While looking for some information on banks' reserves requirement, I found a page at http://www.federalreserve.gov/monetarypolicy/reqresbalances.htm [2] which seems to suggest that banks earn interest from the Fed on their reserve requirement. At 0.25% per week, that appears to work out to roughly 13% APY that banks are essentially guaranteed to make even if they didn't loan out a penny to real customers. Is anyone else taken aback by that? Doesn't it seem like the Fed is sponsoring banks' profits with our dollars?
Go to a bank, borrow say
Go to a bank, borrow say 100,000 dollars and then ask for cash – they can’t do it because they don’t have it (although they could special order it for you). It’s all a ponzi scheme, in that a computer at the bank says they have money in reserve, through another bank.
That bank covers the first bank with reserves in another bank that has reserves in another bank, etc, etc, etc. It’s fiat money, it does not exist, there is no gold, no silver, no precious metals to back them up, just digits on a computer.
They let us think there is money by letting us have some physical pocket change to jingle, which has lost 90% of it’s purchase power in the last 100 years and loosing more every day. But heyyyy, it’s a great scam to be in, making people pay interest on something that does not exist. How kewl a ponzi is that?
Here’s a great read about fiat money and how the name on the credit card you have in your pocket is called a “Straw Man” and you’re paying interest for someone else, since you really do not exist. Not even your car is yours, since the titles are owned by the strawman created by the state.
http://html-pdf-converter.com/pdf/how-i-clobbered-every-bureaucratic-cas... [5]
Of course the core of this corruption is the Federal Reserve and according to Mr. Greenspan, the ultra-secret money men who control our nations money are above the law.
http://www.youtube.com/watch?v=pVmxQsvj6lo&feature=player_embedded [6]
thechampaignlife, Tell me if [8]
thechampaignlife,
Tell me if I’m wrong but here’s in one paragraph what you described that the Banks do. They have you sign a contract for something they do not have on hand in the quantities they wrote the papers for, relying upon others who will send more money in the future, providing further justification in selling more of the paper they create for the newest suckers who sign. Heyyyyyyy… sounds like a ponzi to me.
As for the private corporation called the Federal Reserve, here is what they’re all about.
"We are completely dependant on the commercial banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the banks create ample synthetic money, we are prosperous; if not, we starve. We are absolutely without a permanent money system...” - Robert H Hamphill, Federal Reserve
Who is signing the contract
Who is signing the contract in your second sentence, the depositor or the loanee? If loanee, they do have the money on hand and it is the depositors money sitting in their vault. That's why I called it a sort of reverse Ponzi because they have the money but then give it to others expecting to get it back. It's only when they don't get it back that things fall apart. Ponzi's fall apart when people voluntarily stop choosing to investment while banks fall apart when people break their loan repayment terms for the money they did indeed receive. In a perfect world where all loans are repaid, you could return everyone's money and close down the business no harm, no foul. Not true for Ponzi's.
It's all semantics though.
' If loanee, they do have the
' If loanee, they do have the money on hand and it is the depositors money sitting in their vault.'
Not really...As much as we bemoan the fact that the 'Fed creates money out of thin air,' most of the cash 'created out of thin air' comes from regular banks and credit unions. As anyone who has ever gotten a loan knows, the amount being loaned is not taken out of the vault and given to you in cash. The 'lender' issues you a check or deposits that amount in your checking account. Banks and credit unions are, and have been forever, permitted to loan a certain percentage (presently 900%?) 'more' than what they have in assets (customer deposits, etc.). The exact percentage has varied over the years, controlled by some Fed agency I presume, but the fact remains that a bank that has $1,000,000 in deposits can legally loan out $9,000,000! That's why the biggest fear of bankers is having a 'run on banks,' which has occasionally occurred (The movie, 'It's a Wonderful Life,' portrays such an event).
Example: You're approved to get a loan for $10,000 to purchase a car because the lender considers you, personally, to be a good credit 'risk.' The bank or credit union issues a cashiers check or credits your checking account for that amount. No cash has been taken out of the vault, it was created out of thin air. You then take that $10,000 and give it to the seller of the car, who then takes that check and deposits it in his/her bank account. That bank can now lend $90,000 because of the $10,000 deposit. You will, in accordance of the loan agreement, now 'make payments' to pay off the loan while the bank holds the title to the car. You don't own the car until you pay off the loan. And of course the payments will total more than the actual loan because of 'interest' added to the loan.
