Did U Think The Ponzi Scheme Would Last?

Bearish on Banks - Why Now Is the Time to Sell

On Oct 05 02:22 PM aarc wrote:

"As for being over-bought; it is simply not true. $BKX was only
able to recover 30% of it's total losses from January 2007 to March
2009. Basically $BKX went down by 85.33% from it's Jan 2007 high
of $121 to Mar 2009 low of $17.75.

Today it is still selling at 62% discount from it's highs. That
is not an over-bought condition. So for longer-term hold; buying
$BKX or XLF at these levels is still buying at a discount of 62%.
You cannot be paying at an over-bought price with that kind of massive discount."

You talk like the highs were something other than a credit Ponzi. You make it sound as if it was normal for banking to be 25%+ of GDP. Don't you understand that they don't add any economic benefit? They are money changers, not producers of anything. They are scam artists and the scam is bust. They will NEVER return to their old highs and in fact they will be lucky to stabilize at 20% of their old highs once this depression really plays out.

Out of control fractional reserve banking was a scam that was allowed to run amok as long as it goosed the economy but now that banks won't loan and people won't borrow it is foolish to look for some return to the old days or anything close to it.

The Coming Consequences of Banking Fraud

GREAT analogy. If the bankers are ever forced to look at it they die...


On Sep 09 10:42 AM Roger Knights wrote:

> "transactions that have been kept secret from the world, and that
> will have severe and negative consequences"
>
> The Portrait of Dorian Grey--hidden in the attic.

Goldman's Success: Put Down Those Pitchforks

"We're back to "normal.""

So normal is where banks should make outsized profits for producing nothing of value for the economy while handing us all outsized risk that is guaranteed to blow up in our faces some day. Is that what you are saying?

People like you do not know what a real economy is supposed to look like and thus you think this is normal. The 50s were a real economy and banking was a 3-5% dividend business. They were not superstars. They were stodgy and glassy eyed and careful and conservative. Now we have been sheeplized to believe that cowboy banking is normal.

This will end badly because there are too many people like you that have not one clue as to what is right and sustainable and what is wrong and guaranteed to blow up in our faces.

Bernanke in the Hot Seat

Bernanke is the head of a criminal organization known as the federal reserve. It amazes me how few Americans are on to this scam since it is so obvious. They control the money supply with no oversight, no audits, no nothing. Gawd what a patsy the average American is.

I suspect that this will change once the easy credit based living evaporates in the US. If Ron Paul is successful in auditing the fed I think the light will finally come on for America just how corrupt our government and the associated military industrial complex has become.

Warren's (Ridiculous) Prescription for Banks: Wipe Out Shareholders, Fire CEOs

Academics are nothing more than the consulting arm of the politicians. They will say whatever the politicians want them to say for the right price. We are all supposed to be impressed by their degrees and the names of the schools they attended. But still even with all of their advice and council here we are. Academics are worthless.


On Apr 07 09:14 AM mkat33 wrote:

> "Professor" Elizabeth Warren. That pretty much says all we need to
> know. So many in academia have no clue as to how things work in the
> real world; kind of like politicians. Both groups are typically unable
> to distinguish between theory and reality. As the saying goes, "Those
> who can't do, teach." I suppose we could add to that "... or run
> for public office."

Slow Down Mr. Roubini

I wish Roubini was just being an alarmist. I really do. But the bankers have gone overboard this time with their greed and a collapse is unavoidable. What else should follow the biggest credit boom in the history of man except the biggest economic bust.

The IBM Industrial Average

Desperate spammers on SA. Everyone is an expert now. This will end badly.

Turning Japanese: The Audacity of Reality (Part 3 of 3)

On Feb 04 12:13 PM BS Detector wrote:
> If a single bank multiplies its deposits nine times, and that money
is deposited in other banks after the loans are exchanged for goods, and those banks multiply those deposits nine times, why don't we have an infinite amount of currency? You're describing a geometric progression. So suppose there's one dollar in the entire economy on day 1. A bank transforms this into 10 dollars (1 plus the 9 you say it creates). One dollar stays in the bank, nine go into the world as loans. The 9 are exchanged for something, and are deposited into another bank. A week later, the first bank still has 1 dollar, the second bank has 9 dollars, and 81 dollars are lent out, exchanged for goods, and deposited at a third bank. A week later, the first banks still have 10 dollars between them, the third bank keeps 81 dollars, and creates 729 new dollars which it lends out.

