Comments by "Xyz Same" (@xyzsame4081) on "Thom Hartmann Program"
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When commercial banks create approx. 90 % of the loans (FIAT money - not fractional reserve banking !) that means they have to pay dividends, or interests for the 10 % of the money which they are legally required to "have". Those approx. 10 % are the base that determines what they are allowed to handle in LEVERAGED loans - but they also pay something for the 90 % which the Central Banks/the law allows them to create.
I think the banks have day to day flexibility in the 10 : 90 ratio or whatever the "capital requirements" are, that is looked at at longer time frames (quarterly or yearly). And they have of course ways to work around that.
with the 10 % it is easy. What they pay for those deposits or capital of owners in form of interest and dividends - the interest they demand for loans is higher and the banks keep the difference - paying for costs of course and part is profit. But THAT is only the much smaller part of whatever they lend - the OVERWHELMING VOLUME of loans they create.
Working around showing the loans in the balance sheets:
In the buildup to the GFC the U.S. banks gave out loans to consumers in a reckless manner. European banks simply cannot do that (not for mortgages for consumers - lots of other shady stuff going on but that segment is still regulated). So the next best thing for them to profit from such such schemes was to buy the bundled U.S. loans and to act as if they believed the certificates of good quality.
For the European banks (those who engaged in the con) it was a quick buck. To hedge the risk they were looking for actors accepting BETS on the default risk (Credit default swap) - so the idea was to pass on the risk to other financial institutions - they knew not exactely HOW BAD it would be so better have some backup .... that was when it got crazy and the risks MULTIPLIED - because the bets become popular and did not only cover the volume ONCE.
Risks being the claims in money and the maximum losses if the risk manifested and the loans defaulted. 50 million defaulting could mean: loss of the 50 million to whoever held the bundled loans plus it triggered many bets being lost - and each and every them meant a high claim of people who had no stake in the game whatsoever. (they had speculated like they specualte on oil. currencies, wheat, ...)
(Technically it is more complicated - but that was the effect of the derivates - and they are bets).
For the U.S. banks it meant that they could create money - and the money did not fund the creation of products - or only partially. Lots of houses were built - BUT the value was inflated. So the volume of money created and the value that was REALLY created did not match.
The U.S. banks did not have too many loans (reg. legal requirements how much they were allowed to lend) in the balance sheets - the loans were "exported" to Europe. and the U.S. bank either got money or had a claim on a European bank.
If you simply look at the balance sheet in good faith it is not as high a risk (with cash no riks) than having open loans from consumers.
So their balance sheets looked good. Rinse and repeat - and they could easily outsmart the legal regulations of how much money they were allowed to create.
As no one looks how much money they create to keep the TRILLION derivate and stock exchange bets going. with shares there is at least some connection to the real economy. As for the 700 TRILLION derivate "market" in 2011, reduced to still insane 300 - 400 trillion: see my other comments.
The central bank sets a BASE RATE and then the banks lend out for base rate plus some to companies and consumers. Now it would be interesting what the commercial banks have to PAY to the central bank for that created money. (and the fed partially belongs to the large commercial banks. Who owns the fed is a hot issue, the banks must have an account with the fed - all banks must have one with their central bank - but the large banks also get some of the revenue / profit in the U.S. (not in other nations).
That base rate is a way to finetune the economy, it is not "necessary" to earn interest for that (remember it is created !).
But what the commercial banks give is not "money" it is PURCHASING POWER and access to the (untapped) resources of the economy. That can be underused assembly lines, unused patents, unemployed people, the educated workforce, having a safe country with legal standards, infrastructure, etc.
the banks are allowed to be the gatekeppers to those resources. They can be activated and to some degree there is "leverage" - but the resources of the economy - what the economy CAN DELIVER are not unlimited. So the banks prioritize (not every project gets the loan - many are pie in the sky, some may not get the approval although they would be interesting, the banks of course leaning on the side of caution - well they used to ! - and even when it worked reasonably well the system favored people that were already wealthy. Those who have will be given).
so not ever loan is granted on individual considerations. And then there are general considerations of the economy.
If the economy is under full steam, there is no reason to make new investmenst overly attractive - t he central bank will raise the BASE RATE - and loans become more expensive. If there is a downturn the interest rates can be lowered to incentivize new projects thus giving a boost. That also smoothes out the spikes.
That works only as finetuning - not as tool in major recessions - as is proven by history * although the "experts" act as if they are oblivious to history. The cure for a major recession would be keynsian spending and central banks are usually captured by Big Finance so they have an ideological reason to act as if they could apply low interest rates:
* Japan in the 1990s until now, interest policy after the GFC - and even before, interest rates were too low. Back in the day that would have led to rising wages, but Clinton, Bush 2 could spoil Big Finance with too low interest rates - the workforce had been disciplined with outsourcing of jobs.
Alan Greenspan saw disciplining labor as major achievement of Clinton), so no danger that the workers would have it too good because low interest rates would create jobs for them IN the COUNTRY (and good wages would allow them to take out prudent mortgages for homes to LIVE IN - not for speculation).
