OT: Banking and Finance
san_jose_guy
money was invented for handing to women, but buying dances is a chump's game
https://www.amazon.com/Chaos-Protocols-T…
But so far only the first chapter, and I am still withholding taking a position. He does paint a very dark picture of our entire economic system. Mostly it just comes down to having fiat currency, and all the many ways in which our currency gets multiplied in the banking system, and just how very little is backing this. And he shows how it all works to benefit the rich, not people who need to work for a living.
Gordon White's views may be similar to those of Robert T. Kiyosaki, though this is certainly not someone I support in any way.
Departing from any of these books, by my own observation one thing has definitely changed. It used to be that banks paid the maximum interest allowable by law, 5.75% for banks and 6% for savings and loans. And then in the late 70's and early 80's there was that era of extreme inflation. This was when many decided to no longer keep their money in banks. But now that that extreme inflation is long gone, people use banks, but the banks don't really pay much interest. Why?
Well maybe the answer is that they no longer need our money. They can be merciless with fees. But maybe they have another source of money to lend out? If they get enough interest money, why should they need account holders? So I'm guessing that this new cash flow source would be the credit card industry. As unsecured loans, the interest will be higher. But most of all, it is just how much of our commerce goes through the credit card system, the sheer scale of it. From this, banks must be able to get what they need, and so competing for depositor accounts by offering interest, is just not important to them.
I've read that they call people who pay off their cards so they never have to pay any interest, "freeloaders".
I guess they want to offer some trivial interest, because maybe there is still a distinction between demand deposits, and those which can be delayed. With zero interest checking, at least how it had been, they were supposed to give you all of your money anytime you asked for it, and the required cash reserve was 20% of these demand deposits. But they were not required to have anything for interest bearing accounts. Though I've never seen this used, they can delay withdrawal requests by as much as 30 days. So maybe today, to avoid adding to this cash reserve requirement, and to be able to hold onto that 30 days option, they still want to offer interest, even though it is trivial. They can offer interest, and still recoup that money with fees applied opportunistically.
And then I also read that the law allows them to count US Treasury Bills as 100% safe, and so they can use these to meet the cash reserve ratio. All very interesting.
Also explains that Newt Gingrich and Alan Greenspan altered the calculation of the inflation index, so that now it basically means whatever they want it to mean.
Lots of circulating money of various types is being created. But the system is designed to benefit speculators and the rich, not people who work for a living.
Quoting here from Gordon White, page 40, when Kodak was at the height of its power it had market capitalization of $28 billion, and employed 140,000 people, all of whom could afford cars and housing and families. When instagram was sold to Facebook for a billion dollars, it had thirteen employees and had not made a single cent in revenue.
page 38, in 20% if today's American families everyone is unemployed.
page 36, Sixty percent of Americans say they have less than $25,000 saved for retirement and 56 percent of retirees are still in debt when they retire.
SJG
http://www.investopedia.com/terms/m/m1.a…
http://www.investopedia.com/terms/m/m2.a…
http://www.investopedia.com/terms/m/m3.a…
This gives some explanations of the money definitions. But I believe that there are some which include available revolving credit:
https://en.wikipedia.org/wiki/Money_supp…
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Credit Card Debt
https://www.weeklyfinancialsolutions.com…
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Talk about boring material, and you could never finish it.
https://www.bellagio.com/en/nightlife/th…
My belief, which I am starting to hear talked more about in the media, is that rapid advances in things like technology, process, manufacture and delivery are rendering the world inherently deflationary.
When the world is deflationary people want to save money and spend it later on more stuff as prices drop. In inflation people would rather spend now before the prices rise. So this means there will be a large supply of customers who want to keep their money on in bank, so not much incentive for a bank to pay out interest. Under inflation, the banks would have to pay interest to keep people from just spending it.
Also consider borrowing: under deflation you want to have debt owed to you. You get paid back later with more valuable money. So there is deflation there is less demand to borrow money. This means banks don't require as much money on deposit to met the borrowing demand. So again, less incentive to pay interest.
