ALB
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I wouldn’t say Werner’s views were “interesting”. They are just bog standard currency crankism by someone who has someone managed to get the title “Professor” to go with his name which gives them a credibility they don’t deserve.
His views are dealt with in chapter 4 of our pamphlet The Magic Money Myth entitled “The Pure ‘Thin Air’ Theory of Banking’.
According to this, a meeting to protest against the erection of a tower block in the ward was held on Tuesday 19 November to which it had been announced that candidates in the by-election had been invited:
https://www.savearchwaycampus.org/news/community-rallies-against-plan
Apparently the Labour, Corbynist and LibDem candidates spoke at the meeting. So either the other 4 candidates weren’t invited, turned down the invitation, or didn’t speak.
Our candidate did not receive an invitation. We have contacted the presumed organisers for more information, asking to where any invitation was sent.
If we had known about the meeting we would at least have leafletted it.
The position our candidate would have expressed would have been along the lines of the (unpublished) letter to the Islington Tribune in message #254865 above.
Found the passage you are referring to:
“If the bank has found from experience that it only ever needs to retain 10% of deposits as cash to meet the needs of its customers, then it can loan the remaining 90%. So, here, if the bank starts out by loaning £10,000 to B, who uses it to buy a lathe, this loan appears as £10,000 of bank capital, against which the bank can then make additional loans. So, on this basis, it may make a further loan of £9,000, to C, which then also appears as additional bank capital. The bank can then make an additional loan of £8,100 to D, which then appears as additional bank capital making possible a loan to E and so on. Instead, of just issuing a loan of £10,000, this initial bank capital of £10,000 enables the bank to issue loans of up to £100,000, and each of these appear on its books as capital, whilst in fact this £100,000 is only fictitious capital, it is only able to earn interest to the extent that the money loaned out is used to buy productive-capital, and thereby generate surplus value.”
https://boffyblog.blogspot.com/2014/12/fictitious-capital-part-4.html?m=1
The first sentence is correct but what follows is not. If a bank lends a capitalist £10,000 to buy a lathe, when the capitalist actually buys the lathe then the bank has to transfer £10,000 to the bank of the person who sold it. The money has then gone. The asset represented by the IOU from the borrower has been liquidated and cannot be used to make another loan of £10,000 (In fact, the initial loan could only have been £9,000 but we can let that pass.)
There is, however, one circumstance under which theoretically it could — if the seller of the lathe happened to bank with it. There would then be a fresh deposit of £10,000 and the bank could lend 90% of this, ie £9,000. If the seller again happened to bank with it then it would have a new deposit of £9000, of which it could lend out 90%, or £81,000. This process could continue (assuming the sellers always banked with it) until total loans of £90,000 had been made. But this would have been balanced by total deposits of £100,000.
Of course this is a quite unlikely, not to say impossibke, scenario for a single bank but, applied to the banking system (all banks) it is the theory of fractional reserve banking which used to be taught in university economic courses. It is not incorrect but doesn’t mean what it is sometimes interpreted as meaning that (with a cash ratio of 10%) a single bank could lend 9 times an initial deposit.
Michael Roberts in that blog from 2014 does indeed seem to be putting forward a thin air theory of banking even if he doesn’t call it that — as the “bank capital” he bases it on does disappear as soon as the borrower spends the loan and the bank has to transfer money to the seller.
This is explained in chapter 5 of our pamphlet The Magic Money Myth:
I don’t know if he still adheres the view he expressed in 2014 but in a later blog he explicitly repudiates the thin air theory of banking embraced by David Graeber:
The LibDem candidate puts in a belated appearance:
From last Wednesday on the last 900 leaflets were distributed, bringing the total number distributed to 2950, covering every letter box in the ward not behind a gate or in a block of flats with no free entry.
So that part of our campaign is over. All we will be doing now is intervening on social media such as, if anyone wants to join in:
https://www.facebook.com/story.php?story_fbid=1081857983939883&id=100063470743031
Junction ward by-election – Thursday 28 November 2024
byu/comrademikey inislingtonPolling date is next Thursday with the result being announced within a couple of hours of voting closing at 10pm.
