A look at the future of NZ property market

[Damap]

Actually Donna I stand corrected. Just found this:

http://www.westpac.co.nz/rednews/property/where-and-what-are-investors-buying/

Unbelievable how investment driven we have become in Auckland and CHCH especially!!

[Maccachic]

That info is quite wrong Donna. A company that doesn't seem to actually exist called "corelink" has said that 43% of sales in Christchurch are going to investors.
Given the dubious source who knows if that is even correct :-)

Maybe its meant to be core logic?

[spaceman]

LOLZ.......I'll play

I have a feeling that two factors will lead us to a colossal boom:

1. Over the past 6 years central banks in some major economies have been creating money out of thin air

What other way is there to make money????????

2. Once the non government banks start to feel confident along with their clients they will start the multiplier affect of factoring banking on this freshly printed money

What is this "multiplier affect of factoring banking" of which you speak????

I await your answers with bated breath.

Cheers
Spaceman

[McDuck]

“What other way is there to make money????????”
“What is this "multiplier affect of factoring banking" of which you speak????”

It all depends on how sophisticated your understanding of money is.
A simple paperboy might consider making money as the coins he gets after a week’s work.
However, if you consider money as nothing more than a place holding token, in a system of control, then it gets more interesting.
If you’re talking case two, then you really need to clear up your question, since there are at least three players in a money system.
1: The Government.
2: The Bank.
3: The People.
Did you mean “:
1: How does a person make money?
2: Or how does a bank make money?
3: Or how does a government make money?
4: Or how does the overall system increase the number of money token units?
(Also you might like to put some “Time Markers” into the picture, for example, over the period of a second, or a week and so on.)

[spaceman]

^

Originally Posted by mortgage broker
I have a feeling that two factors will lead us to a colossal boom:

1. Over the past 6 years central banks in some major economies have been creating money out of thin air



What other way is there to make money????????

Since my question was in response to a post about central banks creating money why don't you take a wild stab at answering your own question.

You really need to up your game, this form of low effort trolling is just tedious.....put some effort in and make it entertaining ....lolcats wouldn't hurt.

Cheers
Spaceman

[Damap]

[McDuck]

What is this "multiplier affect of factoring banking" of which you speak????
Cheers
Spaceman

Again, the answer depends on your knowledge of banks and history.
A simple paperboy might think of a bank as that slotted plastic pig sitting on his desk.
He puts surplus coins in there so that he can buy big ticket items like a skateboard.
He might think of a commercial bank as a building with a large metal vault where, tonnes of coins are all piled up.

A more sophisticated understanding requires you to see that the category “ Bank”, can be further split into two groups.

2a: Trading banks,
2b: Reserve Bank.

The Reserve bank is not like a Commercial bank at all. The Reserve bank differs, as it has been given a monopoly by the Government to control the money supply of a country. So, not really a bank in the sense we expect.
In operation, most central reserve banks imitate “The Central Reserve Bank of England”.
That Bank of England was set up way back in about 1690, to enable the (Protestant Dutch) King of England to borrow money to fight the (Catholic) French King, who, he suspected, was intent on ruling all of Europe.

So ” to wage War” is that main reason we have central banks.

[spaceman]

^ What no lolcat....zzzzzzzzzzzzzzzzzz

So why don't you explain what you believe the multiplier affect of factoring banking is ..... that it least should provide me with some giggles.

So ” to wage War” is that main reason we have central banks.

I lol'd ....nice one.

Cheers
Spaceman ......@ Damap ....nice!!!!!

[McDuck]

..So why don't you explain ..
multiplier affect of factoring banking ..
Cheers
Spaceman ......@ Damap ....nice!!!!![/COLOR]

The two main parties at play here are Commercial banks and the Central bank.
Although it should be remembered that all four parties are at play, the Government (which enables the Central bank with its authority) and the people (who use the Commercial bank’s services).

Back to our paperboy - who might be surprised to learn that the coins he deposited in the Commercial bank are not there anymore. He might be shocked to learn that his coins have been lent out to someone else.
He would be slightly relieved to hear that the Central bank has told the Commercial bank that they must keep at least on tenth of his coins on hand, should he want to withdraw some of his deposit.

“Fractional Reserve Banking” is the name of this Central/Commercial bank understanding. One fraction, one coin in ten must be retained in NZ.
It’s about two In ten in other countries (I think).
Predictably, if all the depositors tried to withdraw their money at once, the Commercial bank would be in trouble, fortunately this hardly ever happens. The only thing you can get people to do all at once is get on a motorway in the morning.

