How can everyone be having an economic crisis

The money first is created by the Central Banks of each nation, in cooperation with stipulations from the World Bank-IMF.

When this money is created it is loaned at interest to each respective national government, of which must be paid back at interest. The money is disappearing through each repayment of the original loans, as interest rates cause more money to be owed than was created originally.

This leaves a black hole in the system from the top.

Here are 3 links for you to review to get a better of idea of what is going on.
Keep in mind though, Wiki can easily be controlled by TPTB so take all of this with a grain of salt. We will have to sift the lies from the truth.
Central Banks - Wiki
World Bank - Wiki
International Monetary Fund - Wiki

reply to post by siren8


You have to remember, most "money" is indeed held in assets... just a journal entry. When that asset is devalued... such as homes (33% on average since the decline began), then the "money" truly disappears.

It's the biggest reason the banks are so slow to execute some of these foreclosures (besides not flooding the market and pushing home prices down further), when they actually sell for less than was owed on the house they have to book the loss and disappear more of their assets.

Originally posted by siren8


Its still in someone's hands, it doens't vanish. It doesn't dissapear. It should still be in the economy somewhere.

Ive told you twice, that money IS in the global economy somewhere. Its in the bank accounts of a very few people. It got shifted upwards into their accounts in a very short period of time. Its not vanished off the face of the Earth, they just have no interest in reinvesting in America or Europe until they finish breaking our economies.

Some of the wages that Americans used to earn are now being earned in China, and India. But a lot of the worlds wealth is just being horded by the rich.

reply to post by Illusionsaregrander

Ok. Well, I told you. And I told you pretty clearly. One of your other posts tells me you really dont have any economic understanding at all. Houses dont have to appreciate. Of course they can depreciate. Supply and demand sets price. Houses WERE appreciating because banks were loaning money freely, and that kicked up demand for houses, and that drove up price. But it was false demand, and when the bad loans collapsed, the market was left with way too much supply (too many houses) and not enough demand (no one can buy them.) Its good you are asking the questions you are, it shows you want to know, but you need to let go of the idea that unions are you enemy. Lol. Unless you are very rich with a lot of employees, they arent your enemy. In fact, it is YOUR enemy that is telling you that unions are your enemy.

You are adressing two points. The Unions, I can tell they are my enemy when they are asking questions that invade my privacy and when I mention it they act totally stunned like they had no idea those questions are the exact same ones on any security question list. Why do they need to know all that? They don't. Someone is nosey. I'd find out why but then they really would pull my file and like a docile fool I answered the questions cause I wanted to get along.

As far as the house question you are missing my main point entirely. The commodity doesn't matter. All comodities can't go belly up. If I give you money, you have that money. If you spend it, then someone else has the money. It doesn't vanish. Not accidentally. It has to be siphoned off. Just like you said. For every country and every industry to be failing, something had to be done to cause that. If I give you a hundred dollars and you buy flowers for a holiday, then the florist has the money. Florist buys ribbons. Ribbon company has the money. It didn't dissapear. Someone has it.

My point is that total economic collapse is much more than foolish spending. It is someone deliberately holding on to funds to keep them from cirulating.

Actually, I would also argue that not everyone is having an ecenomic crisis; some countries are doing rather well in fact.

The following is the top 10 countries by ecenomic growth for the last year (%) as published by the IMF:

1 Qatar 16.272
2 Paraguay 15.270
3 Singapore 14.471
4 Taiwan 10.823
5 India 10.365
6 People's Republic of China 10.300
7 Turkmenistan 9.222
8 Argentina 9.161
9 Sri Lanka 9.134
10 Congo, Republic of 9.090

Obviously we will all have heard of India and China having 'growing economies' from MSM but look at sneaky Paraguay and Qatar. I have not looked too deeply into how this relates to their GDP (actual) but it is safe to say that depsite Paraguay's GDP having increased by over 15% I am willing to bet that 10% of China's GDP is probably larger than the entire GDP of Paraguay

You are all missing the point!!

It's not like we have for example $1,000,000 and that is it.

