this may be stupid but...........

[leeb]

Where the hell has all the money gone too in this 'credit crunch'. surely there is a certain amount, which if anything is only going to grow as more is printed. I mean people aren't ripping up £50.00 notes, so who is winning and whats going on.

As i say, I may regret this and look totally stupid, but I need to find out, its been bugging me!

[Maxf]

It never existed.

[fid]

It's not going anywhere, that's the problem. But I'm still profiting out of currency and day trading at the moment.

[Hoppy2008]

leeb said:

Where the hell has all the money gone too in this 'credit crunch'. surely there is a certain amount, which if anything is only going to grow as more is printed. I mean people aren't ripping up £50.00 notes, so who is winning and whats going on.

As i say, I may regret this and look totally stupid, but I need to find out, its been bugging me!

Soovy's got it.

[furtive]

It did exist, but only virtually

[AstonZagato]

If you put £50 in the bank, the bank lends out, say £100 to someone else. He spends the £100, it goes into another bank who then lends £200. That £200 gets spent and put into another bank who lends £800.

It all works till you ask for your £50 back or the banks stop being prepared to lend. Then the £800 quickly collapses back to the £50.

[bishbash]

Your getting money and value mixed up. If you buy a house for £200k and it loses 25% of it's value, there isn't suddenly £50k less money in the world.

[Ikemi]

It's bound to happen with all the banks lending. It needs to do this to stablise. As soon as we are out of recession the same process will begin again until the banks have lent too much money, people want debts paid and there is no money to pay them!

[Rofly Lollers]

bishbash said:

Your getting money and value mixed up. If you buy a house for £200k and it loses 25% of it's value, there isn't suddenly £50k less money in the world.

That's the crux of the issue, the value of companies has been increasing over the years to well beyond what they should have been. Many companies don't manufacture enough real hard goods to be worth as much value as the stock market was putting on them.

So the money which was lost was not real to start with, it's an inflated notional amount which just happens to be linked to the real amounts you've paid into your pension fund because the fund managers have chosen to invest it that way.

[leeb]

all makes sence now. top work.

so, banks, nice one, cheers!

[crofty1984]

leeb said:

all makes sence now. top work.

so, banks, nice one, cheers!

so, RECKLESS BORROWERS and banks, nice one, cheers!

[ypauly]

leeb said:

Where the hell has all the money gone too in this 'credit crunch'. surely there is a certain amount, which if anything is only going to grow as more is printed. I mean people aren't ripping up £50.00 notes, so who is winning and whats going on.

As i say, I may regret this and look totally stupid, but I need to find out, its been bugging me!

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