Communism bailing out Capitalism

SpreadtheJAM

So these last few posts, what are you getting at ? Gold Standard.

DriftingByTheStorm

SpreadtheJAM wrote:

What are you saying here banks are looking for people NOT to pay their debts? Not sure i get that. If the consumer could actually pay off the credit cards and mortgages, and student loans and car payments then this wouldn't be happening. The banks are looking for there money and people are defaulting that is the start, the leveraging that was done just magnified the situation.

There is a happy medium.
SOMEONE must continue to keep paying,
but as long as the banks can work a deal out with the government, or lie via accounting practices to KEEP THOSE LOANS ON THE BOOK ... they (at the end of the day, bottom line) would MUCH PREFER TO KEEP THEM ON THE BOOKS ... whether you are paying or not ... of COURSE they want your account in good standing ... they want you paying SOMETHING on those debts ... otherwise they would (according to GAAP - generally accepted accounting principles) be required to WRITE OFF those loans ... but the BEST situation and the BEST customer a bank could EVER hope for is a customer who will NEVER ... NEVER EVER EVER pay off their debt, but simply pay the bare minimum in perpetuity.

THIS GUARANTEES THEY HAVE PERMANENT ASSETS ON THEIR BOOKS ... and they use that value to LEND OUT MORE MONEY ... so it does NOT matter to them (at the end of the day) whether you are paying it off or not ... or even if you are paying ... as long as they can find a way to lie and KEEP THE LOANS ON THE BOOKS they are happy ... because they can make TEN NEW LOANS off that money that hopefully will be solvent in some fashion.

Its when consumers start PAYING OFF THEIR DEBT that the banks have a HUGE problem.

What IS a problem is that consumers have reached their credit LIMITS and are not in a position to help the banks EXPAND their current balance sheets, and THAT is a VERY real problem, because the credit supply must continue to EXPAND or the risk of all that leverage toppling over becomes imminent. THAT is, in part, what is happening right now.

The pyramid scheme is falling apart, from the bottom up.

The Federal Reserve can lend and inject liquidity to these banks until they turn blue in the face, but at the end of the day, if NO CONSUMER (corporate, private person, cat, dog, or sheep) is willing to USE THAT CREDIT (to BORROW FROM THE BANK) then IT DOESN'T MATTER FOR SHIT because the bank MUST find someone to LEND that money to, in order to get it on their books and to extend the leverage further!

mammasan

SpreadtheJAM wrote:

So these last few posts, what are you getting at ? Gold Standard.

In a perfect world yes, but unfortunately a return to the Gold Standard will not occur. The best we can hope for is that the economy, after this crisis, will be supported by something other than debt, by something other than a dot com or house boom or debt. Our economy used to be based on the strength of our manufactoring industry so we need to great a new industry, maybe as Obama proposed a green industry, to become the foundation of our economy.

SpreadtheJAM

mammasan wrote:

In a perfect world yes, but unfortunately a return to the Gold Standard will not occur. The best we can hope for is that the economy, after this crisis, will be supported by something other than debt, by something other than a dot com or house boom or debt. Our economy used to be based on the strength of our manufactoring industry so we need to great a new industry, maybe as Obama proposed a green industry, to become the foundation of our economy.

Prime debt is a good thing. Subprime debt bad thing. Credit worthy consumers deserve credit. It would be a ridiculous thought to say that somebody has to come up with 100% cash on spot for purchase of say house or car. something like that would set our world back decades.

DriftingByTheStorm

SpreadtheJAM wrote:

So these last few posts, what are you getting at ? Gold Standard.

Milton Friedman's prefered STOP GAP solution would have been to LIMIT INFLATION by route to some SET FIGURE ... like 2 or 3% per year.

Make it a congressional act that sets the mandatory target,
and then no amount of political hocus pocus could cause massive inflation, or allow massive bailout ... because there would be a SET amount of dollar value inflation allowed, period.

His prefered ABSOLUTE SOLUTION (which he recognized the Status Quo would NEVER allow to happen -- because the Banks and The Government are very much one and the same power structure, they BOTH are The Status Quo) would be ABOLISH THE FEDERAL RESERVE, STOP PRINTING MONEY PERIOD placing an absolute cap on the outstanding "high powered money" supply ... meaning whatever dollars are out there now are whatever dollars there will be in the future, period.

When the market needs, wants, or in some way is seeking excess liquidity on top of that capped dollar value, it would be allowed to create credit on the freemarket OUTSIDE of "US Dollars".

Unfortunately, such a proposition is NOT something you could even dream about getting away with in a financial crisis of this magnitude.
It would be like a heroin addict going cold turkey after a 2 week binge of the good stuff.

