Sign In
Register
Help
http://www.sacbee.co...p-7198349c.html
Americans going deeper in debt
Nearly half of consumers make minimum -- or no -- payments on credit card balances, a study finds.
By Loretta Kalb -- Bee Staff Writer - (Published March 9, 2003)
Almost half of U.S. consumers are making only minimum payments -- or no payments at all -- on their credit cards, a new credit survey shows.
And a similarly large volume -- some 44 percent -- are continuing to take on debt because they don't have enough cash to pay ongoing expenses.
The dire outlook is part of the latest Cambridge Consumer Credit Index, a monthly gauge of consumer attitudes toward credit and a reflection of the nation's mounting individual debt.
On Friday, the Federal Reserve released its monthly survey of consumer credit for January, showing consumer debt rose sharply at an annualized rate of 9.1 percent, the fastest pace since November of 2001.
http://www.sacbee.co...p-7198349c.html
Americans Going Deeper In Debt
Nearly half of consumers make minimum -- or no -- payments
Rate Topic:
#1
FauxCaster 
- Doctor of Stock Proctology
-
- Group: Members
- Posts: 2,747
- Joined: 03-December 02
Posted 09 March 2003 - 10:19 PM
"WE ARE BEING KEPT ALIVE by the Entropic movement of Dark Matter(Sino-Nippo-dollar purchasing of $UST)---as soon as there is a ringing sound,a sign of an clogged artriosclerotic wormhole on the emergency fiat-meter it will end--dynamic equilibrium,will have been achieved;better known as death" -- beardrech (Mar 15 2006, 01:17 AM)
"There's a good chance he was drunk or drugged. Only an idiot would jump into the bear cage." -- Belgrade Zoo Director Vuk Bojovic (August 20, 2007).
It's like you're dreamin' about Gorgonzola cheese when it's clearly Brie time, baby. -- Hitchhiker (S.A.M. 1998)
Mar 28 2003: July 2003 is the time I have identified as the low of the bear move...then the first leg of the bear is over ...many will be caught by surprise to see the market near it's all time high again within 3-4 years [2007] ..."depression" similar to 1932 doesn't come until 2010. -- blackbelt (Mar 28 2003, 10:05 PM)
"There's a good chance he was drunk or drugged. Only an idiot would jump into the bear cage." -- Belgrade Zoo Director Vuk Bojovic (August 20, 2007).
It's like you're dreamin' about Gorgonzola cheese when it's clearly Brie time, baby. -- Hitchhiker (S.A.M. 1998)
Mar 28 2003: July 2003 is the time I have identified as the low of the bear move...then the first leg of the bear is over ...many will be caught by surprise to see the market near it's all time high again within 3-4 years [2007] ..."depression" similar to 1932 doesn't come until 2010. -- blackbelt (Mar 28 2003, 10:05 PM)
MultiQuote
#2
tpark
- Bachelor of Stock Proctology
-
- Group: Members
- Posts: 584
- Joined: 09-March 03
Posted 09 March 2003 - 11:08 PM
Oww. That can't be a good sign. How long do you think this rather, uhm, unsustainable position will last? I would think that
the tapping out of credit would stop the spending spree. How long do you think it will be before things get much worse in a nonlinear and dramatic fashion?
the tapping out of credit would stop the spending spree. How long do you think it will be before things get much worse in a nonlinear and dramatic fashion?
#3
mjkst27
- Professor of Stock Proctology
-
- Group: Banned
- Posts: 5,012
- Joined: 29-January 02
Posted 09 March 2003 - 11:19 PM
Whenever this comes up, for some reason all I can think about is the movie Reality Bites, and the grunge music scene of the early 1990's. Apparently the 1990-1991 recession was a pretty despondent time for many, and especially those right out of college (27 wouldn't really know, as he was still an oft-inebriated young college student at the time). Popular culture reflected the angst.
So where's all the despondency now??? This recession has been longer and deeper than the Pearl Jam/Nirvana slowdown of the early 1990's, yet I don't see Reality Bites II coming out, and the pop music scene has been continuously grungy ever since the days when Alice in Chains and Soundgarden were roaming the airwaves.
