Yabby the house and the consumerables are a lie.They are all based on debt.Kevin Rudd will soon have us in Govt Debt that he admits to of $300 billion or $30,000.00 for every working person plus interest.Then we have the balance of payments deficit which is now $ 700 billion plus interest.One trillion dollars for every working person equals $100,000.00 plus interest for every working person of foreign debt.

By my calculations houses in Sydney are still over valued by 33% and you can add that also to our national debt.Has the penny dropped yet Yabby?

Some people still don't appreciate the ramifications of the Fractional Banking system.

Say if you came to me for a loan of $10,000. I give you $1,000 cash and counterfit the remaining $9,000 - on the condition that I agree to "burn" the equivalent number of legitimate banknotes as they are repaid from the loan I would probably be locked up. Yet that is precisely what the banks do for every loan transaction.
On this basis the bank earns for itself the difference between the interest charged on a $10,000 loan and the interest paid on a $1,000 cash deposit (plus fees of course).

If you default on the loan, this leaves an additional amount of counterfit currency circulating in the economy that shouldn't really exist and eventually shows up.

Also, our "surplus" isn't in a vault somewhere in Canberra, stacked to the ceiling with banknotes. A significant amount of it is items like HECS debt, which (in that case) some may or may not ever be repaid and certainly can't be spent like cash. That's why the government has to borrow against it and can't spend it directly.

The alternative is to do nothing and "let the market sort it out".
However, a run on ANY bank in this country would shut down most of the other banks and most small businesses very quickly.

The social upheaval of vast numbers of people losing their savings AND their jobs and the collapse of economic confidence is somewhat worse than being saddled with a debt.

At least you are prepared to use an example, wobbles, instead of simply carrying a sandwich board that announces "the end is nigh".

>>Some people still don't appreciate the ramifications of the Fractional Banking system.<<

And indeed, some people still don't understand it.

But let's say you want to borrow $10,000 from me.

As you correctly point out, I need to have a level of "real" assets in order to make his loan under capital adequacy legislation.

In this case have $1,000 in fresh new banknotes in the vault, which I have just invested in the venture, and under your cap.ad. rules can therefore lend $10,000.

My balance sheet starts out with $1,000 in assets (cash) and $1,000 in liabilities (shareholder funds)

I lend you $10,000 at 10%. You go off and buy a car, or build an extension or whatever.

But unless I am a Central Bank, I would have to borrow in order to lend. The money obviously has to be "created" at some level, and this is where the government's monetary policy comes into play.

So my balance sheet shows $11,000 in assets (my loan to you and my $1,000 cash) and my liabilities show $10,000 to Megabank plus $1,000 of shareholder equity.

Meanwhile my P&L will show the interest payments from you, less the interest payments to Megabank. When you repay the loan, my balance sheet will reflect the increase in capital resulting from the profit on interest on the asset side, and an increase in shareholder equity.

In order to pay off the loan, you would have had to earn money in whatever manner you could - probably not as an accountant - and in the meantime, the money you borrowed from me has been happily passed around, earning other people's livings along the way.

Yes, it's a merry-go-round. And yes, when assets go bad when you can't repay, life gets tough.

But the money that has been ultimately "created" by the central bank has been used to keep the economy moving, people employed and food on the table.

Hope this helps.

extracted from
http://www.globalresearch.ca/index.php?context=viewArticle&code=MAR20090526&articleId=13738

IMF pointed out that its own study on historical recessions suggests that the US is only a third of the way through this current one;..therefore..economies expecting to recover with resurgence in demand from the US..will have a long wait.”

One attendee stated that,..“Equity losses in 2008 were worse than those of 1929,”..and that,..“The next phase of the economic decline will also be worse than the..'30s,..mostly because the US economy carries about $20 trillion of excess debt...Until that debt is eliminated,..the idea of a healthy boom is a mirage.”[9]

http://onlinejournal.com/artman/publish/article_4737.shtml
http://www.forbes.com/2009/03/11/worlds-richest-people-billionaires-2009-billionaires-intro.html

According to Jim Tucker,..Bilderberg is working on setting up a summit in Israel from June 8-11,..where “the world’s leading regulatory experts”..can..“address the current economic situation in one forum.”
http://spectator.org/archives/2009/05/27/here-comes-the-internet-tax
http://www.ynetnews.com/articles/1,7340,L-3722439,00.html
http://lataan.blogspot.com/2009/05/could-calls-for-one-state-solution.html

In regards to the proposals put forward by Carl Bildt..to create a world treasury department..and world department of health..under the United Nations,..the IMF is said to become the World Treasury.. while the World Health Organization is to become the world department of health...Bildt also reaffirmed using..“climate change”..as a key challenge to pursue Bilderberg economic goals,..

