Kucinich: 'Is the Fed paying banks not to loan money?'

To make a long and complicated story short:

The banks are building up their reserves rather than lending. It's in their financial interests to do so.

With enough reserves the bank is less likely to go under if conditions worsen or there is a run on the bank or etc.

This hoarding is not good for the economy but is good for the banks.

That is a very astute realization. Building their reserves to prepare for the worst is exactly what they are doing.

To answer GetReadyAlready, you are saying we should have done exactly what they did do in 1929 and 1932. The only thing that caused the Great Depression to last as long as it did was policies, that by themselves were ineffective. The causes of this Recession were similar to that one, the difference is that we learned from that one and implemented many policies at the same time, including bailouts, instead of doing them 1 at a time and making the changes impotent.

While most Americans are not feeling the recession, only observing it on the news, without the bailout the bank failures would have been the first domino in a large and unpredictable sequence. You are right, we would have entered a deep depression, but tell me, would you prefer to get out of a depression at the expense of several million people just like we did in WWII?

Since we will bring history into it, how about we just look at the RBC, and the fact that we have a recession every 7-10 years. They usually last 6 months to 2 years and as long as the correct policies are enacted quickly, we can expect to see changes to begin 6 - 9 months after the policies were enacted. Unemployment, of course, is one of the last indicators to rebound.

While it upsets me that the banks were bailed out because for some reason our politicians think money trickles down like water through a brook, and that I think the policy was the wrong way to go, it was an option that can have the correct effects, even if it takes longer.

The think I don't want to have happen is for them to allow the banks to fail and see the chain reaction of that. What we should be talking about is why our politicians feel the need to vote in favor or against these bills without ever reading them. That is the rediculous part.

Still, not a conspiracy, even if we thought the Bilderbergs were behind all of this they have nothing to gain by the demise of a nation like the United States. I refer you to Adam Smith and the invisible hand,

"Every individual...generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.... It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our necessities but of their advantages. "

[edit on 27-7-2009 by memarf1]

I believe it about the car loan. We tried to trade our car in to downsize to a car with a lower payment.

It is a nissan altima with a high interest rate. We wanted a car with a lower rate. Even the same car , same year with lower rate would have been wonderful.
The dealer said he could do it.

Then when looking he said the Loan to Value Ratio was to high. He said a year ago, it would have been fine that the car SHOULD be worth 12k rite now, but because of all the defaults, the Nissan is now only worth 9k. It dropped 3k in one year and this is a car that usually holds pretty steady. Last year it had a blue book value of 13k, now it has a 9k value the next.

He said bring in in next year and try again.

Next year , I think we will see people get rebates or incentives to buy GM cars, and that will just further tank value of foreign cars as there will be a less demand for them, or government competition drives them out.

Welcome to living Monopoly and the board is one big railroad.

I like the idea of debt forgiveness. What if they declared a year of jubilee, wherein all debts were forgiven. ( I would exempt bank and brokerage accounts from this.)

Who actually loses the most in a year of Jubilee? The one who loses are the banksters who have accumulated the largest piles of cash and who are owed the most money.

This was actually a part of Old Testament Jewish law and was used in ancient times to break the monopolies of banksters and usurers. It is not right to become a debt slave forever.

reply to post by memarf1


The conspiracy comes alive when you realize who benefits and what they gain by crashing the dollar and destroying the middle class! The U.S. has been unique since its inception because of the strong middle class. The U.S. dollar became the world's currency because it seemed impossible to fail. The entrepreneurship in the US and the cowboy way and the bold nature of Americans insured our success. The private gun ownership ensured our sovereignty. The huge natural resources and natural borders insured our safety.

Now, the global environment has broken all of that down. The Federal government has grown out of proportion. Literally millions of pages of statutes and laws have eroded the sovereignty of the states and the people. Banks and Govt entities have crushed the entrepreneurial spirit. Overzealous DA's have crushed the cowboy way. Our resources are shipped overseas and we buy back cheap products made with cheap labor. We pay farmer's to not grow wheat and corn, so the Commodity markets are predictable, while people around the world and here at home starve! Our borders are no longer secure. People from all countries with all sorts of intentions can walk across our North or South border unchecked! They come through our airports on Student Visa's without any type of background check!