What we, very unfortunately, probably need to do here is find some balance between bailing out these firms (and believe me it makes me sick to say that) to maintain some semblance of order and oppositely, letting these firms fail to instill discipline and help the credit situation "reset". And AFTER this blows over (if and when. Folks this COULD be catastrophic, and mean the end of the ENTIRE current order, political, financial, and otherwise) ... probably 5 years or more down the line, in reality ... start talking about legislation to (as Ron Paul supporters so loudly chanted) "End The Fed"!

ps.
two final thoughts.

a. Gold - you can't have a system based on gold, when the ruling elite that fucked us so badly to begin with OWN all the gold. In all probability the Rothschild elite own some 90% PLUS of the gold supply ... keep in mind the Federal Reserve is NEVER EVER EVER audited, and that money can simply slip right off the printing press and out the back door to buy gold, meaning the elite can buy gold effectively for something like 5 to 20 CENTS an ounce (the cost of printing a bill). And they've probably been doing it for decades. :(

b. Carbon Credit Economy - NOOOoooOOoOoooooOOOooO! ... if you thought things were bad and out of balance when they took us off the gold standard and had fiat (unbacked) currency ... you have ZERO clue how HORRIBLE it will be when they start running the world economy ON THE VERY AIR YOU BREATHE!

MAKE NO MISTAKE. THAT IS WHAT THEY WANT! It would be the ULTIMATE alchemy! And it would be MORE INFLATIONARY THAN YOU COULD EVER IMAGINE!

Rothschild: Carbon Credits "could establish a new world order"! ... it's not fearmongering, its reality ... its what they want, and it SERVES THEIR INTERESTS ENTIRELY, NOT YOURS!

mammasan

SpreadtheJAM wrote:

Prime debt is a good thing. Subprime debt bad thing. Credit worthy consumers deserve credit. It would be a ridiculous thought to say that somebody has to come up with 100% cash on spot for purchase of say house or car. something like that would set our world back decades.

No for large purchases credit is definitely necessary and I'm not advocating that we eliminate credit but to base our entire economy on credit is completely foolish. Sooner or later it is bound to collapse. We need to base our economy on something sound, like it was back during America's manufactoring heyday.

DriftingByTheStorm

mammasan wrote:

No for large purchases credit is definitely necessary and I'm not advocating that we eliminate credit but to base our entire economy on credit is completely foolish. Sooner or later it is bound to collapse. We need to base our economy on something sound, like it was back during America's manufactoring heyday.

all we really need to do is stop the giant wealth funnel that this banking CARTEL has set up ... the funnel that runs right out of OUR wallet and in to THEIR pockets via the Federal Reserve mechanism.

We don't need to infuse the water (our fiat money) with minerals (some form of backing) ... we just NEED TO TURN OF THE SPICKET before it floods the country and drowns us!

Just STOP PRINTING MONEY.

The ENTIRE power structure, and EVEN THE VERY WARS which half of you seem to think are the problem (and in reality are just a SYMPTOM of the problem), is DIRECTLY DEPENDENT on the flow of cheap (nearly free) money from The Federal Reserve to the coffers of private banking.

Just stop that mechanism, and you will have come 85-95% of the way to reaching an amicable solution for the average american.

Just be ware that doing so means that Americans THEMSELVES will have to stop living in a bubble world. There will still be credit, but it will not be ANY where near as easy to obtain ... because the banks themselves can not simply have it printed up at will.

mammasan

DriftingByTheStorm wrote:

all we really need to do is stop the giant wealth funnel that this banking CARTEL has set up ... the funnel that runs right out of OUR wallet and in to THEIR pockets via the Federal Reserve mechanism.

We don't need to infuse the water (our fiat money) with minerals (some form of backing) ... we just NEED TO TURN OF THE SPICKET before it floods the country and drowns us!

Just STOP PRINTING MONEY.

The ENTIRE power structure, and EVEN THE VERY WARS which half of you seem to think are the problem (and in reality are just a SYMPTOM of the problem), is DIRECTLY DEPENDENT on the flow of cheap (nearly free) money from The Federal Reserve to the coffers of private banking.

Just stop that mechanism, and you will have come 85-95% of the way to reaching an amicable solution for the average american.

Just be ware that doing so means that Americans THEMSELVES will have to stop living in a bubble world. There will still be credit, but it will not be ANY where near as easy to obtain ... because the banks themselves can not simply have it printed up at will.

With the exception of buying a home I never use credit. I pay for everything either with my debit card, or cash. If I do, on the rare occassion, use my credit card I pay the balance off the following month. So I'm well prepared for that change. Unfortunately it will never come.

know1

DriftingByTheStorm wrote:

BIG WORRIES! BAD BAD BAD!