Imagine this happening millions and millions of times over the decades and it may help understand how debt, with the accompanying usury, has gotten so completely out of control, and why the US Dollar has lost so much of it's value over the years. And because of usury (which used to be a sin, and still is in the Islamic faith) there will NEVER come a time in which all debts are paid. The instant when that first loan with interest was made, true capitalism died. If Adam and Eve each had $100, and Eve borrowed $10 from Adam while promising to pay back an extra dollar, where is the extra dollar going to come from? Get my drift? She would either have to create it out of thin air or go outside the Garden of Eden and steal one from one some unlucky sap. That's why we have wars?
You've got the general
You've got the general concept down but the percentage is off by an order of 10. Banks can loan out 90% of their deposits and are required to keep 10% of depositor's cash in their vault (or the Fed's vault), known as the cash reserve ratio (see http://en.wikipedia.org/wiki/Reserve_requirement [13]). The same money "generation" concept works where a bank takes in $10,000, loans out $9,000 for someone to buy a car, that's deposited in the car dealer's bank which loans out $8,100 for someone to open a business, that's deposited in their bank which loans out $7290, etc, etc until that $10,000 deposit has created $100,000 in deposits in the banking system. The actual $10,000 in dollar bills never changed but $90,000 in loans were issued based on the expectation that all deposits will not be withdrawn at the same time to deplete the 10% they have on hand and that all of the loans will be repaid to return the original depositor's money back to them. Things fall apart when the interest charged to cover nonpayments (and profit) is insufficient to cover the number of nonpayments and then the depositor's money can't be returned to him when demanded.
I wouldn't consider most of today's rates usurious so long as you borrow responsibly and pay it back. If you've got good credit and are willing to work hard to maintain it, you can find very attractive rates which allow you to borrow rather than save for things. And therein lies the problem. We are an instant gratification society that can't discipline ourselves to work hard and save for what we want, myself included. The easiest way to make borrowing more difficult is to increase the reserve requirement which will reduce the amount banks can loan out and make loans more difficult to come by. Of course that causes the economy to come to a screeching halt so it would have to be done VERY slowly and at the same time as tons of financial education and generally hard, productive work to make up for the lack of money flying around.
As for Adam and Eve, they would have traded in resources such as food. If Adam had 100 baskets of food and loaned Eve 10 with her having to give him back 11, she would have just had to work hard to pay him back. In the end, that's all money really represents - our natural resources. We can print all the paper money we want and even back it with precious metals but, in the end, what we have and/or want are food, water, entertainment, service, etc. A gold-backed dollar does me no good when I'm alone and starving or when someone invents a cost-effective process to create gold from other elements (it's possible but prohibitively expensive currently). Now a cache of tasty and healthy food that would sustain me and anyone else who wanted some indefinitely and never go bad, that's priceless! And to come full circle: "For everything else, there's MasterCard."
Thanks for correcting me.
Thanks for correcting me. And that is the 'fractional reserve ratio,' determined by the Fed, that a bank must have in cash or 'liquid assets.' (like home mortgages) Also, not to be argumentive at all, but the example that you used of the original $10,000 eventually becoming $100,00 sort of proves my point because neither the original amount was loaned as cash (it was credited, created by a mouse-click) nor was the final amount, which turned out to be a 1000% increase from the original amount (100% of $10,000 = $10,000, 200% = $20,000). Am I missing something?
As far as usury, I'm sticking by my guns. There was a reason that it was referred to as a sin and my example of using Adam & Eve was just to simplify my reasoning. We're not talking about the bartering of goods, but lending cold, hard cash. If there were a set supply of cash and a lender wanted interest, where is that cash for interest going to come from? Create more cash (causing inflation) or steal it.
And I would disagree that 'In the end, that's all money really represents - our natural resources.' Fiat money is based on the tenet that people using it 'believe' in it. It has a 10 printed on it so we 'believe' that it is worth ten dollars. As soon as people stop believing that, then they rush to possess precious metals or barter goods. Example: If the game starts with each player having $10, they 'know' what the money is worth because they 'know' what they can and cannot buy with it. If a new player carrying a box of cash joins, then they're not sure what that $10 is worth. They 'believe' it is still worth $10, but if the new player (the Fed) reaches in his box and pulls out twenty $10 bills and hands them out to everyone, now there's more $10 bills wanting to buy the same things as before and suddenly the $10 bill isn't worth as much because it takes more of them to buy the same things (supply & demand 101). That's called inflation. Look at gas prices here being affected by the demand from China.
