Cyprus-Forum.com

[Robin Hood]

I have been waiting for one of these highly paid people we employ to run the economy to come up with a solution to the mortgage crisis whilst still controlling inflation, a solution that to me is very obvious, that is if you understand what a mortgage (Bank loan) actually is!

When you take a bank loan or mortgage the first thing you need to know is that It is NOT a question of the bank lending you money! They simply create debt as they don’t have money! What they claim as assets is your debt and that of other customers because they get interest paid for money they never had but they expect to get the capital back to pay off the debt. The money you keep in the Bank is a liability because they have to repay it to you when to ask for it. In effect the Bank grants you credit to pay out money you don’t have ……….. but neither do they!

You spend the credit the Bank awards you and YOU create new money in someone else’s bank account. The Bank just collects interest for ‘lending’ you money they never had in the first place.

The solution is simple ….. at least that is to me ………………….

Let the BoE create the amount of money required to cover the mortgages and loans that are outstanding with the private banks. This is paid directly into the negative loan accounts and the debt to the Banks drops to zero. No debt …… no interest to pay. As the money the BoE creates is destroyed when it is paid into the banks indebted accounts ………. pooooooooof …. It’s gone! It does not enter the economy so there is no inflation.

The collateral ….. your property …. Is now held by The State instead of the Banks! The State does not need to make a profit charging interest because they can either create what they need or use your mortgage repayments to go straight back into the economy it came out of …… via The treasury ……so there is no inflation.

Instead of taking money out of the economy to pay the interest to the Banks for the money they never loaned in the first place ……. that can go toward increased spending on education, defense, NHS, R&D ……. and other projects to create growth in the country as a whole. We could even start building our own aircraft, ships, trains, trucks etc ….. just like we used to?

Now when someone needs a mortgage they still go to the Bank to arrange it, as the Banks become government agencies and get paid a fixed fee for their administration or, better still have, have State Banks provide the mortgages with money created by the BoE. If inflation starts to climb ….. you cut back on new lending.

As the State has the responsibility to care for you and your family when things don’t go as planned and the Banks foreclose and seize your property to balance the books …….. the State can just leave you in your home and set a rent they calculate you can afford. As every penny you pay off your debt now goes back to the State you are still paying off your debt and eventually the house will be yours!

The only people who lose out on this arrangement is the Banks ….. who will no longer make billions out of interest on your hypothetical loan/mortgage debt.

Now tell me why that will not work?

[Lordo]

That will work very well but one small problem. You are cutting out the parasites that make money for doing no work and unfortunately they have the politician in their pockets. So consequently it will not even be looked at.

Now lets stay within their parameters and look at it another way. The inflation we have has nothing to do with the market over heating so increasing interest rates will not solve it. In fact people now have less money to spend than they did 13 years ago when the Swine came to power.

So what is causing inflation?
1. Brexit. This means we pay tax to import from the EU so naturally the prices will go up. The only solution is put it to the people to return into EU.
2. Energy prices Especially electricity. When they were privatised, that was to the benefit of corporations not the people. The way the price of energy is calculated is a scam. So the Energy corporations are making a killing. No good taxing them they can always get out of paying tax. Corporations should be charged a lower percentage of tax but it should be calculated on turnover not profit so they cannot avoid paying it.
3. Supermarket prices. The Supermarket can charge what ever they want and their mark up is incredible. First they must be forced to pay a fair price for what they buy and and they can only mark up their costs plus 10% profit.

Allowing these Swine to do as they please has brought us to this mess, it is time to take control.

[Maximus]

First you need to help me understand what you are saying better in more simple terms.

Are you saying Paul BoE should create money out of thin air to pay Peter Natwest to buy Johns house off of them. Then Paul BoE should give Johns house to Richi Sunak.,

Then John keeps paying Richi Sunak what he would have been paying Peter Natwest, who would have been paying Paul BoE, so Richi can give the money to Ali, Mahmoud and Cheryl?

Did I understand this correctly?

Smells like communism is lurking in the shadows somewhere int his solution.

All you need is for John to realize he is being taken for a mug and leave. Then Ali, Mahmoud and Cherly wont get any money to survive anymore. Who are probably sitting around doing nothing by this point.

creating more money out of thin air to pay off trillions in debt for real assets will dilute the value of money even further, push up house prices even further and put even more money in to the economy. making it even more worthless than what it was before. so your solution is not really a solution, it is an acceleration of inflation and compounds the original problem.