I think another reason for the 90 : 10 ratio (if 90 % can be created, 95 or 100 % are technically possible as well, a bank could only lend out money w/o handling savings) was to incentivize the banks to make attractive offers for saving accounts for regular people.
The small savings accounts were not cost-efficient (no computers then, they needed a lot of tellers for that. I think they used punch card systems for data processing back in the day), but every dollar they collected from the little people, they could leverage with being allowed to lend out 9 times more. And loans ARE lucrative for banks.
Banks had the infrastructure to handle large fortunes and loans (accounting, regular money transfers, money coming in and out - they could use the same infrastructure to integrate the whole population in a system that is less cash reliant. For instance many workers got their wages in cash weekly or every 2 weeks, that was not efficient. And the shopping was done with cash as well. When people became wealthier they would have more cash at home (risk of stealing) etc.
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@michelle-vl3me health care "workers" can be nurses or administrative staff. And to the degree that nurses leave (assuming that is even true in any relevant numbers) because they do not want to get the vaccines - they should frankly know better, but they are not in research and have limited authority when it comes to treatment.
So if a biased nurse is unable to interpret the DATA, that does not signify much. She may be good with taking blood samples, finding the veins, change dressings, help a person to wash, change their diapers, coloston bags, and know when vital signs are worrying (alerting doctors). Or setting up and minitoring a blood infustion, or infusion to nourish a person.
that does not mean that she has an academic mindset or is right on medical issues.
She / he may be good in practical skills of care, and may have learned to the test to pass the exam. With luck she can also remember and apply what she learned. But knowing about anatomy does not give you critical thinking skills.
And if she has critical thinking skills she is not going to refuse a vaccination when 1 billion doses have been given globally. At most she would rather get a vaccine that is no mRNA (and also not Astra zeneca).
She would have a look at the vaccination campaigns in the 1950s and 1960s where people (objectively) took a little bit of leap of faith.
She would realize that the risk to die in a car accident is even higher for a woman in her reproductive years when she gets Astra Zeneca (it has never been approved in the U.S. and was stopped in Europe for "not being safe enough". The standards are THAT high.) And the risk to die (1 out of 25,000 to 30,000 - in that range) she has year after year. The "risk" of any bad effects of the vaccine are minuscule and ONCE.
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I would not even say the sun controls our weather - the sun is very stable. There are chaotic processes on earth that come into play with weather (plus the influence of climate). The sun definitely controls the AVERAGE temperature and the CLIMATE on the globe. The movement of the solar system (sun and planets) through the galaxy does not matter for the climate. And what is it with the "milky way" - that's our galaxy !
The energy of the sun fortunately is very stable, it was a tiny bit less in the last decades - but global average temperature ROSE sharply and in the EXTREMELY SHORT period of only 50 years. so this time it is NOT the sun. Scientists KNOW these cycles, and they emerge slowly and very predictably.
The tilt of the earth does not matter over 50 years - that cycle last much, much longer. It is correct that those cycles (tilt, distance from the sun) play an important role - over 10 and hundreds of thousands of years. Not 50 or 100.
These cycles IN COMBINATION with the greenhouse gases determine the climate on earth.
For instance if new mountain ranges were folded up (and the new rock reacted with Co2 from the air - thus fishing Co2 out of the normal carbon cyle). Or when extraordinary volcanic activity over 100,000 years spewed a lot of methane or Co2 into the atmosphere. (in India or Siberia, the lava covered the size of countries and grew as high as mountains)
Sometimes these factors (tilt, distance, extra realease or removal of gases) aligned for a "perfect storm" and sometimes they neutralized or weakened each other.
SCIENTISTS !! know how to calculate these influences. the sun cycles are like a clockwork, and the mountain ranges, volcanoes etc: they find fossil evidence for that.
Being able to exlain what happened with the climate in the past (and these usually took ten ouf thousands of years, if not longer) also helps with predicting how it will play out now - when the atmosphere had such an quick rise from 280 to over 400 ppm Co2.
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@lolouro2266 I challenge you to come up with a peer reviewed study that says the earth is only suited for 2 billion people. That is not even possible - it depends on HOW these people EAT and how they have ordered they other energy use (like having a lot of public transportation - China, well insulated homes - Germany, or building more modestly - U.K. and Japan - well most countries other than the U.S. *)
At the rate the rich countries squander the resources (the U.S. being the first) 1 billion is too much. And with careful use I think 10 billions should be possible. Not with the current economic system that makes GREED the cornerstone. Going for the highest profit or the lowest prices (incl. the lowest price for human labor) and not factoring in the costs and damage done to others - in our normal relationship be would detest such persons for being greedy bastards and void of any morality. (Think your neighbour disposing their waste or toxic waste onto your lawn - just because they can and because it would cost a little (or a little effort - which in the world of economics amounts to costs) to take care of that in the proper manner.
