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So, if I got this straight:
Alan Greenspan is the one to blame. Right?
#31, You get partial credit.
If everyone went bankrupt on this, how can anyone be seen as “evil” in this fiasco? It seems to me it’s due to incompetence, and that’s not what being evil is about.
I’m a bit surprised that no one ever mentions the fractional reserve banking system. Creating credit money is really at the heart of the problem.
If real money isn’t expanded to pay back credit money a collapse will eventually take place no matter what.
To understand fractional reserve banking : http://tinyurl.com/745tl
# 34 GF said, “I’m a bit surprised that no one ever mentions the fractional reserve banking system.”
You need to follow these discussions more. I mentioned the ratio problem a few days ago…
#35, One little tidbit — the Fall quarter StimPack had a single little clause in it, something like “banks no longer have to maintain at least 3% of deposits in cash. They only have to maintain up to 3%.”
What this means is they don’t have to keep ANY money on hand anymore.
#30, Cow-Patty,
Where do you think the banks got the cash from to make these loans and cause the chaos?
God, some people are amazingly stupid.
When you weren’t looking they raided your shoe box at your poopcycle stand.
#12 Winston’s URL still has a residual “w” in it, and doesn’t work unless you take it out.
[Fixed — ed.]
But everyone should read the Wired article in Winston’s #10 post. Here it is again:
http://wired.com/techbiz/it/magazine/17-03/wp_quant?currentPage=all
I had been seeing the word “copula” and wondered what it meant, and whether it was just a misspelling of cupola.
The article says that by the end of 2007 there were $62 TRILLION in credit default swaps outstanding. Isn’t that close to the total economic output of the entire country for, like, half a decade? Shouldn’t someone have quoted Gabriel Garcia Marquez and shouted “Cease, cows! Life is short!” Oh wait. Apparently several people tried to point out that this was all very unsustainable, but they were all universally ignored.
We need more grown-ups.
#39
“Oh wait. Apparently several people tried to point out that this was all very unsustainable, but they were all universally ignored.”
As if one would be able to stop this train wreck of hedonism just by telling the truth…
# 38 Mr. Fusion said, “When you weren’t looking…”
You don’t a clue as to what the answer to the question is, do you?
#36, Loser,
One little tidbit — the Fall quarter StimPack had a single little clause in it, something like “banks no longer have to maintain at least 3% of deposits in cash. They only have to maintain up to 3%.”
What this means is they don’t have to keep ANY money on hand anymore.
Not quite. Banks must still have reserves of at least 3% on deposits up to $44.4 million. Over that, they need reserves of 10%. Reserves include cash on hand plus cash deposited with the Federal Reserve.
Certain types of deposits are not required to have any reserves. They make up only a small portion of the net deposits held though.
#41, Cow-Patty,
Did you check your shoe box? Isn’t it short a few billion?
You don’t a clue as to what the answer to the question is, do you?
A more relevant question would be “do I care”?
Moral of the story: Greed always gets you in the end.
P.S. I wish they did mention about house flippers, and others who artificiality enlarged housing prices. All to feed the greed
#42, Poison Twin,
Here is some text pasted directly from the bill passed last fall.
http://tinyurl.com/dees6h
SEC. 202. INCREASED FLEXIBILITY FOR THE FEDERAL RESERVE BOARD TO ESTABLISH RESERVE REQUIREMENTS.
Section 19(b)(2)(A) of the Federal Reserve Act (12 U.S.C. 461(b)(2)(A)) is amended–
(1) in clause (i), by striking `the ratio of 3 per centum’ and inserting `a ratio of not greater than 3 percent (and which may be zero)’; and
(2) in clause (ii), by striking `and not less than 8 per centum,’ and inserting `(and which may be zero),’.
SEC. 203. EFFECTIVE DATE.
The amendments made by this title shall take effect October 1, 2011.
They are removing the reserve ratio altogether. Consider that this bill has already been passed (and no one noticed) and was supposed to be enacted in 2011. This was the original timetable. That has been bumped up now. This is why the press and the leaders are so desperate to get this bill passed — their entire plan is at stake.
Edit:
Here is the original bill to which this is referring:
http://www.federalreserve…
2. Reserve requirements.
A. Each depository institution shall maintain reserves against its transaction accounts as the Board may prescribe by regulation solely for the purpose of implementing monetary policy–
i. in the ratio of 3 per centum for that portion of its total transaction accounts of $25,000,000 or less, subject to subparagraph (C); and*
ii. in the ratio of 12 per centum, or in such other ratio as the Board may prescribe not greater than 14 per centum and not less than 8 per centum, for that portion of its total transaction accounts in excess of $25,000,000, subject to subparagraph (C).
# 45 orangetiki said, “P.S. I wish they did mention about house flippers, and others who artificiality enlarged housing prices.”
“Flipping” isn’t possible unless tons of fiat currency is being fed into the economy. It isn’t a cause but, a symptom. You have it backwards.
#46, Loser,
Interesting link. The second link didn’t work. I’m not sure but you mean:
CHAPTER 3 > SUBCHAPTER XIV > § 461
Prev | Next
§ 461. Reserve requirements>TITLE 12 > CHAPTER 3 > SUBCHAPTER XIV > § 461, Reserve requirements
I wish I had the time to wrap my head around this crap tonight, but dang, I’m only here as a mental refresher from what I’ve been working on. Off the top, there appears to be a discrepancy between what the FED has published as the required reserves and what you are posting.
There is also another aspect where not all banks are regulated by the FDIC or FED. I believe Investment Banks and Private Banks are not covered.
#48, Poison Twin,
The second link was in the blog posting I copied. I didn’t clean up my quote. My apologies. Here is that link:
http://tinyurl.com/dhew2e
It is to the Fed Reserve page (it was included for completeness in the other blog). Note that the bill changed those requirements.
However, the first link is the actual text of the bill, approved by Congress, and signed by the President.
Off the top, there appears to be a discrepancy between what the FED has published as the required reserves and what you are posting.
What you posted is old. The new law that took effect last fall was only supposed to kick in at 2011.
I suspect, and it is only a hunch, that the Bush admin knew the end was coming and wanted to lay the blame on the next president (whoever that would be) as people’s memories are short. It happened a little sooner than expected so they pushed that law into effect sooner. The law that wasn’t supposed to happen until 2011 was passed in 2006 (or around that time frame).
The banks don’t have to keep money anymore. The theory is that if the banks don’t have any cash, there can’t be a run on them. Or at least that is what I could glean from the different blogs where this has popped up. It doesn’t make any sense to me as to why Congress would vote for this unless the plan all along is to nationalize the banking system.
Who knows. I’ve my tuna and guns stockpiled.