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Why is Boom & Bust Predictable ..the Cure

Posted by Ororeef @ 11:12 on July 31, 2014  

Its because the of Leverage employed ,the Credit system,the Fractional Reserve currency…and questionable insurance!

These Banksters need to have some skin in the Game ,everything can’t be “other peoples money” .

For Years Swiss Bankers never had deposit “insurence” why ? the Banker was held personally responsible !

Bank failures were nil..Under the pretext of protecting depositers ,they made the depositer pay for the Insurence in the form of lower return on his money held. How about getting some “return insurence” ? With the “insurence, Bank managers felt they could take any risk because the depositer wouldent ask for his money back and was willing to lend longer…This removed the Bankers old delemma of Lending “LONG “and borrowing “Short” ..For those of you who dont know what that means  any banker who lends money for “Long term “is at RISK of being squeezed if his depositers only lend to him for “short” duration.He is very much at risk if a scare developes that makes run to the bank for their money ..known as a “RUN” on the Bank…So they thought they solved that problem with “insurence” and people didn’t scare so easlily.

Along comes the OLDE Gold storage racket .Years ago when gold was used as money currency people left on deposit at a local gold dealer who issued a receipt that was as good as Gold because you could always go back with your receipt and redeem your gold !.

Then the storage guy got a “bright idea” one day ..He noticed the people were feeling so secure that only about 5 % at any given time would come in to redeem their Gold.  SO he figured he could counterfeit additional receipts on the same Gold and use them himself to buy and sell for his personal use !..Dishonest ,but it worked  as long as the “confidence “kept them from demamding their Gold.This was the original “Paper money” the “Gold receipts”. Carried to extreme today Bankers have only 10 % cash on hand to make redemptions ..the rest the Banker can do what ever he wants to do..make loans and get additional income ,give himself a raise ,or burn it if he wants to…just so he don’t refuse anybody that wants his money…Insurance made this all possible .Some banks broke rules and lent 95 % out,some 100  %..leaving the only reserve in the bank was the Sticker on the Bank window that said “FDIC” insurance.Of coarse some of those banks failed …In the end too much leverage was used the Banks are not making as many loans as they would like so why not make them more solvent by raising the reserve requirement to 20 % and remove the incentive for them to gamble on Wall st with your money !

Better yet why not restrict them to making loans period …forcing them to lend to business improve main st ,and manufacturing liquidity and earn their keep by making loans and stay out of the Wall st Casino.Thats what Glass Steagal bill did after the Crash of 29..

But NO !  along came Gramm,Bliley bill that did away with Glass Steagal and put us back in the Casino with depositers money ..

How did this happin that TWO “ARCH Conservatives”sponser” such a thing and bring about a whole new Financial crisis….

Was it corruption or just plain Stupidity ! Two congressman one from Texas ,one from Virginia two of the MOST conservative states were duped or drank the kool-aid of Liberal mentality of corruption and sponcered Gramm Bliley bill…

They even corrupted the Insurance Giant AIG who insured liar Loans.!   Corruption is the likely source .! and Personal responsibility for Loans …the cure ….NO insurance for Corrupt loans made by Banksters, but personal; liability instead and the cure includes Jail time ! .Raise reserve requirements, and Separate Commercial and Investment Banking.Buy us another 50 years of peace and prosperity without Crashes…

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Post by the Golden Rule. Oasis not responsible for content/accuracy of posts. DYODD.