* the German middle class may have slightly smaller homes on average. On the other hand their middle class is not nearly as much under assault. They ALL have 5 week vacations. parents do spend time with children, vacations, extra holidays, the 40 hour week is still a thing, not as long commutes, etc. They do not save up money for the later college education for kids or a good private kindergarden. And they have not nearly as many homeless persons - there it is mostly related to people who have a personality disorder but will refuse the treatment that is available or even more often people that lost they way because of addiction.
There are other luxuries than having a huge home and a lot of material possession.
TIME and being worry free. Free from the competition to amass a lot of material possessions (the hoarding and consumerism is still bad enough in Europe).
In the U.S. there are studies (!) that show that being content / happy does not increase with income, there is a threshold of 70,000 USD yearly income. 70k can buy you the good life and some luxuries - and freedom from WORRY (in most parts of the U.S., in New York it is merely a middle class income). Money does not buy happiness, but freedom from worries and assistance when necessary. So until 70k there is an increase in well-being with higher income - beyond that more money does not equal living better.
People get USED to whatever BETTER level they reach quite quickly (lottery winners after one year have the same level of happyness. So they may be happy - if they were good in the art of being happy to begin with).
The increase in consumer spending, the larger home becomes the new normal. Splendid vacations may be enjoyable, but if your marriage does not go well, if your work a lot, if you are a grumpy person they will only have a short impact on your overall well-being.
Money does not buy you more joy - but the high income in many cases comes with a sacrifice - like working long hours, a long commute, stress. Surrounding yourself with people that are very much into consumerism, and trigger you to keep up.
Humans are very status driven social animals, if your peer group does consumerism it is hard to not join the race. And the home in the nice neighbourhood has that attached to it. It is not only the nice and safe space, it comes with certain attitudes and level of spending. Your instincts drive you to keep up with the Jones. Whatever the Jones are in your environment. The self-segragating U.S. society (according to wealthy) is especially prone to that. The mix is a little better in the countries that come from a Social Democratic tradition, and they have more people in the middle. Less underclass and less very wealthy or rich people.
the Germans are into fine (and costly) cars - but even in the premium segement energy wasting cars would not be tolerated. The owners of the high end Mercedes and BMW could easily afford double the gas prices - but they demand that their sophistaced car also must be energy efficient. so the industry delivers - relatively speaking.
The combustion engine is a waste of energy on principle - a study of one of the major, major flaws of capitalism. Thus we get a technology that is refined over 100 years. But all the big players cannot be bothered to INNOVATE. They worked around the fringes but never challenged the status quo of having a combustion engine at all (they would have needed to educated the buyers which is a risk, and they had always investments in the retro technology).
Combustion engines by law of physics use less than 30 % for movement (the rest of coal, gas, wood becomes heat). In Germany they use a part of that energy to heat homes and water - so the energy efficiency for electricty production in gas and coal plants can be raised to over 60 % - which is still not good.
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The Brownshirts were also inspired by the KKK - the intereresting part is that Hitler and Roehm could turn them against the unions and labor. The wealthy and influental Conservatives tried to rewrite history after WW1 and blame Social Democrats for the catastrophically lost war.
It is like the legend that slavery was a side issue for the Civil War. It helped the elites to cope with the loss, the wounded pride and it was a good deflection because THEY had been so eager to start a war. In Germany Social Democrats were against it and only reluctantly went along while the Conservatives and the monarch stoke a patriotic frenzy. The "elites" had dragged the country into the war that they so catastrophically lost (the South and Germany).
They too had lost, financially but also status in society (or more precisely the unwashed masses got the vote, women got the vote, separation of church and state). All things that were a major shift in society and incensed those who had lived will under the old more rigid order.
But the losses of the German middle and upper class were nothing compared to the sacrifices of the masses. Which were tha majority, and the Conservatives for sure needed a good deflection to stay politically relevant.
These poor men were made to HATE the left parties, and unions - despite the fact that most of them were poor (unemployed) working class. They may have gotten financial compensation, after some times the Industrial leaders in Germany found it convenient to have such a mob, or the Nazis as a party - to stick it to the Left. So the party that was allegedly for the little people got financed by the Rich Industrialists but they were discreet about it.
The party may have had funding for helping the storm troopers out financially. Or even to invite the group to a beer after a successful raid - even that was something.
Truth is: these people hadn't exactely thrived even before WW1 (unlike the middle and upper middle class that was sentimental for the lost monarchy). It got worse after WW1 and they needed a target for their free floating anger. See the legend who was to blame for losing WW1 (a ridiciulous narrative, but it was eaten up by certain circles nontheles).
In the paramilitary organized mob (it had elements of both), the members could experience themselves as powerful when they were part of the group. They had a purpose in life (a goal larger than themselves), status, could overcome the humiliation, defeat, and despair the nation felt after WW1.
The treaty of Versailles was that humiliation, it was not only the lost war, the bad economy, the many men that had died.
Only a very restricted army was allowed to Germany - so France could invade Germany in the 1920s, and occupy the coal and steel region to extract with force the payment of reparations (in form of coal and steel), when Germany couldn't pay them.
