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To: loantech who wrote (61935)	10/25/2008 10:33:05 PM
From: E. Charters	Respond to of 78410

The trouble with the loans system was that it ended up there WAS NO fractional reserve! Banks could loan out with no limit. Yes FED money is multiplied many times. If the gov't sells 1 trillion in bonds, then 1 trillion is paid out by the FED banks and that (phony) cheque remains on deposit at the same banks, increasing the amount the banks can loan out by a theoretical 12 trillion. But in fact it is much more than that the way it operates. When the loans are paid back, the money is destroyed of course. But often it is not paid back for quite a while. To increase reserves, the Federal Reserve buys U.S. Treasury securities by writing a check drawn on itself. The seller of the treasury security deposits the check in a bank, increasing the seller’s deposit. The bank, in turn, deposits the Federal Reserve check at its district Federal Reserve bank, thus increasing its reserves. The opposite sequence occurs when the Federal Reserve sells treasury securities: the purchaser’s deposits fall, and, in turn, the bank’s reserves fall. econlib.org ********************************************************

To: loantech who wrote (61935)	10/25/2008 10:59:18 PM
From: Valuepro	Respond to of 78410

I believe that you are correct, loantech. However, there are trillions of dollars - the none destructible kind - sitting on the sidelines waiting for a signal that the bottom is in - be it real estate, stocks, or financial instruments. These dollars may be the better means of halting the slide than all the Fed and Treasury games now being played. Also, I quite believe that certain banks are in better shape than we think, and that they will emerge from this very much stronger and very much larger than they would have been without this crisis, a crisis which may have been manufactured by them in the first place. After all, this was foreseeable, was it not?

To: loantech who wrote (61935)	10/26/2008 4:25:01 PM
From: Metacomet	Read Replies (2) \| Respond to of 78410

It is in fact the reverse leverage on the fractional banking as a result of foreclosures, caused by ridiculous loan repayment options, that has brought this whole situation on. Remarkably it is an instant replay of the S& L crisis. Greed does not recognize lessons learned as they interfere with the instant accumulation of money. If you haven't gone thru the Martenson Crash Course series of videos, I highly recommend it for the common sense treatment it gives these topics. chrismartenson.com