Warning: All Banks are Bankrupt and Insolvent. The whole system will Collapse if just 3% of Depositors remove their Money All Banks are Insolvent and Bankrupt. The whole banking system is one big octopus with its slimy tentacles in everything. The existence of the central bank and fractional reserve banking permits commercial banks to generate credit, which is not backed up by real funding. It is credit created out of thin air.
All banks are today insolvent, hence the Repo Markets now being run by Central Bank money. A bank has current creditors: on the whole, these are people like you and me who have our salaries or savings paid or deposited into our accounts on our behalf. We do not actually own our money that is stored in the bank. The bank does. This may come as a surprise to you. However, this is a very well-established point of law.
Since 1811, this has been the case. So you and I are the current creditors to the bank, i.e., we are owed money by the bank. In fact, your bank statement is just an IOU from the bank; acknowledging that it owes you however much it says on the statement on demand. Depositors are unsecured creditors on the bank’s balance sheet. Riddle me this: when you take out a credit card, the bank is the unsecured creditor, and the debt is unsecured.
They charge us quite a bit of interest, from 19 percent to 22 percent, Yet when we loan the bank our cash via deposits, what is the interest that we unsecured creditors receive? 1 percent at best! The assets of the bank are those people to whom the bank has lent its Your money to, i.e., all the borrowers of loans. As has been so clearly displayed during the 2008 crisis, they have lent their money out (formerly your money) over 33 times on average to borrowers. So when more than 1 of 33 of us clients of a bank wish to withdraw our money that is on-demand, the bank cannot pay it back as it does not have it. As for banks, deposits are loans from the depositor to the bank.
They represent the liabilities of the bank. It is true that the assets of the bank (such as loans, securities, and reserves) are assets of the bank. Banks are solvent only if the assets are more significant than the liabilities. The idea that a bank, or any other firm, is insolvent only because something might happen is absurd. There are many things that might happen to a bank, making it unable to pay off its liabilities. For a bank, if none of its creditors could pay off its existing loans, it would fail. It could happen. It is happening all the time.
The scenario where many depositors want payment now and the bank cannot borrow new money now, and it cannot sell-off. For a bank, if none of its creditors could pay off its existing loans, it would fail. On average, if more than one person in 33 in the banking system walks into a bank to get “their” money, the whole system collapses. If a bank defaults, then depositors of all sorts don’t get paid in full. The people who get to the bank first at least before it closes its doors, get paid in full. Then, after it is closed, no one gets anything until the bank is liquidated.
The assets are sold off. Whatever reserves rain in the bank, plus the liquidation value of all the other assets–loans and the like, determine what all the depositors get. The whole system will collapse if just 3% of depositors remove their money. Ignores the possibility that the banks might convince the other 97% of the population to put more money into banks.
And, of course, it assumes the quantity of the monetary base is constant. Why should it be? If the quantity of base money is constant, and there is an increase in the demand for it, then its price must rise. But it serves as a unit of account; this requires other prices, including wages, to fall. And so, increases in the demand for the monetary base are very disruptive to the economy.
Many businesses will fail if the disruption is significant enough. Including the banks. The bankers are granted absolute legal protection to perpetuate their fraud and crime, at the direct expense of the law-abiding citizens of that society. When the economic crisis of 2008 caused the near-collapse of the banks — they were on their knees, begging for help. Now that the workers and the government need them to return the favor — their answer is to kick us all in the teeth.
The Big Bank crime syndicate had their servants in our puppet-governments tear-up the legal distinction between banking (institutionalized fraud) and investing; regulated gambling. Overnight, our banks were transformed into bank-casinos. Not only were these banks lending-out funds which grossly exceeded their current assets, but they were also gambling with these funds and at even higher ratios of leveraged fraud. The result of combining extreme fraud with extreme financial recklessness was the Crash of 2008. The Big Banks literally blew up the Western financial system with their desperate, reckless gambling. The Gambling which began with the deposits which they claimed to be holding as trustees. Instead of our governments punishing these Big Banks for their extreme, reckless fraud, they rewarded them. Using our money, these Traitor Governments indemnified the Big Banks for every cent of their reckless, fraudulent gambling. Then they did something much, much worse. Our Traitor Governments bowed to the will of their banker Overlords and dubbed these institutions of fraud/crime as being too big to fail. Translation? Instead of preventing these institutions of financial crime from continuing their reckless gambling, they promised to pay off all of the banksters’ gambling debts, forever. There is nothing wrong with private bank money creation from bank loans; you just need to know how the system works.