The population was fiercly opposed, the rest of unoccupied Germany was livid. The French had to use martial law, with civilians being executed for sabotage (damaging infrastructure, they did not kill people, but were sentenced to death nontheless to scare off others). All railway workers in the region walked off the job so the French had to bring in their own people, and the technology and norms were different, so it was not a smooth transition.
The German government paid the striking railway workers - one reason they printed a lot of money and got hyperinflation. Civil servants tried to be as uhelpful as they possibly could towards the occupies. So France found out that the occupation (likely also political signalling towards their own voters) cost them a lot, they had to pay the soldiers, and production and transportation in Germany was slowed down by the locals.
Britain did not corner Germany once they had defeated a rising potential competitor (one of the major real reasons for WW1), the U.S. did not ask for reparations, but France had lost a war against Germany in the 1870s and had old scores to settle. They doubled down. With excessively stupid actions. Even the most peaceloving Germans were then convinced that Germany needed a strong army again, and that helped the Nazis.
The Brownshirts usually did not use firearms, even though they may have been trained. THAT would have likely gotten the too lenient authorties breathing down their neck. The authorities were "conservative" leaning, shocked that the working class people and unions had a say after WW1, and were often somewhat gleeful that the lefties were being "roughed up" - but 500,000 well oganized people (or then 4 millions in the 1930s) with a mob mentality and the police looking the other way (even before the power grab), can do a lot of intimidation with other weapons.
Shooting people (when Germany was a democracy * would have made good society nervous, that would have been taking it one step too far. What the brownshirts did was seen and downplayed as "roughing the other side up", and if there were casualties it was not followed when only lefties were the victims.
Germany was a democracy between 1918 and spring 1933 - but often in an impasse abour economic measures because of the immense economic pressure: Reparations on top of a bad economy in all of Europe), and there were divisions within society that were cynically intensified for political gains. If was a politcally very active time too, the unwashed masses got democracy, the reactionary forces did not take that laying down.
See during and especially after the end of reconstruction in the South, or after the Civil Rights movement, or how the election of Obama animated the racists. There will be backlash if the status quo in a society changes. The reactionaries among the pillars of society were not unhappy about Brownshirts being an increasingly intimidating force. They would not get their hands dirty, they found the mob of course also uncough. But these uncough brownshirts were useful to show uppity lefties their place, democracy or not.
I can see parallels with the KKK in the South. There were many covert ! KKK supporters as late as in the 1980s among well situated citizens (polite society) - they got visited by the FBI at the workplace when the FBI got a notebook with names by an informant - and were not pleased about it.
After Hitler had seized power (spring 1933) he got rid of the SA after 1 year. With brutal efficiency. The Night Of The Long Knives. The leaders were killed extra judicially and they were surprised in one night because they allegedly planned a coup. Which likely wasn't even true - so they were surprised. A few got warnings from the insiders (if there were personal friendships, but most were killed before they had time to process how the situation had changed for them).
Hitler feared their power (after they had helped him get into power) and he feared (rightfully or not) competition from SA leader Roehm. Hitler - unlike Trump - was smart and strategic. He also had distinguished himself in WW1 and I think he didn't do it for money. He was a lot of things but not a grifter.
Hitler had paid attention to the adage: the Revolution eats its children and the power struggles that followed if one system of governance was replaced FAST with another (and with force). (And maybe other insiders that also disliked Roehm and the fact that he was a homosexual did not let Hitler forget that Roehm could be a challenge to his power).
4 millions Brownshits in the 1930s was a sizeable mob (to give you an idea: Germany now has over 85 million people, likely they had as many people before WW2).
Those stormtroopers had a blast after their side had "won" and ended democracy, and even terrorized "good" political Nazis (think towns and cooperative mayors). So on the one hand - the population did not mourn their swift and violent end.
On the other hand it signalled what would happen if anyone resisted the regime. These had been former and longtime allies and important for the rise of Hitler and the Nazis from an obscure little party.
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She serves the big donors, probably auditions for a job (with all the grandstanding) that pays better that 176k before taxes as Senator. She might already have a job lined up and may not want to be in politics anymore.
The big donors support such shills, she will not be of direct use if she ends her career or gets voted out. BUT:
They need the other shills to serve them and that can mean losing elections for those politicians (they can't run on popular positions, can't they ?). So the shills that still have the vote in the House or Senate and are in committees must feel confident that they too will get the Golden parachute. Especially if they have a few terms under their belt - all the more reason to be really nice with the party leadership, that also allows access to the cushy jobs.
Else the sellouts that are still active in politics might consider working for the constituents for a change. Can't have that !
and then there are perks, like lucrative real estate deals around 3 corners, the books bought up by think tanks (have you ever wondered who buys the books, every politician seems to have one, and they are printed ! - the publishers know they Will. Be. Bought. Not talking about Obama or Dick Cheney, obviously the will have an audience, but all the other books.
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There is not enough work for everyone and not enough CONSUMER demand worldwide (which is driven by the wages of workers worldwide). The corporations need alternative strategies to sell enough stuff - marketing, inventing consumer debt on the credit card (that "solution" is over since the financial crisis) and in the last 20 years even more throw away stuff, fast fashion, throw away furniture etc. Reducing production would neutralize the advantages of the mergers of Big Biz - Big Manufacturing more precisely..
