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

reply to post by questioningall


Thanks for the topic and enlightenment, however I wish you would shorten your consensus at times. I do not have the patience to read all of your opening posts, just enough to get the jest that you are predicting failure of the USD.

we're in for a wild ride, no doubt. if there was only a way to explain it to the others out there not on ATS...??? hmm cuz even when i try to speak of things similar i get the "You're Crazy" look!...any ideas?

Originally posted by rogerstigers

Originally posted by CookieMonster09
And stop with these nonsense stories about creating money out of nothing. At the local retail bank level, that's not what happens. If you want to talk about the Federal Reserve printing more money and inflating the money supply, that's a different topic. Now continue your discussion.

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are lies or are they just outdated and somewhere along the lines our banks stopped this practice and turned honest?

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. What creates money is a demand for money. Money is an indispensable tool for goods and service exchange. A commercial bank can borrow, like anyone else. So a request for a loan creates demand for money. But when a commercial bank faces a risky loan, which exceeds its ability to lend, the bank will very likely not borrow the necessary amount, so the demand for money isn't there in this case, unleeeeeeees . . .

You can insure your risky loans these days using fancy financial derivatives. Talk to AIG folks to learn more about that. Once you can insure your loan, you are free to borrow the money for that kinda risky loans and contribute to the ever-increasing demand for money. Go to the cemetary and have a chat with the ghost of Washington Mutual about that.




[edit on 9/14/2009 by stander]

Very interesting reading and as usual well put together and well laid out.

We're not far away to see if this comes to light, or if it's somehow been worked around/covered up for a rainy day. However if this really does come out, then surely we must see some war/catastrophe as I can't see the USA letting this one pop for all to see?

Originally posted by CookieMonster09
First, everyone needs to make a huge differentiation between banks on Wall Street and banks on Main Street. There is a massive difference between Wall Street "investment" banks like Goldman Sachs, and your neighborhood retail bank.

Let's get that perfectly clear. Your local bank is rarely, if ever, engaged in derivatives trading, unless they are owned by a big Wall Street bank (like Chase).

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.

Neither are derivatives losses a new phenomena...remember Orange County Ca ? Procter & Gamble ? More recently , the Reading, Pennsylvania, school district.

Dated material , but a reasonable thumbnail sketch....

Who's Got the Biggest Derivatives Exposure?

I've been thinking of pulling my savings from Chase, partly because I think the sale of Wamu was a shady back alley deal to jp morgan, but also because of upcoming economic uncertainty...and putting the cash into my gun safe...
After reading this I see it may not make any difference, as my money might be worthless anyways lol.

Well...I agree with the false flag possibility...another attack shutting down the country, and the banks for a week just might be enough to distract the sheeple.

We'll make it through, but many people, especially younger people these days have been raised on buying and spending...they will throw a fit when they cannot afford their daily starbucks or coach purses

reply to post by questioningall


I don't think the derivatives market is the same as a bank lending money that doesn't exist. These are two separate things.

The money lending scenario is precisely why a bank collapses if there is a run on it. They do not hold all of that money. Say ten people have accounts at a bank, one of them wants a loan of a few thousand. If the bank only holds $10,000, under law they are allowed to "create" a further $90,000 on their balance sheet, they then use that fictional money to pay a customer their loan.
The money never exists, it is effectively nothing but a promise to pay.
If the customer then takes that fictional money to another bank (for example they pay it to someone and that person then deposits it) the money still doesn't exists, it is nothing but a series of numbers that have zero attachment to actual money.

This relies on the customer paying that money back.
The interest added to it is simply profit.
The bank lends you that promise, and you promise to pay it back, and pay them interest for the privilege of being "allowed" to create money from nothing.

Now, when you multiply this by billions of loans, from so many banks, and with an ongoing fragility and less ability for people to pay it back, you can see where a future problem lies.
And it won't be too far down the road before this causes the collapse of more banks.

The derivatives market, I am led to understand, is a completely different thing entirely. I don't understand it myself, but I believe it is financial agreements based on the availability, value and fluidity of various assets.
It has little to do with money (other than people profiting from the agreements) and everything to do with a physical asset.
As money theoretically has no attachment to actual wealth, this is another way for people to make money from things that do have a measurable wealth in association to money.