Do you see where I'm going? At the end of the year, that 1 dollar
would become bank deposits of $417456 followed by 44 zeroes, or 41.75 trillion trillion trillion trillion. Even if you knock it down to
> one lending cycle a month, that one dollar would in one year become $282.4 billion (with another $2.3 trillion ready to be lent). With reserve banking in place in America since its founding, and the M2 money supply at roughly $7 trillion, can you see that this makes no sense whatsoever?
~~~~~~~~~
Did I somehow come across the head in the sand chat board or what? Look, I gave you a link to a video in which the narrator speaks very clearly, and there are cartoons as well. Was it too much for you to watch?

Just watch this one 10 minute video segment and all your questions above are answered. Hint: just because you personally don't understand something yet does not mean it is not true.

www.youtube.com/watch?...

Anyone reading this thread needs to not listen to Myrtle and anyone else who denies the truth of what I posted. They need to go do their own independent research and not let Keynesians lull you to sleep with their money games. The final proof that banks lend out more than is on deposit is so simple it's not funny. How could we have a global banking system meltdown if banks don't lend more than they really have on deposit? How could the debt possibly be so high given that Americans do not own that much money.

How could the entire US banking system be effectively insolvent??? Stop listening to fools like Myrtle. Listen to Nouriel Roubini who is a leading economist at NY Stern School of Business:
www.telegraph.co.uk/fi...

It's time for Americans to wake up and shake out the cobwebs. The bankers are running the show with their funny money. This is NOT a new trick, and Jefferson warned us about it 200 years ago:

"If the American people ever allow the banking system to control their money, first by inflation, then by deflation; their children will one day wake up homeless on the continent their fathers conquered."
-Thomas Jefferson

The inflation he was talking about was credit inflation. Yes, the fed increases the monetary base as well, but it is credit inflation that is so dangerous because individual banks control it, not the gov't. When banks stop lending the money supply crashes and you get a deflationary crash.

Ron Paul warned us about this. The fact that it was too much trouble to read for comprehension means you watch too much TV, sheeple.

Turning Japanese: The Audacity of Reality (Part 3 of 3)

Jim Myrtle said:
> Excellent! They loan out less than their deposits. Much better than your initial claim that they can lend out more. I'm so proud (pats DiverCity on> head)

Dear Jim,
I initially thought you were kidding when I saw your response to my post. Do you really think that $100 put on deposit with a 10% fractional reserve system means that they keep $10 on deposit and loan out $90? I don't know if you will be able to understand this chart but at least it will settle the matter in my favor for anyone else reading this thread.

en.wikipedia.org/wiki/...

Don't bother responding. I can't save you. Nobody can.

Turning Japanese: The Audacity of Reality (Part 3 of 3)

On Feb 01 09:01 PM Jim Myrtle wrote:

"Please explain how a bank can loan more than their money on hand (deposits). Pretend I'm a really dim Ron Paul supporter (I know, I repeat myself) and use small words."

The smallest word I can use to accurately describe the process is "scam". It works as simply as it sounds: a bank gets $1 on deposit and the grand controller of our money supply, the Federal Reserve, has accounting rules that allow banks to create create 9 more dollars worth of credit out of thin air and to loan that credit out for interest. The $1 in reserve is a fraction of the credit created, ergo fractional reserve. The hope is that the guy who loaned the original dollar will not come back to withdraw it otherwise the bank becomes insolvent.

Thus, for every $1 of real money (AKA "monetary base") in the money supply, an a$$hole banker can (and did) create 9 more dollars worth of credit OUT OF THIN AIR. Nobody ever worked to obtain those extra 9 dollars so that they could be put into a bank, yet the bank was allowed to loan that money out and to receive income in the form of interest. It is absolutely a money for nothing scam. Now you know how the bankers were able to get so rich. If you were able to come up with a product that nobody had to actually work to create yet you could lease the use of this product for 3-7% interest, you would get rich too!

To go one step further, once those $9 are loaned out to consumers, they are spent on goods and services and are thus running around in the economy. Most of those dollars spend most of their time in other banks who in turn can treat them as deposits for fractional reseve banking purposes. In this way the original 9 fake dollars of credit can be used to create many more fake dollars of credit.

I wish I were making this up because it is so obviously a scam. Read more of the details on Wiki if you like (Skip down to the criticism section lest you have to wade through many paragraphs of Keynesian clap trap bull$shit):
en.wikipedia.org/wiki/...

If you are like most Americans and are easily bored, here is the first in a series of simple videos to watch that will explain it:
www.youtube.com/watch?...
Each video has a link to the next in the series. Watch them all if you want to understand what a scam the whole thing is.

There are 2 important implications from this:

