Category Archives: Money

Green Party Policies: Only Government to create new Money

The Green Party is very democratic and open to new ideas and debates. The media have seized on some of those policies they don’t recognise and used them to attack the Party – I thought some of them were worth a little investigation – hopefully part of a series.


The truth is out – money is just an IOU, and the banks are rolling in it by David Graeber

The Bank of England’s dose of honesty throws the theoretical basis for austerity out the window Tuesday 18 March 2014 10.47 GMT

Back in the 1930s, Henry Ford is supposed to have remarked that it was a good thing that most Americans didn’t know how banking really works, because if they did, “there’d be a revolution before tomorrow morning”.

Last week, something remarkable happened. The Bank of England let the cat out of the bag. In a paper called “Money Creation in the Modern Economy”, co-authored by three economists from the Bank’s Monetary Analysis Directorate, they stated outright that most common assumptions of how banking works are simply wrong, and that the kind of populist, heterodox positions more ordinarily associated with groups such as Occupy Wall Street are correct. In doing so, they have effectively thrown the entire theoretical basis for austerity out of the window.

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Meet the woman that US Investment Bank JPMorgan Chase paid one of the largest fines in American history to keep from talking


The $9 Billion Witness: Meet JPMorgan Chase’s Worst Nightmare By Matt Taibbi November 6, 2014

Chase whistle-blower Alayne Fleischmann risked it all.

She tried to stay quiet, she really did. But after eight years of keeping a heavy secret, the day came when Alayne Fleischmann couldn’t take it anymore.

“It was like watching an old lady get mugged on the street,” she says. “I thought, ‘I can’t sit by any longer.'”

Fleischmann is a tall, thin, quick-witted securities lawyer in her late thirties, with long blond hair, pale-blue eyes and an infectious sense of humor that has survived some very tough times. She’s had to struggle to find work despite some striking skills and qualifications, a common symptom of a not-so-common condition called being a whistle-blower.

Fleischmann is the central witness in one of the biggest cases of white-collar crime in American history, possessing secrets that JPMorgan Chase CEO Jamie Dimon late last year paid $9 billion (not $13 billion as regularly reported – more on that later) to keep the public from hearing.

Back in 2006, as a deal manager at the gigantic bank, Fleischmann first witnessed, then tried to stop, what she describes as “massive criminal securities fraud” in the bank’s mortgage operations.

Thanks to a confidentiality agreement, she’s kept her mouth shut since then. “My closest family and friends don’t know what I’ve been living with,” she says. “Even my brother will only find out for the first time when he sees this interview.”

Six years after the crisis that cratered the global economy, it’s not exactly news that the country’s biggest banks stole on a grand scale. That’s why the more important part of Fleischmann’s story is in the pains Chase and the Justice Department took to silence her.

She was blocked at every turn: by asleep-on-the-job regulators like the Securities and Exchange Commission, by a court system that allowed Chase to use its billions to bury her evidence, and, finally, by officials like outgoing Attorney General Eric Holder, the chief architect of the crazily elaborate government policy of surrender, secrecy and cover-up. “Every time I had a chance to talk, something always got in the way,” Fleischmann says.

This past year she watched as Holder’s Justice Department struck a series of historic settlement deals with Chase, Citigroup and Bank of America. The root bargain in these deals was cash for secrecy. The banks paid big fines, without trials or even judges – only secret negotiations that typically ended with the public shown nothing but vague, quasi-official papers called “statements of facts,” which were conveniently devoid of anything like actual facts.

And now, with Holder about to leave office and his Justice Department reportedly wrapping up its final settlements, the state is effectively putting the finishing touches on what will amount to a sweeping, industrywide effort to bury the facts of a whole generation of Wall Street corruption. “I could be sued into bankruptcy,” she says. “I could lose my license to practice law. I could lose everything. But if we don’t start speaking up, then this really is all we’re going to get: the biggest financial cover-up in history.”