So if Johns brother cant borrow money now, because the government agencies have been instructed not to lend due to inflation, how is he going to get a house to pay Richi Sunak who is going to pay Ali, Mahmoud and Cheryl?

[Robin Hood]

First you need to help me understand what you are saying better in more simple terms.

I would have thought the original OP was pretty simple and self explanatory? You want it even simpler? Money (actually currency) is created out of thin air, irrespective of whether it is the Private Banks or the Central Bank doing the creation.

I suggest you read this by the BoE “Money creation in the Modern economy’.......
https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy.pdf

Another source is anything by Prof. Dr. Richard Werner ..... he was the guy that explained and defined the term Quantitative Easing and also proved by empirical experiments on a Bank Computer, that money IS created out of thin air by Private Banks and is the only way 97% of all currency is created. I would suggest that is now nearer 99% and it is ALL debt and it was ALL created out of thin air!

Read and understand the basics and then you will maybe get the picture!

Are you saying Paul BoE should create money out of thin air to pay Peter Natwest to buy Johns house off of them. Then Paul BoE should give Johns house to Richi Sunak.,

Then John keeps paying Richi Sunak what he would have been paying Peter Natwest, who would have been paying Paul BoE, so Richi can give the money to Ali, Mahmoud and Cheryl?

Did I understand this correctly?

NO! You don’t understand the basics!

Smells like communism is lurking in the shadows somewhere int his solution.

China does not have this problem as they don’t have many private banks. Those they do have are very strictly controlled by The State.

All you need is for John to realize he is being taken for a mug and leave. Then Ali, Mahmoud and Cherly wont get any money to survive anymore. Who are probably sitting around doing nothing by this point.

John has been taken for a mug for decades because he lives in total ignorance of how the system works!

Creating more money out of thin air to pay off trillions in debt for real assets will dilute the value of money even further, push up house prices even further and put even more money in to the economy. making it even more worthless than what it was before. so your solution is not really a solution, it is an acceleration of inflation and compounds the original problem.

Read the OP! When the ‘trillions’ in debt is paid off, the currency is destroyed! It does NOT return to the economy ..... so how can it possibly create inflation? The WEALTH contained in the property remains unchanged. Legislation can be used to prevent run-away property price inflation if that was required.

So if Johns brother cant borrow money now, because the government agencies have been instructed not to lend due to inflation, how is he going to get a house to pay Richi Sunak who is going to pay Ali, Mahmoud and Cheryl?

The State does not need to stop lending out for property purchase ,,,,, it could be limited, as it can LIMIT what it will allow an individual to borrow, just like the Banks and BS’s used to do “in the Old days”. Then it was a multiplier factor based on your BASIC earnings (2.5 5imes?) and you got that as a mortgage over 20-25 years with a varying interest rate.

If the State creates the ‘money’ it does not need to charge interest like the Banks have to, as it is a 'not-for-profit' organisation and could just create what it needs.

Do you have any concept at all ........ as to how the government gets into debt? Ask yourself where the Government gets its borrowed money from ?

[Maximus]

I know money is created out of thin air.

So what you are saying is for the government to seize peoples property from the banks, and then create money out of thin air to fund public services and for loans to buy "whatever".

The only difference is, the government wont charge interest on the loans like the banks do.

Right?

So whenever the government creates new money, how is this not going to cause inflation?

Furthermore, just because there is no interest on the loan, it does not mean the borrower is not indebted.

You haven't solved any mortgage or inflation problem yet from what I understand.

[Londonrake]

China's property market's been a disaster zone for years.

https://www.economist.com/leaders/2022/ ... lsrc=aw.ds

For any general interest I'd cut and paste the article but................................. you never know who's hovering over their keyboard.

[Robin Hood]

I know money is created out of thin air.

Good .... that is something we can agree on.

So what you are saying is for the government to seize peoples property from the banks, and then create money out of thin air to fund public services and for loans to buy "whatever".

NO! The State would hold the property as collateral in exactly the same way a Bank does. The difference is that with the Banks they DO SEIZE your property under certain circumstances ..... like defaulting on payments or when the value of the collateral is less than the outstanding loan ..... and you cannot pay them the difference. It’s called ‘a margin call’ and in that instance you can lose the lot!

With the State as the holder of the collateral ..... they can leave you in the property with you as part owner based on what you have already paid for, and you just pay what the State decides you can afford. This continues to pay off the mortgage and you continue to live in your home. If you decide to sell, you get the percentage of the value you have paid for and the debt part the government owns just gets paid back into the economy. Where is the inflation coming from?

