Comments on: Banking 3: Fractional Reserve Banking

By: lighthammer2531

lighthammer2531 — Tue, 17 Nov 2009 08:55:18 +0000

*2nd comment*

In this fiat world money continues to lose value as more and more is created from nothing. This has enabled several entities to buy up foreign assets for basically nothing while the dollar keeps falling. Currently, several nations are seeing this and getting angry as their dollar reserves and US investments continue to lose value. In turn they are holding private conferences about dumping the dollar and going with a new world reserve currency.

By: lighthammer2531

lighthammer2531 — Tue, 17 Nov 2009 08:55:18 +0000

njneopatriot:

Not sure if I am following you completely on your statement but I will do my best to answer. Fiat currency is only as good as a commitment to a promise as fiat currency has debt attached from the very beginning. There is only one controlling source (Central Bank) which operates as “the” primary lender for a nation. This controlling source issues credit that it knows can never be paid back causing permanent debt. *Continued on second comment*

By: njneopatriot

njneopatriot — Tue, 17 Nov 2009 08:55:18 +0000

Don’t you think it is also a matter of whether one will keep their promise? Money is really only as good as the commitment to a promise. The society that supports its money determines the value it possesses on a global scale.

By: bombdoghandler

bombdoghandler — Tue, 17 Nov 2009 08:55:18 +0000

What a big fucking sham. The money changers should be hung. They have ruined America!

By: BarringtonDailey

BarringtonDailey — Tue, 17 Nov 2009 08:55:18 +0000

Not bad, but the trouble with this is that modern banks use “chequebook money” based on a fiat currency.

When you ask for a loan, they literally just type it in. In the case of mortgages with 10% (100,000) money down, they bank does not even need any money at hand to create $1000,000. Since the “deposit” includes the cash they need to maintain the reserve. Not to mention some banks were inflating 40 to 1. See “Money as Debt” also on youtube.

By: Rockin2Long

Rockin2Long — Tue, 17 Nov 2009 08:55:18 +0000

10% reserve requirements

By: Muhammadtariqgondal

Muhammadtariqgondal — Tue, 17 Nov 2009 08:55:18 +0000

excellent work

By: lighthammer2531

lighthammer2531 — Tue, 17 Nov 2009 08:55:18 +0000

As a real estate appraiser I know a bit about this. If we are talking real estate with inflated values then thats where the problem occurs. The bank has the over valued properties on their books that wont even sell for 50% of what they loaned for it due to corrupt brokers, RE agents and appraisers. This is why RE prices are going down so slow… The lending institutions do not want to suffer such a loss so they keep the prices fixed but its not working.

By: lighthammer2531

lighthammer2531 — Tue, 17 Nov 2009 08:55:18 +0000

In the end fractional reserve lending is a major risk as it depends on the customer to pay the loan back. But this is why there is collateral. If a customer defaults, they can eventually be sued and have property seized. As long as the property which is seized has been valued correctly then the bank can get their money back by selling the seized property. The major problem we have had lately is the over-valuing of property.

By: lighthammer2531

lighthammer2531 — Tue, 17 Nov 2009 08:55:18 +0000

Gold cannot be printed meaning that if a gold holding bank went under, the chances of being covered for a large amount (Lets say a trillion dollars worth) would be slim to none meaning that only the people that dealt with that bank are effected. Meanwhile other stable gold holding bank and their customers will do just fine as their gold wont face devaluation due to the inability to inflate the gold supply.