Continue reading Meet the woman that US Investment Bank JPMorgan Chase paid one of the largest fines in American history to keep from talking

Book explains how Wall Street has the market rigged so greedy traders can make a profit on every single transaction


Scalpers Inc. by John Lanchester – a review of Michael Lewis 2014 book Flash Boys 5 June 2014

Early in the afternoon of 6 May 2010, the leading stock market index in the US, the Dow Jones Industrial Average, suddenly started falling. There was no evident external reason for the fall – no piece of news or economic data – but the market, which had been drifting slowly downwards that day, in a matter of minutes dropped by 6 per cent. There was pandemonium: some stocks in the Dow were trading for prices as low as 1 cent, others for prices as high as $100,000, in both cases with no apparent rationale. A 15-minute period saw a loss of roughly $1 trillion in market capitalisation.

So far, so weird, but it wasn’t as if nothing like this had ever happened before. Strange things happen in markets, often with no obvious trigger other than mass hysteria; there’s a good reason one of the best books about the history of finance is called Manias, Panics and Crashes. What was truly bizarre and unprecedented, though, was what happened next. Just as quickly as the market had collapsed, it recovered. Prices bounced back, and at the end of a twenty-minute freak-out, the Dow was back where it began. It’s the end of the world! Oh wait, no, it’s just a perfectly normal Thursday.

This incident became known as the Flash Crash. The official report from the Securities and Exchange Commission blamed a single badly timed and unhelpfully large stock sale for the crash, but that explanation failed to convince informed observers. Instead, many students of the market blamed a new set of financial techniques and technologies, collectively known as high-frequency trading or flash trading. This argument rumbles on, and attribution of responsibility is still hotly contested. The conclusion, which becomes more troubling the more you think about it, is that nobody entirely understands the Flash Crash.

The Flash Crash was the first moment in the spotlight for high-frequency trading. This new type of market activity had grown to such a degree that most share markets were now composed not of humans buying and selling from one another, but of computers trading with no human involvement other than in the design of their algorithms. By 2008, 65 per cent of trading on public stock markets in the US was of this type. Actual humans buying and selling made up only a third of the market. Computers were (and are) trading shares in thousandths of a second, exploiting tiny discrepancies in price to make a guaranteed profit. Beyond that, though, hardly anybody knew any further details – or rather, the only people who did were the people who were making money from it, who had every incentive to keep their mouths shut. The Flash Crash dramatised the fact that public equity markets, whose whole rationale is to be open and transparent, had arrived at a point where most of their activity was secret and mysterious.

Enter Michael Lewis. Flash Boys is a number of things, one of the most important being an exposition of exactly what is going on in the stock market; it’s a one-stop shop for an explanation of high-frequency trading (hereafter, HFT). The book reads like a thriller, and indeed is organised as one, featuring a hero whose mission is to solve a mystery. The hero is a Canadian banker called Brad Katsuyama, and the mystery is, on the surface of it, a simple one. Katsuyama’s job involved buying and selling stocks. The problem was that when he sat at his computer and tried to buy a stock, its price would change at the very moment he clicked to execute the trade. The apparent market price was not actually available. He raised the issue with the computer people at his bank, who first tried to blame him, and then when he demonstrated the problem – they watched while he clicked ‘Enter’ and the price changed – went quiet.

Brad Katsuyama
Brad Katsuyama

Katsuyama came to realise that his problem was endemic across the financial industry. The price was not the price. The picture of the market given by stable prices moving across screens was an illusion; the real market was not available to him. Very many people across the industry must have asked themselves what the hell was going on, but what’s unusual about Katsuyama is that he didn’t let the question go: he kept going until he found an answer. Part of that answer came in correctly formulating the question, what the hell is the market anyway?

Continue reading Book explains how Wall Street has the market rigged so greedy traders can make a profit on every single transaction

The terminology for the Wealthy is changing


The Rich – Exactly what does the terminology mean? By Caroline McClatchey BBC News Magazine

“Bankers”, “the rich” and “the 1%” have become part of the lexicon of a maelstrom of protest. But what do the terms really mean?

A wave of protests across the world and of more measured anger expressed in newspaper letters pages and on social networking sites have thrown up a new lexicon of resentment of the wealthy and the powerful.

