If the banks go.. so goes America!

I diidn't mean to choke off discussion with platitudes

While this is an investing site, <b>this</b> <b><i> is</i></b> an economics forum. There is nothing more important to economics than understanding motivations.

Remember Thomas Jefferson's concerns about banks and their ability to affect the availability of money. His feeling was that banks gone haywire are a threat to individual wealth.

Well.....?

 

I think this is most likely the case and the reason the government is so protective of the biggest players is that among them are the primary dealers who sell government debt. Our government exists today only because it is able to procure money to operate through the sale of bonds and other debt instruments. If they lose their dealers they are out of business because the only option then would be to go to the Fed and monetize the debt which would result in uncontrollable inflation in short order. They presently can borrow and defer the negative impact until the future when other politicians and bankers will have to figure out how to deal with the mess they have created, not to mention future generations of taxpayers who will ultimately have to pick up the tab. Obviously new dealers can be authorized if the present ones go under but it would create even more havoc than currently exists, so better to prop up insolvent giants now and avoid the possibility of other unexpected surprises.

Primary Dealer list from Fed Bank of NY

BNP Paribas Securities Corp.
Banc of America Securities LLC
Barclays Capital Inc.
Cantor Fitzgerald & Co.
Citigroup Global Markets Inc.
Credit Suisse Securities (USA) LLC
Daiwa Securities America Inc.
Deutsche Bank Securities Inc.
Dresdner Kleinwort Securities LLC
Goldman, Sachs & Co.
Greenwich Capital Markets, Inc.
HSBC Securities (USA) Inc.
J. P. Morgan Securities Inc.
Mizuho Securities USA Inc.
Morgan Stanley & Co. Incorporated
UBS Securities LLC.
http://www.newyorkfed.org/markets/pridealers_current.html

Some additional news on PD's

http://www.bloomberg.com/apps/news?...s/news?pid=20601103&sid=a3Fp3EwQX32o&refer=us

 

This is how the Federal Reserve screws you. The poor and middle have to work harder every year to pay for inflation benefiting the rich. What’s the point in trying to get ahead? As soon as you do, everything gets more expensive, and they take it all away.

 

I'm having some trouble with the edit function. The two bloomberg links are run together. Here they are separately.


http://www.bloomberg.com/apps/news?pid=20601103&sid=a3Fp3EwQX32o&refer=us
http://www.bloomberg.com/apps/news?pid=20601087&sid=aVWzNaO9CD9M&refer=home

 

The banks that own the Fed won't go under unless the Fed goes under.

 

I have an extremely well-educated, well-read, and successful friend (civil engineer but he's a real estate developer - mostly commercial, and he's done very well) who truly believes that monetary policy of the federal reserve and other central banks is used to intentionally create inflationary booms and deflationary death spirals, so as to allow 'confiscatory asset taking' without having to resort to military/police force, and ensure that additional wealth can be absorbed efficiently by the apex predators, who are extremely few in number, but all believe in a global government.

Now, I don't know (obviously) if this is true or not, but he's not stupid, and in weird times like these, nothing seem crazy or impossible.

 

The only way to stop this is to let the bad banks go bankrupt. It is time to clear the decks and start to rebuild. The Government is making a huge mistake propping up and guaranteeing the worst of the financial system, which will eventually make the US government debt trade like troubled bank debt. I mean why should you feel the need to buy insurance on US government debt yet people are doing it now.

There is a lot of bullshit information out there on the internets and this thread that make people even more misinformed then listening to the politicians. If some of these large banks go the Fed will be fine, ending fractional reserve banking will bring a even bigger hurt to the financial world then what we have gone though since 2007.

Also someone made a very astute point that if we continue on this path we will not be left with the strongest banks when this ends but the most politically connected banks. This will be great for traders for brief a time but a disaster for markets and the economy in the long run. We have already seen how the government forced the hand of BoA to complete the merger with Merrill. Soon they will be deciding who and when the banks should lend maybe you will have to fill out a form to state the social good you will create with your loan or maybe you will be pre-approved for a loan because you neighbor got one.

 

I suspect that many undocumented negotiations affect our financial destinys.

I truely believe that the Fed was set up to control inflation so that those that live on borrowed capital (the rich and the government) could pay their loans off with ever smaller dollars, and that Europe agreed to allow us to get away with this as a means of paying off US expenses for World War I and II, and later, the Cold War.

Note that deflation, the Government's worst fear, only benefits those that save.

 

That’s exactly what they do. They create a problem so that they can fix it and profit from it. If there was a stable money supply, I don’t see how we could have the boom bust cycle.

 

"The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back." - Keynes


Seems to describe the current situation and the attitudes of many discussing this topic, although he seems to have missed out in the blossoming trade of conspiracy theorists.