The only difference is, the government wont charge interest on the loans like the banks do. Right?

NO! Read the above ........ with the Banks you can lose everything even though you are up to date with your payments. Most people are not aware of this but they soon will be when property values fall and many get these ‘margin calls’ drop onto the door mat! They have no option, they pay up .... or the Bank seizes and sells the property.

The Banking system is legalised robbery and if you watch the News you can see why! Sunac and Hunt will let the banks screw the people to enrich themselves and will do sod all to protect those who now have problems because the banks now want more interest to stop the People spending. THE BANKERS get richer ..... the People get poorer.

The State does not need to keep creating new money because the money it receives goes straight back into the same economy it has just come out of, because they re-spend it. The banks destroy the money that is repaid ..... the State re-circulates it. Simple really.

[Robin Hood]

China's property market's been a disaster zone for years.

https://www.economist.com/leaders/2022/ ... lsrc=aw.ds

For any general interest I'd cut and paste the article but................................. you never know who's hovering over their keyboard.

We are talking home ownership ..... not screw ups by a government that builds accomadation where no one lives ..... hoping to redistribute the population by getting them to move. I believe these are often offered for free to people willing to move and to companies that build production units in these regions ..... the govt will even build the factories for free!

Multiple home ownership in Chinese cities: An institutional and cultural perspective

Abstract

China is a country of homeowners, where >80% of households own their homes and >20% of urban households own multiple homes. China achieved this unprecedented high rate home ownership in a short period of three decades.

https://www.sciencedirect.com/science/article/abs/pii/S0264275118318201#:~:text=China%20is%20a%20country%20of,short%20period%20of%20three%20decades

But the Chinese don't have to borrow from private banks! This is how they have virtually taken over in Africa.

[Maximus]

I know money is created out of thin air.

Good .... that is something we can agree on.

So what you are saying is for the government to seize peoples property from the banks, and then create money out of thin air to fund public services and for loans to buy "whatever".

NO! The State would hold the property as collateral in exactly the same way a Bank does. The difference is that with the Banks they DO SEIZE your property under certain circumstances ..... like defaulting on payments or when the value of the collateral is less than the outstanding loan ..... and you cannot pay them the difference. It’s called ‘a margin call’ and in that instance you can lose the lot!

With the State as the holder of the collateral ..... they can leave you in the property with you as part owner based on what you have already paid for, and you just pay what the State decides you can afford. This continues to pay off the mortgage and you continue to live in your home. If you decide to sell, you get the percentage of the value you have paid for and the debt part the government owns just gets paid back into the economy. Where is the inflation coming from?

The only difference is, the government wont charge interest on the loans like the banks do. Right?

NO! Read the above ........ with the Banks you can lose everything even though you are up to date with your payments. Most people are not aware of this but they soon will be when property values fall and many get these ‘margin calls’ drop onto the door mat! They have no option, they pay up .... or the Bank seizes and sells the property.

The Banking system is legalised robbery and if you watch the News you can see why! Sunac and Hunt will let the banks screw the people to enrich themselves and will do sod all to protect those who now have problems because the banks now want more interest to stop the People spending. THE BANKERS get richer ..... the People get poorer.

The State does not need to keep creating new money because the money it receives goes straight back into the same economy it has just come out of, because they re-spend it. The banks destroy the money that is repaid ..... the State re-circulates it. Simple really.

I have never heard of mortgage or loan contracts getting margin calls. This is something you get from a broker trading leveraged products in financial markets.

The inflation is coming from the new money created by the government.

How does new money creation by the government in your system not create inflation like it does in the existing new money creating banking system?

We will get to the rest of what you are saying in a minute but this is a point you need to substantiate to move forward. Otherwise you haven't solve any inflation problem.

I see lots of areas where I can poke holes and it wont hold water but one thing at a time.

[Lordo]

RH I have a question.

Back in the 70s when the Labour government was increasing debt they had to go begging to IMF and of course IMF put conditions on lending us the money. The same thin happened to Cyprus with the haircut they put conditions on Cyprus to lend the money.

Now back in 2008 when the banks went bust, Brown simply lent them the money without any problems. Clearly they did not go to IMF and clearly there was no money printing, which is why they termed that action Quantitative Easing. I don't remember having a run on the pound at that time. Effectively we went from 500 Billion debt to 1000 billion debt overnight. We also have had our debt go up year on year under the swine. They inherited 1000 billion in debt but they got most of the money from the banks so the real debt they inherited was 500 billion. We now have 2400 billion debt. How come it has not affected the currency that badly.