Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Rarebird who wrote (61800)	12/7/2000 8:33:29 AM
From: long-gone	Read Replies (1) \| Respond to of 116762

<<The only restraint to this creation of credit is the fear that too many people show up to the bank and ask to be paid in cash, since the bank could only repay in cash about one consumer in ten. >> Isn't there also the problem of when people can no longer make payments for homes or cars which they have used for collateral? In every downturn collateralized assets are returned to banks at a lower than loaned value. Disposal of these assets results in yet lower returns from disposal costs.

To: Rarebird who wrote (61800)	12/7/2000 8:56:16 AM
From: long-gone	Read Replies (2) \| Respond to of 116762

Your answer was a little overly simplistic, a real "Economics-101" answer. Level of reserves are controlled by law for Federally Insured Institutions. Even for non-insured institutions, reserve levels are important as they drive credit worthiness of the lending institution. As the Internet bubble burst, real people have lost real jobs. In some cases, they were margined to buy their company's stock. In other cases, brokerage accounts were pledged for a reduction in down payment for homes - as stock values fell, ever larger amounts of money are needed be deposited so as to cover down payments. We in the U.S., just had a revision banking regulation from those driven by the Great Depression to something far more loose. These "new & improved" loose loan procedures are coming home to roost. Brokerage Firms are speaking, in less than hushed terms, about margin calls. The problems are only beginning. Isn't "constructive destruction" great!

To: Rarebird who wrote (61800)	12/7/2000 10:25:50 AM
From: Ahda	Read Replies (1) \| Respond to of 116762

When banks lend money, they do not usually lend any cash, they simply create out of nothing the money they lend, at absolutely no cost for them. They need not print any paper money, they only write figures in bank accounts, which circulate in the form of checks, and these bookkeeping figures are just as good as cash. There are two kinds of money(OK 3, I'll be a nice guy and say Gold but no one has ever paid me by this means yet): cash or legal tender (paper money and coins), and bookkeeping money (figures written on checks or bank accounts). This bookkeeping money, created out of thin air by the banks, constitutes, I think, over 95% of all the money of our country; cash constitutes less than 5%. I want to be sarcastic here not to you but to the air and yet i want to take my hat off to you because i feel most who have the knowledge to contribute can't because they are lost in world that lacks an ABC method of transferring information so a child could comprehend. To fight comprehension is part of paper service is it not?