The Unconstitutional Progressive Tax plan envisioned by Karl Marx has destroyed the working man! Social Programs benefit the poor while burdening the middle class. The richest 1% continue to manipulate the legal and financial systems without penalty. The poorest people continue to manipulate the system to garner all the possible benefits of the Old Feudal System of government. The press is bought and paid for by the large corporations and manipulated by the politicians with the FCC as their guard dog!!

YES THEIR IS CERTAINLY A CONSPIRACY AT PLAY!! It is exactly what Karl Marx predicted. Our system of Capitalism will not be self-sustaining. The middle class will erode away to nothing, and a few very large corporations will run the country. We will have Socialism with a puppet government bought and paid for by the richest 1% of people and companies!

Wait.....Wait......OH, it's too late! We have that NOW!!!
We still have the illusion of gun ownership and land ownership, but through taxes, regulation, and licensing, these things are strictly controlled. We do not OWN anything. Even the cash in your pocket is property of the Federal Govt, the Credit Cards are property of the issuing bank! Just read them. Anything can be stretched to be called a Federal Crime, and as such, everything you possess can be seized!! Read the other threads about the guy doing a legal business researching alternative energies. He went to jail for 1 month, because he forgot a sticker on a package he mailed. When the ridiculous sentence was overturned, the government put him in prison for 2 years, because he "abandoned" his hazardous materials while he was in jail for the other month!!
www.abovetopsecret.com...

Read about the Congressman who thinks it is stupid to read the 1000 page bill before voting on it!
www.abovetopsecret.com...

Read about how the ATF can regulate commerce within the confines of one state, because they have stretched the meaning of "interstate" commerce to mean all commerce. They believe that if you make something in FL, sell it to me in FL, and I use it in FL, it is still "interstate" because it affected the ability of a guy in OR to sell me the same thing!!
www.abovetopsecret.com...

Read about how FEMA, is now participating with foreign troops in a mocked terrorism drill to gather intelligence and "Prevent" a follow-up attack on U.S. soil. This will be the largest drill ever, and it includes foreign troops in FL, OK, IL, and other states!! FEMA has also usurped the State Governor's powers, and has legal authority to override a governor's orders and seize control of a state's National Guard and emergency services!
www.abovetopsecret.com...

The U.S. as a corporation, a world leader and innovator is DEAD!!

We are living in something entirely different now! Their will be a second revolution or civil war! There is no turning back at this point. The only question is whether the people wake up and do something now, or wait until the war is almost unwinnable and the casualties more drastic!!

One thing that bothers or even confuses me with this or any other financial institution is where does the interest come from?
Working in a bank myself I know we have loans to other companies and countries that has to be repaid 'with interest'.

Most people can't see that interest is only making the problem worse , and if someone defaults on their loan then they are charged a fee or an increase in interest.

Interest just magically appears in most peoples minds, as if its a tangible resource ready to be tapped, the interest just springs into existance when the need is there. Sorry but its not, interest and payments in general have to come from somewhere , whether its from you and your family making extra payments in higher taxes raises or higher costs for food and fuel or simply 'printed' by the central banks to cover the loses. What ALL the financial insitututions need to do to get the economy back on track is FORGET all their debts from others, like forgetting the third world debt, and your credit card debts, start afresh , but thats me wishing and hoping so it isn't ever going to happen. Flame me if you want , I really couldn't give a monkeys today.

[edit on 28/7/09 by DataWraith]

reply to post by ZindoDoone


zindo do not worry about this guy i have seen him around and he likes to stir the pot up a bit if you know what i mean. he has a perfect life and this down turn with the economy hasnt effected him one bit, so he acts like he is above any implications that come his way, just hope he keeps up on his luck pills.
anyhow i have 2 friends that bought houses, then tried to buy cars with bank credit unions, too there dismay, they were denied. so i know where your coming from.

reply to post by tatersalad


I wonder who you are referring to tater? I hope not me! If you read my other posts, you will see that I lost a $70K/yr job, gave up my truck, my house, and took a $28K/yr job this year. My father was cut from 40 to 30 hours per week, so we remodelled his house and my family of 4 moved in with my parents.