But how did all these newly popular terms come to be used as they are?


“The rich”

Everyone knows someone they consider to be rich. But many would struggle with a precise definition, and plenty considered rich by others would shy away from using the term.

In his book Richistan, Wall Street Journal reporter Robert Frank concluded that “people’s definition of rich is subjective and is usually twice their current net worth”. Some people would define rich as having more money than you “need” to live, but definition of “needs” vary dramatically.

A survey of professional households by insurance firm Hiscox suggested an annual income of £93,000 in the UK was hard to manage on. Those polled complained of feeling broke and said they would need to earn more than £150,000 before they felt wealthy.

For some, merely owning a business means you are wealthy, regardless of whether it’s a corner shop or a multinational company. During the summer riots in England, two teenage looters explained that they were showing the police and “the rich” they could do what they wanted. But their definition of rich seemed to encompass anyone who owned a shop. “It’s the rich people, the people who have businesses,” said one.

Continue reading The terminology for the Wealthy is changing

7 Things You Might Believe About Money That Are Totally Untrue

Public domain image, royalty free stock photo from

Believing money myths can cost you By Lynn Stuart Parramore September 23, 2014

When it comes to money, conventional wisdom may not be worth much. Don’t fall for these common myths.


1. If you want to save money, stick to a budget.

That’s what we’ve always heard, and we feel guilty about not taking grandpa’s advice. But researchers from Brigham Young University and Emory University found that budgeting can sometimes backfire. They conducted a study revealing that people who shopped with a spending limit actually forked over 50 percent more on a single item than consumers who weren’t budgeting.

“The results were always the same – a preference for higher-quality, higher-priced items,” said Jeff Larson, the study’s co-author. “The most surprising aspect of this study was that people’s decision-making process can change so easily. Doing something as simple as asking, ‘Hey, how much would you budget for this product?’ completely changes their thinking.”

Larson suggested that when consumers shop for an item with a budget in mind, they tend to gravitate towards items priced close to the budget’s upper limit. So when people had $1,000 budgeted for a flat-screen TV, they tended to pass over the cheaper items and look at TV that cost between $800 and $1,000 —without even checking out the features.

He noted that perhaps consumers would be better off basing their selection on qualities and features before looking at price. So instead of deciding that you are looking for a TV in the $1,000 range, you should start out thinking, “I want a 42-inch TV” and study the prices from there.

A wage packet and money

2. The more you earn, the richer you are.

You would think that would be a no-brainer, but it turns out to be totally false.

Stephen Goldbart, co-author of Affluence Intelligence and co-founder of the Money, Meaning & Choices Institute explains that earning more just makes most of us spend more. “As people acquire more money, they almost immediately start purchasing things that they’ve felt they’ve always wanted rather than thinking about what percentages that they should put away and the consequences of changing their spending habits.”

Lottery winners are a famous example of how this works. They are more likely to go bankrupt than people who never won a thing. When they retire, a whopping 78 percent of NFL players go bankrupt within five years, and NBA players don’t fare much better: 60 percent of them go belly up within five years of leaving the game. Overspending is thought to be a major cause of elite athletes’ financial stress — they typically spend like crazy and burn through their savings at an alarming rate.

When you earn a big salary, it’s hard to remind yourself that peak earning years don’t last forever.


3. When you retire, you shouldn’t touch the principal and just live off the interest.

Um, that would be nice, and it might have worked for your parents, but it’s unlikely to work for you, in part because dividends and interest aren’t what they used to be. With disappearing pensions and Social Security payments that don’t keep up with costs for seniors, not to mention a lackluster job market, many of us will need to get creative to figure out how to retire comfortably even if we’ve been able to accumulate something in a 401(k).

Marc S. Freedman, author of Retiring for the Genius, suggests what’s called a “total-return approach.” The idea is to give yourself a paycheck in your golden years. If you can manage to save enough for an investment portfolio, you can then leave about 5 to 8 percent of your investable assets in cash. Then, once a month, you have a check for a predetermined amount withdrawn from the cash account and deposited into your checking account. As the cash portion of your portfolio depletes to 3 to 5 percent of the value, you rebalance the portfolio and replenish the cash account. This takes more attention and homework than, say, an annuity, but it can also be more cost-effective.

