$this->bbcode_second_pass_quote('Cid_Yama', 'I') believe the conversion to a national and eventually transnational debit card has been a goal for years before this crisis. It is another move towards <b>CONTROL</b>.
If they can track your transactions and your location, and be able to put a stop on your card at any time, they've got you by the balls.
PeakOil is You
Banks Borrowing $437 Billion Per Day From Fed
Re: Banks Borrowing $437 Billion Per Day From Fed
by EnergyUnlimited » Sun 19 Oct 2008, 13:30:25
You will get systemic collapse of entire global economy before that is possible.
And to have any chance of success to introduce such a system, you would have to do it in environment of stability.
If you attempted that in environment of hyperinflation, it would result in civil war.
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Re: Banks Borrowing $437 Billion Per Day From Fed
by shady28 » Sun 19 Oct 2008, 13:50:10
$this->bbcode_second_pass_quote('yesplease', '
') In that case the difference is still the difference in interest rates, which is what I referred to as the fed losing. For instance if banks gets a trillion from the fed at 1.5%, and makes ten trillion worth of loans at 6%, then they'll make ~40 billion a year. Now, like ya said and I've read, these days banks aren't using this money for loans for the most part, since interbank lending has fizzled, but I suppose we could look at the maximal amount they could benefit from this given the volume of loans as well as average loan duration to figure the maximal inflation possible from this, assuming they kept loaning a trillion over the 28/84(?) day periods for the next decade or two.
') In that case the difference is still the difference in interest rates, which is what I referred to as the fed losing. For instance if banks gets a trillion from the fed at 1.5%, and makes ten trillion worth of loans at 6%, then they'll make ~40 billion a year. Now, like ya said and I've read, these days banks aren't using this money for loans for the most part, since interbank lending has fizzled, but I suppose we could look at the maximal amount they could benefit from this given the volume of loans as well as average loan duration to figure the maximal inflation possible from this, assuming they kept loaning a trillion over the 28/84(?) day periods for the next decade or two.
Which won't happen.
Put yourself in the place of the banker. You can get loans for billions, but THEY MUST BE PAID BACK in 28-84 DAYS. You MIGHT be able to roll these loans over - assuming there is no policy reversal in the interim.
Taking into account the economy, what do you do with this money?
1 - Loan it out to people buying cars, with loan terms of 3 - 6 years?
2 - Issue more credit cards, which only have to be paid back at 1% of principal per month?
3 - Make house loans for 15-30 years?
4 - Sit on it, keep your doors open, and hope that the interest profit on previous investments builds your capital sufficiently so you can pay off the loan and start making money again?
Any bank with even a tidbit of brains is doing #4 above. If the music stops and you've done 1,2 or 3 above then you are completely screwed. The FDIC will close your doors and you will be repeatedly sued by investors and depositors for the next decade.
This means the money has zero effect on the real economy. It is just keeping the bank doors open, and that is all it's doing. Look elsewhere for inflationary money printing.
Welcome to the Kondratieff Winter
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Re: Banks Borrowing $437 Billion Per Day From Fed
by sjn » Sun 19 Oct 2008, 14:48:43
Shady, you are correct except for two things: The FED knows that a policy reversal will crash the system, and the banks know the FED knows a policy reversal will crash the sytem.
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Re: Banks Borrowing $437 Billion Per Day From Fed
by sjn » Sun 19 Oct 2008, 14:52:54
$this->bbcode_second_pass_quote('jasonraymondson', 'h')ow can everything tie in this perfectly to 2012????
Did these people set out to make this happen on purpose, or is this just pure fate that everything is coming into fruition for 2012
I really don't think preparing is all that important anymore, I am personally starting to think that there are some relgious nut jobs out there who are going to force the end of days irregardless.
Did these people set out to make this happen on purpose, or is this just pure fate that everything is coming into fruition for 2012
I really don't think preparing is all that important anymore, I am personally starting to think that there are some relgious nut jobs out there who are going to force the end of days irregardless.
Exponential growth and leverage. 2012 is midnight.
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Re: Banks Borrowing $437 Billion Per Day From Fed
by shady28 » Sun 19 Oct 2008, 15:45:40
$this->bbcode_second_pass_quote('sjn', 'S')hady, you are correct except for two things: The FED knows that a policy reversal will crash the system, and the banks know the FED knows a policy reversal will crash the sytem.
That's obvious. The reason the policy is there is to keep the banks open.
Whichever banks are left holding the bag (ie, not being able to repay the Fed while meeting reserve requirements) at the end of the crisis will go down. The Fed most likely will know which banks those are before it happens.
The best way to make sure you are one of those banks that goes down is to throw your fed money into the credit market.
Ultimately the Fed is only preventing failure of banks who own performing assets. - ie, ones that can make enough income from prior investments to recapitalize themselves before the policy ends. The banks with non performing assets will ultimately still fail if nothing else were done.
If you think about this, the reason for the 700 billion to buy bad assets should become crystal clear.
Given the most likely way the banks are using this money, the fact that they now have to borrow more is NOT an indicator of inflation.
It means the banks in the aggregate need more loans to meet reserve requirements - which means their assets are not performing sufficiently for them to take advantage of this breather the Fed is offering (ie, they are unable to rebuild capital on their own from mortgage payments, interest bearing bonds, etc).
Welcome to the Kondratieff Winter
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