Billions and Billions - Yep hear it all the time - Why it will mean something Soon.

reply to post by marrasca

There have to be some hooks that other countries have to guarantee their monies. Is there a possibility that our infrastructures could be pieced out and sold to these bond holding countries? I see more and more highways, toll roads, and bridges being "leased" to foreign companies. Has America been sold???

yes! foreign ownership is over 70% of US GNP

Whether you blame the leveraged buyout feeding frenzies of the 80's or the World Trade Organization “Free Trade” agreement of the 90's the result is the same - America has been quietly sold off piece by piece. This is a sampling of the industries with over 50% foreign ownership, according to Source Watch www.sourcewatch.org...

* Sound recording industries - 97%
* Commodity contracts dealing and brokerage - 79%
* Motion picture and sound recording industries - 75%
* Metal ore mining - 65%
* Wineries and distilleries - 64%
* Database, directory, Book and other publishers - 63%
* Cement, concrete, lime, and gypsum product - 62%
* Engine, turbine and power transmission equipment - 57%
* Rubber product - 53%
* Nonmetallic mineral product manufacturing - 53%
* Plastics and rubber products manufacturing - 52%
* Other insurance related activities - 51%
* Boiler, tank, and shipping container - 50%
* Glass and glass product - 48%
Coal mining – 48%

A real eye opener isn't it. But it gets worse. The Department of Homeland Security says 80% of our ports are operated by Foreigners and they are buying and running US bridges, toll roads and water authorities www.alabamaeagle.org...

Statistics (courtesy of Bridgewater) showed in 1990,before WTO was ratified, Foreign ownership of U.S. assets amounted to 33% of U.S. GDP. By 2002 this had increased to over 70% of U.S. GDP. www.fame.org...

An analysis of the 2007 financial markets of 48 countries shows the world's finances are in the hands of a few mutual funds, banks, and corporations. This is the first report of global concentration of financial power ..www.insidescience.org...



The greedy cartels running the World Trade Organization are not satisfied with part of the cake they want it ALL.

Up for grabs at the negotiating table is worldwide privatization and deregulation of public energy and water utilities, postal services, higher education and state alcohol distribution controls; a new right for foreign firms to obtain U.S. Small Business Administration loans; elimination of a list of specific U.S. state laws about land use, professional licensing and consumer protections, and extreme deregulation of private-sector service industries such as insurance, banking, mutual funds and securities. www.commondreams.org...

So are you saying that these quotes from pg1 in the OP: “[W]hen a bank makes a loan, it simply adds to the borrower’s deposit account in the bank by the amount of the loan. The money is not taken from anyone else’s deposit; it was not previously paid in to the bank by anyone. It’s new money, created by the bank for the use of the borrower.” – Robert B. Anderson, Treasury Secretary under Eisenhower, in an interview reported in the August 31, 1959 issue of U.S. News and World Report “Do private banks issue money today? Yes. Although banks no longer have the right to issue bank notes, they can create money in the form of bank deposits when they lend money to businesses, or buy securities. . . . The important thing to remember is that when banks lend money they don’t necessarily take it from anyone else to lend. Thus they ‘create’ it.” – Congressman Wright Patman, Money Facts (House Committee on Banking and Currency, 1964) are lies or are they just outdated and somewhere along the lines our banks stopped this practice and turned honest?

Yes, the original post is totally misleading - I would even go so far as to say totally misguided bunk.

You are forgetting that most banks have thousands of clients that hold deposits in the form of cash at their local bank. And, not a small amount of money either. These deposits come in the form of certificates of deposit (CD's), savings accounts, money market accounts, and checking accounts. Anyone that works at a bank and sees the tens of thousands of dollars that some clients keep at the bank for safekeeping - and rarely if ever touch - knows that this is a factual statement.

This is stale money - It is rarely touched except in rare emergencies. It is used for safekeeping. On the consumer side, you see this in the form of retirees that take out $100,000 CD's. On the business side, you see it in the form of what are called "sweep" accounts, that earn interest overnight. Usually sweep accounts have a pretty hefty minimum of $20,000 or more.

