I heard of this today or was it yesterday? I can't remember but I found it very interesting that they didn't know that they were losing money. Maybe they were trying to forget about it and it would go away.
Exactly. I saw this coming from the day the bailouts were even though of. We haven't seen the last of this either.
Quoted for truth. You can be rest assured that we will be hearing more and more people asking for bailouts. Hell, bailouts are even popular amongst late night talk shows. It's all become a joke.
How long are we gonna go by a system where we the people not only bail out these big banks but bail them out by the feds printing money which then hits the middle class as runaway inflation. I mean look at retail food prices. Its rediculous.
It is ridiculous, but it won't stop until the majority of people realize what is really happening with our current monetary policy and all that inflation that is being created. I really hope people realize before something drastic happens, like the collapse of the dollar.
The problem is that even if people do take notice, they still won't take action.
Unfortunately I don't think there's much I can personally do besides buying actual American goods and securing my finances so that I don't have to beg Uncle Sam for help in case I need revenue due to the lack of a job etc. as there have been a lot of lay offs and I don't think we've seen the end of it..
Unfortunately I don't think there's much I can personally do besides buying actual American goods and securing my finances so that I don't have to beg Uncle Sam for help in case I need revenue due to the lack of a job etc. as there have been a lot of lay offs and I don't think we've seen the end of it..
They aren't printing money to do this. They are just borrowing more and taking on a bit of a deficit. We just bought stock in the banks though, so as long as they stay solvent, we'll get it back soon and possibly make a pretty penny off of it.
Technically they never print money to do this. They just convince the banks to lend more or less which in turn influences monetary policy. It would be nice if people understood the necessity of a balanced budget though. We're going to have to make serious cuts in the next 10 years out of simple necessity. The general estimate is that we'll be cut off once we hit $15 trillion in debt.
Technically they never print money to do this. They just convince the banks to lend more or less which in turn influences monetary policy. It would be nice if people understood the necessity of a balanced budget though. We're going to have to make serious cuts in the next 10 years out of simple necessity. The general estimate is that we'll be cut off once we hit $15 trillion in debt.
Where do the banks get this extra money from? Someone has to print it out because as far as i know i dont see any banks with healthy reserves. Even the federal reserve admitted that this is what they are doing and even admitted in front of Ron paul who who is one of the heads of the banking oversight committee that they arent doing a good job of keeping prices stable.
They aren't physically printing the money. It's being loaned out with a 10% reserve. I deposit $100 and then keep $10 then loan out $90. That person will spend or deposit that $90 so some bank will gain $90 in funds. Then $81 is loaned out (and so on and so forth).
New money is put onto the market through the Fed buying or selling securities to give the bank's higher reserves. The banks are pretty fine. It was mainly the investment houses that over leveraged themselves, partly because a bank would be breaking the law if they didn't maintain their reserves of 10%.
This is literally Econ 101.
New money is put onto the market through the Fed buying or selling securities to give the bank's higher reserves. The banks are pretty fine. It was mainly the investment houses that over leveraged themselves, partly because a bank would be breaking the law if they didn't maintain their reserves of 10%.
This is literally Econ 101.
The thing is that this system of fractional reserve banking does create money. Sure banks have to keep a certain percentage of deposits with them, but they are allowed to lend the rest. When they lend the rest, money is created because the original depositors account still stays the same while the new loan (new money) is created. This system really hurts us in times of slow economic growth because it leads to inflation.
Money from security sales do comprise of part of the money that the Fed/government spends, but the vast majority of money out there is created by the fractional reserve banking system. Also, we currently don't have enough buyers for that many securities, so we do print some of the money as well.
Yes. I was just pointing out to PingPong that it was fractional reserve banking, not physical turning on printing presses. That annoys me to no end.
The money that's created isn't bad as long as the Fed is willing to reign it in when it needs to. That's a big if unfortunately. I would say that it works better than a full-reserve system, as we have seen much more investment and general growth under it. I also personally like the idea that it's basically just he money being fully utilized.
I don't see the inflation as a problem, since it has generally been under control (when it was controllable by internal means). The same mechanics for growing the supply work well in reverse. They are more than capable of pulling in the supply to discourage lending and deflate the money supply. It would actually be more effective since they wouldn't have to account for leakage. They just haven't done it in a while. I would actually be more concerned about the crowding out function of the debt in general. That has a larger effect on interest rates and our economy.
I'm not completely sure that we never print money to expand the supply, but I am fairly certain that we've had steady buyers for our treasury bonds. They are quite in demand on the foreign market. We're completely screwed if that money dries up, but that's more an issue of the deficit in general.
The money that's created isn't bad as long as the Fed is willing to reign it in when it needs to. That's a big if unfortunately. I would say that it works better than a full-reserve system, as we have seen much more investment and general growth under it. I also personally like the idea that it's basically just he money being fully utilized.
I don't see the inflation as a problem, since it has generally been under control (when it was controllable by internal means). The same mechanics for growing the supply work well in reverse. They are more than capable of pulling in the supply to discourage lending and deflate the money supply. It would actually be more effective since they wouldn't have to account for leakage. They just haven't done it in a while. I would actually be more concerned about the crowding out function of the debt in general. That has a larger effect on interest rates and our economy.