That is DESTROYING THE MONETARY BASE OF OUR COUNTRY. That would shrink the money\credit supply in this country so fast we would fall in to instand depression. The only reason we are staying afloat is probably because consumers CONTINUE to borrow. Remember, it may be a liability to you, but it is a HUGE ASSET to the system. Your debt is on a bank's BALANCE SHEET as an ASSET, and they use each dollar of debt you have to lend out MORE money. If you pay it back, you undo that chain of leverage, and cause an even worse catastrophe!

THIS is the VERY REASON the US Government will continue to BAIL OUT the banks.
Because what the USG is doing is KEEPING BAD LOANS ON THE BOOK AS ASSETS, by subsidization.
If it allowed these banks to fail, and allowed the debt to be WRITTEN OFF, it would be WIPING OUT THE MONEY SUPPLY OF THE COUNTRY, ...folks THAT is what "TOO BIG TO FAIL" means ... it means, TOO MUCH MONEY WOULD DISSAPEAR DOWN A HOLE TO NOWHERE, if they failed, and THAT CAN NOT HAPPEN!

Very impressed, Mamasans ...
best post in a LONG time on this board!

hip hip hooray.

I'm one of those weirdos without any debt (other than I do owe about 60% of my house). I don't really care if it screws up the system. I'm not going to have consumer debt regardless of whether that's good for the economy or not.

lastexit78

know1 wrote:

I'm one of those weirdos without any debt (other than I do owe about 60% of my house). I don't really care if it screws up the system. I'm not going to have consumer debt regardless of whether that's good for the economy or not.

Don't feel alone. I'm one of those lunatics as well. Only debt I have is the home. I can't honestly believe that this much debt is good for any economy. I thought our economy was driven by the consumer and the ridiculous amounts of unnecessary crap they purchase? Don't people spend less when they're drowning in debt? Or do they just keep spending with no consequences? I feel like the foundation of our ecomony is being supported by a large group of idiots. We need to let these idiots fail but if we do then the entire foundation crumbles and everybody gets hurt that much worse. It's a no win situation.

catch22

know1 wrote:

I'm one of those weirdos without any debt (other than I do owe about 60% of my house). I don't really care if it screws up the system. I'm not going to have consumer debt regardless of whether that's good for the economy or not.

i don't think he's saying that that's a bad thing. i think he's pointing out than the system is dangerously flawed. that not having debt should be a good thing, but instead our system makes it a bad thing.

DriftingByTheStorm

catch22 wrote:

i don't think he's saying that that's a bad thing. i think he's pointing out than the system is dangerously flawed. that not having debt should be a good thing, but instead our system makes it a bad thing.

exactly.

sadly, one of the primary reasons that the bankers got together to reimplement the central bank in America (keep in mind the Federal Reserve is central bank number THREE, i believe) was SPECIFICALY BECAUSE AMERICANS WERE SAVING WAY TOO MUCH.

That is right.
America was actually incredibly prosperous on the whole around the turn of the century, but large banks were failing because citizens were not borrowing enough from them, and their risky business loans were starting to go bad.

In short the banks needed to find some way to get MORE DEBT on to their books, debt that was relatively solid.

Creating a central bank thereby turned ALL MONEY directly in to DEBT ... this is refered to as "the monitization of debt" and it is now the fundamental underpining of our monetary system. ALL MONEY IS DEBT.

This was the SMARTEST IDEA EVER ... FROM THE PERSPECTIVE OF THE BANKS.

From the perspective of a national economy and a national government, it was probably the biggest fleecing and fuck up in the history of fleecings and fuckups. :(

So no,
Catch22 is correct, i am NOT saying being in debt is a good thing ...
i am only saying from the perverse perspective of our current financial system it is IMPERATIVE.

I would much prefer that we have an honest system of money, where if we were going to print fiat currency, THE CONGRESS DID SO WITHOUT INCURRING DEBT TO PRIVATE BANKERS.

Remember the sad fact is, and we have completely lost touch with this reality ... OUR COUNTRY WAS FOUNDED PRIMARILY BECAUSE THE ENGLISH MONARCHY WOULD NOT ALLOW THE COLONIES TO RUN AN "HONEST SYSTEM OF MONEY".

Here is a quote widely attributed to Benjamin Franklin:

"The colonies would gladly have borne the little tax on tea and other matters had it not been that England took away from the colonies their money, which created unemployment and dissatisfaction. The inability of colonists to get power to issue their own money permanently out of the hands of George the III and the international bankers was the PRIME reason for the Revolutionary War."