1) The federal reserve really doesn't control the money supply if banks have the power to expand and contract credit at such huge leverage to the montary base. Thus when banks get scared they stop lending. The fed and the treasury can pound the table for banks to loan more, but banks have rights too and all they have to do is increase the lending standards to decrease the amount of new loans they have to fund. Just having a 20% down requirement automatically makes a huge number of people inelegible to receive a loan for a house selling at the national average price of 187k. By the way, all banks are doing is returning to sane lending standards to achieve this result. The fact that this is causing our credit bloated economy to collapse shows just how out of control banks world wide have become with their fractional reserve funny money pyramid scheme.

2) As mentioned before, the money supply is made up of real money (the kind authorized by the Treasury and directly controlled by the fed) and credit. Inflation is an increase in money and credit relative to the available goods. Deflation is a decrease in money and credit relative to available goods. Inflation generally results in rising prices. Banks have been adding credit to the economy at a enhanced clip since 1995. If you want proof, look at the Dow and S+P stock charts which went into high gear in 1995. Now that banks are overextended and people are losing jobs the banks are cutting the credit component of the money supply and they are doing so very rapidly. That means there is less purchasing power in the economy relative to goods available for purchase and thus the dollar is strengthening. People are holding off spending in anticipation of lower prices and the resulting lack of demand is causing prices on homes, cars, and many other products to tumble. As a result business profits plummet, unemployment increases drastically, and the economy tanks.

Without all the credit we would have had slower but more predictable growth and there would be no busts where people are wiped out and commit suicide and kill their families and wish they had never been born. The booms are good for the bankers and corporations because they drive far higher profits than the companies could ever have earned with a properly constrained money supply. The booms make little kings within gov't and the military industrial complex. The booms concentrate money and power. The busts wipe out the middle class and make them beg for socialism. The corporate kings knew the end was not far off for several years now which is why they were all grabbing as much as they could while they could. They knew the pyramid was collapsing and they needed to get out before it did. Why do you think people like Meg Whitman (Ebay founder and CEO) decided to give up the reins (March 2008) even though everything was still good at the time? They friggin knew this was coming because they knew how money worked and they understood that a credit pyramid scheme will eventually fail.

Remember The Matrix? You just swallowed the red pill, Neo. You will never think about money the same way again. Nor should you. Every patriotic American will do their part to support the abolishment of the Federal Reserve. Ron Paul's Campaign For Liberty is a good place to start.

Turning Japanese: The Audacity of Reality (Part 3 of 3)

"The only solution is 100% reserve banking? How would that work exactly"

The fact that you need to ask this question means that you are totaly indoctrinated into our funny money society because you can't see how things would work without funny money and the high leverage it enables. Generally the people I meet who think like you do cannot see how they could ever buy a house without fractional reserve lending because home values are many times the amount of money on deposit. Also, these people are generally very intelligent but are in denial about the reality of the situation because they themselves paid 300-600k for a house that was selling for only 150-200 10 years ago. They deny the truth because acknowledgement of it would make them the patsy in the Ponzi scheme. Sorry if this hits home but it is better to just acknowledge the truth and jingle mail your house while the tax exemption for doing so is still in place. IFF this does describe your situation then you are an unwitting victim like many others so don't feel bad.

But how did we get to this point where asset prices moved up more quickly than salaries such that a man can no longer buy a home and support his wife and family in comfort? Why does the wife now have to work and why are children such an economic strain? It's because fractional reserve lending has made credit a much larger component of the money supply than is the monetary base. The combination of monetary base + credit have chased up the asset price value to the point where it requires a monster loan in order to acquire something so basic such as shelter. Instead of constraining loans to the amount of money on hand banks have leveraged themselves up to 30x their reserves. This is why Nouriel Roubini calls the entire US banking system effectively insolvent:
www.telegraph.co.uk/fi...

So the facts show that you are asking the wrong question. Instead of asking how exactly would nonfractional reserve lending possibly work, ask yourself how fractional reserve lending lasted this long because it is by its very nature a Ponzi scheme. Ponzi schemes always go bust, it's just a matter of time. Nobody can really predict when they will go bust but when they do there is one sure thing: they do not correct sideways. They are manias, and manias correct to a point lower than where they started. Deflation is the word used to describe it.