The answer? Gotta be found in millions of never-to-be-paid-off credit card accounts, near as I can figure. Long as one can eat and buy necessities, regardless of who actually pays for it, well I guess life aint so bad, no need to be sad. Just makes me wonder what's going to happen when the credit crunch happens.
So where's all the despondency now??? This recession has been longer and deeper than the Pearl Jam/Nirvana slowdown of the early 1990's, yet I don't see Reality Bites II coming out, and the pop music scene has been continuously grungy ever since the days when Alice in Chains and Soundgarden were roaming the airwaves.
The answer? Gotta be found in millions of never-to-be-paid-off credit card accounts, near as I can figure. Long as one can eat and buy necessities, regardless of who actually pays for it, well I guess life aint so bad, no need to be sad. Just makes me wonder what's going to happen when the credit crunch happens.
#4
Bearwithme
- Stock Proctology Intern
-
- Group: Members
- Posts: 104
- Joined: 05-December 02
Posted 09 March 2003 - 11:24 PM
tpark asked: "How long do you think this rather, uhm, unsustainable position will last?"
My answer is quite simple.. once credit card lenders realize that there is a high probability that much of their debt will not get paid back, they will pull back on the reigns of lending.
The same will happen (perhaps not at the same time) with real estate... the cause of the pending RE collapse will be slightly different.. since lenders sell their debt with great urgency.. the buyers of this debt.. (pension funds, insurance companies, FNM etc.. ) will start calling for stricter lending standards.. when that happens we lose 50-60% of our buyers..
I am now leaning very heavily to an OVER CORRECTION in real estate.
A massive flood of foreclosures will flood the market with discount priced homes... a couple of years into this and they will simply run out of buyers...
I would describe an over-correction as this: My suburban town 15 miles of Boston.. Now: Single family starter home $360,000.00 24-36 months from now purchase at foreclosure auction, same home... $75k to $125k.
Think of the real estate bubble as a pendulum.. and it's starting to swing back the other direction..
My answer is quite simple.. once credit card lenders realize that there is a high probability that much of their debt will not get paid back, they will pull back on the reigns of lending.
The same will happen (perhaps not at the same time) with real estate... the cause of the pending RE collapse will be slightly different.. since lenders sell their debt with great urgency.. the buyers of this debt.. (pension funds, insurance companies, FNM etc.. ) will start calling for stricter lending standards.. when that happens we lose 50-60% of our buyers..
I am now leaning very heavily to an OVER CORRECTION in real estate.
A massive flood of foreclosures will flood the market with discount priced homes... a couple of years into this and they will simply run out of buyers...
I would describe an over-correction as this: My suburban town 15 miles of Boston.. Now: Single family starter home $360,000.00 24-36 months from now purchase at foreclosure auction, same home... $75k to $125k.
Think of the real estate bubble as a pendulum.. and it's starting to swing back the other direction..
#5
DogBoy
- Master of Stock Proctology
-
- Group: Banned
- Posts: 1,584
- Joined: 15-March 02
Posted 10 March 2003 - 12:16 AM
"they will pull back on the reigns of lending"
Not. They would have already if they were ever going to.
The Bonkers and AG will have to be staring into the abiss of forced higher interest rates to change their tune. And I do mean F-O-R-C-E-D.
My guess is that it's all links into the dollar chart. When that sucker goes into freefall the bonds market will crash and the credit scam will be over. People will flee paper assets in droves.
And it definitely won't be over voluntarily for the bonkers.
They're like drunks staying at an all night party and then someone starts shooting off fireworks and the neighbor calls the cops.
The cops come and then THE PARTY IS OVER.
I have a sneaking suspicion (educated guess ?) that "Shock and Awe" could be the "too loud fireworks". Someone will call the cops and the drunks will be dragged kicking and screaming from the party.
Anyway it doesn't matter whether it's Shock and Awe or something else cuz it's all in the charts. Whatever the cause you can be sure of one thing, like all parties it WILL BE OVER at some point in time.
