[rs]

Last year (summer I think) there was a discussion on how money works/history of/the financial system etc.. which included a link to an excellent article which explained it all in layman terms. All I remember is the article had a cartoon sketch at the top.

Can anyone recall seeing it and if so, point me to where it is ? I've done a search on here but haven't found it so far.

cheers

[Doly]

You can find a good explanation on:

http://online.bcc.ctc.edu/econ100/kstte ... /MONEY.htm

Notice how economic growth is assumed in the very basics of our banking system. Part of the essence of the system is to expand the money supply, and aim to do it at the same rate that products and services grow.

But if we think that after peak oil, there will be less products and services overall, because we lack the energy to produce them (a fairly reasonable supposition), we should have economic contraction. And our system is simply not built for that. I can't help wondering how the whole thing is going to unravel...

[CrudeAwakening]

rs, maybe you mean this?:

Billions for the Bankers

[virgincrude]

Maybe you mean this one: I want The World Plus 5% which you can find @ www.relfe.com ? Amazing to see it dates from 1971 But even more amazing:
Lord Acton, Lord Chief Justice of England, 1875 - "The issue which has swept down the centuries and which will have to be fought sooner or later is the People v. The Banks."

Amen

[rs]

thanks for the replies folks and Virgincrude, you are bang on the money - that's the one I was looking for - cheers

[DoctorDoom]

It's not bad as a layman's introduction to the subject, but it perpetuates a lot of incorrect thoughts that pervade the discussion here. For one thing, it conflates money supply with the level of economic activity, ignoring factors like the velocity of money. For another, it fails to make distinctions between money, debt, investment, interest, and investment returns. Another mistake that I see people making over and over here is to assume that economic growth is necessarily limited by physical resources. This despite being surrounded by overwhelming evidence to the contrary. Population growth must be limited by physical resources; economic growth will be limited by a combination of physical resources and less tangible limits to human knowledge and expression.

[CrudeAwakening]

It also makes a common error in suggesting that a single bank would simply lend out $900 from a $100 deposit. Although a $100 deposit would create $900 of additional deposits (and loans)throughout the banking system, this doesn't occur in one step. Instead a bank would lend out $90, which would then be redeposited and provide the basis for a loan of $81, etc.

[nero]

Again with the greedy bankers.

Hey but everyone is a banker. If you receive interest on your capital you are a banker. Bankers are just specialists, but they are not a necessary component of our monetary system. There was interest long before there were bankers.

sigh

[JustinFrankl]

I'm still of the relatively simplistic idea that money is a proxy for energy. In exchnage for money you get actual energy (food, gas), or get someone to do something for you which requires energy (clean my house), or a product that required energy (furniture, bicycle).

Less energy equals less economic activity. What "less tangible limits to human expression" will fuel the economy? Ideas? Entertainment?

[DJ_Mittens]

$this->bbcode_second_pass_quote('CrudeAwakening', 'I')t also makes a common error in suggesting that a single bank would simply lend out $900 from a $100 deposit. Although a $100 deposit would create $900 of additional deposits (and loans)throughout the banking system, this doesn't occur in one step. Instead a bank would lend out $90, which would then be redeposited and provide the basis for a loan of $81, etc.