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| Thread ID: 138493 | 2014-12-08 12:59:00 | Is our cash safe | DeSade (984) | PC World Chat |
| Post ID | Timestamp | Content | User | ||
| 1389746 | 2014-12-11 08:06:00 | Who actually has significant spare money in cash or deposits anyway. All I have is debt Debt is a good thing, it is an asset even, you can make a fortune (out of nothing) by trading in debt portfolios :) :lol: for example....http://www.debttrader.com/ the best place to buy and sell debt.............. |
Terry Porritt (14) | ||
| 1389747 | 2014-12-13 08:16:00 | What puzzles me is banks using fractional reserve lending (creating money). For every $100 you deposit, the bank can lend about $800. This actually happens. If even half the loans they have go bad, that still leaves $450 being repaid as normal to cover your $100 deposit. So how can any ordinary main street bank ever go broke? |
Winston001 (3612) | ||
| 1389748 | 2014-12-13 20:57:00 | What puzzles me is banks using fractional reserve lending (creating money) . For every $100 you deposit, the bank can lend about $800 . This actually happens . If even half the loans they have go bad, that still leaves $450 being repaid as normal to cover your $100 deposit . So how can any ordinary main street bank ever go broke? Good question Winston, and I don’t have the answer . I’m still trying to work out how during the great global financial crisis, when Banks and Finance Company’s were falling like flies, the Credit Card company’s didn’t seem to have a problem . I never heard of one Merchant not being paid . Imagine the likes of Bunnings, Warehouse etc . etc . not being paid by a Credit Card Company for say only a single month . The repercussions would be dire to say the least . The only way I can see it is if there is no intention of ever repaying the debt and they just increase the amount of “Funny Money” so it becomes a matter of who is less in debt . |
B.M. (505) | ||
| 1389749 | 2014-12-14 20:01:00 | What puzzles me is banks using fractional reserve lending (creating money). For every $100 you deposit, the bank can lend about $800. This actually happens. If even half the loans they have go bad, that still leaves $450 being repaid as normal to cover your $100 deposit. Ah no. The reality isnt that hard to find en.wikipedia.org Fractional-reserve banking is the practice whereby a bank holds reserves (to satisfy demands for withdrawals) that are less than the amount of its customers' deposits. Reserves are held at the bank as currency, or as deposits in the bank's accounts at the central bank. and The reserve requirement (or cash reserve ratio) is a central bank regulation employed by most, but not all, of the world's central banks, that sets the minimum fraction of customer deposits and notes that each commercial bank must hold as reserves (rather than lend out). These required reserves are normally in the form of cash stored physically in a bank vault (vault cash) or deposits made with a central bank. Banks fail when they cant pay back their loans, or cant pay back deposits . Banks fail when too many depositors what their money back at once or they fail after making crazy, speculative financial choices |
1101 (13337) | ||
| 1389750 | 2014-12-14 22:41:00 | Following on from 1101: Even though it appears that the banks can make money out of thin air via the money multiplication factor, they still need seed corn to do this. If nobody deposited any money, then the banks could lend $0 x money multiplication factor of say 8, and 8x0 = 0. If there was a run on the bank, ie all deposits disappeared, then the banks could not make money out of thin air. This is where the reserve bank could step in, because they reserve the right to print money :), which is what the Reichsbank did in 1921'sh. I still find the concept of buying and selling debt unsettling........though I suppose it is just like any other commodity. |
Terry Porritt (14) | ||
| 1389751 | 2014-12-15 11:07:00 | Ah no. The reality isnt that hard to find en.wikipedia.org Fractional-reserve banking is the practice whereby a bank holds reserves (to satisfy demands for withdrawals) that are less than the amount of its customers' deposits. Reserves are held at the bank as currency, or as deposits in the bank's accounts at the central bank. The reserve requirement (or cash reserve ratio) is a central bank regulation..... These required reserves are normally in the form of cash stored physically in a bank vault (vault cash) or deposits made with a central bank. Banks fail when they cant pay back their loans, or cant pay back deposits . Banks fail when too many depositors what their money back at once or they fail after making crazy, speculative financial choices Following on from 1101: Even though it appears that the banks can make money out of thin air via the money multiplication factor, they still need seed corn to do this. If nobody deposited any money, then the banks could lend $0 x money multiplication factor of say 8, and 8x0 = 0. If there was a run on the bank, ie all deposits disappeared, then the banks could not make money out of thin air. This is where the reserve bank could step in, because they reserve the right to print money :), which is what the Reichsbank did in 1921'sh. Understood but in the absence of a disruptive disaster (asteroid, nuclear bomb), there is no reason for a run on all banks to ever occur at once. It hasn't even happened in Zimbabwe: and the closest event being Cyprus and even then Cyprus has survived. In fact Iceland Ireland and Portugal also survived and still have functional banks. Although the GFC has been a nasty experience for many people and some banks went bankrupt (Northern Rock, Bear Stearns, Lehman Brothers, Merrill Lynch) the vast majority of banks, credit unions, and building societies around the globe all survived. If government bailouts were the answer then none of those banks would have gone under - just consider the power and influence of Bear, Lehman, and ML. If banks have the ability to create money (by only holding a fraction) then they could simply be patient and wait for the good loans to be paid back in. Depositors would be annoyed but they'd get repaid. Provincial Finance did exactly that - full repayment. South Canterbury Finance has recovered $800 million so far. So...if banks actually create money 8 times the amount deposited, how can they fail? |
Winston001 (3612) | ||
| 1389752 | 2014-12-15 17:38:00 | Barings bank that went down in the early 90's was interesting as I was working with the brother in law at the time of the guy who caused it. | gary67 (56) | ||
| 1389753 | 2014-12-15 22:11:00 | "So...if banks actually create money 8 times the amount deposited, how can they fail? " Let's hope they don't, I have all our savings in just one bank, perhaps the risk should be spread. However consider this, the supply of money has to continually increase because the world's population is increasing, doubling around every 35 years. Then there is the rich are getting richer factor, and only some of this comes from the poorer getting poorer, Then we have CEOs in both private and public sector paying themselves enormous sums. This money has to come from somewhere, and this at a time when there are fewer and fewer natural resources to exploit. Ergo, we have to have a money multiplication factor...............:banana :lol: |
Terry Porritt (14) | ||
| 1389754 | 2014-12-16 23:50:00 | Watch the deck chairs start be rearranged now that the ruble is turning to rubble... www.nzherald.co.nz www.bbc.com www.bbc.com |
ruup (1827) | ||
| 1389755 | 2014-12-17 01:13:00 | Watch the deck chairs start be rearranged now that the ruble is turning to rubble... I initially thought they would be links to NZ turning to rubble, another deficit this year despite empty promises to turn things around www.stuff.co.nz www.stuff.co.nz The reporting of this seemed to get swamped by other recent events in Aus |
1101 (13337) | ||
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