Of course like all brear markets once they get going the Great Bond Bear will be accompabnied huge bear market rallies and continual hope of a recovery that wil last for about 3 years before everyone just gives up.
By then interest rates will be at 15% or more and it'll be a moot point because noone will loan out their money to anyone else not matter what they have or who they are.
Lending will come to a complete halt at some point and interest rates won't matter to anyone but a few anile math types.
Not. They would have already if they were ever going to.
The Bonkers and AG will have to be staring into the abiss of forced higher interest rates to change their tune. And I do mean F-O-R-C-E-D.
My guess is that it's all links into the dollar chart. When that sucker goes into freefall the bonds market will crash and the credit scam will be over. People will flee paper assets in droves.
And it definitely won't be over voluntarily for the bonkers.
They're like drunks staying at an all night party and then someone starts shooting off fireworks and the neighbor calls the cops.
The cops come and then THE PARTY IS OVER.
I have a sneaking suspicion (educated guess ?) that "Shock and Awe" could be the "too loud fireworks". Someone will call the cops and the drunks will be dragged kicking and screaming from the party.
Anyway it doesn't matter whether it's Shock and Awe or something else cuz it's all in the charts. Whatever the cause you can be sure of one thing, like all parties it WILL BE OVER at some point in time.
Of course like all brear markets once they get going the Great Bond Bear will be accompabnied huge bear market rallies and continual hope of a recovery that wil last for about 3 years before everyone just gives up.
By then interest rates will be at 15% or more and it'll be a moot point because noone will loan out their money to anyone else not matter what they have or who they are.
Lending will come to a complete halt at some point and interest rates won't matter to anyone but a few anile math types.
#6
Hypertiger
- Assistant Professor of Stock Proctology
-
- Group: Banned
- Posts: 3,270
- Joined: 16-July 02
Posted 10 March 2003 - 03:00 AM
It is a massive spike up... People are paying their gas bills...
When will it end? when all the cards are maxed out and everyone has borrowed all they can borrow... 13 - 18 months maximum but it's looking far sooner...
You can freeze or ride a bike or inflate debt... the credit history has examples of a small contraction followed by a far greater contraction... for the moment debt deflation is over...
When will it end? when all the cards are maxed out and everyone has borrowed all they can borrow... 13 - 18 months maximum but it's looking far sooner...
You can freeze or ride a bike or inflate debt... the credit history has examples of a small contraction followed by a far greater contraction... for the moment debt deflation is over...
Attached image(s)
"We are completely dependant on the commercial banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the banks create ample synthetic money (at the request of the consumer) we are prosperous; if not, we starve. We are absolutely without a permanent money system.... It is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood and the defects remedied very soon." --Robert H. Hemphill, Atlanta Federal Reserve Bank,1938...
#7
threadbare
- Master of Stock Proctology
-
- Group: Members
- Posts: 1,232
- Joined: 18-February 03
Posted 11 March 2003 - 01:37 AM
Dogboy, You're hilarious. Now let me try to get this straight. Are you saying that the banks won't need stricter lending standards as enforced raising of interest rates when the dollar goes into free fall will accomplish the same thing? 
#8
BAREister
- Clinical Professor of Stock Proctology
-
- Group: Members
- Posts: 8,469
- Joined: 17-February 01
Posted 11 March 2003 - 01:47 AM
Gentlemen, it's "reins" of lending, SNOT "reigns"
and "abyss" SNOT "abiss".
Lending reigns right now, alright.
When it reigns it Poors. LOLOL
and "abyss" SNOT "abiss".
Lending reigns right now, alright.
When it reigns it Poors. LOLOL
"The sphinx set riddles for people which they could not solve and the sphinx devoured them." Russian poet Ilia Ehrenberg reflecting years later upon the debacle of the Bolshevik Revolution and civil war
"In any case, experience shows people are unlikely to change their ways without a cataclysm of existential proportions" Meinhard Meigel, German economist and demography expert on his prophecy of a Wagnerian abyss of social and economic chaos
"We believe that here is no easy way out of this mess, and that the chance of a benign outcome, while hopefully possible, is quite low." Comstock Partners 3-17-2005
"Not without a shudder may the human hand reach into the mysterious urn of destiny." Junk email promoting the sale of Valium, Viagra, Soma and Cialis. Of course, we AMERICANS need not WORRY about such CLAPTRAP!!!