Why do you think CD's have early withdrawal penalties? Why do you think banks have minimum deposit requirements for some of their checking accounts? They pay you 1% on a CD, and then turn around and use that same capital to charge a loan customer 8% or more on a business loan. Not a bad spread!

And that's just the consumer side. I am not even mentioning the deposits that your typical business carries. It might be a small amount - say $10,000 - $50,000 in a rainy day savings account, but it adds up, and quick, especially when you multiply the number of businesses in your average sleepy American town.

Plus, you have to remember that banks have not only deposits, but they also have interest income as well that is coming in every month from loan customers. It's called profits.

They also hold first lien positions on nearly every loan that they have on the books. These are first lien positions on real estate, equipment, consumer items such as cars and boats, etc.

So this notion that banks don't have assets that they can lend against, and have to magically "create money out of nothing" is pure BS. Banks have deposits, and thousands of them. Even small banks can carry upwards of $60 million or more in deposits. If a bank is reckless, and lends too aggressively, they can outstrip their deposits - which is what has happened lately (plus the real estate market collapsed, and the banks were left holding the bag).

I can assure you, after having worked in banking for most of my adult life, that well-managed banks have some very serious deposits on hand. And they are always soliciting for more deposits, especially from cash-rich companies such as title companies, funeral homes, etc. They are very aggressive about soliciting deposits from their competitors, even to the point of setting deposit quotas quarterly for their business bankers (i.e., sales reps in the guise of bankers).

To suggest that bankers play some Mickey Mouse game of creating money out of thin air is ludicrous. They are lending deposits that are stale deposits, or they are lending their own capital which they have earned in the form of interest income. Most banks don't want to borrow from the Federal Reserve system if they can avoid it - and even then, it's typically only an emergency overnight loan facility.

Now, I am referring here to small banks, and smaller retail banks. Not the Federal Reserve, which inflates our money supply whenever it wants. Big difference.

Commercial banks are not supposed to create money, but they are responsible for creating money -- they are a heavy catalyst in the process of creating money.

BS. See above. Only the Federal Reserve inflates our money supply.

Not only investment banks...all manner of banks (including commercial & small regional banks) , corporations , hedge funds , pension funds , and even municipalities are trapped in the counterparty maze of derivatives , both as buyers , and sellers.

Bigger banks - national and regional, yes. Small community banks, no. I never mentioned hedge funds (Wall Street), etc.

The derivatives game is Wall Street, not Main Street.

[edit on 14-9-2009 by CookieMonster09]

reply to post by questioningall



I totally agree with you, but I'm confused on the Sept. 30th. I can't believe that the Fed will let those rules (unless those are international rules) for the banks to put all that junk on their books, especially when it has the potential to sink our economy and the dollar. I do agree with the Dr., we should take our pain (4% of the population but we use 40% of the resources). If our economy and our money and our living standard took a 90% drop, That would be worse than the Great Depression. In fact people wouldn't know what to do or where to go after seeing that happen to them. I know about the Gold demand from countries especially from Germany. I don't know if any of you saw that special A Day in the Whitehouse on MSNBC. It followed the president and others over the course of the day on all their duties and in one scene where they are in the Oval Office filming the president his economic adviser and his people come in to discuss with Obama the German situation. The president asks him hows the German situation and he says just great and in about 30 seconds he must say something or gives a signal to the president where the President says that they have to stop filming in order for him to discuss the German issue. Word around the campfire at the time had to do about Germany wanting it's gold.

Then there's word of Bank Holidays for the fall and other things. If they can't change the situation, then things are being set up in order to control the panic that will ensue over the economic damage coming to the forefront.

Originally posted by CookieMonster09
Yes, the original post is totally misleading - I would even go so far as to say totally misguided bunk.

Commercial banks are not supposed to create money, but they are responsible for creating money -- they are a heavy catalyst in the process of creating money.

BS. See above. Only the Federal Reserve inflates our money supply.

You very likely don't understand the meaning of the word "catalyst." Look it up.

Your view takene out of the teller's window doesn't reach beyond the walls of the bank you work for. You are completely illiterate in the subject of how money is created and the mechanisms involved.

