Economic Crisis Made Simple

13 Comments on "Economic Crisis Made Simple"

ghung on Mon, 3rd Feb 2014 3:42 am 



I’ll gladly pay you Tuesday for a hamburger today….

GregT on Mon, 3rd Feb 2014 4:20 am 



Well, Jenna may understand money herself, but she sure doesn’t do a very good job of explaining it. Oh, and fractional reserve lending started with the goldsmiths, not the bankers.

“I’ll gladly pay you Tuesday for a hamburger today….”

Thanks ghung, brings back memories, interesting how much things have changed.

andya on Mon, 3rd Feb 2014 9:37 am 



That was really, really bad.

ohanian on Mon, 3rd Feb 2014 10:11 am 



Her explanation is absolutely TERRIBLE!!!! She made it sounds like the bank can lend any amount of money. After all if you can create it out of thin air, why lend $100 when you can lend $10000000000000000000000000000000000000000000?

GregT on Mon, 3rd Feb 2014 4:24 pm 



“why lend $100 when you can lend $10000000000000000000000000000000000000000000?”

Because there are regulations in effect as to how much fractional reserve lending can be done. In the US the banks are only required to hold 10% of money on deposit. They have found other ways, however, like CDSs and OTC derivatives, to name a couple, and the government has even chipped in with quantitative easing. One giant ponzi scheme, and a multitude of financial bubbles. All of which eventually, will implode.

andya on Mon, 3rd Feb 2014 5:50 pm 



Both wrong, lending depends on the amount of ‘money good collateral.’ Your credit rating is a form of ‘money good collateral’ so is a farm, a mine etc. Banks can lend as much as they think you can afford to pay, other than that there are no restrictions.

GregT on Mon, 3rd Feb 2014 7:40 pm 



Sorry, according to this article, US banks are only required to hold 3% on deposit.

http://en.wikipedia.org/wiki/Fractional_reserve_banking

andya, Incorrect.

“In most countries, the central bank (or other monetary authority) regulates bank credit creation, imposing reserve requirements and other capital adequacy ratios. This limits the amount of money creation that occurs in the commercial banking system, and helps ensure that banks have enough funds to meet the demand for withdrawals”

PapaSmurf on Mon, 3rd Feb 2014 7:55 pm 



“Sorry, according to this article, US banks are only required to hold 3% on deposit.”
====================

It is way safer than that. The central bank requires different tiers of capital and the requirements are actually closer to 7% for banks. Using Wikipedia to understand this was your first mistake.

Although most of the members of this website are too illiterate to ever grasp these concepts. Most of you clowns are too narrow minded to grasp anything outside of your dead end world view.

Northwest Resident on Mon, 3rd Feb 2014 8:08 pm 



PapaSmurf strikes again!

george on Mon, 3rd Feb 2014 8:37 pm 



she forgot to mention the tremendous fees that the banks charge just to let you spend your own money through debit cards

GregT on Mon, 3rd Feb 2014 9:14 pm 



Well Tom S,

In Canada I believe it is 12%, and it was in my understanding that it was 10% in the US. Thank you for supporting my contention that the banks are regulated and must maintain a certain percentage of money on deposit.

Now go back to land of the Smurfs, and let the rest of here get back to discussing reality. But before you go, if I could recommend Nicole Foss’s article today, it might help you to get your head out of your ass. But then again, maybe I’m giving you far too much credit. Clown.

GregT on Mon, 3rd Feb 2014 9:19 pm 



George,

Debit cards are a loss leader for the banks. It costs them money to maintain the systems and infrastructure that we utilize for the convenience of electronic banking. You can always go to your local bank when it is open, and withdraw cash. That is your choice.

jenna orkin on Sun, 16th Feb 2014 4:06 am 



thank you, all, for the interesting comments. please note that this video is intended not for the financially literate such as yourselves but for those people who are intimidated by economics. that’s why some of the details you mention are not raised.

but also please note that whether the capital reserve ratio is 10% or 7% or 3%, it’s still woefully inadequate.

if you respond or object to this comment which, like the video, does not pretend to anything like completeness, do not interpret silence from this end as a concession. you will probably have made valid points; I may or may not have an answer but there’s a limit to the usefulness of back and forth.

thanks again.