While a country has only one Central bank, there are many Commercial banks. This fact can be used to create another interesting effect. The Money Multiplier Effect.
Example:
If our paperboy to put 10 coins in bank A, it’s perfectly legal for that bank to loan out 9 coins.
If those same nine coins were then deposited into bank B, there’s nothing illegal about bank B loaning out 8 coins.
If those coins were deposited into bank C…and so on.

The term “Multiplier” is slightly misleading because while the total number of coins in circulation over this period is now, 9+8+7+6+5+4+3+2 = 44, these extra coins have caused inflation, so the paperboys money has less buying power.

The Money isn’t really multiplied; just that the benefit from the paperboy’s frugality and hard work has been redistributed towards the banks and the borrowers and away from the paperboy.
Every loan our fellow New Zealander takes out, cuts the buying power of your wages and savings.

[Bob Kane]

The term “Multiplier” is slightly misleading because while the total number of coins in circulation over this period is now, 9+8+7+6+5+4+3+2 = 44, these extra coins have caused inflation, so the paperboys money has less buying power.

If we start with 10 coins then surely we still only have 10 coins?
Or do you mean 10 coins and a lot of new paperwork?

Every loan our fellow New Zealander takes out, cuts the buying power of your wages and savings.

What happens when a loan is paid off?
Are we back to square one?

[McDuck]

If we start with 10 coins then surely we still only have 10 coins?
Or do you mean 10 coins and a lot of new paperwork? What happens when a loan is paid off?
Are we back to square one?

Oh, yes Bob, You’re right.
At any point in time there can only be ten actual coins, and a bunch of electronic or paper records of the actual events.
But remember we’re not talking about a moment in time; we’re talking about a period of time, perhaps a day.
In a day a coin could be going round the loop several times.- giving it the appearance of several different coins.

In fact, you don’t even need paper or electronic records for the effect to work, it could just be remembered in the minds of a group of people involved in lending money, buying things and holding money for other people.

[McDuck]

I asked...

Cheers
Spaceman

A Factor is just a fancy word for a middle man.

[McDuck]

Cool

... explain ....

Cheers
Spaceman

Ah, I see your confusion.
You’re failing to grasp the difference between an INSTANT of time and a PERIOD of time.

Now, your main question.
You might like to reread my previous posts, to understand the basic multiplier effect, and the basic operation of a bank.
The bulk of your question is explained there.

The factoring part just means that a bank will loan out money to a business based on its customers unpaid debt.
I guess our paperboy would be surprised to know a favour he owed his sister, say, could be swapped with a third person. He would probably consider the obligation exclusive and non-transferrable.

Why don’t you ask me about Court Jews, that’s a really interesting chapter in banking history?

[spaceman]

^ LOLZ...nope...the confusion is yours.

You clearly said there were 44 coins ..... there were never 44 coins .....time makes absolutely no difference ....there was 10 coins on day 1 and unless some new coins are minted there will never be 44 coins ... you have no real clue about how money and banking actually work....otherwise you never would have said there were 44 coins......

One of your big problems is not being able to tell the difference between money and money supply.......don't feel bad you're not the only one.



Keep digging that hole...... but please try to make it more entertaining

Cheers
Spaceman

[McDuck]

^ ...the confusion...

Cheers
Spaceman

Ahhh, I think I see what’s hanging you up now.
An ideal coin should be exactly the same as every other coin.

The total financial system can’t (and doesn’t try to) identify individual coins.
The total system can’t tell the difference between 100 coins being spent in an hour , or ten coins each being spent ten times in an hour.
The system just sees 100.
The system would see 100, even if only one coin existed and it was spent 100 times in that hour.
System still Just sees 100.
Step outside the money system and things change.
Prices by contrast are set by real people, and are lower when 10 coins are chasing a good on a particular day, and higher when 100 coins are chasing that same good, on that same day.
Remember, the system isn’t a person, it has no hang ups about the actual number of physical coins, just the number of shifts over a given time period.
A way to see where you’re going wrong is to consider our paperboy.
Say he waited until each customer finished reading the paper, then took that same single paper to the next house , and did that for his whole run of 10 houses.
The “system of paper delivery” would still record 10 papers delivered. But our paperboy would see only one paper. Our paperboy would still get paid his normal wage because the system only looks at the big picture.
In fact, if a paper recycler took the read papers back to the agent, then the newsboy wouldn’t even be aware of the looping. In double fact, if a paper recycler took the papers to a Factor, and the Factor then delivered them to the Newsagent, no one but the Factor would know the game.
If you asked anyone (except the Factor), “How many papers were delivered?” they would all say 10.