2016: The Year of Bond Defaults

#131
#131
bamawriter said:
Banks don't create legal tender. Banks rarely, if ever, forward loan proceeds to a borrower in the form of legal tender.
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By the strict definition legal tender barely exists anymore. Hardly anyone uses straight cash. But the credit the bank extends still enters the economy and affects the pricing of everything as if it were legal tender.
 
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#132
#132
bamawriter said:
If you think the banks are bad, then just wait til the payday lenders and various other MSBs get a bigger share of the market.
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The thing is... The CFPB just dropped the hammer on those guys too. All the installment lenders I do business with are trying to figure out whether they're going to be collateral damage. Consumer credit is becoming endangered all the way around.
 
#133
#133
GAVol said:
My point is that you can't just create money exponentially if there's no demand from borrowers. In theory, a fractional system could turn $100 into $1,000 using current reserve requirements, but they can't just create credit for the sake of creating credit without the market intervening.
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Sure the banks may never create the theoretical $1000 out of $100, but I would wager they routinely create $500 out of $100. I still say that's at least $300 too much, and way too much power to give to private institutions.
 
#134
#134
GAVol said:
The thing is... The CFPB just dropped the hammer on those guys too. All the installment lenders I do business with are trying to figure out whether they're going to be collateral damage. Consumer credit is becoming endangered all the way around.
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You guys could always go into prostitution. I hear that's what the mob does when Uncle Sam cracks down on racketeering.
 
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#139
#139
red butler said:
Sure the banks may never create the theoretical $1000 out of $100, but I would wager they routinely create $500 out of $100. I still say that's at least $300 too much, and way too much power to give to private institutions.
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Current Loan to Deposit ratios are about 70%.
 
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#142
#142
GAVol said:
Any credit squeeze is going to stifle growth.
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Would growth be absolutely essential if the whole system didn't need growth to pay back the interest of all the credit created? I mean at some point growth has to slow in an advanced economy and then you're left with a massive problem under our current system. There isn't enough new money to pay back the old money, plus interest. How stable is a system where maintaining the status quo is actually a death nail to the largest economy the world has ever known?
 
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#144
#144
bamawriter said:
I'm sure he won't. But this entire debate has been about whether or not we should call something what it happens to be. "Legal tender" is not a nebulous term.
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So "legal tender" is a non nebulous "legal certificate" of some sort with a valuation that may or may not be backed by something of tangible value? Of course, if it's floated, it doesn't mean it's backed by much of anything tangible.
 
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#145
#145
AM64 said:
So "legal tender" is a non nebulous "legal certificate" of some sort with a valuation that may or may not be backed by something of tangible value? Of course, if it's floated, it doesn't mean it's backed by much of anything tangible.
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Oh my dear God... are you seriously going to start quibbling over what is or isn't legal tender?
 
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#148
#148
AM64 said:
How can you have growth without manufacturing and industry? Remember we moved that offshore. Or are we back to the Ponzi thing again?
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What they fail to realize that the proper and most effective way to grow an economy is to actually make widgets and trade with our neighbors. The more widgets we export, the more that comes back home to us and we grow in that manner, as opposed to financial instruments and Ponzi schemes.

The economy would grind to a halt if you can't buy anything and if you can't make anything to sell. All we have is a printing press for the most part in this country with a military that is backing our currency.
 
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#150
#150
AM64 said:
Are you going to tell us that a resource isn't necessarily a positive entity either?
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No. I wanted to know how he was defining a resource. So... I asked how he was defining a resource.
 
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