Yes you are right. It is the whole idea linked in with QE. The only minor(ha ha) problem with QE is will the borrower ie the commercial bank get its money back from the borrower. And we all know happens when the rumour spreads that a borrower cannot repay its debts!
Evening All. Just having a nosey. Still in with Barclays at the moment who I fear will go the same way as RBS / HSBC come Tuesday. I see there is a bit of debate going on about the banking system. I am afraid taking the money out of the bank as soon as it is put in will not hinder the banking system. It will help it. In the most simplistic way what you spend a business will bank. A bank would never make money purely on lending what somebody has paid in. This is because of bad debts would not over their margiin and they never know when, and how much you will withdraw etc. The amount a bank lends is determined by the government using monetary policy. It dictates the minimum liquidity ratio the commercial banks must hold at any particular time via directions to the Bank Of England. Say it is 10% (and that is not just cash it includes things like government bonds) The bank can lend up to 10x in this example it's liquidity ratio on what is called the multiplier effect. At the end of each day the banks settle up with each other through the discount houses cheques etc. Some times on a settlement a commercial bank will not have sufficient liquid funds and the Bank Of England will lend the commercial bank the money at a rate which used to be called minimum lending rate, it is now called base rate. The point I am making is you and me have very little effect on the banking system by taking your money out of it. I hope tomorrow is a better day for all banking shares. GLA
I know you don't like him , but you really should look at this episode :-) http://rt.com/shows/keiser-report/236223-episode-max-keiser/ . They look at the new bond coin in Zimbabwe where the US dollar is preferred and then to central banks where gold is preferred over the US dollar. So many fools, not enough currencies
note , actually you correct because even if I withdraw as soon as it hits the account . as soon as I spend some of the cash , it ends up back at the bank via where it was spent . but what you are doing with my method of out soon as and have no savings account is stopping them re-hypothecating . . more and more people are doing the correct thing with there spare cash and making a stand against the banks , buying silver and gold , the only real currencies worth holding . have you noted what Greenspan has been saying now he's free to do so ? . the Achilles heel of the elite and bankers
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