You may have seen some of my posts about how much happier I am now! That is very true! But, don't confuse that with not being affected by the depression!

That's because if they do start making loans now inflation will bite everyone so fast that no one will have time to figure out where the First Aid kit is. There's been a lot of credit destruction, and attempts to collateralize new debt to prevent old debt from crashing with new money, and it is going to take it's toll eventually. And if that money doesn't go out, you have a political nightmare, if it does go out, you have inflation and a political nightmare. Not because a mere 1 trillion will cause this, but the leveraging that will follow.

[edit on 28-7-2009 by projectvxn]

reply to post by Keyhole


This is trickery, because they know that if they let that money go it will cause inflation as the government would have to raise interest rates and print more money to satisfy the leverage at some point. Meanwhile large amounts of cash are being distributed abroad buying up commodities like crazy..Sounds like someone is hedging against a dollar devaluation.

reply to post by tatersalad


Tater,
He and I bump heads very seldom and when we do it's civil in nature! I can't think of one friend or acquaintance of mine that doesn't disagree with me or I them from time to time. He's just a pain in the butt when he's right and I'm wrong!!!

Zindo

reply to post by getreadyalready


I don't disagree that things have changed and in some cases for the worse. I also don't disagree that the "cowboy" way of the "bold and innovative" American people has been destroyed in almost every state(of course reserving Texas). But, it's still just the natural progression of things. Yes, a war, revolution or civil, may be just around the corner, but as per other conversations I have had with you, these are just the fast track to exactly what is going to happen one way or another. The only difference is that one way can be peaceful and people will complain, or the other can be deadly and people will be happy with the outcome. It is a matter of how we see things that happen. The peaceful way we complain and don't want it. The deadly way many countries break into smaller regions and then see a NEED for globalization and thus just accept and even prefer it.

If you are concerned that people will wait until it is almost unwinnable, if a war occurs, then I refer you to the first revolution. That war was unwinnable from the very beginning and even Washington lost so many battles for the first few years that he was almost removed from command. It wasn't until General Gates abandoned the cause b/c he lost so bad in a british mussel to mussel battle that Washington was secured in his position. We continued to lose even after that. It is all about staying power, which is also why our current war in Afganistan is going to be so difficult. When the people rise up, it is a matter of who has the most resolve, not who has the most military might! The revolutionary war was also not voted in favor in every colony in the beginning and many colonies didn't start sending troops until much later in the war. War debt mounted and many "Patriotic" banks didn't even want to finance it any more. No war is unwinnable, and it is never too late.

That said, once a war begins, it is too late to seek a peaceful resolution and that should be the absolute biggest requirement. Even the most avid patriots should recognize that and attempt it at every cost. Our country has been driving down a very dark road for a very long time, but you have to realize that just 15 years ago people were very happy and still had national pride. Even the first revolution took decades and decades to come to a head.

Oh yeah, and this is NOT a depression. It has been deep, but we will come out of it pretty soon. If you want to call it a depression then you must wait another 2 or 3 years. Then, if we are still in it then I'll agree with you, but until then it is a deep recession that isn't even in the top 3 in the history of the U.S.. Don't overstate our problems. :-)

[edit on 30-7-2009 by memarf1]

[edit on 30-7-2009 by memarf1]

Originally posted by DataWraith
One thing that bothers or even confuses me with this or any other financial institution is where does the interest come from?
Working in a bank myself I know we have loans to other companies and countries that has to be repaid 'with interest'.

Most people can't see that interest is only making the problem worse , and if someone defaults on their loan then they are charged a fee or an increase in interest.

Interest just magically appears in most peoples minds, as if its a tangible resource ready to be tapped, the interest just springs into existance when the need is there. Sorry but its not, interest and payments in general have to come from somewhere , whether its from you and your family making extra payments in higher taxes raises or higher costs for food and fuel or simply 'printed' by the central banks to cover the loses. What ALL the financial insitututions need to do to get the economy back on track is FORGET all their debts from others, like forgetting the third world debt, and your credit card debts, start afresh , but thats me wishing and hoping so it isn't ever going to happen. Flame me if you want , I really couldn't give a monkeys today.