Your finger-wagging counsel about the great differences between commercial banks and investment banks vouches for the fact that you don't know much about the banking industry and it's history. Have you ever heard the term "universal bank?"

A universal bank participates in many kinds of banking activities and is both a Commercial bank and an Investment bank.

en.wikipedia.org...

I thought that if a person works in some type of industry, he or she would learn a bit about the subject on a broader base. As I see, ignorance reigns supreme.

reply to post by questioningall

Q, I think you are taking an enemy fire here and there. I was thinking about an air support. If this short, simple math doesn't do the job, then you are fighting zombies -- here and there.

Banks create money by loaning out money that was deposited with them. Here's an example:

Andy deposits $100 at the bank.
The bank then loans out $80 to Bill. The amount of the $100 that the bank received as a deposit that can be loaned out depends on the required reserve ratio as set by the Fed.
At this point, Andy has $100 and Bill has $80 in purchasing power. So the money supply has essentially increased from $100 to $180, thus "creating" money.

Further money creation can be achieved if Bill went to a bank and deposited his $80, then that bank could (assuming the required reserve ratio is 20%) loan out $64 to Carl, etc etc.

Hope that helps.

So, a commercial bank CANNOT create money, it CAN and it DOES create a purchasing power -- which is basically the same thing. That happens when Andy withdraws his one hundred bucks and meet Bill, who has eighty bucks loaned by the bank, in the same store. When the shopkeeper sees the big demand it raises the price of Trojans, or whatever Andy and Bill asked for. But that's another story told by Consumer the Price Index.

reply to post by crimvelvet


You have it absolutely correct. In 2000 I had a conversation with a State Representative about that very trend. I did not know it was that bad now. It looks like the US no longer belongs to the US.

I guess I should have been saying kill the Fed before I started saying that in 2000.

And if anyone thinks that TPTB are not behind this need to take off their unreality glasses. Foreign ownership or really TPTB ownership of our only real assets is the endgame and the Federal Reserve and Central banks use of Fiat currency and the manipulation of it was the vehicle. You cannot destroy real assets but you can manipulate the Fiat Dollar to confiscate it. Manipulating the markets and acquiring those said assets and resources was another vehicle.

I hate to say it but we need to seize the assets, of all properties in the US owned by foreign interests, seize assets of all Central Banks and the Federal Reserve. All the employees, lawyers and families that own interest in these Corrupt and evil institutions need to be put on trial and all of their assets seized Madoff style.

Imagine how many trusts, non profit organizations, foundations and other schemes they have set up to stockpile their wealth.

Sorry about the rant but I hate the usury and fiat dollar scheme that has been illegally used to steal the wealth of this nation, ever since they illegally passed this crap back in 1913. It took them 96 years to literally buy America with our own money.

A few names of the families. We all know who they are.

Rockefeller, Morgan, Rothschild, Queen of England, Rome-yes Rome, Warburg,

A couple of quotes from these asses.

• “Give me control of a nation’s money and I care not who makes the laws.” -Mayer Rothschild

• "We shall have World Government…The only question is whether World Government will be achieved by conquest or consent." -James Paul Warburg

I thought that if a person works in some type of industry, he or she would learn a bit about the subject on a broader base. As I see, ignorance reigns supreme.

And your credentials are......? I thought so. Prove me wrong. How do you explain stale deposits? Interest income that the bank earns?

Good chance that if you own a house, some bank holds a first lien on it. If you work for a company, there's a good chance a bank hold a first lien position on your computers, software, furniture, inventory, and equipment, and office space.

Before you go spouting your ill-founded "conspiracy theories" about banking, go ahead and take a couple classes on Introduction to Banking at your local community college.

Banks - small community banks - don't engage in derivatives trading. To say otherwise, is pure nonsense. Bigger banks - especially on Wall Street - are heavily engaged in this speculative trade. Not small banks, and not most small credit unions. They earn their income by lending money - Real cash from stale deposits and earned interest (profits). Rarely borrowed money.

Buy a clue. Explain to me why banks have $3,000 minimums on premier checking accounts. Or CD's have early withdrawal penalties.

