Is the banking system really gonna fall apart?

Could someone please explain how the banking system will fall apart?
I understand just about everything but how does the selling of bonds hold this thing up?
I know the fed prints as much money as it wants. How come we have not had hyper inflation or devalued currency as of yet? I'm just looking for answers or something easy to read so my primitive intellect understands this situation based on solid math. Thanks. Kooler.

Look, the banks run on confidence.

They are essentially selling you the notion that they're a sacred source of energy management to be trusted.

Money, and the concept of debt, is essentially related to promises and agreements.

The Fed is able to print without being devalued, because the whole system is rigged.

The agencies which are supposed to be independently monitoring the trust worthiness of the banks, are in bed with them.

This includes the government.

What holds the bond market from collapsing is the confidence in the governments ability to manipulate the markets effectively, and keep things flowing without major kinks in the system.

What holds the dollar up is the militaries ability to dominate other powers and force them to trade commodities in USD.

Nothing is truly capable of collapsing until the world decides to take on the US as the sole super-power.

Everything else is too interconnected, and stale-mated in place.

The only way the world would take the risk, is if the potential benefits outweigh the consequences of towing the line.

That's just not a reality yet.

1. Shouldnt this be in the economics forum?
2. Damn right its going to fall apart
3. Are you prepped yet?
4. If not prepped then dont say you didnt realise you wouldnt be able to buy a loaf of bread.

reply to post by unityemissions


In a 3-minute reading you summarized the entire reality of the banking system. I hope I get to see the day when we are all free from this stupid system that's only designed to bring the little people down. If all the people would stay in their homes and not go to work, would that help bring the collapse closer? They depend blindly on the people they are taxing, so no work=no money= new system. Right?

reply to post by it4lian


And just what system would you replace it with?
Where do you get the money to buy a car or even a house?

You can change their name from bank to bunk if you like but it will still function the exact same way.
Someone deposits money and recieves interest.
They loan it out and charge interest.

Originally posted by unityemissions

Nothing is truly capable of collapsing until the world decides to take on the US as the sole super-power.

Everything else is too interconnected, and stale-mated in place.

If only this were true.

Sadly, the inter-connectedness you speak of actually ensures the mutual destruction of all economies, because it's not a problem based on the dollar being the reserve currency. It's a problem with banks all over the world having used the exact same collateral to back many, many different loans that were then leveraged to their gills to cut risk, when in reality the risk went out one door and always comes back in another.

The US actually had restrictions in place on how much of your collateral you could re-use as collateral again (re-hypothecation), so the US banks and firms (along with the rest of the world) used London to do all the shady part of destroying your money on that front. Then each shady deal was re-insured multiple times over so that when it fails, they will make even more money than they would had it not defaulted. But the rub is that *someone* has to pay those out, and there's not enough money in all of the world many times over to be able to pay out what's about to be called in. That's why we bent over for the bailouts; letting Lehman or AIG go under would have started the dominoes falling, and they wanted to buy as much time as possible to recoup as much of their own personal interests as they could.

It doesn't matter if they want to "take on the US" or not; any day now, these loans and financial products are going to go tits-up and people will be expecting their cash in return. Only there's no cash to be had; what's left of it has either been transferred to off-shore accounts where you'll never see it again, or has been re-hypothecated until there's a line of 100 creditors wanting their cut.

When even the rich start seeing their massive accounts disappear, as has been happening at MF Global, you know it's about to get bad. And there's no amount of bailouts that will stop it.

Originally posted by KoolerKing
Is the banking system really gonna fall apart?

Yes.

Nothing lasts forever.

What goes up, must come down.

Etc;

reply to post by 00nunya00


Any day now for the past several decades...

Not gonna happen.

Originally posted by unityemissions
reply to post by 00nunya00

 

Any day now for the past several decades...

Not gonna happen.

.........so 2008 didn't happen? Lehman and Bear Sterns and AIG and MF Global didn't happen?

You know they were saying real estate would never, COULD never, plummet in value on a nationwide scale the way it did, right? You know that people put more faith in Lehman than in their own church, right?

Care to expound upon your formula of how we are to unwind the quadrillions of dollars in derivatives we have out there? Care to share your plans for saving the Eurozone?

Originally posted by KoolerKing
Could someone please explain how the banking system will fall apart?
I understand just about everything but how does the selling of bonds hold this thing up?
I know the fed prints as much money as it wants. How come we have not had hyper inflation or devalued currency as of yet? I'm just looking for answers or something easy to read so my primitive intellect understands this situation based on solid math. Thanks. Kooler.

