People sometimes paint the Fed as "bumbling" and "incompetent". I think it's naive to think they don't know what they're doing. They're not stupid, and this is their job; they know exactly what they're doing - they're making a sick profit on the backs of the people.
I find this to be an interesting situation that deserves attention.... Take for example the case with Dick Fuld, and the supposed legal approach to a certain house of cards.... For simplicity..... One average house $250,000 Legal contracts valuation based on $250,000 hard appraisal such as the derivative instruments dependent on the valuation..... $750,000..... When the house price goes to $0....one still has the house.... When the service contracts go to $0....one has $0..... ........................................................ Fuld is going to argue that the full valuation above $250,000 was perfectly legal..... And just like Grasso.....may prevail.... ............................................. But one knows this...... The $250,000 would have been $140,000 if it were not for government housing policies..... ................................................... So now although one knows how insane the situation is.....the question becomes how does one effectively lose the false values amounting to $250,000 less $140,000....and the total loss of $750,000 in derivative contracts....
Martin Armstrong predicted an international debt crisis and hyperinflation. An excerpt of the article at: http://princetoneconomics.blogspot.com/2006/06/economic-confidence-model.html "...he has warned since at least the early 1990's that a major international debt crisis was a certainty with hyper-inflation, hence his statements - "My view of the future is not a very nice one." (had he only known that that would end up being personal premonition) and "We are going to live history."
PFT, One of the solution is to have the gold standard back again. Whatever money the the bank gives out can be backed up by gold. But these bankers wouldn't allow this as this isn't in thier interest, to the extent that if a country wants to be part of the IMF (internation monetary fund) You can't have Gold as your currency. So PFT what do people in these situation? Don't take loans out? Also are we not in a similair situation like the 1929 great dpression where money was not avaiable to borrow from the banks? If so we heading for depression? Seems like recession sounds too good for this current crises!
Unfortunately, hard asset based currency has its own set of problems. We need some sort of dynamic system, where we can base our currency on hard assets, but those that actually have economic value. Something like infrastructure, or something like that. But yeah... something will give eventually.
You also might want to take the crashcourse created by Chris. It deals with banking system, peak oil, environment and how it all comes together. http://www.chrismartenson.com/crashcourse
AMERICA - Home of the FREE and the BRAVE The greatest pyramid scheme ever created, o wait those are illegal aren't they Where is flytiger and why isn't he all over this ????? Because he is an idiot and doesn't realize the WHOLE country and everything he and you believe in is totally CORRUPT. Now go start another WAR (and kill some innocent people) because that's how you pay for all that debt and interest. It amazes me that more people do not understand WHY the rest of the world hates the American leaders so much and why the system is so disgusting. The truth is it's just the way it is BUT the hypocrisy is that American politicians all base their platforms on such high morality and goodness. That's why the American system is hated so much. I understood this along time ago but when in Rome, do as the Romans. Nothing you or I can do will ever change this till we all realize the truth of it all. Great thread and worth the read.
What do we do? I'm not sure but I guess you could stop making your house payment. With the passage of the 700B bill the government will take over your mortgage and renegotiate a new loan. But, do you want the government as your lender? I don't think so. What the Fed is doing now with all the infusions they are pumping into the system is putting another layer of cards underneath the house. When it comes crashing down it will crash from a much higher level than where we crashed from in 1929. The depression that is about to hit is going to be far more severe than the one in 1929 because we are not on the gold standard and we have no savings. The US dollar will be worthless.
It is a Fractional Reserve system with a central bank that controls the currency. You need to educate yourself more. Your math is incomplete. What happens to the 900k that gets loaned out, to, let's say, a business. They will deposit that money in a different bank, or even the same bank. It becomes a deposit and gets lended out again. I like the DebtMoney video but I also think you need to watch Money Masters. A great read (if you can handle it): http://mises.org/Books/mysteryofbanking.pdf I've read it several times. There is more literature out there, as there is no real conclusion on the solution. All of it is worth reading.