This weekend’s i paper has an article entitled “Banks accused of ‘ripping off’ savers over interest rates”. Amongst those making this accusation is Positive Money:
“Simon Youel, head of policy and advocacy at research and campaign group Positive Money, said: ‘Banks have made record profits from increasing interest rates for borrowers while paying depositors insultingly small rates on their savings.’”
This is true but it is odd coming from an organisation which denies that banks are financial intermediaries borrowing from some at one rate (savers) and lending to others at a higher rates (eg mortgages) and claims that banks can create money out of thin air simply by making a loan.
If this claim was true then banks could make even bigger profits by simply creating the money to loan so avoiding having to attract and pay interest to savers. But the fact that they do need to attract savers shows that the claim is not true.
But then currency cranks are nothing if not illogical.
I’d also suggest instead of having “how we are different” from other parties, instead we should have “Why X doesn’t work”.
Actually, we do have something on our website that does this (even if it is not very easy to find):
The Tory candidate manifests himself:
He claims:
“There are four varieties of socialism on offer. If you don’t like any of them, if you don’t believe in socialism, you can vote for me.”
Actually, there is only one candidate who states both on the ballot paper and on their leaflets that they are standing for socialism. The other three he mentions are just offering tweaks to the existing capitalist system.
It would be more accurate to say that there are six varieties of capitalism on offer. So if you want capitalism you’re spoilt for choice. Vote for one of them.
But if you want socialism — the common ownership and democratic control of the means of life with production directly to meet people’s needs, not for profit — there is only one candidate standing for this.
There is also this:
https://finimize.com/content/china-unearths-massive-gold-find-worth-billions#
Of course that gold in the ground is not worth that much. In fact it’s not worth anything. That’s only its notional value if it had been mined and processed (and that its appearance on the market wouldn’t reduce the price of gold) but the geo-strategic point at the end is valid.
Another leftwing endorsement of Jackson Caines, from “the Collective”, a group that wants to form yet another left-of-Labour political party.
https://x.com/wearecollectiv_/status/1858922247479849211
More on “the Collective” here:
https://www.thecanary.co/uk/analysis/2024/09/16/jeremy-corbyn-collective/
When the vacancy occurred we decided to contest the by-election as we had stood in the ward on three previous occasions. Little did we realise that the by-election would attract national attention.
We have even been accused by some of Caines’s supporters of splitting the anti-Labour vote — by the same sort of people who in years gone by used to accuse us of splitting the Labour vote.
Yesterday the remaining part of the Girdlestone estate was leafletted as well as commuters leaving Upper Holloway overground station.
Re the Durham Miners Gala, wouldn’t it be better to organise the debate against a Labourite rather than a Tory? Otherwise we would just be providing entertainment for the anti-Tory participants. It’s the Labour Party we need to hit and hard.
Stand outside businesses, stations, ect with placards challenging this current system in smart ways that will get people to notice, come talk to us or visit our site. Stuff like that.
But it seems that’s what noone wants to do and I don’t for the life of me understand why.Nobody here has suggested we shouldn’t do that. It’s the general strike idea that has been questioned.
Personally I prefer leafletting protest marches and door to door during elections or regular street stalls. But there is no objection in principle to members doing what you suggest here. Put it to your branch and see what they think or to South wales branch. They do something every Saturday.
The SWP intervene. Guess who they are supporting.
You’ve been on some of the fortnightly anti-Gaza war protest marches and so will have seen the variety of papers and leaflets on them calling for all sorts of ways to free non-Jewish workers in Palestine from direct oppression by the Israeli state.
“Smash Israel”, “Socialist intifada”, “workers government”, etc, etc. from the various Trotskyist and Maoists groups. I was going to say I hadn’t read them all but suspected that at least one of them would have called for a general strike.
I then checked and found that I was right:
This is from the “Workers Revolutionary Party”. But it hasn’t raised their profile nor the number of votes they get when they contest elections — they get about the same as us.
We certainly do need to do more and maybe different to draw attention to the need for socialism but starting a campaign for a general strike over the Gaza war wouldn’t do this. So it’s back to the drawing board.