The banking system is a house of cards dependant on a ponzi scheme to keep it going. The banks have created a massive debt of CDOs and other financial paper money which is estimated between $200 and $600 Trillion but nobody really knows how much because they are not regulated. If the banks were healthy they would not need continual money pumping from the FED to survive. Without the FED continuing the money pumping the economy has stalled and it is starting to contract.

fast forward 10 years and the interest on the national debt is about half of all tax reciepts! this is only the interest and not the principal! Where will the money come from?

As far as all of the money pumping it is causing inflation but the way the government calculates inflation it decieves the public. Read John Williams at www.shadowstats.com for some great info on how the government stacks the deck. The US went off the gold standard in about 1971 yet many don't lnow that. I was reading on www.usawatchdog.com last week that one of the big baks moved a bunch of silver from the COMEX.... The amount moved was equal to a years worth of worldwide silver production! Greg Hunter always has some good links on the side of the page with stories from financial smoke and mirrors to what experts are saying....

Honestly do you really think they have "physical" silver or just paper?

Originally posted by 00nunya00

Originally posted by unityemissions
reply to post by 00nunya00

 

Any day now for the past several decades...

Not gonna happen.

.........so 2008 didn't happen? Lehman and Bear Sterns and AIG and MF Global didn't happen?

I've asked you more than once now to stop putting words in my mouth. It's making you look like a fool.

You know they were saying real estate would never, COULD never, plummet in value on a nationwide scale the way it did, right? You know that people put more faith in Lehman than in their own church, right?

Yes, I'm aware of that.

Care to expound upon your formula of how we are to unwind the quadrillions of dollars in derivatives we have out there? Care to share your plans for saving the Eurozone?

No, I don't have to. The system is as I said, built on confidence, and nothing more. These are abstractive monstrosities from the first layer of interest (usury) on. They keep adding additional layers to con, and save ass from the shenanigans. Why someone would think this would magically cease to happen is beyond me.

It's a game. They are using this fear of collapse against all of us. I see people, resources, ideas, and energies flowing, and con-men working their voodo-magic to play people on many levels. It's not going to collapse unless they choose to allow it. They won't allow global collapse because it will be out of anyone's control.

I don't have to invent a new abstractive layer to prove to you that it's possible. It is. History shows us that it's been done time and time before...it will be done again.

Originally posted by unityemissions

I've asked you more than once now to stop putting words in my mouth. It's making you look like a fool.

??? Seriously dude, you're the one who said, quote, "it's not gonna happen." I pointed out that it did, in fact, already happen. You have no retort, so you turn to ad hominem attacks. Sigh.

Care to expound upon your formula of how we are to unwind the quadrillions of dollars in derivatives we have out there? Care to share your plans for saving the Eurozone?

No, I don't have to. The system is as I said, built on confidence, and nothing more. These are abstractive monstrosities from the first layer of interest (usury) on. They keep adding additional layers to con, and save ass from the shenanigans. Why someone would think this would magically cease to happen is beyond me.

It's a game. They are using this fear of collapse against all of us. I see people, resources, ideas, and energies flowing, and con-men working their voodo-magic to play people on many levels. It's not going to collapse unless they choose to allow it. They won't allow global collapse because it will be out of anyone's control.

I don't have to invent a new abstractive layer to prove to you that it's possible. It is. History shows us that it's been done time and time before...it will be done again.

Hey, if you want to put your confidence in the "confidence of the market" then go ahead. If you want to believe that there's some core group that "lets things happen" or not, and that group is going to save us from the falling dominoes you yourself pointed out, then go ahead. I see no point in trying to convince you of reality. But you have not, however, given any solutions to the problems facing us, but rather have fallen back on your "they magically will keep it from imploding" theory. That's fine, but it's not an answer. And it's not reality.

As you yourself said, history shows us that time and again, greed has collapsed our economies on massive scales, and it will indeed happen again.

Originally posted by 00nunya00

Originally posted by unityemissions

I've asked you more than once now to stop putting words in my mouth. It's making you look like a fool.

??? Seriously dude, you're the one who said, quote, "it's not gonna happen." I pointed out that it did, in fact, already happen. You have no retort, so you turn to ad hominem attacks. Sigh.

Look, I'm just going to call you out this once more, then I will ignore you, as you're obviously just trolling my posts at this point.

When I said, "it's not going to happen", I was referring to the entire banking system falling apart, and in your thread a global collapse happening.

It hasn't happened, and it's not going to. What happened? It almost collapsed, and the government came in and saved it. It's almost collapsed now for decades. We went off the gold standard and became fiat. The bankers have done a ton of BS to keep the con going. They will continue to do so.

Hey, if you want to put your confidence in the "confidence of the market" then go ahead. If you want to believe that there's some core group that "lets things happen" or not, and that group is going to save us from the falling dominoes you yourself pointed out, then go ahead.

