UK Karting - Notice Board (Chat) : Re: Borrowing......anyone explain?

Notice Board (Chat)

Re: Borrowing......anyone explain?
Posted by 'MattCortes' on 05 Aug 2011 @ 17:19

| View Message Thread | Reply to this message |

MattCortesJoined: November 2010
Total Posts: 3
[ View User Profile ]

Its to do with the wholesale money markets.

In the olden days building societies only could lend what they had in their safes, ie peoples savings. Banks then came about because these building societies found they could often lend (at a profit) more money than they had in savings so decided to borrow from other banks or lending institutions and then re lend this money.

Governments used to only spend what they brought in in taxes. Then they needed to raise money usually for large state building projects or wars and went to these banks or insurance companies that had large amounts of money sitting doing nothing and borrowed it at a fairly low rate of interest as it was seen as really safe borrowing.

They could not just print money as the more money in circulation leads to inflation (or like German did in 1923 Hyperinflation) and the money that is being printed becomes worth less.

Banks, Investment trusts, Insurance companies etc need to lend safe money as money just sitting in their account actually becomes worth less as standard inflation (2% a year ish) means each year the savings worth drops 2% and that would upset shareholders. Governments need to borrow as it keeps the economy stimulated and allows them to keep up with what they are spending. It is generally agreed as long as they dont borrow more than 7% of their spending all is good.

Message Thread:

Borrowing......anyone explain? by 'Smileyman' (05 Aug 2011 @ 11:49)

Re: Borrowing......anyone explain? by 'PaulMRotax' (05 Aug 2011 @ 13:58)

Re: Borrowing......anyone explain? by 'MattCortes' << You are here!

Re: Borrowing......anyone explain? by 'PaulMRotax' (05 Aug 2011 @ 18:00)

Re: Borrowing......anyone explain? by 'MattCortes' (05 Aug 2011 @ 18:02)

Re: Borrowing......anyone explain? by 'Smileyman' (05 Aug 2011 @ 20:39)

Re: Borrowing......anyone explain? by 'Chris34' (06 Aug 2011 @ 0:09)

Re: Borrowing......anyone explain? by 'Newshound' (06 Aug 2011 @ 0:43)

Re: Borrowing......anyone explain? by 'Newshound' (06 Aug 2011 @ 0:44)

Re: Borrowing......anyone explain? by 'Chris34' (06 Aug 2011 @ 13:06)

Re: Borrowing......anyone explain? by 'PaulMRotax' (06 Aug 2011 @ 12:49)

Post a Reply:

You may post a direct reply to this message which will appear in this thread.
To post a new or unrelated message use This Form. Top of Page
Notice Board Index

[ UK Karting Main Index ]


News	Karts & Karting	Notice Board	Market Place	Companies Directory	Tracks Directory	Events Calendar	Race Results	Photo Gallery	Links