[ExI] Money Games

[Damien Broderick]

At 09:35 AM 12/15/2008 +0000, BillK wrote:

> > Barbara Lamar the tax lawyer comments:
>
> > I don't buy Paul Grignon's statement that if interest is charged 
> on loans of
> > "real" money, the bankers end up with all the money. This would 
> only be true
> > (even on a theoretical level) if the banks could loan money in excess of
> > their reserves.

>...that is exactly what the banks did.
>
>The banks lent out many multiples of their reserves during the bubble
>period.

Oy, wake up there at the back!

Notice the framing word "real" up there?

Barbara adds now for the context-challenged:

< "Real" money in this context is money that represents past or 
present value, as opposed to "bogus" money that represents only 
future value. I was referring to the latter part of the video where 
Grignon talks about moving to a sustainable economy. He argued that a 
government (presumably a central bank) should own the lending 
industry. At the heart of his case for government ownership was his 
claim that, even if loans were made on "real" money, privately owned 
banks would end up with all the money via the process of earning 
interest on loans. He does not offer any proof for this in the video, 
and it doesn't make sense to me. As long as a lender does not enjoy a 
legal monopoly, there is no reason that charging interest on loans 
would result in the lender ending up with all the money, any more 
than charging rent for the use of land results in the lessor owning 
all the land.>

She adds in reply to MB's post:

<Sorry, no time to reply in the depth your question deserves, but 
briefly, part of the problem with current corporation law is that 
investors approach buying stocks rather like buying lottery tickets. 
Based on what I have observed of investor and broker behavior, most 
investors don't know very much about the companies in which they 
invest. I doubt that any more than one in a thousand even bothers to 
take a quick look at a company's annual reports before buying that 
company's securities, especially when investing via a fund.

Surely, the degree of liability should be greater for the people 
directly in control of a corporation (I am using the term corporation 
here to include all forms of limited liability entities), but passive 
shareholders should bear some responsibility for the harm done 
through the use of their money. Under present law, they risk only the 
amount they have invested. >

Damien Broderick








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