The 'Markets' why do we need them?

Vote_No_on_Everything

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Could someone please explain to me why the world needs the 'Markets'?
In particular the word 'Markets' when it is used in phrases like 'The Markets have moved on Country X.'?
Who are these 'Markets'
Why have National economies grew to be so dependent on them?
Why are National Governments so dependent on them for borrowing?
Why can Nations not maintain their economies without the need for borrowing, and therby avoid the waste of interest payments in the long run?
Could the 'Markets' be made extinct or destroyed? would the world be a better place without them?
Are they the equivalent of devious money lenders in a working class community? Are they not huge paracites?
 


Cael

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Could someone please explain to me why the world needs the 'Markets'?
The plain answer is that we don't. We only seem to need them because the banksters have tied world governments up in chains of debt.
 

Tim Johnston

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Could someone please explain to me why the world needs the 'Markets'?
In particular the word 'Markets' when it is used in phrases like 'The Markets have moved on Country X.'?
Who are these 'Markets'
Why have National economies grew to be so dependent on them?
Why are National Governments so dependent on them for borrowing?
Why can Nations not maintain their economies without the need for borrowing, and therby avoid the waste of interest payments in the long run?
Could the 'Markets' be made extinct or destroyed? would the world be a better place without them?
Are they the equivalent of devious money lenders in a working class community? Are they not huge paracites?
The Markets are an abstract concept, blaming The Markets is like blaming "religion" for something. In reality the markets are a description, or a measure, of the sum total of individual human activity. As a result they have no more a mind of their own that any given crowd does.

Having said that, when analysts talk about the Markets they are usually talking about the buying and selling of financial instruments. The players in the markets are far fewer and bigger than those in the market for, say, cars, and when people blame "the markets" they usually have these players in mind, just as when people blame "religion" they usually have a specific troublemaking one in mind :)

Also, because the markets deal in derivatives, there are people who think these are inherently bad, even though things like insurance policies are also derivatives and everybody has those.

Generally, the Markets only misbehave when there is a lack of competition, so in that respect "the markets" can cause problems, but they can't be abolished because unless you ban people from buying and selling, you are stuck with The Markets.

The other problem, as we've discovered in Ireland, is that when government policies are dictated by an obsession with what the market wants. But what the market wants changes all the time, so this is a foolish policy. But, then again, that's a failure of government, not of markets....
 

Cael

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In reality the markets are a description, or a measure, of the sum total of individual human activity.
No, indeed they are not. What is known as the "markets" is a cabal of banks, who do nothing but shift fake money around the globe. I say it's fake, as about 97% of it is conjured out of debt. Its the opposite of wealth, we could call it anti-wealth.
 

Tim Johnston

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No, indeed they are not. What is known as the "markets" is a cabal of banks, who do nothing but shift fake money around the globe. I say it's fake, as about 97% of it is conjured out of debt. Its the opposite of wealth, we could call it anti-wealth.
if you read past the first line you'll see i warn of the danger of the markets being controlled by a small number of players. yes, a lot of the money is conjured out of thin air - and exactly how much of it is is what leads to problems.
 

Cael

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if you read past the first line you'll see i warn of the danger of the markets being controlled by a small number of players. yes, a lot of the money is conjured out of thin air - and exactly how much of it is is what leads to problems.
It seem the figure really is about 97%. Thats frightening. 97% of the money in circulation was not created by any state or by any wealth creating activity, but by private banks issuing debt (as we now know, very often on worthless non-assets.)
 
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So what can I do, personally, to appease these markets? Apart from exporting 2 of my young sons to Australia. I have a daughter who is 11 but she's too young to be exported yet... right?? right??
 

Cael

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So what can I do, personally, to appease these markets? Apart from exporting 2 of my young sons to Australia. I have a daughter who is 11 but she's too young to be exported yet... right?? right??
There is nothing you can do to appease them. Comical Lenny bent over backwards, and they laughed at him and made chimp noises. Its the nature of the beast. The "markets," i.e. the banks, are like a black hole which sucks everything in without having any idea why it does so, or without having any need to ask itself such questions - or indeed having any ability to ask such questions.
 

Tim Johnston

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It seem the figure really is about 97%. Thats frightening. 97% of the money in circulation was not created by any state or by any wealth creating activity, but by private banks issuing debt (as we now know, very often on worthless non-assets.)
I'd be interested to know where that figure came from.
Could it be you are referring to the Irish banks' deposit-to-loans ratio of around 1:30?
In which case, something like 96.7% of loans in Ireland were generated out of 'thin air' - according to one way of looking at it?

1:10 is the rule of thumb standard and I think ireland's banks have been told to reduce it to 1:8 but I'm not sure offhand.
I do know that private banks don't have free reign to create money - only governments can do that.
 

Cael

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I'd be interested to know where that figure came from.
Could it be you are referring to the Irish banks' deposit-to-loans ratio of around 1:30?
In which case, something like 96.7% of loans in Ireland were generated out of 'thin air' - according to one way of looking at it?

1:10 is the rule of thumb standard and I think ireland's banks have been told to reduce it to 1:8 but I'm not sure offhand.
I do know that private banks don't have free reign to create money - only governments can do that.