"The trouble about myths, or lies, is that those who foster them are stuck with them." Edward Crankshaw
"I don't buy the idea that a crash will come without warning. There are always warnings. All crashes have certain common technical preconditions." Doc (snorjt)
"YOU look IMPORTANT. Are you important, or just....WEIRD?"
"Bob I am" at a political gathering, to HRFF, 9-29-04
"Are YOU C.I.A.???"
"No, I'm not "CIA"."
"Well, you sure LOOK LIKE you're C.I.A.!!!"
Lead singer of the rock band KISS to HRFF at a luggage carousel at SeaTac airport circa 1996
"Unlike you, I use words people can understand." Doc
"America at the moment, with its faith-based currency, faith-based economy and faith-based government, might be a heaven for those who love faith, but it's a hell for those of us that respect evidence." The Daily (W?)Reckoning, circa 9-17-04
"What should be clear at this point is that even huge fiscal stimulus and unprecedented financial excess are incapable of fostering a sound and self-sustaining economic expansion. The paramount issue, today and going forward, is the deeply maladjusted U.S. economy and its increasing unresponsiveness to even enormous yet misdirected financial stimulus. Both the Financial Sphere and Economic Sphere are severely maladjusted." Doug Noland's Credit Bubble Bulletin, Aug 24 '04
"U.S. dollar purchasing power relies almost entirely on the difference between interest rates in Japan and the higher rates in the United States." Warren Pollock, Prudent Bear essay circa 9-04
"What about your replacements? the Children. What do we tell them when the whole thing caves in?" HyperTiger
"In any case, experience shows people are unlikely to change their ways without a cataclysm of existential proportions" Meinhard Meigel, German economist and demography expert on his prophecy of a Wagnerian abyss of social and economic chaos
"We believe that here is no easy way out of this mess, and that the chance of a benign outcome, while hopefully possible, is quite low." Comstock Partners 3-17-2005
"Not without a shudder may the human hand reach into the mysterious urn of destiny." Junk email promoting the sale of Valium, Viagra, Soma and Cialis. Of course, we AMERICANS need not WORRY about such CLAPTRAP!!!
"The trouble about myths, or lies, is that those who foster them are stuck with them." Edward Crankshaw
"I don't buy the idea that a crash will come without warning. There are always warnings. All crashes have certain common technical preconditions." Doc (snorjt)
"YOU look IMPORTANT. Are you important, or just....WEIRD?"
"Bob I am" at a political gathering, to HRFF, 9-29-04
"Are YOU C.I.A.???"
"No, I'm not "CIA"."
"Well, you sure LOOK LIKE you're C.I.A.!!!"
Lead singer of the rock band KISS to HRFF at a luggage carousel at SeaTac airport circa 1996
"Unlike you, I use words people can understand." Doc
"America at the moment, with its faith-based currency, faith-based economy and faith-based government, might be a heaven for those who love faith, but it's a hell for those of us that respect evidence." The Daily (W?)Reckoning, circa 9-17-04
"What should be clear at this point is that even huge fiscal stimulus and unprecedented financial excess are incapable of fostering a sound and self-sustaining economic expansion. The paramount issue, today and going forward, is the deeply maladjusted U.S. economy and its increasing unresponsiveness to even enormous yet misdirected financial stimulus. Both the Financial Sphere and Economic Sphere are severely maladjusted." Doug Noland's Credit Bubble Bulletin, Aug 24 '04
"U.S. dollar purchasing power relies almost entirely on the difference between interest rates in Japan and the higher rates in the United States." Warren Pollock, Prudent Bear essay circa 9-04
"What about your replacements? the Children. What do we tell them when the whole thing caves in?" HyperTiger
#9
Sphinxter
- Doctor of Stock Proctology
-
- Group: Members
- Posts: 2,083
- Joined: 28-January 03
Posted 11 March 2003 - 09:38 AM
Actually, I quite like the double meaning of "Reign of lending".