Yes, central bankers, and governments have the ability to create additional layers to the global financial system. They can forgive debt, and reset the system to some extent. What do you think the government did? There was a core group that came in and took control of the situation. We can argue that it was good or bad, but it happened, and I see no reason to think it won't happen again. It's not as spooky as you make it out to be.

I see no point in trying to convince you of reality.

Is this not what each of us has attempted to do from our perspective? You don't own reality.

But you have not, however, given any solutions to the problems facing us, but rather have fallen back on your "they magically will keep it from imploding" theory.

Actually, I've stated it more like, : they have already saved the system from imploding many times over...why would it be otherwise this time? Can you explain why it would be so different this time?!

That's fine, but it's not an answer. And it's not reality.

It's a statement of fact. I don't own reality.

As you yourself said, history shows us that time and again, greed has collapsed our economies on massive scales, and it will indeed happen again.

Time will tell.

reply to post by unityemissions


So this is some personal beef you have with me? Because you posted in two threads about financial collapse, and because I replied to your [bombastic and dismissive] posts, you think I'm stalking and/or trolling you? It's called a conversation, a debate. I'm sure there are many threads you've posted in that I have not. Drop the paranoia.

You and I can disagree, that's fine. But when you go around dismissing distinct possibilities that many *respected* economists have suggested are probable, that's where you're the one straying into fool's territory. And hence my replies challenging your idea of reality; don't take it personally. No need for getting your panties in a bunch over it. If I bother you, don't respond. Simple as that.

Originally posted by 00nunya00

Originally posted by unityemissions

Nothing is truly capable of collapsing until the world decides to take on the US as the sole super-power.

Everything else is too interconnected, and stale-mated in place.

If only this were true.

Sadly, the inter-connectedness you speak of actually ensures the mutual destruction of all economies, because it's not a problem based on the dollar being the reserve currency. It's a problem with banks all over the world having used the exact same collateral to back many, many different loans that were then leveraged to their gills to cut risk, when in reality the risk went out one door and always comes back in another.

The US actually had restrictions in place on how much of your collateral you could re-use as collateral again (re-hypothecation), so the US banks and firms (along with the rest of the world) used London to do all the shady part of destroying your money on that front. Then each shady deal was re-insured multiple times over so that when it fails, they will make even more money than they would had it not defaulted. But the rub is that *someone* has to pay those out, and there's not enough money in all of the world many times over to be able to pay out what's about to be called in. That's why we bent over for the bailouts; letting Lehman or AIG go under would have started the dominoes falling, and they wanted to buy as much time as possible to recoup as much of their own personal interests as they could.

It doesn't matter if they want to "take on the US" or not; any day now, these loans and financial products are going to go tits-up and people will be expecting their cash in return. Only there's no cash to be had; what's left of it has either been transferred to off-shore accounts where you'll never see it again, or has been re-hypothecated until there's a line of 100 creditors wanting their cut.

When even the rich start seeing their massive accounts disappear, as has been happening at MF Global, you know it's about to get bad. And there's no amount of bailouts that will stop it.

edit on 30-4-2012 by 00nunya00 because: (no reason given)

Excellent point. and to top it off the bankruptcy laws have been re-written and if a bank goes bankrupt those who hold the hypothecated asset can immediately take posession of the asset. Those in the company like stockholders and other stake holders now go behind the holders of the hypotheacated paper.

This is one of the thing that happened to MF Globals assets....

reply to post by KoolerKing


All closed systems tend towards entropy. This is the 2nd Law of Thermodynamics, or that law in part. Some would argue that this law only applies to the chemical reactions of heat systems, but it is observably so that closed systems outside of heat systems also tend towards entropy. The Soviet Union was a closed system and its state of entropy was easily predicted. The banking system as it stands today is without a doubt a closed system.

There was a time when having a savings account was a good idea because the interest accrued was an asset and not a liability. That is no longer true because the interest rate on that savings account is lower than the rate of inflation, so instead of earning income off of savings, instead one looses money. This is done so to encourage consumerism.

There was a time when people spoke of the market in terms of buyers and sellers and depending upon the market itself there was a term known as "buying power". Consumers do not have "buying power". Buyers are not the same as "consumers". Consumers are parasitic, so it was only a matter of time, after a period of time replacing the word "buyer" with "consumers" that the market would produce precisely that: "consumers". Take, for example, the music or film industry. Both are struggling with losses in profit due to piracy and illegal downloading which is what "consumers" do, not "buyers". Thoughts are things, and as I stated, it was only a matter of time before the market was inundated with "consumers" instead of "buyers".