If the government needs to fund its programs it will do so by taxes or selling treasury bills. So say I own all 1 million and i go to the govt and buy 1000 bonds @ $1000 each. They promise to pay me 2% after 5 years. So in 5 years the government will have to pay me back $1,020,000... see the problem? Thats nothing to worry about!

The FED comes in and buys up new bonds with printed money, increasing the money supply.. so they buy 1020 bonds @ $1000 each and I am paid back $1,020,000 .... etc..

Oh i guess this doesn't answer where the money 'dissapears' to.. I guess it never existed in the first place.

Look up fractional reserve banking.

With all these foreclosures happening and stuff the value of assets keeps declining, and less people paying into the mortgage system decreases assets even more so.. etc etc

reply to post by Scalded Frog

You have to remember, most "money" is indeed held in assets... just a journal entry. When that asset is devalued... such as homes (33% on average since the decline began), then the "money" truly disappears. It's the biggest reason the banks are so slow to execute some of these foreclosures (besides not flooding the market and pushing home prices down further), when they actually sell for less than was owed on the house they have to book the loss and disappear more of their assets.

I am talking about the existance of the money plain and simple. If a bank loaned you $100,000 to buy a house, the money did not dissapear. First off, you give that money to whoever you bought the house from. The money didn't vanish. Does the bank loose out if you don't pay? yes, but the money is still circulating throughout the economy. The person who sold the house has the money. It is circulating. For every one to go broke the way they are, money has to not circulate.

'Money' is not just 'green paper'. You mentioned accounting; in accounting there are numerous asset accounts that are valued in dollars, but do not represent ready cash: land, buildings, equipment, etc. These have a book value that may or may not be representative of market value (what you can sell them for). If you have a piece of equipment that you have on your books for, say, $1,000,000 and it is actually only worth $100,000 on the open market, you have lost $900,000 on that piece of equipment.

Stocks are worth whatever people will buy them for. If you bought stock in WalMart, for instance, and it is only worth half of what you paid, you just lost half of your 'money'.

A house is only worth what you can sell it for. If you paid $100,000 for your house and the most anyone will pay for it now is $75,000, you have lost $25,000. Even worse, if you borrowed $80,000 of that original price to buy it, and you still owe, say, $77,000, you now owe more than the house is worth! You have paid $20,000 up front when you bought it and you have nothing to show for that $20,000, and you also have nothing to show for all the payments you made.

There is, I would guess, a total amount of cash in the world (although I have no idea how much there would be, nor do I think anyone does). But there is a much greater amount of value in things than there is in cash. Those things can lose or gain value, and as they lose value, there is less actual monetary value available.

What is happening is that people around the world are hurting... prices continue to go up and wages have not gone up as fast to cover them. As people have to spend more on everything, they typically have to cut back on something... usually luxuries. That old car will have to last another year or two before it is traded in, the older computer will have to do this year, that vacation will have to be postponed and replaced by a weekend at the local park. Every time someone cannot buy as much as they could before, someone who made those things they want to buy loses money... either there is less work and less hours, or the profit margin drops. If the profit margin drops, that means the company doesn't look as good to investors, and the price of the stock drops. As the prices of stocks drop, the retirement plans don't make as much. If the retirement plans are not making as much, the retired don't have as much income. If they don't have as much income, they can't buy as much. And so it spirals.

Eventually, if nothing improves, the entire economy will fail completely. At that point, no one will have anything. Food will be a luxury. Gasoline will be non-existent. Communication will be a memory. Jobs will be rare and pay prices that we hear about from our grandparents if you can get them. Think Great Depression, only it wasn't a complete collapse. We may be heading toward a complete collapse, when green paper is worthless and gold/silver is something you only hear about.

TheRedneck

reply to post by siren8


But appreciation on a house is not a real monetary gain unless its realized. And when it depreciates, and the loss is "realized" like someone else explained to you, that money IS gone.

The money from the housing bubble was flowing all through our economy before the bubble burst. People who bet against the housing bubble, (in various ways in the bond market) took private possession of very large sums of money when the bubble burst.