Sort of along the line of the "reign of the Hapsburgs".
Our overextended collapsing credit marklets have long pointy heads, will bleed profusely once pricked, and seem to have a poor capacity to learn from past mistaktes. Hey, Alan! Too much in-feeding will do that to you!
Sort of along the line of the "reign of the Hapsburgs".
Our overextended collapsing credit marklets have long pointy heads, will bleed profusely once pricked, and seem to have a poor capacity to learn from past mistaktes. Hey, Alan! Too much in-feeding will do that to you!
#10
tpark
- Bachelor of Stock Proctology
-
- Group: Members
- Posts: 584
- Joined: 09-March 03
Posted 11 March 2003 - 02:27 PM
I see two scenarios for Joe Nobucks at or near the end of his
credit run. If Joe has a job, and suddenly gets a bit of a clue,
and his situation is not totally desparate, he could hugely
cut back on spending, sell stuff he doesn't want or need, and try
and pay down his backbreaking debt. The other scenario is that
Joe goes bankrupt, leaving Joe on the street, the bank with a
huge bad debt, and a house that really isn't worth the amount of
outstanding debt on it. Credit card companies have to write off
more debt too. In both cases, Joe's contribution to the consumer
spendfest will be significantly reduced. If Joe goes to the dark
side, he may have been robbing Peter to pay Paul for some time, so
the credit issuers would not be able to really say anything until
the payments stopped. If this is right, and 44% of people are
totally over their heads, I am going to suggest that the collapse
will happen within this year. What sort of things could the fed
do to either prevent this from happening, or cushion the fall? I
suppose they could keep pushing the interest rate down, but probably
all that would do is postpone the inevitable for a bit.
However.
I looked at the report itself though, and it seems as though that was
less than a third of people in the US surveyed that maintained a balance.
from http://www.cambridge...survey.htm#wild we have
Wildcard Question:
This month's wildcard question asks: Thinking about the credit card purchases you made last month, when you received the bills this month, did you pay off the balance in full or are you extending payments past this month?:
Responses
- Pay off balance in full 43%
- Extend payments 31%
- Did not use credit cards 26%
- Don't know/refused 1%
So 69% of people surveyed there didn't utilize interest bearing credit.
So really the problem is only among the 31% that extend their payments.
Of course if half of those 31% are on the rocks, that won't be good, and its not
like thats the only problem with overextended credit there is.
credit run. If Joe has a job, and suddenly gets a bit of a clue,
and his situation is not totally desparate, he could hugely
cut back on spending, sell stuff he doesn't want or need, and try
and pay down his backbreaking debt. The other scenario is that
Joe goes bankrupt, leaving Joe on the street, the bank with a
huge bad debt, and a house that really isn't worth the amount of
outstanding debt on it. Credit card companies have to write off
more debt too. In both cases, Joe's contribution to the consumer
spendfest will be significantly reduced. If Joe goes to the dark
side, he may have been robbing Peter to pay Paul for some time, so
the credit issuers would not be able to really say anything until
the payments stopped. If this is right, and 44% of people are
totally over their heads, I am going to suggest that the collapse
will happen within this year. What sort of things could the fed
do to either prevent this from happening, or cushion the fall? I
suppose they could keep pushing the interest rate down, but probably
all that would do is postpone the inevitable for a bit.
However.
I looked at the report itself though, and it seems as though that was
less than a third of people in the US surveyed that maintained a balance.
from http://www.cambridge...survey.htm#wild we have
Wildcard Question:
This month's wildcard question asks: Thinking about the credit card purchases you made last month, when you received the bills this month, did you pay off the balance in full or are you extending payments past this month?:
Responses
- Pay off balance in full 43%
- Extend payments 31%
- Did not use credit cards 26%
- Don't know/refused 1%
So 69% of people surveyed there didn't utilize interest bearing credit.
