Investment Bank question

Discussion in 'Economics' started by lorax2013, Feb 26, 2008.

  1. I must be missing something here - can someone please educate me? From what I understand, banks used to be prohibited from trading commodities contracts by the Glass-Steagall Act which was revoked in 1999. Now is it true that Banks can use fractional reserve banking at a ratio of 25 to 1 to create money from thin air and then trade commodities contracts? If so, how can any independent trader compete with that? We are risking our own money, we are losing from inflation on the principal, we can't expect a government bailout when we screw up, and if we are wiped out we can't just open a new bank and start over again with a new low interest loan from the Fed. Please tell me Bank's aren't allowed to do this. If they are, I think it's the beginning of the end for independent traders just as private lenders couldn't compete when banks were given the same unfair advantage in traditional lending.
  2. amylase


    I'm not sure but i'm afraid that is very close to our reality...