$5 to use your debit card

[meatrace]

Gary Teter wrote:

Comrade Anklebiter wrote:

15 trillion, 16 trillion, who's counting?

Some perspective on the publication in question. This isn't really a linked article, it's a repurposed blog post from here, looks like.

Regardless of the source the information is reliable, while the editorializing can be ignored. The Fed loaned out 16+ trillion in the last 3 years at 0% interest to major financial institutions and kept it secret.

We deserve a centralized banking system, not a private corporation whose shareholders are secret and who is not beholden to the citizenry.

[Dennis Baker]

meatrace wrote:

We deserve a centralized banking system, not a private corporation whose shareholders are secret and who is not beholden to the citizenry.

Their motto would be "As efficient as the Postal Service, as compassionate as the Department of Homeland Security"

(A secret shareholder of Bank of America and Wells Fargo Bank via ownership of Berkshire Hathaway and my 401k)

[Freehold DM]

Dennis Baker wrote:

meatrace wrote:

We deserve a centralized banking system, not a private corporation whose shareholders are secret and who is not beholden to the citizenry.

Their motto would be "As efficient as the Postal Service, as compassionate as the Department of Homeland Security"

(A secret shareholder of Bank of America and Wells Fargo Bank via ownership of Berkshire Hathaway and my 401k)

You just made me spew beer all over my netbook. Thanks man.

[meatrace]

Dennis Baker wrote:

meatrace wrote:

We deserve a centralized banking system, not a private corporation whose shareholders are secret and who is not beholden to the citizenry.

Their motto would be "As efficient as the Postal Service, as compassionate as the Department of Homeland Security"

(A secret shareholder of Bank of America and Wells Fargo Bank via ownership of Berkshire Hathaway and my 401k)

Oh yeah. I forgot. Everything the government does is automatically inefficient. Unlike everything in the private sector.

You have to remember that the Post Office is, more than anything, financially inefficient. It's not allowed to compete in the free market or for profit and is subsidized by the government. Their actual package delivery system is actually pretty efficient.

Regardless, the root of all the problems as I see it is investment banking. Banking institutions were barred for decades from participating in the stock market or other high risk investments because they can leverage funds far greater than the sum of their deposits (see Required Reserve Rate). The more you see how commercial banking works the more sick it makes you. Especially now that it's all electronic, you can just sort of put zeroes in places if you want to and no one notices.

Explanation . One of my favorite comedians. His explanation is clearly very tongue in cheek but he really gets the essence of the current global financial situation.

[Loztastic]

LazarX wrote:

In America, we force those people to use check cashing establishments.

wouldn't work over here - most benefits are paid by bank transfer only, and I don't know a single employer who pays by any means other than bank transfer

[A Man In Black]

meatrace wrote:

Regardless of the source the information is reliable, while the editorializing can be ignored. The Fed loaned out 16+ trillion in the last 3 years at 0% interest to major financial institutions and kept it secret.

No, the information isn't reliable, for reasons I posted here. The $16 trillion figure is massively inflated by how the PDCF's loans were expressed.

Also, who said anything about 0% interest? I haven't looked up the other loan programs, but the PDCF loans are repaid with interest. In fact, it's higher interest than the Fed's typical loan rate, by about half a percent.

Now, if you think it's unfair that the US federal government backs private loans for private banks' profit, then that's fine, but don't exaggerate or just flat-out lie if you don't know what you're talking about.

[meatrace]

A Man In Black wrote:

meatrace wrote:

Regardless of the source the information is reliable, while the editorializing can be ignored. The Fed loaned out 16+ trillion in the last 3 years at 0% interest to major financial institutions and kept it secret.

No, the information isn't reliable, for reasons I posted here. The $16 trillion figure is massively inflated by how the PDCF's loans were expressed.

Right, so your argument is a semantic one. You believe that the 16 trillion number is an exaggeration, but it's an appropriate aggregation based on the terms the banks accepted for said loans. It's an aggregation of the total dollar amount loaned per term, even if that term was a day. Teasing apart the numbers into what they "really" borrowed and combining all loan terms that were "really, when it all boils down, the same money" is beyond my means. I don't take kindly to being called a liar, by the way.

Regardless, the GAO found that, at its peak, more than $1 trillion was loaned out at once, greater than the entire financial stimulus championed by Obama, secretly to various banks at what amounts to about 0.1% APR. There's a lot of information to comb through in that 266 page behemoth released by the GAO, but it's in there.