So really the problem is only among the 31% that extend their payments.
Of course if half of those 31% are on the rocks, that won't be good, and its not
like thats the only problem with overextended credit there is.
#11
EasyAl
- Doctor of Stock Proctology
-
- Group: Members
- Posts: 2,228
- Joined: 20-August 01
Posted 11 March 2003 - 03:22 PM
Quote
Household continue to tap into home equity to finance their expenditures. The fourth quarter flows of funds data indicate that households extracted an additional $66.3 billion dollars of their home equity. The year 2002 closed with the proxy for home equity extraction running to annual average of $265.7 billion compared with a $97.8 billion mark in the prior year.
More here
#12
DogBoy
- Master of Stock Proctology
-
- Group: Banned
- Posts: 1,584
- Joined: 15-March 02
Posted 11 March 2003 - 11:14 PM
"Dogboy, You're hilarious. Now let me try to get this straight. Are you saying that the banks won't need stricter lending standards as enforced raising of interest rates when the dollar goes into free fall will accomplish the same thing?"
All I was saying is that the bonkers won't pull back on lending until they are FORCED to.
And they will be forced to pull back -- probably by some external event.
I don't think most banks care who they lend to or how much they lend. To them money is like air --- it's practically free.
And if this isn't a sing of the end-stages of currency collapse then what is ?
When Bonks and major players start regarding money as a infinitely renewable resource then it's only a matter of time until everybody does the same and the currencies bite the dust.
All I was saying is that the bonkers won't pull back on lending until they are FORCED to.
And they will be forced to pull back -- probably by some external event.
I don't think most banks care who they lend to or how much they lend. To them money is like air --- it's practically free.
And if this isn't a sing of the end-stages of currency collapse then what is ?
When Bonks and major players start regarding money as a infinitely renewable resource then it's only a matter of time until everybody does the same and the currencies bite the dust.
#13
Hypertiger
- Assistant Professor of Stock Proctology
-
- Group: Banned
- Posts: 3,270
- Joined: 16-July 02
Posted 12 March 2003 - 04:05 AM
If you assume that banks need a 10% fraction of debt to back up their debt out of thin air ponzi scheme and the that is a $10,000 CD for 1 year at 2.0%
then they can create out of thin air or lend out $100,000 at 4.25% prime...
After 1 year the bank owes you $200 pssst a joke...
They profit $4,250 divide that by 12 and you get $354.16 per month at 42.5% or 3541.60 at 4.25%/month compounding or $42,500 per year at 4.25%
I wonder where inflation comes from...
Banks fractionally reserve every penny of profit...
The "forced" is when victims of the scheme can't pay it back, won't pay it back or won't, can't get into anymore debt... debt deflation...
That is the situation we are heading towards... the more you reduce the rates the less debt that is created... and since in a debt backed economy all the paychecks are just borrowed money they disapear or shrink... once maxout is reached the paychecks are vaporised or shrink... prices have to deflate at that point and real estate is in big big big trouble... because it is caught in a paradox where in order for conusmer credit to expand real estate has to rise in price but in order for real estate to rise in price consumer credit has to expand... It is all based on people borrowing more debt than the previous debt to pay compound interest... Compound interest payment is the driving force of inflation... it is the price to live...
The unemployment will keep growing untill the banks go bankrupt and the economy collapses... once real estate cracks it will be very quick... Then you will see a "real waterfall"... unemployment will rocket... it will move so fast that it will be unbelievable...
When will real estate/consumer credit collapse Hyper? In the next 13 -18 months we will all have front row seats to witness a not seen in living memory economic implosion that is beyond current human comprehension... a full blown economic emergency...
then they can create out of thin air or lend out $100,000 at 4.25% prime...
After 1 year the bank owes you $200 pssst a joke...
They profit $4,250 divide that by 12 and you get $354.16 per month at 42.5% or 3541.60 at 4.25%/month compounding or $42,500 per year at 4.25%
I wonder where inflation comes from...
Banks fractionally reserve every penny of profit...
