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Started By
Message
re: How do banks work?
Posted on 4/24/09 at 12:24 am to Meauxjeaux
Posted on 4/24/09 at 12:24 am to Meauxjeaux
quote:
he's still got his Florida beach house. Realized wealth
Until a hurricane wipes it out, and his insurance company was supported by the inflated houses that he sold, so now Poof goes his as well. Boy what fun!!
1
Posted on 4/24/09 at 4:18 am to C
What's the old saying: 3-6-3?
Pay out savings accounts at 3%
Loan money at 6%
On the course by 3pm.
Pay out savings accounts at 3%
Loan money at 6%
On the course by 3pm.
Posted on 4/24/09 at 8:13 am to Golfer
quote:
Pay out savings accounts at 3%
Loan money at 6%
On the course by 3pm.
That's correct, except today it is:
Pay savings accounts .10%
Only loan to other banks at .25%
Be on the golf course by noon....
Posted on 4/24/09 at 10:09 am to LSURussian
I'd like to throw in that in the case of a home loan through this "e-printing," a bank is able to e-print, i.e. create credit out of thin air, the money for the loanee to buy the house and then the loaner receives a mortgage on the property. So the bank "spent" no money, but now has a lien on a very valuable asset. They do assume the proverbial "risk" and that is also important to point out.
This is not harmful at its face value, b/c it is a mutually entered into business transaction b/t the loaner and loanee. However, you can see how this is a very profitable venture for banks when things are going well in the housing market....and we are seeing the inverse.
Credit has a delicate balance and is very powerful if used correctly.
This is not harmful at its face value, b/c it is a mutually entered into business transaction b/t the loaner and loanee. However, you can see how this is a very profitable venture for banks when things are going well in the housing market....and we are seeing the inverse.
Credit has a delicate balance and is very powerful if used correctly.
This post was edited on 4/24/09 at 10:11 am
Posted on 4/24/09 at 10:15 am to Worn Hanes
quote:Really? How does that work exactly?
a bank is able to e-print, i.e. create credit out of thin air,
Posted on 4/24/09 at 12:13 pm to LSURussian
quote:
Really? How does that work exactly?
Your explanation earlier illustrates how the compounding of the fractional lending works.
The dirty little secret about credit is that there is not enough currency in the world to pay back all loans at the same time.
Posted on 4/24/09 at 12:51 pm to Worn Hanes
quote:This isn't a secret though.
The dirty little secret about credit is that there is not enough currency in the world to pay back all loans at the same time.
Posted on 4/24/09 at 1:11 pm to Cold Cous Cous
quote:
This isn't a secret though.
Yeah, its more like the definition of credit.
Posted on 4/24/09 at 1:29 pm to C
people gave money to banks. goverment gave money to banks, banks gave out loans, people who received those loans spent them. the people who received money put money back into the bank.
Posted on 4/24/09 at 1:37 pm to Worn Hanes
quote:CCC is correct. You're confusing "currency" with "money supply." Currency is such a small part of money supply, it's almost ignored these days as a measure. Besides, there are more $100 U.S. bills in circulation in Russia than there are in the USA. You can look it up....
The dirty little secret about credit is that there is not enough currency in the world to pay back all loans at the same time.
This post was edited on 4/24/09 at 1:40 pm
Posted on 4/24/09 at 1:40 pm to dgnx6
quote:
people gave money to banks. goverment gave money to banks, banks gave out loans, people who received those loans spent them. the people who received money put money back into the bank.
Nailed it!!!
Posted on 4/24/09 at 1:49 pm to LSURussian
quote:
Besides, there are more $100 U.S. bills in circulation in Russia than there are in the USA. You can look it up....
I could look it up, but I'd prefer to have you do my research for me
Posted on 4/24/09 at 1:54 pm to Cold Cous Cous
Not today, but thanks for the thought. 
Posted on 4/24/09 at 10:32 pm to kfizzle85
quote:
Yeah, its more like the definition of credit.
or fractional reserve lending.
Posted on 4/24/09 at 10:46 pm to LSURussian
quote:
Isn't it amazing how informative and useful a Money Talk Board thread can be as long as clamdip, Rivers and MileHigh stay out of it?
If you want the party line, propaganda and lots of bs, make sure to listen to azz hat...er, Russian.
When the shtf you better have something in your poke besides pieces of paper. Any maroon or azz hat, think Russian, can set up a press and print lots of pretty, worthless, pieces of paper.
Posted on 4/24/09 at 11:03 pm to Rivers
quote:
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This post was edited on 4/24/09 at 11:20 pm
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