Pyrpoliser:
Now about the future of the EU everybody seems to ignore the new rising giants, Poland and Romania.There's a good chance they will dominate after 20 years as most factories and heavy industries move there (mainly to Poland).
There is a problem with that. It will not last when they are obliged to adopt the Euro, just like in Cyprus. Both those countries produce their own currencies which are not international trading currencies thus their Treasury/CB can control the value against the reserve currencies. A pension in Poland works out for many at about €300 per month, a good pension is double that but in Poland that will provide a reasonable living standard ..... you would be in dire straights to survive on that here. Cheap rates of pay attract foreign investment from high wage countries.
Perhaps Paphitis who admires UK's financial system could explain us what of essence that system is actually delivering. Thin air maybe? I must admit the same system worked fine in Cyprus for about 2 decades. We all became rich, and thought we were clever...
Basically, he can’t answer because he has no clue how the system works. He can only caste pearls of Paphitis wisdom which are of questionable value!
The UK banking and financial system creates ‘
numbers’ it does not create jobs by investing in the wealth creating manufacturing industries, it simply feeds numbers into the financial system and their ‘
products’demonstrated as soaring Stock Markets and huge rises in property prices ..... all deemed as ‘
assets’. The BoE created £375bn by QE and it ALL went to the banks and then the financial system to create these assets .... not the intended jobs. These assets have no substance ..... they represent
perceived wealth only and they can crash dramatically if someone trips them up. Thus the UK is primarily an asset based economy not a wealth based economy. In short the financial system gives an
impression of wealth rather than real wealth. It is in effect a Ponzi scheme ..... and there has never been one of those that was a success ..... they all fail eventually.
The situation in Cyprus before they adopted the Euro was similar to the UK but not quite the same. There was also a lot of under the counter/off-shore trading, tax evasion and placating the Unions by paying civil servants more Cyprus pounds than those in private businesses could afford.
The difference was that the Central Bank of Cyprus was independent and produced its own currency which had no value outside Cyprus. It had to be converted to be able to spend it elsewhere. The exchange rate was basically controlled by the Cyprus Treasury. When I came here a Sony TV was almost a CP£1000! In the UK the same set was less than a third of that. The Govt. controlled the price of imports by making spending on foreign imports expensive, this limited imports to a degree. If you remember those days; it was not permitted for a Cypriot national to legally hold foreign currency; only a foreigner like me with a foreign currency income, had Sterling or Dollar accounts. When I paid for my house I paid in Sterling but the credit to the builder was always in Cyprus pounds, the Sterling went to the Central Bank.
When they joined the Euro, they completely lost this independence. In addition, the only way the Government could now get money to pay the bills, apart from taxation, was to borrow. They no longer had the option of just creating money as they needed it, the banks now created it for them as a loan with interest, when they bought Cyprus Government Bonds. As you say ...... money out of thin air, no different than previously, but now the banks were creating it as an interest bearing loan. They entered the ‘
debt spiral’ economy favoured by the banks.
The only option was to reduce spending and they introduced austerity so that they had more money to repay the banks by reducing government expenditure on salaries and more importantly social services like health and education. This filtered through to the private sector and collapsed the economy.
Paphitis said that The UK would be lost without its Central Bank BoE.
In a way I agree, but it is how that Central Bank operates that is important.
The Bank of England is NOT independent; it is just one of a consortium of Global Central Banks that in turn have their own Central Bank. Cyprus has a Central bank but it isn’t one, it is in effect a branch office of the ECB, who in turn are a branch of the IMF/World Bank and ultimately The Bank of International Settlement (BIS). The BoE is the same sort of status as the FED/ECB because it creates a currency that is a reserve currency and as I see it, that is where the fiscal problems start.
A country that produces its own money can never go bankrupt, unlike those in the Eurozone with weak economies that are slipping into bankruptcy led by Greece and followed by Italy, Spain, Portugal, Cyprus.
I posted what Trump said about just printing more money (
USD’s) to pay off the national debt by buying back US Govt. Bonds? Trump was, in a simplistic sort of way correct. (
But did you notice it was never followed up like his other 'crazy' suggestions?) but we discussed it in the other thread on the ‘
Super Rich’ before Paphitis took over the thread with his ill-informed ramblings and insults. What that does is to repay debt with more debt. You spend your way out of debt by creating more debt!!!!!!
This is why I believe Corbyn is a lot smarter than Osborne! With the present system, the Government borrows by selling Bonds to private commercial Banks and financial institutions, like pension funds. Once you realise and accept how the Banks create this debt that they then ‘
lend’ to Government, the answer to the problem is very simple ......
DON’T BORROW ........ CREATE YOUR OWN MONEY but the banks hate this idea.(
That is why they blanked Trumps statement .... like Paphitis does with mine. The Bankers don't want their banking system dissected in front of the generally dumb public!)
If I were voting on this Brexit in the UK, if I thought that there were people running the system that were capable of doing this I would vote ‘OUT’ but ....... there is no party that would do this, certainly not the Tories because they are in the pocket of their banking friends.
The Government creating its own money would crash the commercial banks ability to create money to fuel financial asset inflation and the banks would lose the bulk of their income. They would revert to being an intermediary and left lending to companies and citizens with money
THEY had to borrow from the Central Bank. The Government would effectively be controlling the Banks not the other way round as it is now and the Bakers will do anything to prevent this happeneing.
The rest of Paphitis detailed explanation is only his impression of how the Banking system works and is mainly just an example of how banks swap columns in their accounts, give the operations fancy names, and create the illusions of wealth. It's all smoke-and-mirrors!