Individual people gained billions and billions of dollars from the economic collapse. And banks and corporations have continued to make billions and billions of dollars in the aftermath. Its just that when too much money gets into too few hands, economies grind to a halt. Because the trickle down theory of economics is a big fat lie. All economies trickle up. Not down. And right now, too much wealth is being horded by too few people.

reply to post by Illusionsaregrander

Ive told you twice, that money IS in the global economy somewhere. Its in the bank accounts of a very few people. It got shifted upwards into their accounts in a very short period of time. Its not vanished off the face of the Earth, they just have no interest in reinvesting in America or Europe until they finish breaking our economies. Some of the wages that Americans used to earn are now being earned in China, and India. But a lot of the worlds wealth is just being horded by the rich

Thats what I have meant in everypost where I am wondering where the money went. I just never heard of IMF.

reply to post by TheRedneck


Well said my man..

and really well thought out and explained too...

I like the way you think..

Star for you!

reply to post by siren8


Then here is a quick and dirty lesson on them.

reply to post by Illusionsaregrander

But appreciate on a house is not a real monetary gain unless its realized. And when it depreciates, and the loss is "realized" like someone else explained to you, that money IS gone. The money from the housing bubble was flowing all through our economy before the bubble burst. People who bet against the housing bubble, (in various ways in the bond market) took private possession of very large sums of money when the bubble burst. Individual people gained billions and billions of dollars from the economic collapse. And banks and corporations have continued to make billions and billions of dollars in the aftermath. Its just that when too much money gets into too few hands, economies grind to a halt. Because the trickle down theory of economics is a big fat lie. All economies trickle up. Not down. And right now, too much wealth is being horded by too few people.

The housing buble was intentionally created. And no the money is not gone. The bank doesn't have it, but whoever they lent it to, they are spending it. On something. They gave the check to the people they bought the house from, and that keeps it circulating. The money is stil where it can be spent. Someone has the money, its just not the bank that lent it. I'm talking about money that has left the system. Is no longer circulating.

reply to post by Illusionsaregrander



Awesome video..short sweet,and to the point

reply to post by TheRedneck

Money' is not just 'green paper'. You mentioned accounting; in accounting there are numerous asset accounts that are valued in dollars, but do not represent ready cash: land, buildings, equipment, etc. These have a book value that may or may not be representative of market value (what you can sell them for). If you have a piece of equipment that you have on your books for, say, $1,000,000 and it is actually only worth $100,000 on the open market, you have lost $900,000 on that piece of equipment.

I believe you are seeing this only from an idividuals loss perspecitve which has nothing to do with the cash circulating in the economy. The individual lost money, but the original $900,000 still circulated in the economy. The company who manufactured the equipment got the money, and likely spent it on labor. The paychecks then went to pay electric bills and stuff like that.

For every industry to go down, in every country, the way it has, money has to be pulled out of circulation. That is the point I am getting at. A loss to an individual or company does not dictate the amount of money circulating in the economy. Yes, that company is at a loss, but someone else got richer. The money is in the system an functioning. if no companies anywhere have any money, they are all in the red, then someone else has the money. The number of circulating dollars very much effects economy.

reply to post by Illusionsaregrander

But appreciation on a house is not a real monetary gain unless its realized. And when it depreciates, and the loss is "realized" like someone else explained to you, that money IS gone.

No, the loss is only realized by the individual. The amount of cash circulating in the global economy is not based on that individual loss.

Originally posted by siren8


The housing buble was intentionally created.

The intention to get rich created it. Greed created it. But its hard to argue the bubble itself was totally intentional. MOST of the people in the market were betting, with their money, that the market would keep going up. MOST of the people did not think it was a bubble. Including a lot of people who were in a position to know.

Some people, the people who bet against the bubble, DID know it was a bubble. Thats why they bet against it, and why they made a LOT of money on those bets.

But its hard to argue that the bubble was a "plot." It was a conspiracy of greed. But no one actually sat down and planned for that to happen, very few people, relatively speaking, had their money on the bubble bursting.