IMO, central banks need to start printing money to counteract this historical trend. I think a good thing to do would be to printing money and pay it out to people as basic incomes. This will become increasingly important as technology decreases the amount of time people need to work, and as some people may find themselves without jobs altogether as they are replaced by robots and AI.
They would definitely prefer you borrow and be indebted to them (see above). But no need to feel guilty if you always pay your balance. They are still collecting 2% from merchants on all your purchases.
I don't know about this inherent deflation. Grocery prices still rise. Housing costs mostly rise. But the Fed does keep interest rates very low. Not sure if I am understanding you. Certainly the Fed and the Treasury keep creating more money via T-bills to deal with deficit spending, and that means inflation, or as Gordon White calls it, debasement of currency.
Do you have any sources for this deflation idea? Gordon White sees debasement of currency as a huge issue.
I think banks don't pay much interest because they don't need depositors because they get enough money to lend out via the credit card industry, because of its fairly high interest rates, but also because this has become a huge portion of our economy. This had not been the case.
Probably better electronic communications is what has done this. Credit reporting, and then merchants being able to eliminate risk by instant verification. Credit has replaced cash, but with credit, the banks make huge amounts of money, and at both ends.
If banks have enough money to loan out, they don't need more depositors. And they especially don't want demand deposits, or the kinds of accounts which usually don't result in fees. They don't really need our money anymore.
SJG
I personally never use a debit card I have a few CCs that pay cash back or FF miles I use them primarily pay the bill in full every month have never incurred any fees plus I am constantly bombarded with offers.
Maybe some people use them because they don't qualify for a credit card? Or maybe they don't want a credit card. Occasional use of the debit card serves their needs.
My point was, why banks don't pay serious depositor interest anymore. Seems like they get all the money they need from the credit card system. Don't really need our accounts.
SJG
Debit and credit cards are not remotely similar, get out of the basement retard.
Just look at the price of oil and industrial metals lately.
I always heard debit card used as the term for a bank/atm/check card, which is the same essentially as paying cash. I don't see what one has to do with the other.
@SJG Debit/ATM/Check Cards are issued by the bank and have nothing to do with the government enforced rules regarding number of withdrawals or transactions,a debit card functions the same way as a check, just as simple no limit other than how much cash you have available
Just started to read a bit of an older edition of:
https://www.amazon.com/Principles-Macroe…
Want to learn more about Keynesianism.
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Gordon White (London) runs one of the leading chaos magic blogs, Rune Soup........ During this time, he has partied with princes, dined in castles, been mentored by a former director of a private spy agency, and even had a billionaire knight buy him bottles of champagne.
Hayek's Road to Serfdom is analysis of this intense human desire to organize the world around us through planning in order to achieve some always ill-defined optimum for all. The book clearly demonstrates that the great flaw in this idea is that men can never get together and agree exactly what to plan for or what is optimal. The artist will want resources allocated to the National Endowment for the Arts; the scientist will insist that more be sent to the National Institutes for Health; the farmer will demand that subsidies for corn are the only way society can survive, parents and students will demand bursary, and the poor will clamor for support. This will inevitably lead to conflict as what each man lobbies for is not really an optimum for all but an optimum for himself. The only way these conflicts can be resolved is through a strong central authority that can coerce the cooperation of all the members of society and assign priorities for the allocation of resources. As men will always resist coercion, the applied authority must become increasingly violent to the point of being life threatening in order to impose its central economic will. As the process of organization and planning becomes ever more comprehensive, ultimate authority must eventually be concentrated in the hands of one person, a dictator. In Hayek’s words:
“Most planners who have seriously considered the practical aspects of their task have little doubt that a directed economy must be run on more or less dictatorial lines. That the complex system of interrelated activities, if it is to be consciously directed at all, must be directed by a single staff of experts, and that ultimate responsibility and power must rest in the hands of a commander-in-chief whose actions must not be fettered by democratic procedure .........[planners believe that] by giving up freedom in what are, or ought to be, the less important aspects of our lives, we shall obtain greater freedom in the pursuit of higher values.”