What's that got to do with the banking system? In terms of "buyers" and "sellers", what precisely is a bank selling? If you have more wealth than you can safely store, a bank has a product to offer in terms of securing that wealth. If you want to take out a loan to start your own business, then a bank has a product they are selling in terms of capital loans to help you with that. Do you, or the vast majority of people in the world have enough wealth to justify storing it in a bank? What are your chances, realistically, of securing a loan from a bank to start up a new business?

Instead of investing in entrepreneurial-ship, banks have decided it is better for them to focus on mortgages, school loans, and other such loans that have the effect of consumerism and not anything near free market principles. The banking system has become an incredibly closed system and it is not like it was ever all that open of a system. The banking system has demonstrably reached its entropic state and is now mired in the hopelessness of kick starting that useless energy back into something useful, but banks were not all that useful to begin with.

It is beyond absurd to allow a system such as the banking system to become the end all and be all of the marketplace. Their "selling power" is limited, and it is inevitable that they will limit the "buying power".

Another word for entropy is chaos.

reply to post by Jean Paul Zodeaux


Exactly. And add to that, the fact that personal saving levels plummeted while global lending exploded, and it doesn't take a genius to figure out that system is unsustainable, no matter what amount of cash and "abstractions" you throw at it. The only option left for "saving" the system without massive fallout is the global debt reset----but that will never, ever happen unless it's predicated on a new monetary system (global currency or not) that keeps the richest on top and the poorest on bottom without all of these hoops they have to jump through. There will be no "okay, wipe the slate and start again, no rules change" event. The rules are going to change, big time. There are quadrillions of dollars (if not more) at stake in this crisis, and someone's coming out on top. No one's going to forgive debt that easily.

reply to post by 00nunya00


I think, in terms of "wiping clean" any debt, that the law of contracts should be seriously considered. If this "debt" that has been burdening nations was created through fraud, and it appears as if indeed there was fraud, then the contract of the debt is not valid.

There need be no "wiping clean" of a fraudulent debt. Further, so much of what banking does today is based upon electronic transactions where no real wealth has ever been transferred. If I take a loan out from a bank and I never see any evidence of the wealth that puts me in debt then what debt do I truly have? Many times the loan isn't even transacted in the form of a check, which would still not be a transfer of wealth, only a promise of one. Even if that loan were given to me in cold hard cash, this phrase "cold hard cash" is nothing more than empty rhetoric today. If I cannot take this "cold hard cash" and exchange it for actual wealth, then I have never been loaned any wealth.

I hate the mystical incantations of the priest class lawyer sect with a passion, but in spite of that, there are many times when one can take the wall of "legality" that has been built by these lawyers and their adherents and use it against them. In terms of yet another law - bodies in motion - using the weight of an opponent against them is a strong strategy.

Originally posted by Jean Paul Zodeaux
reply to post by 00nunya00

 

I think, in terms of "wiping clean" any debt, that the law of contracts should be seriously considered. If this "debt" that has been burdening nations was created through fraud, and it appears as if indeed there was fraud, then the contract of the debt is not valid.

Quite so; but these transactions are not legally fraud because there were no rules governing many of them in the first place, and when there were they were mostly all legally done within the confines of the laws of the most permissive nations they could find (such as the UK). These debts were not created through fraud, just stupidity and greed, and unfortunately stupidity and greed are not illegal.

There need be no "wiping clean" of a fraudulent debt. Further, so much of what banking does today is based upon electronic transactions where no real wealth has ever been transferred. If I take a loan out from a bank and I never see any evidence of the wealth that puts me in debt then what debt do I truly have? Many times the loan isn't even transacted in the form of a check, which would still not be a transfer of wealth, only a promise of one. Even if that loan were given to me in cold hard cash, this phrase "cold hard cash" is nothing more than empty rhetoric today. If I cannot take this "cold hard cash" and exchange it for actual wealth, then I have never been loaned any wealth.

Is your electronic bank account not "real money"; can you not withdraw every cent into "cold hard cash" and then purchase gold and whatnot with it? Perhaps I'm not understanding your definition of the word "wealth".

reply to post by 00nunya00


What is legal is not necessarily lawful. If what is legal is not lawful then this legality is merely a mystical incantation that has as much force as any shamans ooga booga nonsense. It matters not what nation we are talking about, there is a rule of law and there is "rule by law". The rule of law begins with the inherent political power belonging to the people, and all governments are established to protect and defend the rights of individuals. "Rule by law" is the reverse, where governments assert that only they can grant rights and that the people exist solely for their pleasure.

In terms of electronic transferals, no this is not "cold hard cash". Cold hard cash would actually be coins minted with some precious metal that reflects the value of the coin. Fiat currency is not "cold hard cash" it is money build upon confidence instead of backed by actual wealth. If I take out a loan based upon confidence then what do I have? If I take out a loan backed by say gold, what do I have?