You're clueless, pal. I have seen - with my own eyes - millions upon millions of dollars in deposit accounts. Savings, CD's, etc. Average retail branch can easily have $60 million or more on deposit at any given time.

The real issue with banks? Defaulted loans and depressed real estate values. That's the main issue. Banks are clogged with bad real estate loans - That's why they are not lending. But fruitcakes like you think that banks operate in some magic fantasy land and create magical money out of thin air.

Of course, you would know this, if you had a clue about the banking system, and how it actually operates at the local level. You don't. All you have is the conspiracy theory book, "Creature from Jeckyll Island", and a bunch of kooky Wikipedia articles. Give me a break.

You are completely illiterate in the subject of how money is created and the mechanisms involved.

Your local small town bank doesn't create money. You are confusing a small bank with the Federal Reserve - which inflates the money supply.

All small banks do is manage deposits and lend money. They aren't in the derivatives business. Big banks are. Especially big banks like Chase, Bank of America, etc. Not the small fry. Their assets are heavily tied to first lien positions on real estate.

Medium sized banks - regional players like Regions Bank, BB&T, etc. - I am sure they dip into the derivatives business. But not nearly to the extent that Chase and BOA do. Heck, look it up. I have seen charts that break down who is most heavily engaged in derivatives, and it's always the big banks.

A universal bank participates in many kinds of banking activities and is both a Commercial bank and an Investment bank.

So what? Who cares?

If you had a clue, you would realize that the major derivative players are the big banks. Your local mom and pop community bank isn't playing on Wall Street, pal. Buy a clue.

I thought that if a person works in some type of industry, he or she would learn a bit about the subject on a broader base. As I see, ignorance reigns supreme.

Kind of like the fools that claim that money just "appears" out of nowhere, out of thin air, and is somehow "magically" created by a bank, right? And you have the audacity to call me ignorant? What kind of fairy tale planet do you live on?

If you close a loan, the seller receives a check from the bank at closing. That check might be $200,000 for the sale of a piece of real estate. It's not make-believe money. It's real, spendable cash. To say otherwise is pure baloney.

If the bank didn't give a bonafide check at closing - and the check bounced - that would be called mortgage fraud, you fruit cake.

That cash came from any number of sources. The bank's capital. Reserves the bank has set aside for lending purposes. Interest income. Stale deposits, etc.

AND I am NOT talking about the Federal Reserve. I am talking about the local level community bank that sits in most every country in America - the ones that small business owners love because they are flexible, patient, and understand the local economy.

And that kind of bank is most emphatically NOT a big bank. Most entrepreneurs hate big banks.

Small town, community banks, make up the backbone of lending to small businesses in this country. They are the banks that know their local business owners, and have lived in their local community for decades. They don't trade in derivatives, and you won't find them on Wall Street. Oh, and they don't "create money out of thin air" as you suggest. They gain deposits by opening new deposit accounts the old-fashioned way - through good service.

Oh, and one more thing, fruity tooty. There is a massive difference between a Commercial Bank and an Investment Bank.

The merging of the two types of banks in recent history - ala Chase, Bank of America et al - has been a major disaster. (Read: Big banks!)

This was the whole point behind the Glass-Steagal Act that came about after the Great Depression. The goal was to separate traditional business banking activities (deposits, real estate loans, etc.) from speculative Investment Banking (mergers and acquisitions, stock trading, etc.).

So, yes, there is a huge difference between the two. The two types of banks should be separate and stand apart. Unfortunately, today, you have big, massive banks like Chase that trade derivatives, and operate like a retail bank managing deposits. Scary stuff.

The "universal banks" as you call it? That's Chase. That's Bank of America. That's the big banks. They have a wide breadth of products and services. Your local credit union can't even begin to compare with what these big banks can offer in terms of the types of financial activities these big banks are into - everything from credit card processing (Chase Paymentech) to 1031 Exchanges (Chase has a huge outfit for 1031's), etc.

reply to post by CookieMonster09


Maybe I’m making a rear end out of myself, maybe you already have.

