WE THE PEOPLE (taxpayer) are currently bailing out a bunch of CRIMINAL FRAUDSTERS!!! They are doing this with the help of CRIMINAL POLITIONS!!
These bankers are not only crminals,thieves and fraudsters BUT hypocrites and liars. If these people believe in FREE MARKET economics then these people would be BUST!! The world however would still be turning and the economy recovering.HOW?
Well the unprofitable and incomptant banks(“Wall Street” and “the City”) would of gone bust ,the professional and compitant banks(Credit Unions and Chinese and Saudi banks etc.)would survive AND THRIVE!! HOW?
Well the assets of the unprofitable and incompitant banks would flood the market ,thus reducing prices and making available a wealth of assets for compitant banks.
It is almost funny to think that Chinese Communists are better capitalists than Western bankers. The west runs a DEBTorist economy not a capitalist.
Maybe our western banks have gone BUST because they do NOT understand free market capitalist boom and bust economics? Our politions do not have a clue about the boom and bust cycle!! This is obvious as we have just gone thru the BOOM period and are in DEBT!!!! We have nothing saved for a rainy day(the BUST period)
POLTIONS and BANKERS can I ask how you thought we would pay the debt YOU rung up during the BOOM period, now we are in the BUST period?
The brightest and the best?!?!?!?
Fractional Reserve Banking System Basis of Bankster Fraud
Stock-Markets / Credit Crisis 2009
Oct 10, 2009 – 02:52 PM
The heart of the modern monetary system is fractional reserve banking. This system is based on fraud. At the very heart of the modern economy is fraud – fraud on a gigantic scale.
What is the nature of this fraud? Counterfeiting. Banks are government-licensed institutions that issue bogus IOUs. Because these IOUs function as money, they are counterfeit money. This is the heart, mind, and soul of all modern banking
The banker offers a deal to holders of currency. (Prior to 1914 in Europe and prior to 1933 in the United States, the public held gold coins.) Here is the offer.
If you will deposit your money in my bank, I will lend it out at interest. I will share some of this interest with you by guaranteeing you a fixed rate of return.
So far, so good. But then comes the kicker. Furthermore, I will pay you your money on demand during banking hours. Any time you want your currency back, just come to the bank and take it out – no questions asked (unless you try to take out $10,000 or more).
The banker knows what the economics professor knows: almost no one can think through the implications of this promise. Both the banker and the professor of money and banking strive to keep people in the dark. They promote the mystery of banking.
What are a few implications? Here is one. When the bank lends money to a borrower at a fixed rate of return, it lends for a specific period of time (commercial loans) or else no deadline (credit card loans). It cannot get this money back on demand. Yet it owes money on demand.
The depositor can demand immediate payment. Yet the money is gone. The bank has therefore issued two IOUs to the same deposit. The depositor can pull out his money at any time. The borrower, who has the money sitting in his account, can do the same thing.
How is this possible? Because the government or the central bank allows the bank to set aside a small percentage of reserves on the deposit. The bank does not have to keep 100% of the on-demand money in reserve.
With a 10% reserve requirement, if a bank gets a $100 deposit and sends $10 to the central bank as a reserve, it can legally lend $90. When the borrower spends this $90, the receiving bank sets aside $9 and lends $81. The initial $100 deposit leads to $900 in new money, if banks lend all of the money they are legally allowed to lend.
If the banker had added the following statement, there would be no fraud. There would be no counterfeiting.
You will not be able to get your money back on demand until the contract runs out for the borrower. As he repays interest, you will get your share. If he refuses to repay, I will pay you your principal based on bank reserves. But, of course, if the bank goes bankrupt, you will not be repaid.
This offer would make it clear to the depositor that there is no such thing as a free lunch. He cannot get the return of his money until the bank gets it back from the borrower. The same deposit still serves as money: for the borrower, not for the depositor.
The banker makes the offer of payment on demand because he knows that few depositors will demand their money most of the time. Those who do demand their money can be paid out of the money deposited by today’s depositors. Is this a Ponzi scheme? In part, yes. It is a Ponzi scheme that can go on much longer, because the bank possesses the power to create money.
The bank has borrowed short – “withdraw the money on demand” – and has lent long: “pay the money back on time.” This is fraudulent.
INFLATION AND BAD INFORMATION
Counterfeiters increase the money supply. This is inflationary. They defraud holders of the non-counterfeit currency. How? By lowering the market price of the currency already in circulation. The slogan is: “More money chasing the same amount of goods.”
But, as Mises showed, there is more to it than this. The added money, when lent to producers, leads to a transfer of wealth to the producers. They start bidding for production goods: land (including raw materials), labor, and capital (land plus labor over time). The can make higher bids. They supply goods and services to match expected demand. This creates an economic boom. But when the counterfeiters stop counterfeiting, expected demand does not appear. This creates a bust.
Counterfeit money distorts information. How? Because prices convey information. Prices should convey accurate information. When decision-makers have accurate information, they can find ways to lower the transaction costs of their decisions. They can search out better ways to cut expenses. They can become more efficient.
When prices convey inaccurate information, individuals find that they make more mistakes. They make decisions in terms of information that is misleading. This is why prices should be based on decentralized decisions in which individuals making the decisions are responsible for the outcome of their actions. This is the defense of free-market capitalism. But, when it comes to banks, the economists refuse to follow the logic of this principle of individual responsibility and performance. Defenders of central banking and fractional reserve banking are necessarily defenders of inaccurate information.
A central bank provides emergency money to commercial banks. This reduces the threat of bank runs. Central banks intervene to save large banks. This is why no large American bank went bust in the Great Depression, while over 6,000 small banks did.
Central banks are the enforcing arm of the fractional reserve banking system. Central banks determine which banks survive and which do not in a national bank run. Their job is to protect the largest commercial banks. This is a form of central planning by a government-licensed monopolistic agency.
Fractional reserve banking creates blindness. Central banking extends this blindness.
Any economy that relies on fractional reserve banking is flying partially blind. This blindness becomes permanent when a central bank protects large commercial banks that are regarded as too big to fail.
Fractional reserve banking is inherently fraudulent. It inflates the money supply. It creates the boom-bust cycle. Through central banking, it transfers planning authority to bureaucrats with only an indirect stake in the outcome of their decisions.
It is the basis of the modern economy. The booms and busts get worse. The dollar depreciates. Central planning increases. Information becomes more distorted.
This will end badly. Worse, it may start over again.
Gary North [send him mail ] is the author of Mises on Money . Visit http://www.garynorth.com . He is also the author of a free 20-volume series, An Economic Commentary on the Bible .
The bankers should be facing charges of FRAUD and so should the politions that aided and abetted this criminal looting of the people!
They should be stripped of THIER assets that they got thru CRIIMINAL ACTIVITIES!!!
Finacial spokespersons give thier opinion on the finacial recovery
Financial spokesperson No.1
“ROOLS , ROOLS!!!!! We don’t need no stinkin ROOLS!!”
Financial spokesperson No.2
“OK everybody , just give us the money and no-one will get hurt!!!”
A last note . Bankers are the best suited for unemployment.WHY?
Well they are non-productive members of society , so society does not loose anything when they are unemployed.
They have thier own house and assets so do not need state subsidy.
SO WHY ARE WE FINANCING THESE CRIMINALS????