Debt – In the Long Run

Yesterday I wrote about the changing role of banks in tax evasion. At one time banks across the world facilitated tax evasion, but are now by the enactment of new laws becoming key players in preventing tax evasion. “Let me issue and control a nation’s money and I care not who writes the laws” Mayer Amschel Rothschild is said to have stated. It may have taken three hundred years but the politicians elected to enact laws, may have now understood that governments must not let bankers either issue or control a nation’s money. Continue reading

Living Without Companions

The song tells us that money makes the world go round. The song is wrong; the world went round before money was invented and will continue to revolve long after money has become obsolete. Nevertheless, the way we humans have organised our world by having money, which is a rapid medium of exchange of goods services and work, has shaped our environment more than anything else, because having such a simple and convenient tool has distorted human activity from the need to survive in balance with our surroundings to a desire to acquire money in huge quantities.

Continue reading

The Root of All Kinds of Evil

The love of money is, according to one source, the root of all kinds of evil. It is hard to disagree with that statement. It is often misquoted into “money is the root of all evil” which ignores two important points. The first is that it is not money, but the love of money that the proverb explains causes the damage. The second point is that love of money does is not the root of every kind of evil, but the root of all kinds of evil. Continue reading

Money has no conscience and owes no loyalty

I think that the economic recession is ending now but people fear the changes that a return to relative prosperity will bring. For some, a modest increase in interest rates will mean bankruptcy while for others it will mean that they can afford a bit more and lose a bit less of their savings each year. Continue reading

How to Borrow Money and How to Repay Borrowing and How to Avoid Borrowing

In the United Kingdom the Bank of England base rate is a mere half of one per cent, the lowest it has been in modern economic times. If you deposit money with a large bank or institution you will get a rate of interest tied to that half per cent; it may be a few points higher or a few points lower, depending on how long you are prepared to trust the bank with your money. In any event it will not produce a real return or even keep up with inflation, which is running comfortably more than 2.5% a year. Continue reading

A stout door is better protection than the devices of the financial markets

As I locked the front door I realised just how much we have to trust our fellow human beings. The door is heavy and substantial and like most doors it can be broken down. Most of us are not protected by armed guards, security scanners and numerous devices; most of us rely on a door, a lock and the goodwill of those that live around us to keep us safe. Continue reading

False Taxations

One of the people who reads these essays and comments on them (Davy Stephenson)wrote a phrase which set me thinking. He wrote about “false taxations” in the context of carbon taxes. It is an interesting concept because it implies that some taxes are false in the sense that they are immoral or wrong, or that they (and this would be the context actually used) purport to stop a harmful thing by penalising the activity that creates that harm. In the context of carbon tax being false the argument is that as the emission of carbon is not (in the mind of this reader) a harmful activity a tax on it is false. Continue reading

Why Banks are Unsafe.

Markets now feel that banks are much less safe. Suddenly, the credit rating agencies have decided what we knew a couple of years ago. Fifteen major banks have had their ratings downgraded so that the relatively position of each to each is more or less unchanged but putting your money in a bank is deemed to be much more risky that it was before.

There are four reasons why bank are unsafe, regardless of their ratings by credit agencies.

1. Banks which need to get support from governments can never be safe becasue governments do not have endless supplies of money to bail out those banks.

2.Banks are unsafe becasue they leverage their customer deposits too much.

3. Banks are unsafe becasue they enter into transactions involing derivatives which no one really understands, gambling hugely on them and for every winner there is a loser.

4. Banks are unsafe because they put our money where their mouth is.