Search for "planned obsolescence" - fewer and fewer corporations are producting MORE and MORE (there are concentrations processes going on thanks to globalization, also trading their shares on the stockmarket and the rules for it helps them buy up smaller competitors, or to merge).
The disposable income of consumers does not grow (well paying jobs in the rich countries are replaced by not so well - or poorly - paid jobs in developing countries. Sure there is SOME improvement in China for instance - it is bought with a decline elsewhere. So in total they cannot sell MORE in value - if they want to sell more STUFF it has be CHEAPER.
The race to the bottom regarding product price and quality:
Cutting corners in production naturally limits the lifespan and quality of products. And they also intentionally limit it by using components that are carefully chosen to fail reliably but only after the warranty time. So a washing machine will cost half of what a good, durable machine used to cost. It will give the impression of having a lot of features (that is easy with electronics) - a cheap machine can boast easily 20 programs. Does not mean they all were carefully tested to make sense or actually improve washing results (or use of resources). And use the alleged multitude of options - as long as the machine is functioning.
That cheap machine has a good chance to fail after 5 or 6 years (pumps and seals usually). Sometimes earlier. And repairing it is not an obvious option. If the basic quality is not there, the often costly repair will be a gamble. And a new machine with warranty will not cost that much more.
Why is reparing expensive ? Human labor, spare parts - often you have to replace one large component even if only a small part is affected (they do that with cars as well), they just do not offer the small parts separately.
So they pay the workers less who produce the machines, automation brought more efficiency. But the consumers (who lose their jobs due to outsourcing) do not even get the advantage of lower product costs (if you factor in the use over longer time).
Products cost half of the price and last only half as long. Plus the hassle to get the new machine. Never mind the damage to the environment and use of energy for needing a new cheap machine every few years.
Plus IF a quality machine needs a repair, it would be warranted - you could have it for many more years afterwards. I know of machines that worked for 16 years (lots of use, 1 repair inbetween). Now, 16 years was good but no uncommon lifespan - with that type of quality machine one could expect to get at least 10 - 12 years of regular ! use out of it.
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+centinel20 Modern Monetary Theory. - Please, please unlearn what you think you know about money. For a start I recommend the pdf of Bank of England: Money Creation in a Modern Economy * that does some myth busting, of course the site of M. Hudson, and also positivemoney(dot)org (search forSovereign Money or QE for the people).
Also see the term: FIAT money (money created "out of thin air" ).
* We are taught that the banks collect money of savers and then they use the collected money to give out loans - that's complete nonsense, please see the BoE pdf, I highly recommend reading it, it is easy understandable, not too long, good that such an influental Central Bank made that information available for the lay persons.
If I would lend money to a person, first I would need to HAVE that money before I can lend it to someone else. Citizens intuitively think that is how money functions at the large scale - no it doesn't. Not at all.
Banks actually "invent" money every time they give out a loan (Prof. Hudson mentions that). Until the early 80s that meant usually some PRODUCTIVE project, it meant entrepreneurs getting orders and people doing jobs (and making an income from it).
Of course a state cannot (well it should not ! ** ) create money just like that - well the task of "creating money" is usually left to commercial banks (although the state/central banks CAN create money - they did so when creating TRILLIONS in the U.S. and Europe for the bailed out banks in order to improve their balances. What Prof. Husdon talks about would be in the line of QE or the people.
IMPORTANT: The amount of money in an economy (currency) should correlate to the amount of goods and services provided by that economy (so if that volume increases as it did during the Economic Boom after WW2 - of course the volume of money which we use after all to exchange those goods and services, must increase as well. (And until the 1980s it was like that.)
How was the additionally needed money injected into the eocnomy ?
Not by "printing" it (or creating it virtually in the books or now with the help of computers).
Imagine the bank notes coming from the press, the bundles packed into cartons sitting on shelves where it is printed or at the treasury. Now what ? - How does the money GET INTO CIRCULATION ? Do they throw it on the streets, send it out with postal services ??
This is how it really worked (and worked well until the 80s): the economy was going well, corporations and citizens were asking banks for loans to expand business and produce MORE. The banks confidently gave those loans - after ASSESSING if the projects and investments seemed "economically reasonable". Then they used their PRIVILEGE to "invent money" - effectively giving out PURCHASING POWER to the borrower. The borrower signed a contract to "pay back" - that meant they assumed they would have an income from which they could pay back in the future. And that usually meant they provided goods and services to other participants of the economy (by being an employee or an entrepreneur).
So the loan enabled them to take some larger chunk (goods and services) out of the economy, of the pool, right away - and then they gave back to the system over time by providing goods and services to others.
Legal requirements for the banks forced banks to have a good look at the projects for which they created money (allowing access to the pool of resources of human labour and goods). Would there be that "payback" ? Would the economic system get the later contribution of the borrower ? Was it likely that the balance of take and then give would be kept ?
Since the resources of the economy are not unlimited, such a testing for the most worthwhile projects is essential. Banks that do not / did not follow the rules could get into legal or at least economic trouble.