referring to the..economic..crisis as a “once-in-a-generation crisis while global warming is a once-in-a-millennium challenge.”..Bildt also advocated expanding NAFTA through the Western hemisphere..to create an American Union,..using the EU as a..“model of integration.”
http://www.geldpress.com/2009/05/ireland-debtor-nation/

The IMF reportedly sent a report to Bilderberg..advocating its rise to becoming the World Treasury Department,and..“U.S./Treasury Secretary Timothy Geithner enthusiastically endorsed the plan for a World Treasury Department...Geithner further said,..“Our hope is that we can work with Europe on a global framework,a global infrastructure which has appropriate global oversight.”[10]
http://www.tomdispatch.com/post/175075


Bilderberg’s Plan in Action?
http://www.commondreams.org/views03/0817-07.htm
http://www.startribune.com/nation/46085367.html?elr=KArksLckD8EQDUoaEyqyP4O:DW3ckUiD3aPc:_Yyc:aU1yDEmP:QMDCinchO7DU
http://revolutionarypolitics.com/?p=850
http://www.prisonplanet.com/how-george-bush-gave-krazy-kim-the-bomb.html

Reorganizing the Federal Reserve
http://seekingalpha.com/article/139505-china-is-now-in-firm-control-of-u-s-debt-markets
http://www.prisonplanet.com/economist-waterboard-the-fed.html

Following the Bilderberg meeting,..there were several interesting announcements made by key participants,..specifically in regards to reorganizing the Federal Reserve...

On May 21,it was reported that US Treasury Secretary Timothy Geithner..“is believed to be leaning heavily..towards giving the Federal Reserve..a central role in future regulation,”..

and.“it is understood that the Fed/would take on some of the work..currently undertaken by the US Securities and Exchange Commission.”[11]...lol

wow govt powers to ngo

*Has the penny dropped yet Yabby?*

Lol Arjay, you do have a sense of humour. What would you like to
know? :)

AFAIK Pericles and I have both stated that in the past, credit
was far too easily obtainable and Australian consumers overborrowed,
just look at their credit card debts, all at record interest payments.

But consumers seemingly did not care, they were going to live it up
at any cost. A whole generation has never known hard times or high
unemployment. IMHO a bit of recession is not such a bad thing, it
brings people back to earth, individuals and companies who have
over borrowed are brought to account, businesses that are not viable
are sold, restructured, etc. Yes that involves tears, as people
learn the hard way. But reality does not go away, when we close
our eyes and wish it would.

I agree with you that Australian houses are still overvalued. At the
moment all that give away money for new home owners is keeping things
going, low interest rates mean people will borrow to the max, so
median house prices won't drop that much. But down the track, when
commodity prices rise again, inflation sets in etc, the RBA will
have no choice but to raise interest rates, there will be more
tears as people who cannot afford those homes, have to liquidate.

That does not mean that the middle class are doing badly. There
are plenty who bought houses before the housing boom, who have low
repayments, even if interest rates rise. Their real income is still
far better then 30 years ago, they might have to cancel or delay
that overseas holiday for a bit, but they are doing very well in
any measured terms. They make up the middle class, which you claim
is suffering.

I know, we've had false dawns before, but I really think we may be making headway with this, Arjay.

>>Kevin Rudd will soon have us in Govt Debt that he admits to of $300 billion or $30,000.00 for every working person plus interest.<<

True. But bear in mind that in some form or other, every working person will also have experienced a benefit from the creation of that $30,000 on their behalf.

>>Then we have the balance of payments deficit which is now $ 700 billion plus interest.<<

A quick read of the following article might put the balance of payments deficit into some perspective for you

http://www.econlib.org/library/Enc/BalanceofPayments.html

"the conditions to which the deficit responds may be good or bad and may be the results of good or bad policy; but if there is a problem, it is in the underlying conditions and not in the deficit per se."

The underlying conditions in this instance would be the sudden lurch - caused by the world-wide financial problems - in our trading patterns. You may have noticed two things have occurred simultaneously with our export strategy: we are selling less overseas, and not getting as good a price as before.

Meanwhile (get this!) we are still importing a whole shedload of stuff, which (Oh horror) people are going out and buying!

With debt!

So you have to be a little bit careful when you add your figures together that you are not double-counting.

>>One trillion dollars for every working person equals $100,000.00 plus interest for every working person of foreign debt<<

It hasn't quite reached a trillion each, Arjay, but we know what you mean.

But once again, with feeling. It is you and I who are causing the problem. When Kevin hands out all that money, he has effectively borrowed it from our future. But in the meantime, we go out and buy more stuff, which keeps people employed, which keeps the economy moving.

It's not all good, on account of we are going to have to pay it back someday. But in the meantime, live, spend and be merry.