[edit on 28/7/09 by DataWraith]

Interest from the FED is simply created from thin air. The FED is in charge of making the dollars and regulating it and controlling inflation and such, and so when they pay interest, they are simply adding money to the supply. This is why I was against it in my other posts. Central banks all around the world use this policy, so yes, the interest does just get created, and yes it does create inflation. There are pros to it as well however. For example, inflation takes time to hit people, so while it is true that we pay for it in some form eventually, the increased money supply initially enables us to buy more stuff. Since we Americans like stuff we should be okay with a controlled increase in the general level of prices, since wages and profits typically follow the inflation rates as well. Wages are the bad part b/c they typically take longer to follow, but they too have an affect on inflation. There are no free rides up. It's complicated and annoying, but the alternative is barter which is highly inefficient.

reply to post by memarf1


Good analogies with first Revolution. I contend that this one began brewing during the Eisenhower administration when he started warning of the "military-industrial complex" and admitted that he was not in control!

That gives us 5 or 6 decades of build up.

Making money out of thin air, allowing Fed to run unchecked, and eroding State's rights and People's rights are going to be the final pick in the lock. Obama is a patsy. He is all smiles now, but this will be his fault, regardless of his true intentions. I personally think he had good intentions, but he is playing right into the Master Plan!

We are in a Depression, it may be 2 or 3 years before economists admit it, but it is happening now!! We all said we were in a recession a full year before the economists finally agreed, and then said it started a year earlier!! This will be the same. Sometime next year they will say a Depression started in Oct. 2008.

Bernanke has already stated that they underestimated the drastic effects, and that this 'may' be worse than the Great Depression!
www.abovetopsecret.com...

Originally posted by getreadyalready
reply to post by memarf1

 

Good analogies with first Revolution. I contend that this one began brewing during the Eisenhower administration when he started warning of the "military-industrial complex" and admitted that he was not in control!

That gives us 5 or 6 decades of build up.

Making money out of thin air, allowing Fed to run unchecked, and eroding State's rights and People's rights are going to be the final pick in the lock. Obama is a patsy. He is all smiles now, but this will be his fault, regardless of his true intentions. I personally think he had good intentions, but he is playing right into the Master Plan!

We are in a Depression, it may be 2 or 3 years before economists admit it, but it is happening now!! We all said we were in a recession a full year before the economists finally agreed, and then said it started a year earlier!! This will be the same. Sometime next year they will say a Depression started in Oct. 2008.

Bernanke has already stated that they underestimated the drastic effects, and that this 'may' be worse than the Great Depression!
www.abovetopsecret.com...

Allowing the FED to run unchecked is exactly why we don't have runaway inflation. As soon as we begin oversite on this bank, which technically has its own oversite, and as soon as we begin federalizing that bank, is exactly when we need to run for the hills! History has shown that banks with tight federal ties typically cause large amounts of inflation and soon there after those nations currencies typically fail. See teh following with stong ties to the respective governments:

www.huffingtonpost.com...

And I hope you remember the Soviets:

en.wikipedia.org...

I know you like to use Ben Bernanke as a source a lot, so here is a good quote from him about inflation:

Ben Bernake States: "We see little indication today of the beginnings of a 1970s-style wage-price spiral, in which wages and prices chased each other ever upward,"

www.forbes.com...

And from Gwartney, Stroup, Sobel, and Machperson:

The independence of the FED is designed to reduce the likelihood that political pressures will adversely affect its ability to follow a stable, noninflationary monetary policy.

Examples of banks without oversite from their respective governments include, Japan, England, the EU, and Canada. Also sources from the above Macroeconomics book, published in 2006. However, if we look at counterexamples like many Latin American nations we can quote the same book:

Studies indicate that when a country's central bank is strongly influenced by political considerationos, the bank is more likely to follow inflationary policies... politicians in a country with high budget deficits might lobby their central bank to expand money supply to help finance the governments spending.

What is happening however, is that even though we have weak ties, our politicians keep trying to do oversight and regulation on the FED. For some reason the FED is allowing it when they shouldn't be. That is what everyone should complain about, not that the FED has no oversight. In fact I argue we need to push our politicians to leave them the heck alone.