I'm not completely sure that we never print money to expand the supply, but I am fairly certain that we've had steady buyers for our treasury bonds. They are quite in demand on the foreign market. We're completely screwed if that money dries up, but that's more an issue of the deficit in general.
I stand corrected. Your right the fed doesnt technically print money. I went through to try to understand this fractional reserve banking and I found this great post on yahoo answers. They might as well have created this money out of thin air because it wasnt in the system before and this is what is creating our inflations.
http://answers.yahoo.com/question/index?qid=20080410213030AAcp4qd
There's an old trick called "fractional reserve banking."
Let's say you have a bank, and in your vault you have $1000 from all your depositors. Someone comes in to take out a loan for $10,000. Uh oh! You don't have that amount! Doesn't matter. Under a fractional reserve monetary system, you are allowed to issue credit for, say, 10 times the amount you actually have. This works because all the banks are in agreement to honor one anothers' credit.
So the person wishing to take a loan for $10,000 signs his house away as collateral. His house actually has value. In exchange, you, the banker, issue him a bank credit for $10,000. In the moment he signs his name, $9000 was just created out of THIN AIR. You have just robbed this man, and he is none the wiser because he fails to understand the trick. He has just traded his house for a slip of paper.
Many people think that money is created when printed by the Treasury. This could not be more wrong. Money is created every day, by the banks themselves, as liquid credit.
This is why it holds no value. It's an ongoing scheme to rob the American people of their property, and bury them under insurmountable debt. Between the taxes, the inflation (the devaluing of the dollar which is never accurately reported) and the interest on the debt, we have been made to be slaves to our creditors.
So where does the Fed come in? Well, the Fed determines the Fraction part of the Fractional Reserve System. It is the authority to which all the lower banks refer. It also determines the interest rate on new currency (which the Fed technically LOANS to the Treasury)... but I want to keep my answer short so I won't get into this aspect.
Still confused? Here, watch this documentary:
http://www.neithercorp.us/nforum/serious...
http://answers.yahoo.com/question/index?qid=20080410213030AAcp4qd
There's an old trick called "fractional reserve banking."
Let's say you have a bank, and in your vault you have $1000 from all your depositors. Someone comes in to take out a loan for $10,000. Uh oh! You don't have that amount! Doesn't matter. Under a fractional reserve monetary system, you are allowed to issue credit for, say, 10 times the amount you actually have. This works because all the banks are in agreement to honor one anothers' credit.
So the person wishing to take a loan for $10,000 signs his house away as collateral. His house actually has value. In exchange, you, the banker, issue him a bank credit for $10,000. In the moment he signs his name, $9000 was just created out of THIN AIR. You have just robbed this man, and he is none the wiser because he fails to understand the trick. He has just traded his house for a slip of paper.
Many people think that money is created when printed by the Treasury. This could not be more wrong. Money is created every day, by the banks themselves, as liquid credit.
This is why it holds no value. It's an ongoing scheme to rob the American people of their property, and bury them under insurmountable debt. Between the taxes, the inflation (the devaluing of the dollar which is never accurately reported) and the interest on the debt, we have been made to be slaves to our creditors.
So where does the Fed come in? Well, the Fed determines the Fraction part of the Fractional Reserve System. It is the authority to which all the lower banks refer. It also determines the interest rate on new currency (which the Fed technically LOANS to the Treasury)... but I want to keep my answer short so I won't get into this aspect.
Still confused? Here, watch this documentary:
http://www.neithercorp.us/nforum/serious...
- 9 months ago
Actually that's not exactly how fractional reserve banking works. They can't make a loan for $10,000. $9,000 extra is created along the line though, so it's only a little off.
The bank must maintain a reserve of 10% for their current deposits (not loans). If someone deposits $1,000, then they have to keep $100 around. They can loan out the $900 though. For the sake of this example, the man who loaned the money spends it on a used car. The car salesmen then deposits this $900 in the same bank. They can then re-loan $810 out. This continues until the end amount of the deposit has been grown by the inverse value of the reserve ratio. Since the reserve rate is 10% right now, that would mean it grows by ten times.
The important difference is that there is a whole chain of liabilities along the way. It would take a lot of failures for that money to just dry up.
I'll also note that they usually don't change the reserve rate to grow or shrink the money supply. That's a really drastic option and usually saved for tough times. The standard procedure to grow the money supply is to buy US treasury bonds from the banks at a premium. They sell (because we are offering a bit more than face value for them) and they therefore have new reserves to lend. If we want to shrink the money supply, then we sell US treasury bonds at a discount. They buy (because we're giving them a good deal) and this sucks up their reserves and limits lending.
Again, inflation isn't directly caused by growing the money supply. It's obviously related, but not a direct ratio. That's the beauty of the fiat system. The money is worth what everyone agrees it is worth. Inflation is therefore determined by roughly how much we can buy. I'll agree that it's been a little under-reported recently. The consumer price index doesn't include gasoline, which kept inflation down over the last year and a half. I believe estimates were that it would have been about 5-6% if gas was included. Then again, a lot of people drove less without a significant reduction in quality of life, so it's a bit of a toss up.
