Last night Niall Ferguson talked about Shylock and a pound of flesh. The reason why Shylock wanted his pound of flesh for non-payment of a loan was because Shylock advanced real, hard, physical specie for that loan. In comparison, today a bank loans out nothing for its loans.
How does this work?
Ferguson did not address this point last night toward the end of the programme when he was driving around Memphis with a car repo man. The questions Ferguson did not ask were why banks have been so keen to issue loans and where the money for those loans came from.
The answer to both those questions is that the money, if we can call it that, does not exist. A bank can issue many loans because it is not really lending anything out. If you or I loaned a friend a tenner then we would be down a tenner and the friend up a tenner. There is conservation of money; one loses and the other gains.
But if a bank lends you a tenner then there is not conservation of money; you would be up a tenner but the bank would keep the tenner, and you would be expected to return that tenner while the bank kept the original tenner, so the bank would be up a tenner.
That's why the banks are not out for their pounds of flesh. Deep down they know they're taking the piss with the banking scam.
It's all as clear as custard, when by law it should be crystal clear.
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