How sneaky bankers steal all our money.

[Tyrannical]

How sneaky bankers steal all our money.

Now imagine you had $10,000 to invest and could do so at 10% interest, but inflation was 20%. Your $11,000 only buys $8800 worth of goods at the previous years price.

Now imagine you are a bank that practices fractional reserves lending with $10,000. You can lend that $10,000 to several different people at the same time
You lend $50,000 of your $10,000 while still keeping $5,000 in the bank as a fractional reserve At 10% interest, your assets have gone up to $15,000 and adjusted for inflation is worth $12,000.

Normally it would not make sense to charge less interest than the inflation rate, but banks when they do so can still make big profits. The borrowers get a good deal, they only pay 10% interest, but with inflation they pay the loans back in future cheaper dollars. You might even say they are being charged negative 10% interest.

[Atheist-Lite]

How sneaky bankers steal all our money.

Now imagine you had $10,000 to invest and could do so at 10% interest, but inflation was 20%. Your $11,000 only buys $8800 worth of goods at the previous years price.

Now imagine you are a bank that practices fractional reserves lending with $10,000. You can lend that $10,000 to several different people at the same time
You lend $50,000 of your $10,000 while still keeping $5,000 in the bank as a fractional reserve At 10% interest, your assets have gone up to $15,000 and adjusted for inflation is worth $12,000.

Normally it would not make sense to charge less interest than the inflation rate, but banks when they do so can still make big profits. The borrowers get a good deal, they only pay 10% interest, but with inflation they pay the loans back in future cheaper dollars. You might even say they are being charged negative 10% interest.

The money supply is increased to supply the payments via inflation busting wage increases for debts owed and this is entirely possible whilst the goods/services in the economy are growing in quantity fast enough. Once there is prolonged and signifcant contraction in the real world economy, the house of cards and its derivatives does what all pyramid schemes does....time to buy a tent.

[Gawdzilla Sama]

Don't worry. The private sector will step in and make everything right. IF big government doesn't interfere of course.

Oh, and when the banks need a bailout, big government had better be there to cough up the dough for those golden parachutes.

[PsychoSerenity]

How sneaky bankers steal all our money.

Now imagine you had $10,000 to invest and could do so at 10% interest, but inflation was 20%. Your $11,000 only buys $8800 worth of goods at the previous years price.

Now imagine you are a bank that practices fractional reserves lending with $10,000. You can lend that $10,000 to several different people at the same time
You lend $50,000 of your $10,000 while still keeping $5,000 in the bank as a fractional reserve At 10% interest, your assets have gone up to $15,000 and adjusted for inflation is worth $12,000.

Normally it would not make sense to charge less interest than the inflation rate, but banks when they do so can still make big profits. The borrowers get a good deal, they only pay 10% interest, but with inflation they pay the loans back in future cheaper dollars. You might even say they are being charged negative 10% interest.

Except the borrowers get charged an interest rate above inflation - so the banks rake it in from both sides.

[Atheist-Lite]

How sneaky bankers steal all our money.

Now imagine you had $10,000 to invest and could do so at 10% interest, but inflation was 20%. Your $11,000 only buys $8800 worth of goods at the previous years price.

Now imagine you are a bank that practices fractional reserves lending with $10,000. You can lend that $10,000 to several different people at the same time
You lend $50,000 of your $10,000 while still keeping $5,000 in the bank as a fractional reserve At 10% interest, your assets have gone up to $15,000 and adjusted for inflation is worth $12,000.

Normally it would not make sense to charge less interest than the inflation rate, but banks when they do so can still make big profits. The borrowers get a good deal, they only pay 10% interest, but with inflation they pay the loans back in future cheaper dollars. You might even say they are being charged negative 10% interest.

Except the borrowers get charged an interest rate above inflation - so the banks rake it in from both sides.

It's a artificial needlesly complex and rigged system with only one winner and he happens to run the bank. It's a rube goldman machine to control printing pieces of paper. Slows down when there's too much paper in circulation and speeds up when there's too little, at least when working well....nowadays they've lost track of the paper and I'm betting on hyper-inflation....or the cash machines will stop and anarchy?

[Gawdzilla Sama]

"Rube GOLDBERG".

[Atheist-Lite]

"Rube GOLDBERG".

It is actually a Sachs Goldman machine to be precise....much crazier than those machines Rube built.

[Gawdzilla Sama]

"Rube GOLDBERG".

It is actually a Sachs Goldman machine to be precise....much crazier than those machines Rube built.

That would take some work. We have the state Rube Goldberg finals at Purdue every year. Videos of those lovely examples of over-engineering are on the web.

[Tero]

Declare all money on paper useless, then all those suitcases full of dollars in Russia and China will never be cashed.

[Gawdzilla Sama]

Declare all money on paper useless, then all those suitcases full of dollars in Russia and China will never be cashed.

As long as we have politicians (and any other kind of criminal) we'll need cash money.

[Seth]

If you don't want the bank using your money to make money, then don't put your money in the bank. That's pretty simple isn't it?

I've become a "banker" of sorts...really a loan shark. I've been loaning out my ranch proceeds on real estate deals with friends with the property as collateral. I'm getting around 10 percent on my money, as opposed to the 0.5 percent I'm getting on the money market.

If the fucking Fed would quit printing and giving away money for "quantitative easing" (read: deliberate inflation) investing might be more attractive.

[Gawdzilla Sama]

Ah, the tool speaks.

[Seth]

Ah, the tool speaks.

You do? Why don't you say something even remotely interesting then? Not up to it?

[Coito ergo sum]

If only Jefferson had won the day over Hamilton....[youtube]http://www.youtube.com/watch?v=Oy7IFSS- ... re=related[/youtube]

[youtube]http://www.youtube.com/watch?v=2stq8ouD ... re=related[/youtube]

[gt2211]

If the fucking Fed would quit printing and giving away money for "quantitative easing" (read: deliberate inflation) investing might be more attractive.

Except it isn't deliberate inflation..... If they wanted higher inflation they would announce a higher inflation target, not QE. I think they should have a higher inflation target, but unfortunately that isn't the world I live in.