Okay, now I'm going around in circles.

Either way, I'm certain that the banks creating money from nothing is a completely different beast from the derivatives market.

reply to post by detachedindividual


Actually it is the same, but more vehicles were used to sell "what is suppose to be there but isn't" - like the AIG vehicle to foreign banks and investors.

Derivatives is used in many ways, basically it is the betting - gambling tool used.

But the ultimate and basis of derivatives is what is suppose to be there of exposure compared to on the books - ie: the compounding of deposits.

The derivatives market is complex, but it is also simple in the absolute base of it (or nonexisting base).

The betting against deposits - that is how it starts - can be with loans, can be on bets, shorts, etc.

So, the ultimate problem, is banks don't have what they are suppose to have, they have been gambling the money.

I wonder when people will start realize that money is not necessary, only resources are. It can and will work when people understand that we are all one, when you are helping someone you are at the same time more or less helping yourself.

But yes its only a matter of time before it all will come down.

I'm very interested in all of this. What is the specific legislation or regulation that will force them to put derivatives on the books by Sept. 30? I want read more about this and research a bit. Thanks for posting this.

EDIT: P.S. I agree, InOurNature.

[edit on 9/14/2009 by AceWombat04]

Thank you for a fascinating post, QA. S&F for you!

I am not an expert in financial matters, but I can understand the principle that banks basically loan money that does not really exist. Of course, all of the credit card companies (allied with or owned by the banks) do the same thing, and I wonder what effect any serious deterioration in the USD's value would have on all those cards.

Just a little perspective on the value of the USD: when I first arrived in the Czech Republic 16 years ago, one USD would buy about 40 Czech Crowns (CZK). To give some idea of relative value, a beer at the local pub cost about 6 CZK back then. So you could buy 6 half-litre beers for a dollar and get change.

I drank a lot of beer that first summer After all, it was cheaper than soda. (And it still is!)

Moving along to the here and now, a beer at a cheaper local pub costs around 18 to 20 CZK, but one USD will now buy you only about 18 CZK. So, you can now buy just 1 beer for that dollar (if you can find a cheap pub). Allowing for a 3x increase in the beer's CZK price (which is nearly compensated for by a rise in local pay rates), the USD's value here has taken a real hammering. True, Americans make more now than they did 16 years ago, but this part of the world is no longer the "cheap vacation" destination it used to be.

As for how an economic "crisis" can affect the USD's value, back in Spring of this year, many "Change" shops were buying USD for 10 to 11 CZK... They've now gone back up to around 16 to 18, but if there is another crisis I could well imagine the USD being worth even less than 10 CZK. Actually, with the shenanigans going on in the banking/insurance sector, I'm ready to imagine it could go a lot lower.

I also hope it doesn't. Not just because of my American friends, but because of the inevitable knock-on effects around the world.

Mike

Originally posted by detachedindividual
reply to post by questioningall

 

I don't think the derivatives market is the same as a bank lending money that doesn't exist. These are two separate things.

Either way, I'm certain that the banks creating money from nothing is a completely different beast from the derivatives market.

I agree. The fiat money system is basically a ponzi scheme. But derivatives, especially credit default swaps are insurance instruments.

It's all a scam either way though and will eventually bankrupt the nation unless the financial experts can figure out a way to write off the losses without hanging them on the middle classes via taxes.

Originally posted by questioningall
China is defaulting on their derivatives contracts - they say it was done illegally and a scam from the banks?

China is pushing gold and silver to it's citizens to buy - the Chinese government are running commercials like it is soap on their T.V. constantly?

Hong Kong, Dubai, and Germany have called their gold in from storage from the U.K. and the U.S. - for the first time ever?

The U.S. State Dept. informed all of the Embassies to have local currencies on hand, that will last them a year by Sept. 30th?

