Money as Debt: Private Central Reserve Banks, Usury and Fractional Reserve Banking

Discussion in 'Business & Economics' started by wesmorris, Aug 9, 2014.

  1. wesmorris Nerd Overlord - we(s):1 of N Valued Senior Member

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  3. joepistole Deacon Blues Valued Senior Member

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    There is nothing wrong with a well regulated "fractional" banking system. It works well and we have centuries of data to support that assertion. An unregulated or insufficiently regulated fractional banking system is very dangerous as we have just recently witnesses (i.e. The Great Recession). Banking is inherently a risky business, that is why regulation and a central bank (i.e. a banker's bank) are critical to a stable banking system. A central bank is the bank which provides clearinghouse operations for banks and is the lender of last resort for banks. Banks are businesses and like other businesses from time to time they need money, operating money. When this occurs banks first try to borrow money from fellow banks and if that fails, they go to the Federal Reserve where they can always get collateralized loans through the Fed Discount Window. But it costs those banks about three times what it would cost if they borrowed from a fellow bank. So borrowing from the central banks is a last resort and the most expensive route for banks to get cash needed for day to day operations.
     
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  5. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    While debt growth has slowed (1st graph); Public debt has soared as % of GDP (2nd graph)
    China is in same leaking boat. (3d graph) SUMMARY of them: Question is when, not if, the fiat money game closes and how?
    Red text because:
    Public debt (not even counting growing unfunded liabilities promised) has been increasing faster than GDP for a least a decade & half.
    Graphs from: http://www.bloomberg.com/news/articles/2015-02-05/a-world-overflowing-with-debt ....... Sorry graphs are so big. For facts, see all three.

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    Note in graph below: Public debt to GDP ratio is rapidly ACCELERATING. (From 3 to 35 percentage points since 2008 crisis!)*
    * Rapid increase of public debt to GDP is sign world is in: (1) seven years now of "recovery mode" OR (2) fiat's terminal phase - You guess which is correct.
    Note from above graph, the increase in seven years of the annual (or compound) rate of growth of the pubic debt to GDP (9.3/5.8) is 160%

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    Experimenting with last graph to see If I can make them post smaller:

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    No can do but it changed and new is smaller

    PS to wesmorris I too like your link in post 21. Think even Joe may too as he thinks Congress is most of US's problems, I think. BTW the automatically playing after "trailer" (all you can watch at link) is another "trailer" on " Jack." Too bad he only got 4 years instead of 40 for passing out millions to many Congressmen - buying votes for the corporate PTB and supper rich 1% who soon own half of all the world's wealth. I always say:
    "US has the best (for the rich) government money can buy."
     
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  7. CHRIS.Q Registered Senior Member

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    Don't like the past feudal system
     
  8. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    Few, except members of the royal court, did, but what is you point? Try to comment on post 23, with some POV.
     
  9. Michael 歌舞伎 Valued Senior Member

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    "Once upon a time, your dollar was as good as gold, then for many decades, they said your dollar was backed by the full faith and credit of government." Do you know what it’s backed by now? "Used car loans, bad home loans, distressed assets and derivatives."
    -- Paul (2015)

    Don't worry, the Bankers will come looking for QE4-eva soon enough. A couple more decades of that, and then it's time to start 'taxing' those 'income producing' assets that's left. And, shipping off the old and the unproductive (but I repeat myself) to Government Licensed, Day Supervision Centres - you know, for the Good of Society. Someone's got to pay for the roads, and we all use them. Just think of all the good Jerbs that'll be created for the Government Schooled functional illiterates. Millions.
     
  10. joepistole Deacon Blues Valued Senior Member

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    How about making some sense every once in a while instead of posting this demagogic nonsense?
     
  11. cornel Registered Senior Member

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    Yes, and it is problematic nowadays because the people paying for the debt are often not the ones who actually took out the loan.

    (And obviously this mostly applies to government-debts, but individuals and companies who can't pay their debts will often get some kind of
    get-out-of-paying option under conditions as well, and societies still end up having to pay for the debts of those individuals/companies/Greece)
     
  12. joepistole Deacon Blues Valued Senior Member

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    Debt is not "slavery for all". There is a difference between government debt and individual debt. Debt is a critical part of capitalism and the efficient utilization of capital. Debt allows excess capital to be redeployed into areas of growth. Debt is critical to efficient markets. Now, debt can become problematic if it is misused, just as anything can be misused. And debt defaults are falling, not growing.
    http://blogs.wsj.com/cfo/2015/01/16/moodys-expects-low-default-rate-in-2015/

    I am not sure what you mean when you say "society will end up having to pay for the debts of those individuals/companies/Greece". It's a little more complicated than that, normally the creditor pays the cost of a default. The degree to which the creditor is able to pass his default costs on to others depends on the elasticity of the market for his goods and services. https://en.wikipedia.org/wiki/Price_elasticity_of_demand

    Consumer debt can be construed as a kind of slavery for the indebted party. But there are options available to debtors to mitigate that debt. There is never a good reason for spendthrift behaviors. But banks lend to people knowing some will default because the rewards (i.e. returns) exceed the default costs. It’s a business and it’s a profitable business. If it were not profitable, banks would not be making those loans (e.g. credit cards).

    In the case of Greece, it is a rather different situation. But, debt, national debt is how nation states manage their money supply. So just because a nation issues debt, it doesn't mean everyone will ever have to pay for it. Growing economies and growing populations require a growing money supply. Unfortunately, this is not well understood by most people so it leads to a lot of confusion and because of that confusion and ignorance, it is a ripe subject for demagogues.
     
  13. Fraggle Rocker Staff Member

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    The citizens of the southern USA were so fond of it that they tried very hard to recreate it here. Unfortunately, there weren't any white people who were willing to fill the roles of the yeomen--since the Industrial Revolution was just beginning and there were better jobs available in the new factories.

    So they enslaved black people, and treated them much worse than yeomen had been treated in England.

    After the Civil War they were no longer permitted to own slaves, but they continued to employ black people in very poor conditions with very poor pay. When World War I began, there was suddenly a great need for factory workers in the Northeast. Thousands of black people migrated up from the South to find a better life.
     

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