The central banks started to reveal all in 2014. Thirty-five years too late for the neoliberal globalization project. Financial liberalization was an idiotic idea. Our knowledge of privately created money has been going backward since 1856. Credit creation theory to fractional reserve theory to financial intermediation theory, A lost century in economics: Three theories of banking and the conclusive evidence, Policymakers, like Ben Bernanke, thought banks were financial intermediaries and this was a terrible mistake.
Bank credit lets you bring future prosperity into today. This can be very useful:
1. You don’t want to spend your life saving for a house to move in when you are about 50.
2. Business and industry can invest and expand today, and pay that money back later It can be useful, but it can also be dangerous if you not careful.
Japan had a debt-fuelled real estate boom in the 1980s, and its economy has been flat-lining ever since as they pay back all that debt. They hadn’t realized that the boom times of the late 1980s would impoverish them the next thirty years.
During globalization, policymakers thought banks were financial intermediaries and so they couldn’t see how bank credit impoverished the future. Banks loans create money, and debt repayments to banks destroy wealth, and this rather haphazard process produces 97% of the money supply. Bankers get to create money out of nothing, through bank loans and get to charge interest on it.
What could possibly go wrong ! Bankers do need to ensure the vast majority of that money gets paid back, and this is where they keep falling flat on their faces. Banking requires prudent lending. If someone can’t repay a loan, they need to repossess that asset and sell it to recoup that money. If they use bank loans to inflate asset prices, they get into a world of trouble when those asset prices collapse. It’s nearly $14 trillion pyramids of super leveraged toxic assets built on the back of $1.4 trillion of US sub-prime loans and dispersed throughout the world.
When this little lot lost almost all its value overnight, the Western banking system became insolvent. Wall Street can turn a typical asset price bubble into something that will take out the global economy using leverage.
Bankers create money out of nothing, and the monetary system requires that nearly all that money they loaned out gets paid back. Bank credit is a claim on future prosperity, and when you realize all that debt can’t be paid back, a financial black hole opens up, as it did in 2008. Like the UK before 1980 and you use bank credit to increase the productive capacity of the economy. Before 1980 – banks lending into the right places that result in GDP growth ; business and industry, creating new products and services in the economy.
After 1980 – banks lending into the wrong places that don’t result in GDP growth ; real estate and financial speculation. And what happened in 1979? The UK eliminated corset controls on banking in 1979, and the banks invaded the mortgage market, and this is where the problem started. No matter how you paint the picture, the farmer, farmhands, and farm equipment makers all work for the infinite money bankers who require their Fake Money to be used as a marker for all debts.
So with interest, taxes, and inflation, all money eventually returns to the bankers, because the bankers own all the money and land at the start of and end of the game of Monopoly. Today all business investments require Fake Money loans or investment capital, that money belongs to the Bankers and eventually all their money returns to them via consumption of utilities, energy, food, financial transactions, laws, taxes, etc. Printing money only inflicts more damage and therefore, should never be considered as a means to help the economy.
Also, even if the central bank were to be successful in preventing a fall in the money supply, this would not be able to avoid an economic slump if the pool of real funding is falling. Our current system of banking is an abomination and should be ended. The only reason we could say the system is near its end is that the Powers that be are keeping the money away from the mass of people.
They are choking the system out. It can all be fixed. People in charge are playing games with us while they steal from us. Accountability is what they are all running from both Fiscal and LEGAL, and they don’t want to get locked up. Ten years of hookers blow, mal-investment and it is all gone. The price of steak has doubled while your wages have not. Your pensions are about to implode. The FED wants to repeat. Main Street is doomed. QE is one thing and one thing only: Asset Theft.
Global leaders have tried just about everything that they can think of, but the coming global financial catastrophe continues to march steadily toward us. We have seen “stimulus packages”, quantitative easing, bond buying, interest rate cuts, emergency economic summits, bailout packages for banks, bailout packages for entire nations, “Operation Twist”, unprecedented government intervention in business and massive amounts of new government debt and yet nothing seems to revive the global economy. In fact, it looks like we are rapidly heading into the second dip of a “double dip recession”. Unfortunately, many believe that this next dip will be more like a full-blown depression.
