Topic: Fractional reserve Youtube propaganda (Read 2072 times)

Quote from: wasserman99 on August 24, 2014, 10:47:52 PM

Quote from: Poorri on August 28, 2014, 02:39:15 PM

Fractional Reserve System is what prevented a lot of banks from going under during the last recession.
Just imagine, if banks had chosen just to hold 2-3% reserves, how many banks would have failed.

I think you have more or less contradicted yourself. Banks need to operate on a fractional reserve system to survive, as if they cannot leverage their own money they would not be able to make enough money to pay their expenses. However if banks are over-leveraged then they will have a much greater chance of failing when the economy turn sour as it did in 2008/9.

Not really. The Fractional Reserve Requirement is what prevented banks from over-leveraging.
We should be thankful that their are standards in place.

There are many ways around the reserve requirements. Many banks used off-balance sheet vehicles that essentially allowed them to take on more risk then they should have. Also if the assets they buy with borrowed money decline in value significantly then the fact that they are only leveraged x to 1 does not matter because the equity will be wiped out.

And you are talking about only the legal ways. Looking at the 'settlements' major banks are making these days, I am sure some of them bent rules as well.

Banks are being strongarmed into paying billions to the government, and the governments claims do not have merit. The government also has been more or less forcing banks to reach multiple settlements over what is generally the same issue, but with only very minor differences multiple times.

Damnyo

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Google Agenda 21. We are fucked, that should scare the pants out of you. Start racking up BTC my friends.

botany

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We need more BTC propaganda Cool

BTC has its foot soldiers too. Vocal adopters like us.

Poorri

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We need more BTC propaganda Cool

catlinhappy

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This is mere propaganda so it shouldn't be a thing of worry until much later.

botany

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Quote from: wasserman99 on August 28, 2014, 12:02:32 AM

Quote from: wasserman99 on August 24, 2014, 10:47:52 PM

Fractional Reserve System is what prevented a lot of banks from going under during the last recession.
Just imagine, if banks had chosen just to hold 2-3% reserves, how many banks would have failed.

I think you have more or less contradicted yourself. Banks need to operate on a fractional reserve system to survive, as if they cannot leverage their own money they would not be able to make enough money to pay their expenses. However if banks are over-leveraged then they will have a much greater chance of failing when the economy turn sour as it did in 2008/9.

Not really. The Fractional Reserve Requirement is what prevented banks from over-leveraging.
We should be thankful that their are standards in place.

There are many ways around the reserve requirements. Many banks used off-balance sheet vehicles that essentially allowed them to take on more risk then they should have. Also if the assets they buy with borrowed money decline in value significantly then the fact that they are only leveraged x to 1 does not matter because the equity will be wiped out.

And you are talking about only the legal ways. Looking at the 'settlements' major banks are making these days, I am sure some of them bent rules as well.

wasserman99

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Quote from: wasserman99 on August 24, 2014, 10:47:52 PM

Quote from: botany on August 26, 2014, 12:54:53 PM

Fractional Reserve System is what prevented a lot of banks from going under during the last recession.
Just imagine, if banks had chosen just to hold 2-3% reserves, how many banks would have failed.

I think you have more or less contradicted yourself. Banks need to operate on a fractional reserve system to survive, as if they cannot leverage their own money they would not be able to make enough money to pay their expenses. However if banks are over-leveraged then they will have a much greater chance of failing when the economy turn sour as it did in 2008/9.

Not really. The Fractional Reserve Requirement is what prevented banks from over-leveraging.
We should be thankful that their are standards in place.

There are many ways around the reserve requirements. Many banks used off-balance sheet vehicles that essentially allowed them to take on more risk then they should have. Also if the assets they buy with borrowed money decline in value significantly then the fact that they are only leveraged x to 1 does not matter because the equity will be wiped out.

Skrillex

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Fuck the fractional reserve! Biggest scam in the planet.

Rassah

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"Now you may point out that during the later parts of our current industrial period, we stopped using commodity money, and have only been using credit money, and, therefore, the trend is wrong. However, stick your fingers in your ears and go "lalala" *waves hands around* Wooooo... Nothing to see here....."

I'm pretty sure the cost of that insurance premium will eventually rise up to be about the same as the opportunity cost. Cheap credit only means there's going to be MUCH more of it, and as the people keep borrowing, the premiums will go up until they reach the same level people were able to manage when opportunity cost was part of the interest. Then the insurer would be found not to have enough money to cover the credit default swaps (which is what these are), and crash. Like things did in 2008. But I guess the economy would be able to expand a whole hell of a lot more... on borrowed money... like it also has for the last 100 years... or something.

sidhujag

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Quote from: wasserman99 on August 24, 2014, 10:47:52 PM

Quote from: EnfoncerQ2 on August 23, 2014, 12:36:34 PM

Fractional Reserve System is what prevented a lot of banks from going under during the last recession.
Just imagine, if banks had chosen just to hold 2-3% reserves, how many banks would have failed.

I think you have more or less contradicted yourself. Banks need to operate on a fractional reserve system to survive, as if they cannot leverage their own money they would not be able to make enough money to pay their expenses. However if banks are over-leveraged then they will have a much greater chance of failing when the economy turn sour as it did in 2008/9.

Not really. The Fractional Reserve Requirement is what prevented banks from over-leveraging.
We should be thankful that their are standards in place.