There's one definition for growing the money supply that I like. It's that the money supply is being fully exercised. It is being loaned to the maximum amount possible without a failure or runaway inflation. This allows for much more growth and spending which generally keeps the economy going strong.
Not sure what to say about the whole "no value" argument. Any currency has no inherent value. That's what makes it a good currency. If it had inherent value, then it would just encourage hoarding amongst the population. Inflation itself never robs anyone of their money. Only unexpected inflation would do that. A small amount of fairly reliable inflation is healthy since it encourages investment, which creates jobs, which distributes the money, which allows for a higher quality of life. Deflation on the other hand is a true nightmare that kills investment. There's also no real way out of it until people just decide to start spending.
I apologize if this is a bit more rambling than usual. This post was fueled by insomnia (which gave out about halfway through thankfully). Good night my friends.
The bank must maintain a reserve of 10% for their current deposits (not loans). If someone deposits $1,000, then they have to keep $100 around. They can loan out the $900 though. For the sake of this example, the man who loaned the money spends it on a used car. The car salesmen then deposits this $900 in the same bank. They can then re-loan $810 out. This continues until the end amount of the deposit has been grown by the inverse value of the reserve ratio. Since the reserve rate is 10% right now, that would mean it grows by ten times.
The important difference is that there is a whole chain of liabilities along the way. It would take a lot of failures for that money to just dry up.
I'll also note that they usually don't change the reserve rate to grow or shrink the money supply. That's a really drastic option and usually saved for tough times. The standard procedure to grow the money supply is to buy US treasury bonds from the banks at a premium. They sell (because we are offering a bit more than face value for them) and they therefore have new reserves to lend. If we want to shrink the money supply, then we sell US treasury bonds at a discount. They buy (because we're giving them a good deal) and this sucks up their reserves and limits lending.
Again, inflation isn't directly caused by growing the money supply. It's obviously related, but not a direct ratio. That's the beauty of the fiat system. The money is worth what everyone agrees it is worth. Inflation is therefore determined by roughly how much we can buy. I'll agree that it's been a little under-reported recently. The consumer price index doesn't include gasoline, which kept inflation down over the last year and a half. I believe estimates were that it would have been about 5-6% if gas was included. Then again, a lot of people drove less without a significant reduction in quality of life, so it's a bit of a toss up.
There's one definition for growing the money supply that I like. It's that the money supply is being fully exercised. It is being loaned to the maximum amount possible without a failure or runaway inflation. This allows for much more growth and spending which generally keeps the economy going strong.
Not sure what to say about the whole "no value" argument. Any currency has no inherent value. That's what makes it a good currency. If it had inherent value, then it would just encourage hoarding amongst the population. Inflation itself never robs anyone of their money. Only unexpected inflation would do that. A small amount of fairly reliable inflation is healthy since it encourages investment, which creates jobs, which distributes the money, which allows for a higher quality of life. Deflation on the other hand is a true nightmare that kills investment. There's also no real way out of it until people just decide to start spending.
I apologize if this is a bit more rambling than usual. This post was fueled by insomnia (which gave out about halfway through thankfully). Good night my friends.
This is funny as there is another large forum ATS. There were many threads on there and there are also hundreds of other people all over giving advice to boycot the Bank of America and a few other owned government banks. It looks the people actually managed to make a bank unsteady, I say go people, now its time to do that for your human rights!
Yeah...some random guys on the Internet took their money out of the bank. That was what destabilized it.
All that stuff about Mortgage Backed Securities and sub-prime lending was a coverup.
All that stuff about Mortgage Backed Securities and sub-prime lending was a coverup.
Even if we weren't in the current economic situation, I'd take my money out of Bank of America. I once opened an account with them, and made a fairly large deposit, and two days later, my money was gone. They closed my account for security reasons, and took some of my money (but of course they said the funds couldn't be recovered, the liars).
Anyhow, I wouldn't put my money in any of these "big banks" nowadays. There's too much corruption within their own systems. I'd rather have my suitcase full of cash, lol!
Anyhow, I wouldn't put my money in any of these "big banks" nowadays. There's too much corruption within their own systems. I'd rather have my suitcase full of cash, lol!
I'll back you up on the whole big bank thing. I had to put some of my money in US Bank while I'm college, and I just don't care for them. They screwed two of my friends with about $600 in overdraft charges while they were away on Christmas break. The service is not that great either.
I really miss my old credit union back home. I've always found that the small regional banks are better. ING is winning some respect though. You can't beat the interest on their ING Direct accounts (2.5% for a normal savings account)
I really miss my old credit union back home. I've always found that the small regional banks are better. ING is winning some respect though. You can't beat the interest on their ING Direct accounts (2.5% for a normal savings account)
Absolutely agreed! And I really think this would have been a good solution for the banking crisis. Instead of bailing out BIG banks who are really only serving BIG finance and investors, creating local credit unions in the communities would have been a much more effective way to get money to circulate again. Also agreed with ING Direct. When I was in Canada I had my savings with them, my experiences have just been very good with them, effortless, efficient with no waste at all.
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