If the economy was booming the interest rates would be set (by Central Banks like the Fed) at a level that would make borrowing less attractive (the lead rates are set by the central banks, which then influenced the lending banks).
So the interest rate is the instrument for fine tuning the economy.
Creating money means for a bank: writing a number at one side of the bank balance sheet ( = the account which gives the borrower the purchasing power) - and when the loan is paid back, a series of numbers booked on the other side of the balance, until it evens out.
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+centinel20 part 2 The bank does not "have" the money to give out the loan nor do they "keep" the money when the borrower "pays back".
There is money banks do keep: On top of the nominal value of the loan, they also get money in form of interest, fees, charges etc. When they receive the regular payments they are splitted into loan + interest/fees - and the latter are booked on OTHER accounts. THAT is the compensation for their services - which they get like every other service company.
The loan is created out of nothing - and the amount vanishes from their books when the loan is completely paid back (the amount on one side is balance out by the amounts on the other side) .
The banks do not need to HAVE the money - the government, society grants the banks the right to give access to the resources of the economy. They can use that privilege for their business model, and can earn money with their service for the economy (interest, fees).
And with loans they can earn the money that will enable them to offer other necessary, useful banking services (savings or cheque acounts, money transfer) at reasonable costs.
THAT is the real reason that the governments in all modern economies required the banks to have a certain volume of savings (or proprietary capital from large investors). From a technical standpoint it would not be necessary (banks need a little bit money in form of cash for daily handling, but not much).
It is costly for the banks to collect money in form of smaller savings accounts - but if they are allowed to give out let's say ten times of that volume in form of loans - that is the area there they can make a nice profit. So the government effectively forced the banks to show some interest in providing bank services for the little people - and at costs where the little people would actually use those banking services.
That was a huge advantage for the economy. Consumers/workers were used to handling cash in the 1940s and 1950s, and would not have changed if the bank services would have been too expensive.
Please note that since the the 1980s that beneficial model (creating money to give out loans) to finance an EXPANSIVE economy has been perverted. Then money creation was almost always TIED TO PRODUCTIVE projects, it resulted in jobs, companies having orders, value being created.
Now a lot of the money that is created, fuels speculation (stock markets, derivatives). Speculative "instruments" can be used to create money (no ties to the productive economy whatsoever !), the central banks have mostly lost control over the process of money creation (or more accurately: the leading figures plus politicians assist the Big Casino and have no intention to exert control for the benefit of the economy and the regular citizens).
Since the 1970s the growth of GDP (worldwide and in the U.S.) has lost all correlation with the growth of money volume.
The volume of money has exploded.Times 13 resp. times 18 - compared to what would be justified by GDP growth - that is INSANE.
It is the effect of deregulation, of "financialization" resp. money creation for and by ** speculation.
** One bubble feeds another bubble which feeds another bubble. They end up writing all the vitual wealth onto their accounts and use it as base to speculate some more - all with the help of the central banks and the "authorities).
So what you - falsley - fear MMT would do, is already the INSANE REALITY.
If so much money CREATED than is justified by GDP growth (much, much more than is justified by increase of goods and services exchanged) why does it not show in INFLATION or even hyper inflation ?
Because that money does not show up in the REAL economy. Not in the pockets of regular people who would spend it. - Also try getting a loan as smaller company or start-up, or for financing a home. At that level ! the banks will have a very, very critical look. Banks have widely lost interst (and confidence) in fulfilling THAT task, to finance such projects - which is the ONLY RATIONAL to grant them the legal right to create money in the first place.
The money exists in the virtual world, - there is the "inflation" happening.In the derivative markets and in the value of shares.
A lot of money was injected in the financial "markets" - QE for the banks, TRILLIONS in the U.S. and Europe.
The profits of the speculative transactions (that do not serve the real economy at all) land on the accounts of very few people.
The very rich pack some additional billions on their offshore accounts (it the money is sittling idly on those accounts is does not INFLUENCE the real economy, thus it does not cause inflation in the economy sphere * of the regular people. Inflation is a phenomen that shows up when REAL goods and services are exchanged.
* Income inequality shows also in the fact that wealthy or rich people have occupied real estate, education, healthcare as fields of "investments" - which means the costs of living are rising for most of the population (and those costs are not more than offset by financial gains of the investments). That drives inflation. That has however not directely to do with FIAT MONEY.
The well paid ! employees in the financial "industry" are not numerous enough to spend so much money into the economy that it would be felt (wealthy people keep additional income, only regular or low income people spend more when they get more money).
There is much more money on those offshore accounts and at the disposal of there few, very rich people. More than they could ever spend.
BUT the problem is that even a fraction of that money gives very few people enormous influence, they can buy politicians, media, acamdic mouthpieces, laws, "free" "trade" deals, price out their competition, finance mergers (eliminating competition), buy up interesting technologies and patents - and even finance armies of mercenaries,
Rich financiers and the financial industry (and their bought shills - media, politicians, even academics) would have us believe that we need wealthy and rich investors to get worthwhile projects financed.