Are you implying that because you have seen millions and millions in deposit accounts, savings and Cd's that the cash was all there? I mean the little green pieces of paper with a number on it that is suppose to mean its worth that amount? Was the cash stacked neatly in the corner of the vault or was the value recorded in the computer?

Even if the dollar bills were stacked neatly in the corner (which I doubt they were) did you get the occasion even once to count them?

Before you replied did you think about the possibility that just because the computer says that an amount is available it does not have to mean that the hard cash is on hand. There is a perpetual flow of money in and out and banks know that there will always be an amount available to be played with, that is until there is a run on the bank.

If we don’t know how much gold we have in reserves nor the true value of our dollars versus that gold (or lack there of), what makes you think that any bank is going to be openly honest about what they do with your money after you deposit it? Do you get the same dollar bill back? Does it go into a drawer with your name on it to be saved for you awaiting your return plus a few pennies?

Wait! Most people I know use plastic, fewer checks and cash.

Its all numbers and they know how to work it. It’s truly ingenious.

Ok so I dont know what the heck Im talkin about, Just my take...

oops . . .

_____
______




[edit on 9/15/2009 by stander]

reply to post by CookieMonster09

Read it again:

Andy deposits $100 at the bank.
The bank then loans out $80 to Bill. The amount of the $100 that the bank received as a deposit that can be loaned out depends on the required reserve ratio as set by the Fed.
At this point, Andy has $100 and Bill has $80 in purchasing power. So the money supply has essentially increased from $100 to $180, thus "creating" money.

Further money creation can be achieved if Bill went to a bank and deposited his $80, then that bank could (assuming the required reserve ratio is 20%) loan out $64 to Carl, etc etc.

That doesn't describe a complicated credit default swap, does it?

Are you aware of banking essentials?

If I set up a saving account and deposit $100, are you aware of the fact that the bank can lend $80 as a personal loan to Jack?

Are you aware of the fact that if I show up after one week at the MamaPapa Bank again and cancel my saving account that the bank gives me my $100 back?

Are you going to dispute the fact that if I meet Jack in the store with my $100 in my pocket and Jack has $80 in his pocket, there are no 180 bucks in the store to be spent? Are you gonna make an ass of yourself again and type in another out of the topic novel?

Originally posted by questioningall
What am I talking about D-day = Derivatives!!

You couldn't be more right! I have to laugh at how the Feds keep putting the inevitable off, they ain't gonna put it off much longer, they're running out of Juice...lol We have the G20 Summit coming up next week, we already pissed off our benefactor China who refuses to buy any long term T-Bills, the Arabs can't afford our T-Bills any longer, man this is just a mess. The Derivatives are Nuclear and they're gonna hit this Fall, we're done folks.

[edit on 15-9-2009 by Boomer1941]

Guess You ahve kinda answered the question I asked here on ATS a couple of weeks ago:

www.abovetopsecret.com...

Oh well... an answer late is better than an answer never. Im just glad there are otehr people who are watching out for this date.

End of American Economy?

END OF FISCAL FINANCIAL YEAR 2009

Just a very short and sweet question that I hope someone can answer for me and expand on...... What will happen on the 30 Sep 09/ 1 Oct 09 when all the end of year statistics and results are published?

I am not 100% sure but I think this date is similar to the 5th April In the Uk where the next year budget and last years statistics are published.

It's just that just lately all the markets seem to be propped up and keep rising and everyone are in that good old frame of mind that 'GROWTH IS GOOD'.

But surely this being the first year end after the bailouts early this year, and with mounting pressure on the FEDs audit books, the true mess that has been created will be plain for all to see for the first time? How can they hide the mass amount of debt (That has been predicted to reach 100% GDP in 2012)?!.

Also will the effect of the bond auctions last month (and the lack of selling to the Chinese) impact the figures.

I am asking for the simple reason I am curious, does the public in America get to see these figures and are they reported on by the media or is it a very low key event.

Maybe I have got this date completely wrong I don't know, Just wanted to guage how the public were going to react, and the dollar along with it.

Thank You.