There are countless articles on the history of money, the first instance of fractional reserve banking, how the Church deemed, after a thousand years, that usury was not a sin after all. It's all very interesting and, as always, I'm eager to learn more. So much to learn...so little time.
Does anyone really believe
Does anyone really believe that the Fed is paying banks 13% interest on their reserve money? Why would a bank ever lend out money to anyone if they could get 13% guaranteed from the Fed?
I know there is distrust of the Fed, but they're paying .25 basis points, not 13% annually.
That was my exact thought. Is
That was my exact thought. Is the .25% the annual rate or actual rate? Because .25% per week amounts to roughly 13% annual rate. Based on the fact that they give a weekly variable rate and don't say anything about it being annual (kinda a big deal you think the bank of banks would be careful to disclose), I surmised it to be .25% per week. Hope I'm wrong because that level of subsidy on vault holdings would stifle lending and slow the economy.
When you have money sitting
When you have money sitting there, do you loan it out at say 5 percent or loan it back to the hydra that feeds you at double digits.
You have to always remember that banking is a ponzi scheme and that they will always cover their own and let everyone else go belly up. Just follow the money and see where it leads you right through the Private Federal Reserve.
If you’re one of "them" your covered regardless of the amount, all of us suckers are only good for a couple of hundred thousand.
http://www.activistpost.com/2011/01/elite-now-have-unlimited-fdic-covera... [19]
And there are thousands of ways to bolster bank profits through our tax dollars.
http://dailybail.com/home/chris-whalen-gift-from-government-to-bank-of-a... [20]
Of course the ultra wealthy don’t pay taxes on their money as so much of it is off shore.
http://theeconomiccollapseblog.com/archives/the-shadow-banking-system-a-... [21]
But it is the future bailouts we will pay for that have me most concerned.
http://dailybail.com/home/chris-whalen-devaluation-and-default-will-be-d... [22]
When combined with the devaluation of the dollar that is now driving up our gas prices to new record high, you have the perfect storm of financial insolvency.
Remember this friends, its all about enslavement through usury, because those who owe others cannot dictate how their own lives are lived.
It would be inaccurate to
It would be inaccurate to describe it as a ponzi. Ponzi schemes sell an asset that you don't possess for delivery at a future date and rely on future sales of that asset to meet delivery of previously sold assets. Of course the problem comes when you don't sell enough to cover the deliveries demanded and then all remaining undelivered assets are unable to be delivered.
Banking takes delivery of an asset for delivery back at a future date and, in the meantime, lends that asset to others expecting to be repaid in full (plus some). Of course the problem comes when the people that the bank lends to are unable to repay in full and then all remaining undelivered assets are unable to be delivered back. I suppose you could describe it as a reverse ponzi. However, I'd fault the people who took a loan that they couldn't repay more than the banks. Financial education of the American consumer would go a long way but there will also be the over-zealous person that over-extends themselves and I don't know of any good solution to that problem except to make all lending illegal.
Not sure what the low-end limit is for FDIC elite status but I'd consider myself pretty elite if I had more than a couple hundred thousand at any single bank.
Has anyone seen any data showing the effective tax rate for various income levels? That would be interesting to see. I know my personal effective rate is quite a bit lower than my marginal rate because of exemptions, deductions, credits, etc.
I can't say that usury exists in the business world given interest rates from the past decade and the fact that you could avoid it by saving instead of borrowing, becoming the lendor instead of the lendee. I suppose you could argue usury based on the level of taxation (or future taxation based on accruing deficits) that might be going to the benefit of private businesses but that's a pretty broad sword and would need some specific examples to clarify.
Should 5% appear too
Should 5% appear too small...be thankful they don't take it all. - Beatles 'Taxman'
Hey, now that money is
Hey, now that money is officially "speech" it shouldn't surprise us that moneyed interests write their own rules. Really, it's not like citizens have any right to complain. I guess I should be thankful that money still allows me to live in this great country where the top 1% suck up all the money and leave the rest of us fighting over the scraps.
The rich get richer...no news
The rich get richer...no news here.
Bernanke wants to buy back all those 'bundled' mortgage securities from his friends at the Central Banks in Europe. States and municipalities going bankrupt? Too bad, the international bankers come first.
Ain't America great?!