The U.S. bond market has been missing China and other countries - they have stopped purchasing our debt? Besides how our bond buyers are now "indirect" buyers? ( in other words the Fed is printing the money as no tomorrow and buying the U.S. debt themselves through "friends")

Source? I'm considering shifting some investments around but I can't substantiate what you've written there ..

reply to post by Guidance.Is.Internal


I believe most of it has been on Reuters in the past several weeks, Fark.com may have links in its archive for at least the article concerning German & other embassies pulling its gold out.

reply to post by questioningall


I guess you got some inside information because now even the news are addressing this very well tricky issue.

Let's Pay Bankers in Toxic Assets: Farrell

More on the topic of the thread,

Bankers that created toxic assets like subprime-mortgage derivates should be paid in those assets instead of cash, which will bring about a more transparent and less reckless Wall Street, Vince Farrell, chief investment officer at Soleil Securities, said Monday.

"The investment bankers who came up with all this toxic stuff should get paid with what they created," Farrell told "Worldwide Exchange." "Why don't you have them get some of this paper?"

"If your own self interest is on the line, you might be a little more careful of what you trade," Farrel said.

www.cnbc.com...

So, the talks about regulating Wall-street is causing a stir on those that knows how the corruption of the financial Markets has done with Americas economy

reply to post by AnonymousMoose


False Flag indeed. Russian and Chinese subs are parked off our coast waiting for payment.

False Flag attack = excuse to default on our loans while at the same time declaring martial law, confiscating guns, and asking the UN to save us as we give up all sovereignty to the UN.

My ear is to the ground and what I am hearing is not good at all. Worse than even I had originally planned for.

I don't buy it for a moment.

So the house of cards is going to come crashing down and the bankers will be caught with their pants down? America will arise from the ashes with new technology to emerge like the Phoenix?

I don't buy it.

I'm a firm believer that nothing, esp in the halls of power, happens without first being carefully planned, WELL in advance.
For many years I've wondered about a new monetary system. A world currency ....

I believe the whole process is a well orchestrated plan, slowly ticking off the boxes as time passes.

Nothing beats a staged 'catastrophe' to implement said plans and goals. If there's one thing those in power can count on, its everyday Joe totally flipping out when his financial future is bought to a screaming halt. You can pretty much guarantee he'll accept anything offered to reverse the situation.

How convenient laws where written to allow the banks to create the mess we now find ourselves in. But it was all some accident? No one foreseen what would eventuate from this? I don't buy it.
I am confident this whole business we find ourselves in has been preplanned, executed and most importantly, the answers needed to get us out of this mess are conveniently waiting in the wings ....

Nothing happens in the halls of power by mistake. This whole financial crisis has been encouraged and the laws created to implement it.

How smart are they?

They offer two forms of answers. One form is the official line that you can get from the MSM 24/7
The other form is 'those in the know' who understand the goings on, the who's, the why's and when's. They can go into detail on how the banks did this, how the lenders did that, and give those who search for 'truth' a sense of getting behind the scene and finding the answers.
All the while the answers are a diversion from the real question of why?

What do 'they' have to gain by implementing this financial crisis? What is their end goal? A golden age of promise for they love thee so much? Do you buy that? Do you believe what ever their plans are, its going to be in your best interests?

Its interesting to know the who's, the why's and when's. As far as how this mess came about, the banking system and its mechanics. But I don't buy it for a second.

reply to post by OBE1


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* ...

Our main concern right now is twofold: deflation of the Real Economy; depreciation of the USD..

Exotic financial products collapsing is but a symptom of these two, and seeing the economy is being ignored, there no reason to assume lenders will be healing anytime soon.

reply to post by Burginthorn


You know its more comforting to assume that TPTB have everything planned and everything goes according to their plans, than the alternative: there is no plan.

Politicians, bankers and schemers ARE NOT INFALLIBLE GODS

The God honest truth: no one knows what's going to happen, no one knows if what we have done will work, and no one knows how far we can drop..

Some of the wealthiest people behind these crazy financial instruments lost everything, some of the wealthiest share holders in the country were wiped out...

Don't elevate them to God status, last year they were running around like chickens with their heads cut off without a clue.. of course, they would rather you believe they at all times had control. If only you realized how close we came to the brink of no return...

Astrology, webbot, timewave also support a possible October meltdown event.
Peace,