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Tuesday, 8 December 2015

Blatant Lies from the BBC

Article here
"The overnight deposit rate was cut from -0.2% to -0.3%, to push banks to lend instead of parking money at the ECB."

And here it begins. Banks don't lend reserves. Loans create deposits. Of course most readers don't know that and our 'national broadcaster' knows they don't.
"The cut in the interest rate on overnight bank deposits means that banks in effect pay more to the ECB for holding their reserves.
The policy is designed to make it more profitable for banks to offer loans to consumers and businesses, ensuring a free flow of money."
OK, BBC how does it make it "more profitable for banks to offer loans to customers and businesses"? It doesn't.
"Instead, Mr Draghi said it would go on longer but at the same monthly rate. And the markets expected a bigger cut in the interest rate on banks' deposits at the ECB. It's already below zero which means the banks are being charged to park excess funds at the central bank.
A bigger cut would have given them an even bigger incentive to lend more rather than sit on idle cash."
Nope. Again, when banks lend they create a deposit (an IOU of the bank) and a loan (your IOU to the bank.) The reserves needed pop into existence. Banks lend when there are profit-worthy customers at a certain price of money. This will do nothing, except perhaps slightly reduce bank profits. How people think this will boost lending is beyond me.
This isn't really separate lies - just repeating the same lie over and over!
"The reality of how money is created today differs from the description found in some economics textbooks: • Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits. • In normal times, the central bank does not fix the amount of money in circulation, nor is central bank money ‘multiplied up’ into more loans and deposits."

Wednesday, 2 December 2015

Quote of the day - suck on it oldies!

From Neil Wilson
""But that all changes when you have a JG. So is it reasonable to expect an unemployed person of 60+ to work for a fraction of his previous wages or salary? What about 55+?"

Yes. It's called obsolescence. 

Your 'higher wage' is only there because you have multiple bids in a market to drive the wage above the living wage. If that stops happening then your wage drops as well. That's what redundancy and economic shrinkage does in the actual job market that most people operate in (the secondary job market), where economic pullback and the effect on wages is a fact of everyday life. And you've recently seen it with the steelworkers in Redcar, etc. 

In the current system you drop onto JSA at £73.10 per week - where you will likely stay until you get to state retirement age or finally come to the realisation that a minimum wage job at B&Q is your only option. 

In the new world you will get a JG job at the living wage where you can do stuff that makes you happy and add great value to society. A significant improvement.

There are far too many people who think they get higher wages because they are somehow magically brilliant or wonderfully skilled. Nope. It's simple supply and demand in a market alongside unionised activity to help keep that in trim. 

Nobody has any right to a higher payment than anybody else regardless of how wonderful they think they are. The JG is very much an equal pay employer - and it needs to be because that wage fall is part of the reset mechanism of capitalism. It is one of the auto-stabilisers. 

The JG changes an unemployed buffer stock into an employed buffer stock. It deliberately tries to avoid disrupting the private sector wage structure and in particular changing anything so that it artificially maintains boom or obsolete skill wage rates."

""The introduction of a JG will give the neo-liberals , the not-so-innocent fraudsters, a very powerful weapon indeed to force down wages. We need to be careful about that."

One person's forced down wages is another person's greater equality. 

Try telling the 20 something struggling in the private sector 'gig economy' that a 50 year old is worth paying until they retire on a six figure salary they no longer provide the output to cover. 

You will get cycles of the right forcing down wages, and the left forcing them back up by raising the living wage. It's a useful tension that keeps things where they should be - about equal. 

Those who want a higher waged public sector job are very welcome to put the proposal to council tax payers (via their unions if they have one) - including the increase in council tax necessary to cover it. If your peers agree that you are a Very Valuable Person doing something Really Useful then they will pay the council tax necessary to cover your increased salary expectations. 

So you have a democratic way of getting what you want. You just don't get it 'by right'."