The question to me is why did we need federal financial stimulus money when the Federal Reserve was already doling out cash to the banks and global financial elite?

I'm not saying something kooky like returning to a gold (or silver) standard for our currency, just that the backbone of our banking system (the federal reserve) operates virtually unchecked despite our appointment of its board of governors. If you don't think this audit is strong evidence that the system needs to change then color me baffled.

[A Man In Black]

meatrace wrote:

Regardless, the GAO found that, at its peak, more than $1 trillion was loaned out at once, greater than the entire financial stimulus championed by Obama, secretly to various banks at what amounts to about 0.1% APR. There's a lot of information to comb through in that 266 page behemoth released by the GAO, but it's in there.

Again, using the PDCF as an example, the loans were made at the fed's repo rate, which ranged from 5% (at the highest) to .5% (at its lowest, for most of 2009). Here's a handy table, with the repo rate contrasted with the fed funds rate.

Quote:

The question to me is why did we need federal financial stimulus money when the Federal Reserve was already doling out cash to the banks and global financial elite?

I'm not saying something kooky like returning to a gold (or silver) standard for our currency, just that the backbone of our banking system (the federal reserve) operates virtually unchecked despite our appointment of its board of governors. If you don't think this audit is strong evidence that the system needs to change then color me baffled.

I'm not sure how you can take issue with me calling you a liar when you exaggerate about interest and say things like "doling out cash", but okay.

Our banking system is based on fractional-reserve banking: in very simple terms, banks take deposits, then invest a portion of them. Under some circumstances, depositors are going to demand more of their deposits back than the bank has on hand. Either the bank needs to be able to borrow from someone else to pay these back, or face disastrous circumstances (bankruptcy, having to cancel investments on no notice, etc.). Generally, these loans are taken out from other banks. This causes problems when the other banks are similarly strained.

So there's demand for a lender of last resort. The Fed serves as that lender of last resort. It serves as that lender of last resort because it cannot be overwhelmed, as it controls the currency it lends in, and because ceding that kind of control over the economy to a third party would be extremely dangerous.

So I put it to you, what change do you want? It's not possible to have a public banking system without having the public bank participate in that system, and with an economy the size of the world's today, yeah, that is going to involve trillions of dollars in transactions. If all you have is rhetoric about "doling out cash" to the rich and exaggerations of the facts, though, you have nothing.

[meatrace]

A Man In Black wrote:

So I put it to you, what change do you want?

A return to a system where the banks were not allowed to make high-risk investments such as in the stock market or *ahem* mortgage backed securities. That'd be a start, and a pretty common-sense one I'd think after the last 3 years.

This I find disingenuous though,

A Man In Black wrote:

Our banking system is based on fractional-reserve banking: in very simple terms, banks take deposits, then invest a portion of them.

That's not what fractional reserve means. It means that if the sum total of a banks deposits is 1 million, it can loan out (or "invest") up to 10 million, since the RRR (required reserve ratio) is 10%. This is simplified of course, as basically any argument like this on a gaming site would be. Banks effectively create their own money, and I feel it's irresponsible for us as a country to allow them to leverage this created money to invest in the stock market because when the banks fail the general citizens lose. One bad decision can utterly tank an economy.

[A Man In Black]

meatrace wrote:

A return to a system where the banks were not allowed to make high-risk investments such as in the stock market or *ahem* mortgage backed securities. That'd be a start, and a pretty common-sense one I'd think after the last 3 years.

Okay. But that doesn't have a lot to do with the Fed, which was conducting this same business before banks were allowed to make those kinds of investments.

Quote:

That's not what fractional reserve means. It means that if the sum total of a banks deposits is 1 million, it can loan out (or "invest") up to 10 million, since the RRR (required reserve ratio) is 10%.

That total of 10% is not the bank's deposits, it's the bank's reserve, which (by law) must be held in order to serve depositors. If a bank is going to loan out $9 million, it needs $10 million of deposits and needs to hold $1 million in reserve to serve those depositors. If depositors come along and want more than that 10%, the bank borrows money against its outstanding investments/loans to pay them off, and has a very short window to get their reserve back in order. The bank's deposits are much higher than that 10%; that's why we need a system both to require banks to keep a certain reserve to serve those deposits and also protect banks from "runs" where depositors demand more than the bank has on hand.