Posted on 11/11/2008 1:20:30 PM PST by Grim
“American Express had a petition approved to become a bank holding company. Why? How about a bit of truth here Amex? Do you intend to toss bad credit-card debt on the taxpayer’s back and cover it with a TARP?”
Yes, that is EXACTLY what they intend.
Same as every CC company out there if they can do it. They will all petition to become a “bank” so to qualify for bailouts.
Hell, meet handbasket.
FELONY!
Doomsday ping.
As soon as they are approved, I am going to start thank you all for paying my American Express card for me. Some months it is quite substantial, so I’d cut back on the beer and ball games if I was you. Just fair warning.
What forms do I need to fill out to declare myself a bank?
Grim, do you read this page too?
http://globaleconomicanalysis.blogspot.com/
I do as well as the one you posted. Thanks you.
An interesting read.
Please explain to us, who are not economists, how the gov’t prints money.
Thanks
Because that would be racist. Just ask Charley Rangel.
The only thing was when soldiers sang it they substituted F'em for Bless'em.
Further into the army version of the song was
For we're saying good-bye to them all
As back to the barracks we crawl
You can be damn sure the Baracks want to see us crawl.
Ask American Express.
“Please explain to us, who are not economists, how the gov’t prints money.”
I assume you’re asking how new Fed notes are introduced into the economy. That happens when the Fed purchases assets, drawing a check upon its own reserves, either directly from commercial banks or on the open market.
LOL! I was born at Fort Benning....now in Reno, NV ;)
(FYI - My mother said it was h3ll having a baby on the base....worst experience of her life! LOL!)
When the term "print money" is used in the context of this article the author is talking about the creation of money, not the actual printing of currency. There is much more money out there in our system than the ammount of currency. Think about your life. You earn a salary, but it's paid by electronic transfer. You pay your mortgage the same way. So currency is only a small part of the total money supply.
The Fed used to release statistics on how much various measures of money supply had grown over time. There is M1, M2 and M3. M1 is the smallest number, it's "cash and cash equivilents". Your checking account is a cash eqivilent. You can spend it as you please. M2 added time deposits. This money isn't instantly available, but it's still money. M3 added other things that were even more locked up.
Essentiall all money in our system is created as debt. Money is created when a bank lends someone money. You apply for a loan, the banks says OK. Suddenly you have $40,000 in your account, or an escrow agent gets $400,000 from your bank for a house. The bank meanwhile puts that loan on it's books as an assett. (They are a bank after all, and having good customers paying back loans is how they are supposed to make money. How many loans can any one bank give? That's up to the Fed who makes the rules. The basic rule is something like (I'm using simple numbers to illustrate, not accurate ones as of this week or anything) for every dollar of Liquid Assetts you have you may make $10 in loans. The types of assetts that "count" toward the reserve have traditionally been: cash, bonds, currency and gold. What happens if one day you, Mr, Banker, are closing up and you notice that you have $10 million in loans outstanding (same as yesterday, say) but only $900,000 in cash and other qualifying reserves. Well you have to go borrow $100,000 right pronto to get back to the magic 10:1 ratio. The Fed controls the rate at which you borrow these "overnight" funds. The problem with the banking system is that they suddenly found them selves far short of the capital they needed. Bonds that they were holding that they thought had value, in fact had far less, almost zero. The response of the Fed has been to drastically redefine what can be used as reserves (lowering standards) and to buy the junk bonds (aka: toxic paper) from the banks, and give them nice solid US Savings Bonds in return. This helps because the Fed is massively overpaying for the junk bonds. A while ago the Fed said they would no longer publish M3, the broadest measure of money in the system. They had a various technical reasons for this, but many felt it was just because the figures were so embarrasing. Here is what the chart looked like up until the end of publishing it. So, even a whle ago the Fed was drastially increasing the money supply. Now it's gone vertical apparently. I'm sure someone else can do a better job and correct my errors, but at least I tried to answer you question.
When the term "print money" is used in the context of this article the author is talking about the creation of money, not the actual printing of currency. There is much more money out there in our system than the ammount of currency. Think about your life. You earn a salary, but it's paid by electronic transfer. You pay your mortgage the same way. So currency is only a small part of the total money supply.
The Fed used to release statistics on how much various measures of money supply had grown over time. There is M1, M2 and M3. M1 is the smallest number, it's "cash and cash equivilents". Your checking account is a cash eqivilent.
You can spend it as you please. M2 added time deposits. This money isn't instantly available, but it's still money. M3 added other things that were even more locked up.
Essentiall all money in our system is created as debt. Money is created when a bank lends someone money. You apply for a loan, the banks says OK. Suddenly you have $40,000 in your account, or an escrow agent gets $400,000 from your bank for a house. The bank meanwhile puts that loan on it's books as an assett.
(They are a bank after all, and having good customers paying back loans is how they are supposed to make money.
How many loans can any one bank give? That's up to the Fed who makes the rules. The basic rule is something like (I'm using simple numbers to illustrate, not accurate ones as of this week or anything) for every dollar of Liquid Assetts you have you may make $10 in loans.
The types of assetts that "count" toward the reserve have traditionally been: cash, bonds, currency and gold. What happens if one day you, Mr, Banker, are closing up and you notice that you have $10 million in loans outstanding (same as yesterday, say) but only $900,000 in cash and other qualifying reserves. Well you have to go borrow $100,000 right pronto to get back to the magic 10:1 ratio.
The Fed controls the rate at which you borrow these "overnight" funds. The problem with the banking system is that they suddenly found them selves far short of the capital they needed. Bonds that they were holding that they thought had value, in fact had far less, almost zero. This helps because the Fed is massively overpaying for the junk bonds.
A while ago the Fed said they would no longer publish M3, the broadest measure of money in the system. They had a various technical reasons for this, but many felt it was just because the figures were so embarrasing. Here is what the chart looked like up until the end of publishing it.
So, even a whle ago the Fed was drastially increasing the money supply. Now it's gone vertical apparently.
I'm sure someone else can do a better job and correct my errors, but at least I tried to answer you question.
LOL! Great story. Glad we crossed paths.
Me too! This is one of the reasons I love FR ;)
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