I read it as a figure for the UK. Its mentioned all over the internet, just google 97% of money created from debt.
 

Cobra 427

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A great post by Tim Johnston. I will add that markets are simply designed to bring buyers and sellers together. This can be for goods, services, agricultural products...whatever. Most associate the term "markets" with "financial markets" where buyers and sellers are brought together to raise capital and share risk. Markets are generally very efficient when basic rules of risk are adhered to. The problems faced by Europe and the US are primarily associated with that "risk" side of markets. Those that invested for gain, are now unwilling to bear the weight of the risk they took. The homeowners that purchased too much house have walked away and threw the risk back to the banks. The banks cried "too big to fail" and have saddled the governments with the risk. And now the governments, collapsing under their own weight, are sending the risk back to the taxpayers. This makes for very inefficient markets to say the least as no one is willing to shoulder the risk. It seems in all of Europe, only Merkel made sense briefly when she espoused risk sharing. Her silence is now deafening.

As to why governments must borrow money...other than the occasional misunderstanding with other governments that leads to exhaustive purchases of aircraft and tanks, it is usually directly linked to the size of your nation's entitlements and welfare programs. Governments borrow money to pay for the promises of politicians. These promises buy blocks of votes (usually from the unions, public employees, and uneducated masses) and bonds must then be issues to pay for the promises. Lots of promises that cannot possibly be delivered upon without borrowing money. Very plain...very simple. Socialism at work.
 

Cael

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A great post by Tim Johnston. I will add that markets are simply designed to bring buyers and sellers together.
Not at all. "Markets" are designed to bring those who own the means of production into a relation of dominance with those who do not. The greatest trick of the banksters was to turn debt itself into a means of production - the principal means of production in todays world. In other words, without actually doing or having anything useful, the banks have managed to set themselves up as the place to which we must come if we are to be allowed to do anything productive in the world. We go to them to borrow money, and they lend us money that never existed before we signed on the dotted line, and which only exists now because we have promised the bank that we will "return" it. And if and when we do "return" it, it will cease, once more, to exist. That's the magic of the markets - and it really is hocus pocus.
 

Tim Johnston

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We go to them to borrow money, and they lend us money that never existed before we signed on the dotted line, and which only exists now because we have promised the bank that we will "return" it. And if and when we do "return" it, it will cease, once more, to exist. That's the magic of the markets - and it really is hocus pocus.
So how then does it 'not exist'? It exists both at the beginning and the end of the transaction. Or are we talking past one another?

As I understand it, the bank 'creates' money by taking future earnings and advancing it to the borrower. Over the term i.e. the future, the borrower subtracts from his earnings to repay the lender, which balances the double-entry of debit and credit (plus interest which is the service fee for the advance).
 

Vote_No_on_Everything

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But who has given the bank the authority to own or lend the so called 'future earnings'?
Especially since the money lend is debt created out of thin air, not even backed by a fractional reserve in many cases?
 

ddoggfather

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I'd be interested to know where that figure came from.
Could it be you are referring to the Irish banks' deposit-to-loans ratio of around 1:30?
In which case, something like 96.7% of loans in Ireland were generated out of 'thin air' - according to one way of looking at it?

1:10 is the rule of thumb standard and I think ireland's banks have been told to reduce it to 1:8 but I'm not sure offhand.
I do know that private banks don't have free reign to create money - only governments can do that.
Using 1:10 ratio, that is for example a bank has 10mil on deposit it can lend out 100mil. That means the bank never had 100mil to lend out in the first place, it only ever had 10 mil. it is simply creating money or debt whichever way you want to put it.
You cant give me a loan of a e100 if you only have e10 yet the banks are free to do this.
 

Cobra 427

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Ah...the Marxist in the crowd. I see your point. The next time I go to the farmers' market to by some fresh fruit, I'll give that farmer a good verbal "thrashing" just for being there and attempting to take advantage of me be selling his fruit. If he tries to sell me a bushel of fruit on credit, I guess I just kill him with my hammer and sickle, much like Lenin and Stalin would have done.
 

Cobra 427

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One of the better presentations by the way on "fractional reserve" lending is available in 5 short parts on You Tube. Google: You Tube Money as Debt. Its by Paul Gagnon I believe and will give yopu a great understandiong of the fractional reserve concept.
 

Cael

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Ah...the Marxist in the crowd. I see your point. The next time I go to the farmers' market to by some fresh fruit, I'll give that farmer a good verbal "thrashing" just for being there and attempting to take advantage of me be selling his fruit. If he tries to sell me a bushel of fruit on credit, I guess I just kill him with my hammer and sickle, much like Lenin and Stalin would have done.
Leave off the silly rant, you are impressing nobody but yourself.
 

CarnivalOfAction

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There is nothing you can do to appease them. Comical Lenny bent over backwards, and they laughed at him and made chimp noises. Its the nature of the beast. The "markets," i.e. the banks, are like a black hole which sucks everything in without having any idea why it does so, or without having any need to ask itself such questions - or indeed having any ability to ask such questions.
spooFFer:
YouTube - Bertie Ahern on Dragons' Den
 


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