Raising the floor : how a universal basic income can renew our economy and rebuild the American dream / Andy Stern, with Lee Kravitz
https://www.britannica.com/topic/Keynesi…
http://www.wisegeek.org/what-is-keynesia…
Nothing about Keynesianism is discredited. Its just that it is a real threat to unequal distribution. And so when our dependence on non-renewable resources finally caught up with us, in middle-eastern countries organizing and asking for reasonable prices, our economy really started tripping up, high unemployment and high inflation at the same time.
People lobbied Jimmy Carter to let the deposed Shaw of Iran in, and so we soon had Americans being held hostage in an embassy and lots of very angry people.
The Religious Right turned against their Southern Baptist Sunday School Teacher and backed a Hollywood Playboy Divorcee.
That's all it was. Nothing about Keynsianism has been discredited, it was just rejected because people were angry and could not understand what was going on, and were receptive to gut level appeals, and so we continue now to run ever more on credit at all levels, and run from boom to bust, and run by scapegoating the poor as we devolve into a two tier society.
SJG
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Andy Stern, Universal Basic Income
https://www.youtube.com/watch?v=aKzNBXFn…
Once we deregulated energy and turned to the free market, the world changed for the better in less than a year. OPEC and Russia have lost all their leverage. The balance of power has shifted almost overnight.
In the late 70's it seemed like our economy was coming to an end, high inflation and high unemployment at the same time. Well, the middle eastern countries were demanding serious money. They weren't going to be competing with each other any more.
So this, along with the embassy matter destabilized Jimmy Carter. So Keynesianism has never been discredited, the voters just went for Reagan.
And Reagan took care of OPEC, standing with Hassam Hussein in starting a war with Iran, and then supplying both sides.
Reagan and his Monetarist voodoo solved absolutely nothing! The whole episode was just one big and ongoing backslide.
https://www.amazon.com/America-Stole-Don…
SJG
^^ Yep. anything that lowers energy (esp. utilities) costs or housing costs is a big help, since wages are flat (and have been for decades).
https://www.forbes.com/sites/peterferrar…
Keynesian economics is the false vision of human action which says the way to promote economic recovery and renewed growth is through increased government spending, deficits and debt. If that sounds nuts, that’s because it is.
The idea is that the increased government spending and deficits will increase demand in the economy for more production, and that producers will increase supply to meet that demand, hiring more workers and reducing unemployment in the process. Keynesian economics arose in the 1930s in response to the Depression. It never worked then, as the recession of 1929 extended into the decade long Great Depression. And it never worked anywhere it's been tried since then, in the U.S. or abroad.
Oil demand should reach it's peak within a few years and energy companies are scrambling or will to come up with revised business models as solar and electric become cheaper preferred alternatives. This should contribute to a massive decrease in co2 emissions and when combined with less solar radiation, the planet should start getting colder. No need to cloud the skies if less solar radiation naturally causes planet wide cooling. If it's bad enough, it will get very cold and freeze crops. That's not good.
I think officials have been lying so long, some believe their own lies. If the planet isn't significantly cooler a few years from now, need to build more co2 absorption equipment and curb more co2 emissions. It should be clear which way it is within 4 years. Solar radiation is predicted to significantly drop just 2 or 3 years from now. Living in the northern states may be like you moved to northern Canada 10 years from now if the solar radiation theory holds more truth. If it's not colder 5 years from now, the greenhouse gas people were right if they aren't faking the data claiming it's just as warm while glaciers are growing, the Arctic is full of ice, etc, etc.
If I look back at this thread in 2022 it should be colder if solar radiation drops affect climate more than the amount of co2 in the air. We should decrease co2 anyway because it is making our oceans too acidic. I would like a hot summer in the southern US to be a day that reached 80 degrees instead of what we have now. I'd save a fortune with my air conditioning.
Alternative is somone could be an eco terrorist and block out sunlight with nano particles blanketing the whole planet.
SJG