CityCyclingEdinburgh Forum » Debate!

Where the money goes

(95 posts)
  • Started 13 years ago by chdot
  • Latest reply from the canuck

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  1. crowriver
    Member

    ---

    Call for rethink over A96 dualling plans between Huntly and Aberdeen

    Mr Macdonald - who has written to Transport Minister Michael Matheson - believes the current road should be dualled, but said this is not what is being offered. He told BBC Scotland News: "What's actually coming forward is a series of plans all of which are about building new roads, in many cases running in parallel with the existing road. So people are asking why on earth a commitment to upgrade infrastructure has actually transformed into new road building."

    https://www.bbc.co.uk/news/uk-scotland-north-east-orkney-shetland-56083121

    ---

    Posted 3 years ago #

  2. chdot
    Admin

    “

    Contact tracing alone has a marginal impact on Covid transmission, curbing the spread of the disease by just 2% to 5%, official estimates show.

    The figures come after Dido Harding, who heads the UK government’s £22bn test and trace programme, suggested it was set to substantially reduce the spread of coronavirus this spring.

    “

    https://www.theguardian.com/world/2021/feb/16/contact-tracing-alone-has-little-impact-on-curbing-covid-spread-report-finds

    Posted 3 years ago #

  3. chdot
    Admin

    “

    The billionaire hedge fund manager Sir Chris Hohn paid himself $479m last year after his Children’s Investment (TCI) fund, recorded a 66% jump in pre-tax profits to $695m.

    It is believed to be the highest annual amount ever paid to one person in Britain and equates to £940,000 a day. It is 9,000 times the average UK salary and 1,700 times the amount paid to the prime minister, Boris Johnson.

    “

    https://www.theguardian.com/business/2021/mar/01/billionaire-hedge-fund-boss-pays-himself-uk-record-of-343m-chris-hohn

    Posted 3 years ago #

  4. chdot
    Admin

    “

    A financier who has donated almost £150,000 to the Conservatives has been made a life peer and given a ministerial job, Downing Street has announced.

    Malcolm Offord, founder and chair of an Edinburgh-based “boutique investment” company, Badenoch and Co, will be made a life peer, a statement said, and become a junior minister in the Scotland Office.

    “

    https://www.theguardian.com/politics/2021/sep/30/tory-donor-made-life-peer-and-appointed-as-government-minister

    Posted 3 years ago #

  5. HankChief
    Member

    Was he a substitute speaker at a Spokes hustings recently?

    Posted 3 years ago #

  6. Frenchy
    Member

    Oh, that's where I've seen him. Yes - he spoke at the Spokes Holyrood hustings in April.

    Posted 3 years ago #

  7. gembo
    Member

    Maybe to the Wet Leg tune - Chaise Longue

    Pleas sir, can I have a knighthood
    Yes sir just pay here for your knighthood

    Works better if you know the tune so check out Wet Leg video on YouTube or listen on the Spotify.

    Posted 3 years ago #

  8. Baldcyclist
    Member

    "Where has all the money gone"

    All the QE money has gone into assets (stocks/crypto/property), and they're getting ready to dump it all on retail right now as they flood into markets thinking everything is awsome...

    I'm getting ready to dump my teeny stash.

    Posted 3 years ago #

  9. neddie
    Member

    There is no issue at all with unlimited QE, as long as there isn't full employment...

    Oh wait... there's a shortage in many professions...

    (*Full employment plus QE leads to rampant inflation)

    Posted 3 years ago #

  10. Baldcyclist
    Member

    "rampant inflation"

    Yes, if you are lucky enough have any 'extra' money, you wouldn't want it tied up in any $ or £ derivative frittering away to nothing at 9% a year...

    Mind you interest rates will be up soon too, to make us all feel even more skint. I've locked the mortgage rate for 10 years which seems expensive just now, but won't in a couple of years.

    Posted 3 years ago #

  11. neddie
    Member

    Isn't inflation good for people who are net debtors i.e. pretty much anyone that holds a mortgage? That means the amount you owe becomes relatively less over time, provided your wages keep pace with inflation.

    Inflation is really bad for net savers, pensions, pensioners, etc.

    Posted 3 years ago #

  12. Baldcyclist
    Member

    Yes, and no, high interest rates often follow high inflation (80s, early 90s).

    Mind you central banks now do everything to try protect the markets to stop that happening. When you do include assets, inflation has been spiraling out of control for 25 years with no rate hikes to control it (as we can see with the property market that is out of control).

    For those that overborrowed on cheap interest rates it's curtains for them.

    When bubbles pop it's *always* the over leveraged (ie the working class) that suffer most.