EDIT TO ADD PREVIOUS POST

[edit on 15-9-2009 by carlitomoore]

So who here is shorting the USD????

Originally posted by crimvelvet
yes! foreign ownership is over 70% of US GNP

Whether you blame the leveraged buyout feeding frenzies of the 80's or the World Trade Organization “Free Trade” agreement of the 90's the result is the same - America has been quietly sold off piece by piece. This is a sampling of the industries with over 50% foreign ownership, according to Source Watch www.sourcewatch.org...

* Sound recording industries - 97%
* Commodity contracts dealing and brokerage - 79%
* Motion picture and sound recording industries - 75%
* Metal ore mining - 65%
* Wineries and distilleries - 64%
* Database, directory, Book and other publishers - 63%
* Cement, concrete, lime, and gypsum product - 62%
* Engine, turbine and power transmission equipment - 57%
* Rubber product - 53%
* Nonmetallic mineral product manufacturing - 53%
* Plastics and rubber products manufacturing - 52%
* Other insurance related activities - 51%
* Boiler, tank, and shipping container - 50%
* Glass and glass product - 48%
Coal mining – 48%

What will happen when the foreigners decide to "dump the dollar," with all the we-are-screwed-when-it-happens consequence?

reply to post by CookieMonster09
You appear to be someone who understands financial matters. Please define what a 'bank run' is and why regulatory authorities tend to guard against them. Also, please explain the necessity of 'bank holidays' in relationship to my first question. And a good definition for 'fractional reserve banking' would help also.

Thank you in advance for your reply.




[edit on 9/15/2009 by theophilus77]

[edit on 9/15/2009 by theophilus77]

Are you implying that because you have seen millions and millions in deposit accounts, savings and Cd's that the cash was all there?

No. I never said that.

First, in a world of credit cards, debit cards, online banking, etc., more and more of our world's transactions are electronic, not the physical exchange of actual coins and paper.

Secondly, banks don't have the demand - generally speaking - on a typical business day where people want to withdraw every single penny that they have in the bank. Most people keep their cash at the bank as safekeeping, and to earn interest.

The bank doesn't have to have every single penny and dollar bill stored at their retail outlet because the demand simply isn't there. They keep enough on hand for their daily teller transactions. There is very little need to do so, because a big section of the world's population is essentially cashless. They operate using debit and credit cards.

And, please note, I am not making a judgment whether that's right or wrong. I have my own opinions about this whole "cashless" gig.

If we don’t know how much gold we have in reserves nor the true value of our dollars versus that gold (or lack there of), what makes you think that any bank is going to be openly honest about what they do with your money after you deposit it?

When you deposit $100 in an American bank backed by the FDIC, you can go online at anytime - 24 hours a day - and make an electronic transaction to get that cash - either via a debit card at an ATM, a wire transfer, etc. Or, if you prefer an in person visit - you can visit the local retail branch, and they can hand you your $100 bill back to you.

The money is yours to spend - It's simply the bank's job to keep an accurate account of your ledger balance, as should you, as the depositor.

Gold in reserve? We're not on the gold standard, and you're venturing very far from the local banking scene.

Who sets the market value of anything? Whether it's gold, real estate, or any other tangible? The market does - At least in theory. In practice, well, that's a more complicated, er...political answer.

That doesn't describe a complicated credit default swap, does it?

No, it's an absolutely asinine, stupid way to describe how banking works. What about all the interest (profits) that banks earn? Where does that fit into your silly little amusing story? Or first lien positions on everything from loans on real estate, equipment, inventory, etc.? What about CD's? Stale deposits? Savings accounts? Capital the bank has acquired over many decades?

None of these assets could possibly be used to make a loan, now could they? At least not in your fantasy land magic fairy world of banking.

Your "story" is too simple. That's not how banking works. Banks have assets. Real estate for one. Buildings for another. Interest income. Investments. All things that your silly little example fails to take into account.

Please define what a 'bank run' is and why regulatory authorities tend to guard against them

Bank run? Loss of confidence in the banking system based on fear. Some of the fear is warranted, most of it is hysteria.

Also, please explain the necessity of 'bank holidays' in relationship to my first question.

