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Misc says
The banks are paying a higher rate to savers than they are receiving from the MBS on their books. That is how they are losing money. Yes, they do have to borrow every dollar they loan out except for the stockholder's equity.
Do you not understand what fractional-reserve banking is? Even if there were a 10% reserve requirement, the bank paying 4% interest on $1M deposits (and they are not paying that much except for on CD's and only starting the last few weeks) allows it to lend out $10M, even at the lowest 30yr fixed mortgage rate there ever was at about 2.75%, the annual interest income would be $275k, to pay an annual interest expense of $40k on the $1M. How is that losing money? Seems there is a 273k - 40k = $233k gross profit; i.e. 233 / 40 = 582.5% gross profit margin! The real reserve requirement is much lower than 10%; currently sub-5% or near 0%, so th...
The really nasty thing about the depression in the 30's was that all loans were callable. So the banks called in all the loans that were almost paid off, and the debtors, who were practically paid off, had their assets seized. The banks didn't even get around to the 100% LTV people before public outrage ended the mass evictions.
Wages can increase until people can afford the new homes to be built.
If you work for a living and are in debt, deflation would reduced your wages until you could not make payments and you would lose whatever you went into debt to obtain.
The people with the assets would sit back and collect it all.
I recognize the situation of inflation helping the high debt folks.
Since 1913, the price of silver has gone up about 3.3% per year vs the dollar
Misc says
Since 1913, the price of silver has gone up about 3.3% per year vs the dollar
Well here is a simple chart for you that shows that relationship:
https://www.macrotrends.net/1470/historical-silver-prices-100-year-chart
Hint: take off log scale and inflation adjustment to see the effect of inflation!!!
Funny enough, there is no need to talk about "investing" in silver/gold up until the late 1960's! This is when the government started printing dollars not backed by the metal in the bank.
So if you take your 3.3% per year, and subtract out all the flat years between 1913 and 1971, to when nixon took us off the commodity standard, you will see that an ounce of silver (which has not changed at ALL and has been NON-productive) went...
If everyone was on the gold/silver standard the rate of return is ZERO
Misc says
If everyone was on the gold/silver standard the rate of return is ZERO
Isn't this what we are saying!?! Yes. You get the point. No need for a return on cash in a savings account if your cash isn't devaluing at 5.5% per year on average!
Fractional Reserve banking is for the system as a whole and creates CREDIT.
Do you understand accounting? Where assets equal liabilities+ owner's equity. This is a requirement for banks too ! ! ! (Hint: You can look at any bank's balance sheet at any financial website)That 4% payment on liabilities is on all the liabilities not 10% of the liabilities. Currently the reserve requirement is set at 0%. The amount that can be loaned is based on the bank's equity.
The percentage of income that would need to be saved for retirement simply could not be achieved. Retirement is a fairly modern construct requiring fiat currency.
There is also no way to get a return higher than ZERO because of system collapse and no way to save.
Gold manipulation is a sound argument for paper currency. At least fiat money supply is more fungible than Gold. Everyone is trading the same dollars. I promise you all that under Gold, you're issued tokens or script in exchange for your labor. You can't save up those financial means to improve your situation.
There is also no way to get a return higher than ZERO because of system collapse and no way to save.
Which if you think about it, what good is placing a value on Gold if you can't buy it with fiat currency? Which is the point of this thread.
Again, such weird thinking. You can produce literally anything. What you produce is what you "buy" gold with. You give out your goods and services, and people give you gold for it. Then you give out the gold for other people's goods and services. You are constantly producing through your daily output. How is this not sensible?
If you are employed then you are not a producer, how hard is that to understand
Everyone worries about banks devaluing money, but the thing is it happens around the world so everything stays equal. And since Money isn't a finite commodity like Gold is. .It's not Pie, that fat cats can't eat it all. At the end of the day after all of the banks have manipulated the money and the robber barons have consolidated all of the goods. The printer still goes Vrrrrrrroooooommmm and more money is created. Those on the bottom can scrap and save and still manage to produce in spite of the banks and Monopolies best efforts.
Les you end up with Monopolies and Robber Barons.
Countries don't need natural resources, just the mere changing money for employment, goods and services. Those that have a bank printing money and is available for small entreprenuers they thrive. But you see in countries where rare earth and precious minerals are mined. They are intentionally cut out from participating. They are poorer than my Lima 2002 impression. They must not be allowed to prosper and buy into the natural resource production or offer an althernative to the slave labor needed to mine those resouces. So even though those countries are dirt poor, they have riches beyond their wildest dreams.
That's a gold ecconomy.
There is no reason to debate sound money, even though it is the system that our founding documents establish. A dollar was established as a rather specific amount and purity of silver. And the banksters has to get rid of that standard because it was too hard to perpetuate fraud with such a reliable and unfakable measure of honesty.
The poverty you saw in Peru in 2002 had nothing to do with gold-based money. Peru didn't have gold-based money; they had hyperinflation (of their fiat money) in the late 1980's
The poverty you saw in Peru in 2002 had nothing to do with gold-based money. Peru didn't have gold-based money; they had hyperinflation (of their fiat money) in the late 1980's.
How much self sufficient was Peru ? Did it have to import energy (gas and oil) ? How much food did it have to import ? How much building supplies did it have to import ?
It's beyond ridiculous. If workers don't produce anything, then why do employers employ them!?!?
Have you ever seen anyone's name on a pair of Nike's?
This is the answer I would expect. You don't know, but you have a question that is confusing to you. Fair enough. But that should really inform you as to whether the opinion you are putting forth holds, and you should spend time arguing for it, or if you should be trying to listen to the other people explaining the economic foundations and asking questions.
This ignores the printing of banknotes by banks.
Peru is very rich in precious metals, but the Presidents in the 90's through the early 2000's squandered all of it to China. They were building a railway system, but one of the President's absconded with the funds, it sat unfinished for over 20 years.
When they had minerals and wealth they were held down to dirt poor third world conditions. I saw it with my own eyes. It happens all over the world. I have also seen around the world when once third world countries have commerce open up and investors build and open business where none existed before. Those countries fast track to the 21st century over night.
The total worldwide supply of gold increases at a rate of about .9% per year. The supply of silver increases at a rate of about 1.2% per year.
Without social security, let's say the savings rate would be 20% (and I'd say that is waaaaaay too low).
With people needing to save 20% minimum of what they make and the supply increasing about 1%, how long could the system survive?
That is a separate issue though. Bank deposits should be made at the depositors own risk.
What enables a dictatorial regime is not the specific mineral per se, but the dollar value and its ability to buy support from cronies and buy violence to suppress the public. That is precisely what a Fiat Money Central Banking system is (until the currency it prints is universally rejected). The US is effectively having a giant mine that spits out trillions of dollars, the mine is the fiat money central banking system . . . and that is why the republic is gradually breaking down!
There's only about 550000 metric tons of silver in the world. There is only about 208874 metric tons of gold in the world. With the population of 1st world countries being about 1 billion, there is simply not enough of the commodity for it to be used as a currency.
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