    If you do have 'extra' money (for me) that needs to be in an inflation hedge which isn't a Fiat derivative, and you average in every month when it becomes cheap (ie when the bubble pops and no one else wants it).

    Posted 3 years ago #

  13. Baldcyclist
    Member

    And that asset inflation has led to the rich being even richer while the poor pay more for a roof over their head. The rich have so much money they literally buy crap, for example jpg files swapping online for $20K to $100K a pop...

    Posted 3 years ago #

  14. neddie
    Member

    Why do you see the property market as out of control?

    Ignoring all the headlines/clickbait of property having shot up by 10% this month or that month (and media ignoring stagnation / price falls), the average increase in property value is only something like 3% per annum.

    Admittedly above the Consumer Price Index at ~2%, but not *that* bad...

    Overborrowing should not have been allowed by banks in the first place because that only serves to drive prices up, then subsequent crash. Banks need to be strongly regulated to stop them over-lending

    Posted 3 years ago #

  15. Baldcyclist
    Member

    "Why do you see the property market as out of control?"

    This was just the first graph I came accros.

    If you track average house prices against average salary, it was around 3.5-4.5 times for most of the last 100 years, now it's arround 6-8 times, it's nuts:

    Personally I'm lucky, I have a mortgage half the size of my younger colleauges, and also live in a house twice the size. Young folks have no hope just now.

    Posted 3 years ago #

  16. crowriver
    Member

    "Overborrowing"

    "Banks need to be strongly regulated to stop them over-lending"

    How do you think money is created these days? A bank issues a loan, that is new money, literally created out of thin air (well an entry in a database on a server somewhere).

    QE was mostly done through banks, which are regulated by the central banks. In our case the Bank Of England.

    There's no longer any dire ct relationship between bank deposits (e.g. people's savings) and lending. Hasn't been for a long time.

    Posted 3 years ago #

  17. neddie
    Member

    That graph is telling me the problem is in the disparity in earnings between those aged 25-34 and older people, not that there's a problem with the property market.

    Property prices are driven by the (essentially fixed amount of) housing stock, average wages across all the "house-buying ages", and the multiplier on the amount the bank will lend you (3x, 4x, 5x salary).

    I'd argue the banks are responsible for the increase from 3.5-4.5 to 5-6x value due to them similarly increasing the amount times your salary they would lend (from zero, except specific priviledged people, to 2x, 3x, 4x, even up to 10x before the crash, and now back to 4x)

    Posted 3 years ago #

  18. neddie
    Member

    Banks in general cannot create or destroy money - that would be a nonsense. Only the Bank of England can do that, with the authority of the goverment, to provide QE

    Posted 3 years ago #

  19. crowriver
    Member

    @neddie, okay then whose money does the bank loan to you when you borrow to buy, say a car? Whose money are you borrowing when you buy a new flat screen TV on your credit card?

    Posted 3 years ago #

  20. neddie
    Member

    @crowriver

    You are borrowing someone's else money, their savings or pension normally. If the bank doesn't have that money, then it needs to borrow that money from someone else before it can lend it to you. The bank can't magically create that money. Normally, banks borrow or lend to each other at the rate set by the BofE to make up any differences.

    This is a simplistic view. Any financial bods on here, feel free to expand...

    Posted 3 years ago #

  21. ejstubbs
    Member

    You're right, it's simplistic view. If you want to try to understand how it does work, you could try this: https://en.wikipedia.org/wiki/Fractional-reserve_banking for starters.

    Posted 3 years ago #

  22. Baldcyclist
    Member

    " fractional-reserve banking permits the money supply to grow beyond the amount of the underlying base money originally created"

    "Just as taking out a new loan expands the money supply, the repayment of bank loans reduces the money supply"

    So, from the link, the 'broad money' is the magic money that @Crowriver describes.

    When we pay that back the bank magics it away again and keeps the 5% or whatever the interest amount is.

    Posted 3 years ago #

  23. crowriver
    Member

    Also from that link:

    "However, rather than directly controlling the money supply, central banks usually pursue an interest-rate target to control bank issuance of credit and the rate of inflation."

    Try searching up Modern Monetary Theory if you want to think about what money really is nowadays...

    Posted 3 years ago #

  24. chdot
    Admin

    “Property prices are driven by the (essentially fixed amount of) housing stock, average wages across all the "house-buying ages", and the multiplier on the amount the bank will lend you (3x, 4x, 5x salary).”

    I’ve no idea how much of that was/is/will be true.

    If you are taking a longish view that ‘as long as you can get a mortgage and pay it off, you’ll end up with a nice asset/nest egg’, then maybe.