Time to cool off, and let rationality return to people that have gone into hysterics.

And a good definition for 'fractional reserve banking' would help also.

In a word - Profits. And centralized control by the few over the many. How 'bout them apples?

Nonetheless, the money out of thin air is nonsense. The only logical argument is that people repay more than is originally lent. But that's no different that normal every day profits by any manufacturer or distributor - buy wholesale, sell retail.

reply to post by Rockpuck

Originally posted by Rockpuck
I simply don't feel that derivatives are our biggest concern. Actually, I'll go as far as to say they are a side effect, not a cause. The reason they collapsed the first time around was defaulting loans, the reason loans defaulted was debt to income ratios pushing homeowners under water, the reason that happened was the increased cause of living, the reason that happened was income stagnated compared to non-core inflation, the reason that happened was the Dollar depreciated, all of this led to massive cuts in unemployment resulting in a debt cycle that would lead to another loan crisis......

*gasps for breath*

Hi RP!

I'm just hoping you don't live in some under-funded municipality in Calif....and that the paramedics arrived in time

I guess concerns are relative , but I would certainly categorize OTC derivatives as the biggest threat to the global financial system. Currency support , inflation , and employment are policy issues...responsibilities of the US Fed. What precipitated the defaults ? After holding rates historically low at 1% , the Fed began tighten in 2004...by 2006 , the housing market , the economy , and consumer spending began to stall.

No doubt , as housing prices (the consumers ATM) began to top , sub-prime loan defaults provided the initial spark. Was this rash of defaults simply the result of low wages ? , or , a combination of shoddy lending practices , coupled with a multitude of under-qualified , over-leveraged buyers sucked into believing the fairytale that home prices could only go up ?

We should have done the politically unacceptable , and taken our lumps in the last recession...difficult , but we would have survived/recovered much , much sooner , and without the threat from the exponential growth in OTC derivatives now overhanging the financial system , not to mention the prohibitive multi-generational tax burden.

The dollar-negative Greenspan induced housing bubble was a short-term fix.....only served to exponentially increase leverage , risk , and the economic distortions that were trying desperately to unwind back in 2001-2002.

Systemic abuse in the OTC derivatives market absolutely exploded in 2002 (chart)...hand-in-glove with the proliferation in sub-prime lending practices. There's no denying that derivatives played a central role in accommodating the economic over-expansion of the past decade , and Alan Greenspan was arguably their most influential promoter. If you haven't already , it's worth a few minutes to read this informative 2008 NY Times editorial on the Greenspan/derivatives relationship.....

The Reckoning
Taking Hard New Look at a Greenspan Legacy


A Greenspan Legacy in graphic form....

[atsimg]http://files.abovetopsecret.com/images/member/704f78638ea4.gif[/atsimg]

*Note to the board:

Think of Fractional Reserve Banking as a 1954 Buick.

Financial derivatives as cactus plants.

Any relationship ?

Nope

Add: Credit default swaps were designed to transfer risk. Beginning with the derivatives induced collapse of Freddie Mac and Fannie Mae , I guess you can say they've performed perfectly....transfering over a $trillion in risk from the derivatives market..to..the taxpayer.


[edit on 15-9-2009 by OBE1]

Much credit to the OP, good post, and very relevant to these times. I hear you loud and clear, but fear many will not. I too have been researching and exposing the truth about the FED and America's monetary system, and for the most part when someone talks about the FED is falls on deafened ears. I even had one college major argue me for a week that the F.R.B. was owned by the government, and not privately owned as I know it is. People are complacent, and easy to convince of most anything, all you need do is keep repeating it, and they will believe it. Official 9-11 story, for example, may will go to their grave thinking a man sitting in a cave with a cell phone did all that, even ordered the Air force to stand down. Americas may actually do something about the FED when it all comes crashing down on them, and their money is no good anymore. And..it's not a matter of IF it happens, but when it happens.

reply to post by CookieMonster09


Modern Money Mechanics, pubblished by the Federal Reserve Chicago is a great resource for understanding the money supply and how fracional banking works.
available at wikisource