The "forced" is when victims of the scheme can't pay it back, won't pay it back or won't, can't get into anymore debt... debt deflation...
That is the situation we are heading towards... the more you reduce the rates the less debt that is created... and since in a debt backed economy all the paychecks are just borrowed money they disapear or shrink... once maxout is reached the paychecks are vaporised or shrink... prices have to deflate at that point and real estate is in big big big trouble... because it is caught in a paradox where in order for conusmer credit to expand real estate has to rise in price but in order for real estate to rise in price consumer credit has to expand... It is all based on people borrowing more debt than the previous debt to pay compound interest... Compound interest payment is the driving force of inflation... it is the price to live...
The unemployment will keep growing untill the banks go bankrupt and the economy collapses... once real estate cracks it will be very quick... Then you will see a "real waterfall"... unemployment will rocket... it will move so fast that it will be unbelievable...
When will real estate/consumer credit collapse Hyper? In the next 13 -18 months we will all have front row seats to witness a not seen in living memory economic implosion that is beyond current human comprehension... a full blown economic emergency...
"We are completely dependant on the commercial banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the banks create ample synthetic money (at the request of the consumer) we are prosperous; if not, we starve. We are absolutely without a permanent money system.... It is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood and the defects remedied very soon." --Robert H. Hemphill, Atlanta Federal Reserve Bank,1938...
#14
tpark
- Bachelor of Stock Proctology
-
- Group: Members
- Posts: 584
- Joined: 09-March 03
Posted 12 March 2003 - 11:44 AM
Having fractional reserves makes a bank vulnerable to runs as well. I suspect the payout that the government would have to make to cover "deposit insurance" would be too great a load, and they would be unable to cover these liabilities if too many banks croaked. Deposit insurance by the government is a truly stupid idea, because
people (or at least some people) won't check out the bank as closely if they think
the gummamint will cover them if the bank fails. What kind of banking does that
encourage? In any event, even a bank that had no bad loans, and even held a
20% reserve would be in trouble if they had a run. If enough people think that the
bank will be unable to give them their money, or they think that money is being inflated away from them, they will want it out of the bank.
I'm sure I don't need to mention this, but it would probably be best to have some kind of non-bank (or at least non-local bank) storage if you hold bullion, as safe deposit won't be accessable if the bank croaks, or maybe the same thing that
happened April 5, 1933 will happen again.
That chart EasyAl posted is scary, and doesn't exactly bode well for continued financial stability
people (or at least some people) won't check out the bank as closely if they think
the gummamint will cover them if the bank fails. What kind of banking does that
encourage? In any event, even a bank that had no bad loans, and even held a
20% reserve would be in trouble if they had a run. If enough people think that the
bank will be unable to give them their money, or they think that money is being inflated away from them, they will want it out of the bank.
I'm sure I don't need to mention this, but it would probably be best to have some kind of non-bank (or at least non-local bank) storage if you hold bullion, as safe deposit won't be accessable if the bank croaks, or maybe the same thing that
happened April 5, 1933 will happen again.
That chart EasyAl posted is scary, and doesn't exactly bode well for continued financial stability
#15
DogBoy
- Master of Stock Proctology
-
- Group: Banned
- Posts: 1,584
- Joined: 15-March 02
Posted 13 March 2003 - 12:38 AM
Don't wait too long for that bank run or closing.
It'll never happen. Ag will print and print and print until the banks are ok.
Uncle Buck will be nearly worthless but the banks will be open and will be more than happy to hand you some little pieces of paper in exchange for a deduction from your balance.
The game here is print and inflate as much as you can get away with.
And when the real shit is about to hit the fan just open the foodgates and kill Uncle Buck dead.
It'll never happen. Ag will print and print and print until the banks are ok.
Uncle Buck will be nearly worthless but the banks will be open and will be more than happy to hand you some little pieces of paper in exchange for a deduction from your balance.
The game here is print and inflate as much as you can get away with.
And when the real shit is about to hit the fan just open the foodgates and kill Uncle Buck dead.
