Do banks create wealth?

[SmoothRB]

From another thread. Someone asserted that Britain would be screwed w/out the 'wealth' that the city generates.

I don't see any 'wealth' being generated. I just see a lot of people with the right to draw wealth out of the economy...able to get others to work for them (elites).

Banks 'make money' sure...banking is in effect a license to print money...a printing press could also 'make money'.

[Trommel]

Not again.

[Andy Zarse]

See that bloke driving his Aston DB9 down past London Wall? That's wealth that is.

Yeesh

[ln1234]

Don't know if Banks actually create money for the economy, but the do facilitate the flow of credit to the population, and the income tax/national insurance that banks and their employees pay is a significant wealth earner, especially for London.

[RichardD]

Isn't the idea that a bank will make a clever loan so that e.g. an inventor with big white hair and a massive moustache can implement his idea and generate genuine substance/wealth. A form of stimulation in other words.

But the the problem is when this doesn't happen and it is just playing a part in a pyramid scheme of substanceless debt

[SmoothRB]

Andy Zarse said:

See that bloke driving his Aston DB9 down past London Wall? That's wealth that is.

Yeesh

That wealth was created by Aston Martin.

[SmoothRB]

ln1234 said:

Don't know if Banks actually create money for the economy, but the do facilitate the flow of credit to the population, and the income tax/national insurance that banks and their employees pay is a significant wealth earner, especially for London.

We are only dependent on their credit 'cos the system is set up that way.

Tax paid is not wealth. It's just tokens that allow the government to spend. You can't eat tax reciepts.

[king arthur]

In theory British-based investment banks make investments around the world and the return on those investments is taxed here, so yes they create wealth for this country.

[SmoothRB]

RichardD said:

Isn't the idea that a bank will make a clever loan so that e.g. an inventor with big white hair and a massive moustache can implement his idea and generate genuine substance/wealth. A form of stimulation in other words.

But the the problem is when this doesn't happen and it is just playing a part in a pyramid scheme of substanceless debt

Yes I think so. The banks direct 'credit' to 'worthy' projects. 'Credit' is just if you like a 'liscense' to draw goods and services out of the economy.

Thing is with fiat money the banks earn interest on something they never owned in the first place. They may own 90% of you house. How?

[SmoothRB]

king arthur said:

In theory British-based investment banks make investments around the world and the return on those investments is taxed here, so yes they create wealth for this country.

No they just give us a liscense to buy foreign goods and services.

[Somewhatfoolish]

Finance isn't a zero sum game.

Investment banks (in theory) help shift both risk and capital to where it ought to be, greasing the wheels of the economy and helping everything grow. For providing this service, they get handsomely rewarded as it is so important.

Edit: I seem to have forgotten how to speak english, but I hope that the above at least makes some sense.

Edited by Somewhatfoolish on Friday 30th April 10:07

[Digga]

SmoothRB said:

king arthur said:

In theory British-based investment banks make investments around the world and the return on those investments is taxed here, so yes they create wealth for this country.

No they just give us a liscense to buy foreign goods and services.

:rolf: Some truth in that.

[Andy Zarse]

SmoothRB said:

Andy Zarse said:

See that bloke driving his Aston DB9 down past London Wall? That's wealth that is.

Yeesh

That wealth was created by Aston Martin.

Where's that picture of Winky facepalming in the Radio studio...

I'm not going to bother to explain, it seems clear to me you're being deliberately obtuse for comic effect. I refuse to believe you're actually this dumb.

[king arthur]

SmoothRB said:

king arthur said:

In theory British-based investment banks make investments around the world and the return on those investments is taxed here, so yes they create wealth for this country.

No they just give us a liscense to buy foreign goods and services.

Then I think you'd better explain what your definition of wealth is. One of the measures of wealth is surely the ability to purchase foreign goods and services?

[SmoothRB]

Somewhatfoolish said:

Finance isn't a zero sum game.

Investment banks (in theory) help shift both risk and capital to where it ought to be, greasing the wheels of the economy and helping everything grow. For providing this service, they get handsomely rewarded as it is so important.

Edit: I seem to have forgotten how to speak english, but I hope that the above at least makes some sense.

Edited by Somewhatfoolish on Friday 30th April 10:07

Seems like the credit crisis refuted that, or at least the way banking works with fiat instead of a fixed money supply.

[SmoothRB]

Andy Zarse said:

SmoothRB said:

Andy Zarse said:

See that bloke driving his Aston DB9 down past London Wall? That's wealth that is.

Yeesh

That wealth was created by Aston Martin.

Where's that picture of Winky facepalming in the Radio studio...

I'm not going to bother to explain, it seems clear to me you're being deliberately obtuse for comic effect. I refuse to believe you're actually this dumb.

You think someone else made the Aston?

[SmoothRB]

king arthur said:

SmoothRB said:

king arthur said:

In theory British-based investment banks make investments around the world and the return on those investments is taxed here, so yes they create wealth for this country.

No they just give us a liscense to buy foreign goods and services.

Then I think you'd better explain what your definition of wealth is. One of the measures of wealth is surely the ability to purchase foreign goods and services?

Ok so you have a million dollars in the bank but you are the only person in the world left. Your wealth is zero.

[Somewhatfoolish]

SmoothRB said:

Somewhatfoolish said:

Finance isn't a zero sum game.

Investment banks (in theory) help shift both risk and capital to where it ought to be, greasing the wheels of the economy and helping everything grow. For providing this service, they get handsomely rewarded as it is so important.

Edit: I seem to have forgotten how to speak english, but I hope that the above at least makes some sense.

Edited by Somewhatfoolish on Friday 30th April 10:07

Seems like the credit crisis refuted that, or at least the way banking works with fiat instead of a fixed money supply.

The credit crisis didn't refute that; what it showed was that they were being imprudent in the risk transfer aspect...

[don4l]

SmoothRB said:

From another thread. Someone asserted that Britain would be screwed w/out the 'wealth' that the city generates.

I don't see any 'wealth' being generated. I just see a lot of people with the right to draw wealth out of the economy...able to get others to work for them (elites).

Banks 'make money' sure...banking is in effect a license to print money...a printing press could also 'make money'.

Banks provide "service". They don't create wealth.

The "City" helps to transfer wealth that was created abroad into the UK economy, so they are important to the UK economy.

Don
--

[king arthur]

SmoothRB said:

king arthur said:

SmoothRB said:

king arthur said:

In theory British-based investment banks make investments around the world and the return on those investments is taxed here, so yes they create wealth for this country.

No they just give us a liscense to buy foreign goods and services.

Then I think you'd better explain what your definition of wealth is. One of the measures of wealth is surely the ability to purchase foreign goods and services?

Ok so you have a million dollars in the bank but you are the only person in the world left. Your wealth is zero.

Or infinite.