Originally posted by siren8
And no the money is not gone. The bank doesn't have it, but whoever they lent it to, they are spending it.

some of them are spending it, A lot of them spent it already. Its tied back up in another house, one that may be worth less than they paid for it, which means some of their money is gone. Poof. Some spent on good manufactured overseas, but multinational corporations, and so it does not recirculate here in the US. That money goes to wages for workers in the other countries.

Originally posted by siren8
I'm talking about money that has left the system. Is no longer circulating.

And yet again a lot of that money ended up in a few private hands, and they are hording it. Not spending it. They were already rich, they dont need to buy a ton of stuff, now they are just more rich. Someone has to spend money in YOUR country for it to help YOU, and right now, no one is really investing in America. Nor will they.

Its better to let our economy totally collapse, and then force the American people to work for a lot less, and accept worse working conditions.

Globalization is actually a globalization of labor, which means more labor supply, same demand, lower price of labor. Means more money moves up, in terms of profit, into the hands of the rich, and less and less circulates among the people.

Originally posted by siren8
reply to post by Cthulhu33

 

Money is an illusion. It only has a perceived value. The same goes for most traded and stockpile-able commodity's. So, yes, it did just disappear, kinda. One day a house is is worth $200,000(which you can trade for money or borrow against). The next day the value of that house suddenly drops to $100,000. Now the economy has $100,000 less to trade with. It hasn't been spent in cash as in $100 dollar bills. The value of what it can be traded for and the value of the traded items is what changed. At least thats how I understand it.

Umm... except that houses apreciate not depreciate. That means a 200K house would be worth 300K. And that 300k is in a bank somewhere in money that can be spent as the value. I could still buy 300K of whatever I choose. Not that many houses dropped in value.

Even metaphorically speaking, say by "house" you mean any random commodity, the value of everything doesn't just drop like that. Some things here and there might but not everything.

What exactly are you talking about - houses appreciate not depreciate. Have you checked home prices lately? They are down by 50% or more from their peaks in many places, and down everywhere in the last three years. That is the same ignorant thinking that got people paying double for a comparable house to what it cost 5 years before that allowed the meltdown to happen in the first place. Any appreciation over the long term is in fact only due to inflation - and that is not really appreciation in value at all. A home is an investment with risk of loss just like any other, and if you believe otherwise - well you are just wrong.

Home prices are at year 2000 levels in most places. I would argue, that since our population growth is slowing and aging, that there is a surplus of homes available, and that the worst is yet to come economically home prices will still be lower than they are now a decade from now.

Anyway the poster you quote is correct, debt - which is how the money supply is increased has been used to buy all sorts of stuff that has lost its value now because - wait for it - most people are in so much debt. They can't / won't pay the same prices for it now because they no longer have access to easy credit / cash, or as much income as they used to.

This is due to many factors, such as loss of jobs overseas, illegal immigration driving down wages, but the main reason is people got access to credit way, way to easily from dozens of credit cards, no money down loans, 2nd mortgages and used all that money stupidly - often because they believed like you their house would always go up in value and they would be fine. Uhm WRONG.

Another point to consider is inflation. There can be more money supply in the economy but as inflation grows, you become poorer by default, and that can happen if you have more money.

Let's say it cost $1.00 for a loaf of bread. You earn $2.00. You pay half of your income to purchase the loaf of bread. You get a pay rise up to $3.00! Yippeeeeeeeeee! But the bread now costs $2.00 a loaf. You now have to pay approx 66 per cent of your income to by said loaf of bread. If everyone had a million dollars, a million dollars wouldn't be worth poo poo.

Herein is the problem as it has been well explained above. There is more money in the economy, but your percentage of the total circulating money has decreased, and hence you are poorer. The increase has found its way into fewer hands.

reply to post by surrealist


Exactly. When wealth consolidates into too few hands it just doesnt circulate as freely. They dont need to spend it. They can horde it. Money the masses has tends to circulate quickly and freely. We normally cant afford to horde it, and even if we can, most of us dont. Many Americans not only spend all they make, but they borrow to spend more than they make.