Does anyone out there in RRS land understand what money is and where it comes from ? This last week has made me realise that I don't know - but would now quite like to do so.

Take for example the £100,000,000,000 (£100billion) that the Government has just injected into the money market. Where is that from then ? Is this £100 billion they had under the mattress ? Or has it just been "created" from thin air (it didn't even have time to grow on a tree) ?

I think it might literally just have been created. This money is then effectively "rented" to people who want it and the rent is paid in the form of interest. And who sets the level of rent ? Well that's the Bank of England Committee of academics who try to make "rationale" decisions about that.

Indeed all money is really now just figures in cyberspace - much of it never even bits of paper (aka banknotes). Any government can create money, just some do it more than others. Zimbabwe are particularly good at creating money. Indeed they create thousands of billions of Zim dollars a day. The only problem is they make so much of it, it becomes worthless. Is it possible that could happen in the UK ?

I think the theory is that if the government creates too much money it causes inflation. I recall the sound bite of inflation being caused by "too much money chasing too few goods". When inflation really gets hold you soon need wheelbarrows of money to buy a loaf of bread.

And then Bank's create more money. If someone deposits £100 in a Bank, they then lend that same £100 to 10 seperate people. Each of those people think they now have £100, so the total money apparently in circulation goes up to £1,000. This obviously goes wronmg when all the depositers want their £100 back. Q's form outide the Bank and the poor bank manager has to explain he doesn't actually have enough money in stock to give them theirs back.

Where everything goes horribly wrong is when people start doubting whether the "money" they have in their name will actually allow them to buy something to eat. You can after all only exchange money (numbers) for real things (like bread) if the person who gives you the bread thinks that the money you just gave him will allow him to exchange it for flour to make more bread.

What just nearly happened this week was the incredibly scary prospect of people starting to doubt that money was worth anything. If that doubt is allowed to grow, you quickly get to a meltdown in financial systems and people can't exchange goods for money any more. So the rate of exchange of goods massively slows down. Its not long after that that hunger stalks the streets.

So, whats to do ? Firstly I suggest we breath a sigh of relief. Then realise that living in debt is not a bad thing (cos if money loses it's value, the amount you owe also falls). Then realise if you have got some money, its not a bad idea to swap some of it for a few cans of baked beans and store them in a garage, whilst you still can. And by the way, beans grow on something like a tree. If you have lots of money, its not a bad idea to buy something bigger of more permanent value. Land is good, houses aren't bad either. Wood for a fire works too (and that defintely grows on trees). Gold is possibly not bad, but then again, Gold is really just like money - not worth much unless people think it is, as you can't eat it, live in it or keep warm with it.

So, I am off to Costco to buy some beans ..... RRS TDv8 HSE Rimini
Disco 4 TDv6 HSE Ipanema
Defender 90, 200tdi CSW

I believe there is some more bad news to come, lets see if the BOE does the same, I think there maybe another "institution" that is holding on by its fingernails and believes that they will get bailed out as well. Speed Limits! not where I live!

Back in a D3

Did have: RRS TDV8 2008.5MY
Did have: Q7 3.0TDi S-Line/Tech/Comms pack
Did Have: Disco3 HSE

an interesting article about why the cash injection (or basically talk about it) wont help


http://www.moneyandmarkets.com/Issues.aspx...to-do-2283

As an "expert" on the radio said yesterday - no Central Bank can go bust, they just keep printing more money. Sounds like some "experts" still don't remember what happened in the 1920's and 1930's after the stock market crash when a certain Central European country started printing millions of valueless bank notes................... 2020 Pangea Green 1st Edition D240 New Defender 110 is here and loving it
2018 Melting Silver Mini Countryman PHEV - soon to be replaced
2015MY Corris Grey SDv6 HSE Dynamic, the best car I have ever owned, totally reliable only a cou0le of rattles in 3 years, now no longer in my care
Also in my garage is a 1996 TDi300 Defender 90 County HT made into a fake CSW

You even get to watch the vid.

http://www.informationclearinghouse.info/article18205.htm

Tim in Scotland wrote:

As an "expert" on the radio said yesterday - no Central Bank can go bust, they just keep printing more money. Sounds like some "experts" still don't remember what happened in the 1920's and 1930's after the stock market crash when a certain Central European country started printing millions of valueless bank notes...................

Don't be that pessimistic .Anyway D-mark isn't existing anymore and J.C TRICHET is sooooo obsessed by the ''inflation risk'' that no such thing could happen nowadays.

Bradford & Bingley.....another one bites the dust........one more to come...... Speed Limits! not where I live!

Back in a D3

Did have: RRS TDV8 2008.5MY
Did have: Q7 3.0TDi S-Line/Tech/Comms pack
Did Have: Disco3 HSE

The quicker it all comes out the quicker we get back to normal Porsche Cayenne S Diesel 66 Plate