The Whole Banking System Maybe a Ponzi

Effectively all of the deposite banks are doing the same thing as Madoff. What Madoff did was to pool money into a clients account only for when the report was due, and then move it to the next account that had a report. He did this so that, on paper, it looked like his clients had the money. Deposite banks don't even do this, they just write in that the money is still there, and when it comes time to prove it, like when a withdrawel is made, then they pool money from other accounts to fill the withdrawel. The banks accounting system is twisted, and it likely fools even the high ups, and there's probably a shadow accounting system, that's more realistic, used by a few. This is why even the heads of many banks couldn't see what was happening, they were using the wrong accounting system.

People say money is dept, or the money in the bank is invisable. No it's not invisable, it's not there, it's in investments. The deposite banks are not like the other investment banks, which show the value of the investments bought with the deposited money, instead they just say that the money is there. Deposites are just IOU's of how much the bank owe's the depositor. They are not money, they can only be exchanged with the bank for money, but they cannot buy anything like real money can.

Banks are like Ponzi Schemes, but it's probably somewhere in the legal paper work that justifies it. I don't know enough about the laws to decide either way.

If deposites are counted as money then the money supply numbers are wrong.

As long as money is an intangible thing which can easily be created out of thin air, accounting for it becomes impossible.

(An argument for the gold standard, which isn't perfect either, but a lot better than what we're dealing with right now)

Frankly - yes it is.

You have a Transnational Banking cartel represented in the Fed, it has a monopoly on the creation and holding of currency; and also controls the lending rate. It has ZERO accountability, no audit has ever been completed, and no disclosure about the bank's true ownership has ever been revealed.

You have financial vehicles that are designed to extract usurious profit from those who request and are approved to get this 'reserve note' currency; which the bank is allowed to lend - despite the fact that it doesn't have that amount to lend. Fractional Reserve lending ratio limits have been all but repealed.

It IS a scheme. we ARE the victims, and OUR REPRESENTATIVES are their shills, insisting that THIS IS THE WAY IT MUST BE! (Except for the few whose lives and or reputations have been disrupted or destroyed for challenging the paradigm publicly.)

I hate to recall an anecdote that many will confuse for religious zealotry, but Jesus was right to attack and harass the money changers.

I have my 401k in a comercial bank. Although this bank and the many other banks connected with it have not yet falied, I'm wondering how long before they go down like dominos. The bank had a statement of it's worth last year, but has yet to provide a new statement on it's main site.

I'm stiill wondering where exactly all of this money has gone to. It's as if it never even existed. Yeah, unitl I hear of a better excuse, it's all a ponzi scheme and always has been. It's time for the slaves to revolt.

www.portfolio.com...#

That’s when Eisman finally got it. Here he’d been making these side bets with Goldman Sachs and Deutsche Bank on the fate of the BBB tranche without fully understanding why those firms were so eager to make the bets. Now he saw. There weren’t enough Americans with *snip* credit taking out loans to satisfy investors’ appetite for the end product. The firms used Eisman’s bet to synthesize more of them. Here, then, was the difference between fantasy finance and fantasy football: When a fantasy player drafts Peyton Manning, he doesn’t create a second Peyton Manning to inflate the league’s stats. But when Eisman bought a credit-default swap, he enabled Deutsche Bank to create another bond identical in every respect but one to the original. The only difference was that there was no actual homebuyer or borrower. The only assets backing the bonds were the side bets Eisman and others made with firms like Goldman Sachs. Eisman, in effect, was paying to Goldman the interest on a subprime mortgage. In fact, there was no mortgage at all. “They weren’t satisfied getting lots of unqualified borrowers to borrow money to buy a house they couldn’t afford,” Eisman says. “They were creating them out of whole cloth. One hundred times over! That’s why the losses are so much greater than the loans. But that’s when I realized they needed us to keep the machine running. I was like, “This is allowed?”…

…On July 19, 2007, the same day that Federal Reserve Chairman Ben Bernanke told the U.S. Senate that he anticipated as much as $100 billion in losses in the subprime-mortgage market, FrontPoint did something unusual: It hosted its own conference call. It had had calls with its tiny population of investors, but this time FrontPoint opened it up. Steve Eisman had become a poorly kept secret. Five hundred people called in to hear what he had to say, and another 500 logged on afterward to listen to a recording of it. He explained the strange alchemy of the C.D.O. and said that he expected losses of up to $300 billion from this sliver of the market alone. To evaluate the situation, he urged his audience to “just throw your model in the garbage can. The models are all backward-looking.

The models don’t have any idea of what this world has become…. For the first time in their lives, people in the asset-backed-securitization world are actually having to think.” He explained that the rating agencies were morally bankrupt and living in fear of becoming actually bankrupt. “The rating agencies are scared to death,” he said. “They’re scared to death about doing nothing because they’ll look like fools if they do nothing.”

...read more @ link


Everyone needs to read this link. It's an unbelievable account of what has happened.

Banking as we knew it is over. After reading the article, I don't even know what's next for the U.S.



[edit on 2/2/2009 by kosmicjack]

I'll elaborait on 'deposites are not money' though there is real money somewhere in the system. If a bank is fully invested in cash, real money, then the deposite are real money. But most banks deposites now are mostly hyperinflated investments, and probably a very tiny percentage of real money. Though if the trillions of money supply growth was real money, then the banks have that.

A deposite can not be real money by definition because if it was then banks would never crash. If deposites were money then the bank could hand it out when there's a run on the bank, or if they're out of cash, then at least cheques would still work.

There's a mistake with the "money as dept" movie. Money is not created by fractional reserve banking (FRB) the money circulates, going from bank, to borrower, to the sellers bank, and so on, but it doesn't stay long in one place. It keeps moving, and the bank borrows, and reborrows it many times, as the bank is borrowing from the depositor when he makes a deposite. This leverages, and devalues the money so it has the same effect as creating money but it is not new money. What it does is increases the frequency of money, and devalues it that way.