As to how it would work, it would work as it has for many thousands of years prior to central banks and fractional reserve lending. Or did you think there was always a federal reserve? you owe it to yourself to watch this short video with Alan Greenspan, talking AFTER he left the fed of course, about the value of a gold standard and life before the federal reserve being just fine:

www.youtube.com/watch?...

Clearly Greeenspan wanted to be on record that he was never fooled by any of this. He knew the dynamics even though he went along with the agenda. He went from being a sane, even intelligent economist in the 60s before his involvement in the federal reserve to serving as the high priest of funny money and unsustainable, extreme leverage during his tenure as fed chief.

Greenspan clearly indicated that we should return to the gold standard (or some other way of limiting the speed of money creation) and then cites the history of the united states up until the creation of the federal reserve as a perfectly sane monetary period. The hard statement was that we can AND SHOULD return to a gold standard with the implication that we don't need a federal reserve (the high priests of fiat money). Without fiat currency there can be no leverage scheme called fractional reserve banking. Removal of fiat currency kills the notion of a "rubber band money supply" and gets everyone to return to paygo.

So, how would it work? Abolish the fed. Return to honest money. Restrict credit like a mofo. Fractional reserve banking goes poof and as a result asset prices drop like a freaking stone. Salaries drop too, but not as much. All of a sudden you don't need to become an indentured debt slave for life to own a home. Without all that credit running around to chase up the price of things, a man can now support his family while the woman rears the children at home if the couple so choses the traditional notion of family (I am not against women in the workforce!).

Is it painful? Absolutely. Credit is a drug and drugs cause withdrawal pains when you stop using them. But the good news is that the drug dealer is himself mortally wounded this time and so the drug supply is crashing. The result so far is very similar to that achieved had we phased out the fed. The banks are deleveraging. Asset prices are falling like a rock. The original projections of 10-15% in CA and FL housing price corrections are turning into 50-75% corrections. A depression is upon us FOR SURE. The only question is how long will the gov't drag it out by trying to prop up unproppable assets and bailing out banks and insurance companies that are too big to bail.

There is no fixing what has been done. We have spent next decade's income this decade and now we need to slow down consumption and pay down debt and increase savings. The only real question is whether we allow bankers another shot at doing this same damned thing to our children and grandchildren. This is the perfect time to abolish the fed because the pain is already upon us. In fact, I suggest that doing so would increase confidence in our monetary system. People would be able to go about their business knowing that the ground they were standing on was bedrock instead of chocolate pudding.

And now a question for you: Did U REALLY think the Ponzi Scheme would last? Really?

Turning Japanese: The Audacity of Reality (Part 3 of 3)

GREAT article. The only problem is you missed the most important action item needed to fix this for the long term: ABOLISH THE FEDERAL RESERVE BANK and its policies of fiat currency and fictional reserve lending. That is a Ponzi scheme as sure as I am writing this. NEVER let the federal reserve out of the spot light for it is they and their central bank something for nothing counterparts around the world who have been the keystones of katastrophe (or is that the keystone kops?).

Folks, fiat currency and fractional reserve banking is a money scam. Don't you understand that? Were you sleeping when Ron Paul tried to educate you on this fact? Perhaps he wasn't presidential looking or well spoken or charismatic enough for you? Be honest, did you vote for McCain, or Obama or someone else from the Central Socialist Party which the dems and the GOPs have combined to form or were you an independent, non sheeple thinking person who saw through Ron Paul's squeaky little voice and diminutive physical posture to see the great statesman that he was and is?

Obama was the lesser of 2 evils relative to that war monger mf'er McCain, but neither of them are fit to open Ron Paul's car door. People, wake the heck up to what really matters at this point which is how to save our children from life in a 3rd world nation on Main St. USA. The only way to do this is to return to honest money. No other solution is worth the paper it is written on unless it builds upon honest money. It is soooo much more important than you understand because honest money is the road to personal freedoms whereas fiat money is the road to socialism and state control of you taking a dump. It's not just about the economy!! Once the US citizen is impoverished then the socialist gov't elite will own you. Time to go review the teachings of Ron Paul before it's too late.

www.campaignforliberty.../

S&P 500 Internals: Understanding the Index's Path

Earnings are collapsing. What else needs to be said? The S+P is a $400 index trading at $800.

A Look at Beazer from Quarter-to-Quarter

So the pace of decline goes from heart stopping to merely horrifying and these guys are turning cautiously optimistic?

BZH will BK before this bust is over.

Last Thursday Was the Bottom - It's Time to Get Back in

Go look back at 1929-33. How many people said the same thing? The market is falling apart IMO and the earnings in 2009 and 2010 will be abysmal with some sunshine in 2011 MAYBE.

In short, I think you are catching the falling knife.