You are, possibly deliberately, leveraging the misapprehension that Forkes posted earlier:

>>the main reason: banks are permitted by government to manufacture money as credit, out of thin air.<<

You and I both know that this is a total furphy. But one that you consistently fail to acknowledge - in public, at least.

As you have yourself observed, if this were literally true, then there would be nothing to stop the Banks creating for themselves trillions, instead of mere billions, in profit.

Why don't they? Because (of course) they are not "permitted by government to manufacture money as credit, out of thin air"

And Forkes, old chap. A word of advice.

Any article on currency/finance/credit/banks etc. that contains the phrase "New World Order" in its opening paragraphs, should be avoided like the plague. It leads to conspiracy madness. Next you'll find yourself believing all the stuff about 9/11 being a plot cooked up by the Bush family.

Incidentally, you are aware, I am sure, that the views you point us towards were created by one "Graham Ferguson... an editor of Nimbin News and an agitator for economic and social reform. He is also an artist and animal trainer living in the Nimbin area, Australia"

Even Robert Gottliebsen is a better bet than this, in terms of useful sources. Although much of his writing, also, appears to have been heavily influenced by Nimbin's favourite leisure activity.

Forkes is correct that banks create money out of nothing. You can see an explanation of the process in my book Economia, unfortunately a bit hard to find these days, but try your library. My explanation is taken from well-known economists R. Heilbroner and L. Thurow, Economics Explained, 1994, New York: Simon and Schuster.

The creation comes about through the operation of the fractional reserve system, which effectively allows banks to loan about 10 times as much as they have on deposit. However you have to follow the transactions through a series of loans and deposits to see clearly that new money is created.

The new money is not available for the banks to spend directly. However they issue it in "loans" and charge interest, and the interest is theirs to spend, even though most of the "loan" is not of previously-earned wealth but of money newly created in a computer at essentially no cost to the bank.

I will post an account of this on my blog site http://betternature.wordpress.com/ .

Regarding David Richardson's article, he is correct that banking is a critical service. However he does not isolate the most critical part: the provision of a medium of exchange. Banking should be given special status and treatment, the way courts and the military are. It should be closely regulated, and it should be non-profit and charge for the cost of services provided. It should not be thrown to the competitive markets. Competition eliminates competitors, a simple fact our ideologues are blind to. We are very foolish to allow a minority to control such a critical service.

Yes Geoff Davies ,I've been trying to expose this rort called fractional reserve for a long time.I thought is was a 9:1 ratio but in the USA some of the banks like Lehman Bros used 30:1 ratios.
It is really difficult to find out the exact mechanism.

I think it works like this.If a bank has $10.00 in deposits,it can loan out $100.00 The banks gets to keep the interest and the money depositors money in circulation,but the principal repayed by the mortagee enters oblivion.Now that does seem too extreme,however it takes a long time for the principal to be repaid and many loans are interest only.Some of this newly generated money enters bank acounts to add to the new fractional reserve thus causing inflation.

Now the average inflation rate for the USA since the instigation of the Federal Reserve has been 3.5%.The US currency and ours have devalued by 96% in since 1913.$1.00 now will only buy 4 cents of goods in 1913. This is a 2500% decrease in value,but multiply 3.5% by 96 yrs and we only get 336% decrease in value.The rub is that inflation by these banks is compounding.If you use the compound interest formula it works out to be approx 2500%.

So banks create a compounding inflation thus depreciation of our earning capacity via the fractional reserve system.

If Geoff Davies counterfeits $22 million, it is like taking $1.00 from every person in Aust.It is stealing via the dilution of our money.We call it inflation and it is Govts and more particularily banks who are the greatest offenders.

*even though most of the "loan" is not of previously-earned wealth but of money newly created in a computer at essentially no cost to the bank.*

Ah Geoff, if only that were true! I would be buying far more bank
shares with my hard earned savings. Yes, banks create money in terms
of increasing the money supply, but its the same money going around
and around. They only need to keep a % of it as reserves.

In other words, if you deposit money at the bank and I borrow it from
the bank, the bank writes you an IOU, so it is available to you and
to me as well. That does not mean that they don't have to pay
interest, or they would be pretty foolish to compete for funds
in the domestic market, or even borrow expensive money from
overseas. Before St George were taken over, they were paying
up to 8.5% for some overseas wholesale funds.

Fact is that today banks are far more competitive, then in the days
of the good old Govt owned CBA. In those days they earned spreads
of 4% on housing loans, today it is half that.

They are making lots of money for good reasons. Firstly, banks
are very much into running super funds under various names, which
is an extremely lucrative business.

Secondly, today's spend up generation seemingly just can't help
themselves max out their credit cards, or borrow even more for
an even bigger house. Australians are living it up and borrowing
at record amounts, so it only makes sense that banks should be making
record profits.

The other good news is that Super Funds in fact are the big owners
of bank shares. So really, its Australian workers who own the banks
and who benefit from their large profits. So its not a bad way
of forced saving for peoples old age, given that Aussies seemingly
prefer to blow it on the pokies or on that new dress thats on sale,
commonly booked up on the credit card, at high interest rates.

It is amazing that Pericles and Yabby back the biggest institutions on the planet who produce next to nothing.Pericles warns that super funds will suffer,but have not our financial institutions with the aid of the banksters stolen enough,with their ponzy scaming derivatives?

It is outrageous that the tax payer again is asked to bail out these criminals who instigated the GFC!

The real criminals are Wall St backed by the US Federal Reserve.
The banks that really conrol the West are based in Europe.They own the Euro and the US $.The following banks control the Govts of the West and decide who the next US president will be.They are more powerful than you can imagine.

Rothschild of London and Berlin.
Lazard Bros Paris.
Israel Moses Seif Italy.
Kuhn Loeb & Warburg Germany.
Goldman Sachs.
Rothschild controlled Rockerfeller NY.

Govts in the West, dare not cross them .We live in an oligarchy that have over the last 250 yrs been made all powerful by the fractional reserve system of banking.They presently have destroyed real productivity in the West and made China the engine room of the world.

They were going for global dominance at Copenhagen with the Western Carbon taxes and the carbon derivatives .World Govt exposed by Christoper Monckton was in the treaty and even conservaties like Janet Albrechsten & Alan Jones rang the alarm bells.

Was it all just and illusion? Was Kevin about to sign a treaty of no consequence? Not likely.It would have been a tax that would have crushed the last essence of freedom and spirit in the West.
All the taxes and derivatives were going to the share market and the banks and the polluters would please themselves since these very banks have shares in the major energy sources on the planet.

*The following banks control the Govts of the West and decide who the next US president will be.*

Sheesh Arjay, there was silly old me, thinking that Americans actually
vote for their president! You are a mine of information, you really
are.

*It is amazing that Pericles and Yabby back the biggest institutions on the planet who produce next to nothing*

Arjay, today services are in fact something. How long would you
survive, if your ATM did not work?

The problem is that you are so naive, that you don't even understand
the role that derivatives play in our economy. Have you ever sold
a million $ worth of goods offshore? Would you like to hedge your
currency?

Arjay, you might make a living from fixing peoples broken taps or
whatever, but I can can assure you, that derivatives are an important
part of the financial cycle, of most exporting companies of any
substance.