Other strategists recommend what’s called the “bucket approach.” That means you that you create a dedicated pool of assets, made up of cash and other very liquid holdings, which can cover your near-term income needs. Then you can take what’s left over and gradually invest them in more aggressive investment vehicles.

In any case, living off the interest is simply a fantasy for many people today.


4. Money won’t buy happiness.

Well, actually it can buy at least some happiness for some of us.

Researchers from Princeton University have found that if you are a low- or middle-income earner, your life outlook tends to improve if you earn more income. Boosts in salary and happiness increased at the same rate regardless of economic class: a 20 percent increase in salary increased happiness at the same rate for both low-income and high-income people.

Jumps in income also enhanced peoples’ “emotional well-being” – the perception of the quality of their daily life. This effect held true until they reached the $75,000 mark. On the other hand, making over $75,000 did nothing to improve subjects’ daily attitudes. As income fell below $75,000, people were more stressed and less happy.

Another interesting thing that researchers at San Francisco state have found is that the old saw that buying experiences rather than things with our money will make us happier may not be true. It really depends on the authenticity of the experience. If your income goes up and you decide that you should buy tickets to the opera, unless you really enjoy the music such spending will not make you any happier. In fact, you may feel worse. The trick is to spend money on things that really reflect who you are. If you’re a basketball fan, buy a ticket to a game. If you love the water, spend money on a sail. Doing what you think you should do with the money is just a buzzkill.


5. Collecting coupons isn’t worth it.

The folks at have concluded that if you are savvy about it, collecting coupons is indeed worth it.

This comes with a few caveats. You have to avoid the temptation to buy more than you need. Mint recommends keeping a 3 months’ supply of non-perishable food and condiments on hand so that you’ll buy things when they are on sale or when you have the coupons instead of being forced to buy them just when you need them. They also suggest checking to see if the coupon is saving you more than you would save if you were to buy generic.

But the real secret is in something called “coupon stacking.” That means that you apply more than one coupon to the same item. For example, you combine a manufacturer’s coupon and the store coupon for that same box of cereal. Mint notes that you can also usually use an e-coupon and a printed coupon for the same item.

Yes, it can take a bit of time to collect and sort coupons, but one survey showed that people who spend 10 minutes or less per week clipping coupons save an average of $7 off their weekly grocery bill. Not a bad hourly rate for your time.


6. Buying a home is better than renting.

This really depends on a lot of factors, like how long you plan to stay in the home and the details of your mortgage. But certainly it’s not true across the board that buying is best. The Wall Street Journal reports than in many places — including large metropolitan areas like Phoenix, Austin, and Sacramento — renting is the cheaper alternative.

Most people think that investing in homeownership pays off over time, but the financial crisis proved that the value of your home can take a nosedive, and if this happens at a time you need to sell, you’re pretty much screwed. When they consider the cost of buying v. renting, many folks don’t calculate the costs of things like maintenance, fees, property taxes, and repair.

If you rent, you have more flexibility in terms of moving, which can be the key to taking a job with higher income. And because many renters pay less per month than buyers, they can invest the extra money, as well as the money they would have used for a down payment.


7. You can save money on gas by not running the air conditioner in your car.

Ever heard this one? Let’s hope you haven’t sweat too much over it, because according to Consumer Reports, it’s pretty much a myth.

Turning on the A/C in the car doesn’t put more load on the engine and it only slightly decreases fuel economy. At higher speeds (over 55mph), putting the windows down can reduce fuel economy by up to 20 percent, depending on how aerodynamic the car is. However, experts say that when you’re just cruising around town, you’d probably burn a little less gas by having the windows down and the A/C off. Your fan speed doesn’t affect fuel economy, so you can go ahead and turn that up. And park in the shade.


Mythbusters tested this

Original Article