With the idea of QE for the people becoming meanstream (as opposed to banks needing to collect money from wealthy people) that position of power is undermined.
Sure the money creation by QE for the people must be democratically controlled, transparent, prudent. But it would end the narrative of "We need the investors or the too big to fail banks ".
No we don't - and we are not supposed to know that. They need us, and the economic and legal system kept afloat by ALL members of society (even low income people, who often provide workforce and are definitely consumers - the most important part of the economic web).
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As for the costs of living: Housing, healthcare (even more expensive than housing for a family), education, and transportation/cars are the larges chunks of the budget. - If those needs are well taken care of in a society, its members can make do with less work hours even ! if that means less income.
European style single payer healthcare is possible at USD 5 - 5,5 k per capita per year - expenditures when all of the population in in the same risk pool ( most wealthy European nations are in that range - even though they usually have an older population than the U.S.).
Anyway: that would mean approx. 20,000 USD per year for a family of four. If you have that covered (like in Europe where you pay a percentage of your wage, so it is always affordable, the family is insured with you, individual risk does not matter, and not payments when you need treatment) you can afford to have less in your pockets.
Now with housing: a nation could do QE for the people and finance well built and planned flats with it - QE means the state creates the money for it directly instead of making it a business opportunity of the haves with bonds with interest.
Advantage: it could be done with almost no interest, thus low cost when stretched over 30 or 35 years. It provides basic safety, having people live together is much more EFFICIENT than individual houses - use of energy, land, needs for streets, sewage systems, etc.
The banks are not going to like that idea - they insist that injecting money into the economy should only be done with bank loans, or with bonds which they handle for the issuers and buyers. Or of course QE for the Banks.
Nor would wealthy people like it who "invest" in housing and then rent it. Or buying up homes (foreclosed homes !) in the hope of selling them with a profit later (such institutions were rescued - ony recently at the end of 2016, see Blackstone).
If folks have affordable housing or OWN the flats they will just refuse to upgrade if it gets to expensive. And people will not panic if they lose jobs, they have alternatives.
Under FDR, and maybe also after WW2 workers were encouraged to get mortgages - people with such financial liabilites do not go on strike. If a modest but safe way of living with a lot of free time is possible the ruling class would lose their grip over the unwashed masses. If you do not like you boss and your partner still has a job - you can quit and look for another annoying boss. Hard to to strongarm and blackmail people if they have the basics well covered.
One could allow people to buy such flats over a span of 30 or 35 years. Meaning of course that the children would inherent what their parents created. So over generations the costs for housing in the population would decline.
Well built houses can be used much longer - 100 years are fine for brick and mortar, even much older and when renovated they allow a good quality of living. Sure there will be need for renovations but that is cheaper than building new - and much more stustainable as well.
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That narrative (intermediaries, savers are "rewarded" with interest for providing the banks with money so that they are able to give out loans - is a narrative that serves Big Finance. - Banking, interest, the stock exchange, money = currency are concepts that were invented to help the rich and powerful - and the myths around it prove that.
When you take the money to the bank it is not a deposit. It becomes "capital" of the bank (that is a legal provision), and that means it can be lost. Whenever banks get in major trouble it turns out that the regulators didn't do their job.
On the other hand in this economy it is almost impossible to not have a bank account and there is a push to do away with cash. So people with savings have no choice but become involuntarily "investors" in more or less risky endevours. Plus the banks are left off the leash and have formed an oligopoly.
But after all if you want INTEREST on your modest savings the bank obviously must lend out your money to make it "work" (not not really !) so that is the rationale to make the people with normal savings accoutns PARTAKE in the risk. (that is not the case if a person rents a safe with the bank and DEPOSITS valuables. In case the bank is bankrupt those valuables remain the property of the owner. Which is NOT the case if you bring the money to the bank).
That means regular citizens = VOTERS become HOSTAGES for reckless banks and the LARGE SHAREHOLDERS of these banks. As long as the party lasts good profits can be made, management is highly paid (much more pforits than with prudent banking), and when it they crash the VOTERS have a situation where the banks can make their politicians sell the narrative of how they MUST BE SAVED, that they are TOO BIG TO FAIL, etc. If everyone would keep their deposits (or the state allow MONEY CREATION for that ! as well) the incorporated structure could go bankrupt. And new corporation would take over the savings accounts, loans, employees, software, etc. (incl. the pension plans) and just go on.
Of course no prudently acting bank got ever into that kind of massive trouble - so it begs the questions WHO else (apart from the people with savings accounts) has claims on the bankrupt bank. What shady projects have they funded, WHO got that money, and why did they not spread out the risks. (There are cases of banks that are not doing well, which may have to do with projects gone wrong, wrong strategy etc - but these are NOT the spectacular failures). usually they are taken over.
The OWNERS that either make large deposits or usually they have SHARES have a VOTE on management and have influence. They have and accept entrepreneurial risks. So THEY would lose their money. So WHAT - they could have done something about it.
