About Me 0117: foreclosure list

@rebdav

You're against fractional reserve banking? Really? And you have your Master's in Finance?

Here are the broad steps of how a deposit taking bank works.

1) A depositer places money in the bank, earning an interest rate for doing so.

2) The bank lends the money to a borrower, earning a higher interest rate for doing so.

At this point, the bank has both an asset (the loan) and a liability (the deposit) on its books. They cancel each other out and the bank's true income comes from the difference in interest rates.

When you speak to 'free money creation' I presume you refer to the money-multiplier effect:(http://en.wikipedia.org/wiki/Money_multiplier).

I think it is important to note that no new wealth is being created - the money supply is simply being expanded beyond the constraints of currency, allowing for more economic activity. This is a good thing. The money-multiplier does not effect the banks balance sheets since the banks stock of assets (cash reserves and loans) and liabilities (deposits) remain in equilibrium.

On a more substantive note, the abolition of fractional reserve banking would be terrible. It would lead to the following conditions:

-> Banks would be able to lend only out of their profits, since they would have to maintain enough cash on hand to cover all their liabilities. This would dramatically reduce the financial sectors ability to lend money.

-> Ignoring the catastrophic effects on industry (especially for small businesses which can't issue bonds) this would dramatically raise the cost of borrowing money for consumers. Starting a business or buying a house becomes much more expensive, in the unlikely event that you can find someone to lend you money.

[marxist analysis] This entrenches class divides [/marxist analysis]

-> Banks would not be able to pay interest rates on deposits, since deposits are no longer income generating. This reduces any incentive towards saving.

These are just a few of the consequences of the abolition of fractional reserve banking. I'm positive that a wiser man could come up with many more.

The only theoretical downside of fractional banking is the possibility that the bank will not be able to repay you the money you've deposited. Fortunately a balanced regulatory approach, which balances reserve levels with the risk of investments minimizes that chance. Federal Deposit Insurance means that even in the event of a bank bust, depositors will still recieve their savings.

For what it is worth, I agree that what happened in this specific case is outrageous. I would hesitate to suggest criminal prosecutions, since arresting a filing clerk is probably not going to fix anything.

ThinkFast: January 4, 2010

President Obama, on his way home from Hawaii, offered an assessment of how Republicans will act in the opening months of 2011, saying he expects they will “play to their base for a certain period of time.” He still retained some optimism, however. “My expectation, my hope is that John Boehner and Mitch McConnell will realize that there will be plenty of time to campaign for 2012 in 2012.”

In a letter to House Speaker John Boehner (R-OH) yesterday, Senate Democratic leadership said “we will block” in the Senate any attempt by the House to “move forward with a repeal of the health care law.” Particularly concerned over the elimination of the “donut hole” Medicare fix, Democrats said the law “is too important to be treated as collateral damage in a partisan mission.”

House Republicans, led by Rep. Darrell Issa (R-CA), have announced a list of investigations they hope “could embarrass the Obama administration.” Over the next three months, Issa plans six investigations: into the WikiLeaks scandal; recalls at the Food and Drug Administration; the role of Fannie Mae and Freddie Mac in the foreclosure crisis; the Financial Crisis Inquiry Commission’s failure to identify the origins of the meltdown; and corruption in Afghanistan.

Obama’s advisers are debating whether he should use his executive authority to issue a signing statement that would allow him to bypass new restrictions on the transfer of Guantánamo detainees. Congress included the restrictions — which would make it harder to close the detention facility — in a defense bill it passed last month and the President is expected to act on the measure this week.

Republican military expert John Wheeler, 66, was found dead in a Delaware landfill Monday. A former aide in the Reagan and both Bush administrations and a veteran of the Vietnam War, Wheeler’s “death has been ruled a homicide.”

“A band of Senate Democrats signaled on Monday that it would press forward when Congress convenes this week with a proposal to curtail filibusters and other methods of slowing the chamber’s work.” Democrats will likely use some “procedural sleight-of-hand” to buy time for negotiations with Republicans over rule changes, delaying implementation for a few weeks.

Sen. Robert Menendez (D-NJ) plans to reach out to Sen. Lindsey Graham (R-SC) to craft a bipartisan immigration reform bill in the new Congress, but it is unclear if Graham will respond favorably to Menendez’s outreach. Otherwise, Menendez said he will introduce his own bill. “If there’s nothing to have hearings about, nothing to debate over, you will never move forward,” he said last month.

And finally: While debating the authenticity of Sen. Lindsey Graham’s (R-SC) new tan, MSNBC host Joe Scarborough wondered if the senator was attempting to mimic pop star David Bowie’s space-traveling alter ego. “Did you follow David Bowie through the Ziggy Stardust years? He had more makeup than Bowie did,” Scarborough said of Graham. “I think the senator was just out in the sun over the holidays,” replied co-host Willie Geist.

ThinkProgress is hiring! Details here.

surface encounters noblesville surface encounters macomb mi

Thursday, January 6, 2011

foreclosure list

ThinkFast: January 4, 2010

No comments:

Post a Comment