I am not sure what you are talking about. Part of the reason for the financial crisis is that some banks were massively over-leveraged. Some had in excess of 40 to 1 leverage.

I don't think you are talking about banks. Banks have stringent reserve requirements, partly because they hold deposits of people. Other financial institutions, which are not subject to stringent regulations, can have very high leverage.

As a bank you have 100:1 leverage.. if everyone chooses the same bank, the money supply is inflated via lending by 99.9999:1

titulng

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HubrisOne

They are just perpetuating their status quo bullshit.

its not bullshit

itsAj

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Quote from: botany on August 26, 2014, 12:54:53 PM

Quote from: wasserman99 on August 24, 2014, 10:47:52 PM

Quote from: botany on August 26, 2014, 12:54:53 PM

Fractional Reserve System is what prevented a lot of banks from going under during the last recession.
Just imagine, if banks had chosen just to hold 2-3% reserves, how many banks would have failed.

I think you have more or less contradicted yourself. Banks need to operate on a fractional reserve system to survive, as if they cannot leverage their own money they would not be able to make enough money to pay their expenses. However if banks are over-leveraged then they will have a much greater chance of failing when the economy turn sour as it did in 2008/9.

Not really. The Fractional Reserve Requirement is what prevented banks from over-leveraging.
We should be thankful that their are standards in place.

I am not sure what you are talking about. Part of the reason for the financial crisis is that some banks were massively over-leveraged. Some had in excess of 40 to 1 leverage.

I don't think you are talking about banks. Banks have stringent reserve requirements, partly because they hold deposits of people. Other financial institutions, which are not subject to stringent regulations, can have very high leverage.

These other institutions were using a fractional reserve system. Even the banks that kept their leverage to no more then 10-1 failed (although now all of them did).

madken7777

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Quote from: wasserman99 on August 24, 2014, 10:47:52 PM

Fractional Reserve System is what prevented a lot of banks from going under during the last recession.
Just imagine, if banks had chosen just to hold 2-3% reserves, how many banks would have failed.

I think you have more or less contradicted yourself. Banks need to operate on a fractional reserve system to survive, as if they cannot leverage their own money they would not be able to make enough money to pay their expenses. However if banks are over-leveraged then they will have a much greater chance of failing when the economy turn sour as it did in 2008/9.

Not really. The Fractional Reserve Requirement is what prevented banks from over-leveraging.
We should be thankful that their are standards in place.

I am not sure what you are talking about. Part of the reason for the financial crisis is that some banks were massively over-leveraged. Some had in excess of 40 to 1 leverage.

I don't think you are talking about banks. Banks have stringent reserve requirements, partly because they hold deposits of people. Other financial institutions, which are not subject to stringent regulations, can have very high leverage.

Glass Steagall removed all the constraints during Clinton years. And Bush took a blame for all the ill-effect.

botany

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Quote from: wasserman99 on August 24, 2014, 10:47:52 PM

Fractional Reserve System is what prevented a lot of banks from going under during the last recession.
Just imagine, if banks had chosen just to hold 2-3% reserves, how many banks would have failed.

I think you have more or less contradicted yourself. Banks need to operate on a fractional reserve system to survive, as if they cannot leverage their own money they would not be able to make enough money to pay their expenses. However if banks are over-leveraged then they will have a much greater chance of failing when the economy turn sour as it did in 2008/9.

Not really. The Fractional Reserve Requirement is what prevented banks from over-leveraging.
We should be thankful that their are standards in place.

I am not sure what you are talking about. Part of the reason for the financial crisis is that some banks were massively over-leveraged. Some had in excess of 40 to 1 leverage.

I don't think you are talking about banks. Banks have stringent reserve requirements, partly because they hold deposits of people. Other financial institutions, which are not subject to stringent regulations, can have very high leverage.

itsAj

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Activity: 588

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Quote from: wasserman99 on August 24, 2014, 10:47:52 PM

Quote from: wasserman99 on August 24, 2014, 10:47:52 PM

Fractional Reserve System is what prevented a lot of banks from going under during the last recession.
Just imagine, if banks had chosen just to hold 2-3% reserves, how many banks would have failed.

I think you have more or less contradicted yourself. Banks need to operate on a fractional reserve system to survive, as if they cannot leverage their own money they would not be able to make enough money to pay their expenses. However if banks are over-leveraged then they will have a much greater chance of failing when the economy turn sour as it did in 2008/9.

Not really. The Fractional Reserve Requirement is what prevented banks from over-leveraging.
We should be thankful that their are standards in place.

I am not sure what you are talking about. Part of the reason for the financial crisis is that some banks were massively over-leveraged. Some had in excess of 40 to 1 leverage.

botany

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Activity: 1582

Merit: 1064

Fractional Reserve System is what prevented a lot of banks from going under during the last recession.
Just imagine, if banks had chosen just to hold 2-3% reserves, how many banks would have failed.

I think you have more or less contradicted yourself. Banks need to operate on a fractional reserve system to survive, as if they cannot leverage their own money they would not be able to make enough money to pay their expenses. However if banks are over-leveraged then they will have a much greater chance of failing when the economy turn sour as it did in 2008/9.

Not really. The Fractional Reserve Requirement is what prevented banks from over-leveraging.
We should be thankful that there are standards in place.

wasserman99

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