How you pay the banks interest on the loans THEY recieve.

First, if I am wrong on this, anyone please correct me. I can't figure out how this can possibly be happening.. Also, while I am fairly well versed the market, I am not an expert on inter-bank lending, but I will say that I make a comfortable living as a trader.

A common notion among the American people is that China owns our unsustainable debt. This is simply not the case. They only own 7.5% of our Government debt... For a pie chart display on owners of U.S. Government debt:


As the chart shows, all holdings of U.S. debt are insignificant compared to U.S. individuals and institutions. Why is this? Since about 2001 our interest rates have been basically zero. What does this mean? J.P. Morgan wants a loan, so he calls up Ben Bernake, and takes a loan for lets say 100,000,000$. Now Mr. Morgan has 100 million that he can purchase 10 yr U.S. treasuries with, which pay monthly Coupon interest as well as a percentage on maturity of the bond.

So to put this plainly, the banks are using money that they were supposed to loan to people, and for all intents and purposes are charging the government interest on loans THEY receive.. Which of course is then paid for by the people they were supposed to offer low interest credit to via taxes and inflation. (A vast majority of commodities traded on the exchange are up over 100% in price since 2001, the dollar index is down like 33%)

Any questions? I know this isn't the political forum, but maybe consider which candidates(or candidate) wants this to stop because if debt is slavery, we really did lose our freedom a long time ago.

reply to post by dontshoot


i don't get it.

but i star and flaged just in case because it looks important.


if its important more people will post in thread, if not, well then i dunno.

Banks borrow money from the government for free then loan that money back to the government and charge them interest, making an almost infinite profit and causing us to fall further into debt. I hope that makes sense.

Edit: By government, I mean the Federal Reserve. I guess there is a distinction there.