    It remains to be seen how much that it is true in 10, 20 … 40 years.

    Meanwhile MANY people won’t get on the ‘property ladder’. Many will be people who have jobs that used to pay well enough to get a deposit/mortgage AND allow 1/2 of a couple to not earn money for a while (conventionally speaking, when they had young children).

    Other people were happy renting, largely with security of tenure.

    Things have changed.

    Right to buy.

    Buy to let.

    Etc.

    Houses used to be primarily places to live.

    In simple terms there aren’t enough houses of the sort that people want to (or can afford to) live in. Inevitably ‘the market’ sees that prices rise.

    Whether or not it’s ‘out of control’ is subjective. If it is, normally, there will be a ‘market correction’.

    Not sure normal is a sound concept anymore…

    Posted 3 years ago #

  25. steveo
    Member

    A tax on buy to let would probably help massively.

    Half the problem is housing stock is bought up by people looking for an investment and charging 3/4 times what a mortgage costs, I couldn't afford to not own my own home. So even all this student battery housing isn't reducing rental costs despite taking a lot of students out of the normal market.

    Posted 3 years ago #

  26. Baldcyclist
    Member

    "Whether or not it’s ‘out of control’ is subjective. If it is, normally, there will be a ‘market correction’."

    If we look at a few assests, and lets try guage if there is an asset bubble...

    Edinburgh houses are going for 20-30% above valuation again.
    Every other flat in Edinburgh has a keysafe on the door cos it's a holiday home being let out.
    Supply is being drained on a number of fronts to push up prices, pandemic, buy to let, holiday homes. 'People' can't afford to buy them.
    The 'correction' that should have happened in 2008 didn't, central banks propped up the markets allowing the rich to buy uo even more assets cheaply.

    Stock markets have been going consistently up since 2011 (again propped up by money printing), minor covid correction, all time highs weeks later. Retail ape'ing in.

    Bitcoin will be >$100K by December. Retail ape'ing in. All you hear in train is people bragging about their crypto gains, sure sign it'll pop. Look for Dogecoin to go parabolic again then run for the hills.

    NFT/DeFi markets are in a bubble. Retail ape'ing in.

    Fed Covid money has largely just gone into Stocks / Crypto. Retail ape'ing in.

    USA is about to 'technically' default on debt repayments in Oct (Fed won't let that happen and will print more $)

    US inflation rates arround 8%, UK creeping to 4%

    Housing bubble in China (Evergrande defualt looming) - will the west bail them as they did us in 2008...

    Either the mother of all crashes is coming in the new year, or the Bank of England is going to have to print away the value of your £s over the next 30 years...

    Posted 3 years ago #

  27. chdot
    Admin

    “The 'correction' that should have happened in 2008 didn't“

    Yes

    As you say - ‘and the rest’.

    ‘Normal’ is pretty much over.

    Crypto currency is clearly a scam - or at least an extreme bubble (deliberate or otherwise).

    Part of its attraction is that it is ‘free from government interference’ and so ‘unregulated’.

    I’m sure there must be many ways Govs could ‘do something’ - turn off the electricity to the ‘mines’ for instance! - but perhaps they have vested interests in waiting for the bubble to burst…

    Meanwhile (today) Boris is welcoming the rapid rises in wages (for some).

    There is no normal.

    Posted 3 years ago #

  28. Baldcyclist
    Member

    Crypto is interesting - lot's of projects are clearly scams.

    Some are really interesting. Some of those chains have real world application, and are being used for money transfer, goods tracking, identity management and a whole lot more. Some of those existing chains will power nation states Central Bank Digital Currencies (cbdc's).

    Visa is in big now...
    Some layer 1 networks - Solana is claimed to be faster and have more transaction capacity than Visa network.

    Like most markets it is pyramid in nature - new investors pay early investors - network effect, crypto growing faster than internet did.

    US and Chinese states are amongst the largest holders of Bitcoin, pensions will be there soon.

    Decentralised finance, no less green than centralised finance, since China kicked them out most (not all) of the miners are using (a lot of) renewable energy in western countries.

    Posted 3 years ago #

  29. crowriver
    Member

    I'll just leave this here...

    https://en.wikipedia.org/wiki/Credit_theory_of_money

    Posted 3 years ago #

  30. chdot
    Admin

    “

    Private hospitals treated a total of just eight Covid patients a day during the pandemic despite a multi-billion pound deal with the government to help stop the NHS being overwhelmed, a report reveals.

    “

    https://www.theguardian.com/world/2021/oct/07/private-hospitals-treated-eight-covid-patients-a-day-during-pandemic-says-report

    Posted 3 years ago #

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