Other banks might have CLAIMS on the bankrupt bank - often coming from shady biz, from speculation. (like with the GFC: not only did the U.S. banks give out shady loans and sell them off to European banks - which knew what they were doing btw. Lot of institutions then started BETTING on the default risk of the bad loans. This is when the risks MULTIPLIED. The risk of a default was not only covered ONCE and by the party that would actually lose money in such an event (which would be an "insurance" but many used it as another "commodity" to bet on: like oil, currencies, interest rates, pork halves, wheat, ....
One of the first that needed a bailout in the U.S. (under Obama) was AIG, that is an insurance company and they got into trouble over such bets. Now Congress demanded that all financial institutions had to make public WHO would get the money of the bailout (it turns out Deutsche Bank had major claims against AIG, had AIG gone bankrupt their troubles would have been already out in the open THEN. The German government was not so nosy, they gave bailout money without forcing the banks to declare WHO would profit (that is why a completely unknown investment bank - no dealings with normal savings, loans, and business accounts - was rescued and an investigative reporter found out that bailout ALSO served DB, because they would have lost money).
Deposit insurance is not for all you have in the bank, not for higher sums, and not in a major crash where all the banks go under (countries have different regulations, but it is possible if a person has the maximum of 100,000 with one bank and 100,000 in another bank that they will miss out on the money when BOTH banks fail - because there is a total cap of 100k for instance).
That has already happened in Cyprus and Iceland - and needless to say the really large deposits got a warning in advance (in Cyprus), so that will hit businesses or wealth people but not the super rich.
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The U.S. under LBJ had gotten bugs into the embassy of the South Vienam AND even into the office of the "president" (read the U.S. puppet dictator). LBJ had escalated the war in Vietnam, so it is possible he prefered Nixon over the candidate of his own party, a president Nixon would continue the war and if he "won" then he - LBJ - would be justified after all.
(at least I think that is a possible motivation).
But LBJ had to initiate peace talks, the Democratic party and the campaign of the candidate got nervous, this was 1968, MLK was murdered in spring, in Juni Bobby Kennedy was murdered, and more and more soldiers died (or came home broken).
The public got very negative about the war, it was a traumatic year overall - and if the war had ended before the election, it would have increased their chances to win the presidency.
Because of the bugs the LBJ admin KNEW that Nixon had contacts to the puppet in Vietnam and had advised him to sabotage the peace talks. With the information I got from this segement by Thom Hartman - that he had a lot of dark money by the mob - I assume he bribed the president / U.S. puppet. It was by no means certain that Nixon would win, so refusing to showing in Paris and not negotiating at all - would not have strengthened the position of the puppet dictatr, if a war adverse Democrat had won. After all he depended on the support of the U.S., and the U.S. government had increasing trouble to sell the war to the population. Some willingness to get at the table would have been wise.
I guess the Vietnamese U.S. puppet got well compensated by Nixon for such risks (like the uttelry corrupt president of Afghanistan, a complete DC creation, he was not that much into political power or transforming the country. This was just about the grift, I assume he too ran tail beween legs and had transfered the money out of the country).
So Nixon was not smart enough or did not anticipate such an intel succes (the bugs in the embassy and the presidency). President Johnson could have busted Nixon and forced him to step down from his campaign for "health reasons" - I guess they did not want to expose the Vietnamese collaborators that had installed the bugs.
But IF they would have needed to go public to FORCE Nixon to step down - it would have reflected worse on Nixon: For undermining the U.S. intel agency successes, because the Vietnamese would have known who had the ability to place the bugs for the big "partner".
Either LBJ wanted the talks to not happen and just pretended, or he had skeletons in the closet (most likely he had them and he knew about the skeletons of others, too. The question is if that could be leveraged against him). Or it was unimaginable for him to expose someone of his class. They were both not shy to throw the punches. LBJ was a sleek actor himself, although likely not as criminal in domestic affairs.
There is an audio where JBJ comments on Nixon undermining the peace talks. But we do not know why he decided not to bust his sorry ass. The Dems could have smoked the presidential candidate of the Republicans, tying every dead soldier to his treason.
Conservative voters are into loyalty (that is why they do not care if their guy is a thug, see the reelection in 1972). But if "our guy" costs the life of young servicemen that is another story.
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@zippydodahquirk9039 A man in California, 30 years. 3 kids (all under 8), wife due to give birth to another one in September. Organizing anti mask ralleys and harrassing school boards was more important than care for his pregnant wife (she and his daughters could not get the vaccine, and he was - of course also against getting vaccinated. ).
Funny how he got into the hospital. First he refused to test, then he decided to self medicate, (vitamin C, D, ivermectin, zinc), after 4 days he was in bad shape and got admitted (end of July), he needed 4 weeks to die.
His wife opened a gofundme after 2 weeks, likely he got his wages every 2 weeks. For paying essentials and for the mortgage.
What business did he have running around to play the contrarian, no matter what - while he had 3 kids, soon 4 and a preganant wife that was more vulnerable. Even if she had only gotten a "harmless" case no hospital needed. People have if very mild others say it is like a bad cold or the flu.
Imagine that in the last month of pregnancy or while she gives birth.
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