All over the world, top economic experts are warning that we are facing an unprecedented crisis of debt and insolvency that will result in a global financial catastrophe. The eurozone is drowning in debt, the U.S. government is drowning in debt and major banks all over the globe are drowning in debt. Global authorities have been trying to patch the system together and keep it going, but the incredible damage that all of this debt has done is now becoming apparent to everyone. The global debt bubble that has fueled prosperity in the western world for the last several decades is getting ready to burst, and when that happens the chaos that will result will be absolutely horrifying.
The following are 19 warnings about a coming global financial catastrophe….
1. “Dr. Doom” Nouriel Roubini says that the rapidly approaching financial crisis will be even worse than 2008….
“Worse because like 2008 you will have an economic and financial crisis but unlike 2008, you are running out of policy bullets. In 2008, you could cut rates; do QE1, QE2; you could do fiscal stimulus; you could backstop/ringfence/guarantee banks and everybody else. Today, more QEs are becoming less and less effective because the problems are of solvency not liquidity. Fiscal deficits are already so large and you cannot bail out the banks because 1) there is a political opposition to it; and 2) governments are near-insolvent – they cannot bailout themselves let alone their banks. The problem is that we are running out of policy rabbits to pull out of the hat!”
2. John Embry….
“This situation is unprecedented. The world has never, ever been in a condition like this. As a result, anyone that is complacent here and says, ‘This is just business as usual,’ they are dead wrong and will be shocked at the chaos that is heading our way.”
3. Jim Rogers….
“Just because now you have a way to get them (the banks) to borrow even more money, this is not solving the problem, this is making the problem worse”
4. Prominent Spanish politician Felipe Gonzalez….
“We’re in a situation of total emergency, the worst crisis we have ever lived through”
5. Leader of the UK Independence Party Nigel Farage….
You know, this deal makes things worse not better. A hundred billion [euro] is put up for the Spanish banking system, and 20 per cent of that money has to come from Italy. And under the deal the Italians have to lend to the Spanish banks at 3 per cent but to get that money they have to borrow on the markets at 7 per cent. It‘s genius isn’t it. It really is brilliant.
So what we are doing with this package is we are actually driving countries like Italy towards needing to be bailed out themselves.
In addition to that, we put a further 10 per cent on Spanish national debt and I tell you, any banking analyst will tell you, 100 billion does not solve the Spanish banking problem, it would need to be more like 400 billion.
And with Greece teetering on the edge of Euro withdrawal, the real elephant in the room is that once Greece leaves, the ECB, the European Central Bank is bust. It’s gone.
It has 444 billion euros worth of exposure to the bailed-out countries and to rectify that you’ll need to have a cash call from Ireland, Spain, Portugal, Greece and Italy. You couldn’t make it up could you!
6. Peter Praet, chief economist at the European Central Bank….
“The eurozone crisis is now much more profound and fundamental than at the time of Lehman”
7. Graham Summers….
Angela Merkel is up for re-election next year. There is no way on earth she’ll opt to let Germany get dragged down by the EU. She’s even said she will not allow Eurobonds for “as long as [she] lives.”
This is not empty rhetoric. This is fact. Germany has expressed its intentions dozens of times in the last month: NO Eurobonds and NO guarantee of EU banking deposits.
The reasons for this are simple: EITHER option renders Germany insolvent. It’s already teetering on insolvency to begin with. But to allow Eurobonds or some kind of guarantee of the EU banking system to occur on top of the money Germany has already spent propping up the EU will take Germany down.
The German economy is already slowing. Most Germans are fed up with the Euro. Merkel would rather die than let her country become like Greece (which the creation of Eurobonds or EU deposit guarantees would most assuredly result in).
So Germany is tapped out as well. This leaves… NOBODY.
Again, Europe is out of money. End of story. This is the truth and investing based on the idea of some magical bailout occurring is like investing on Hank Paulson’s Bazooka policy for Fannie and Freddie (three months later the markets imploded).
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8. Peter Schiff….
“I think we’re still in a depression. I think it’s going to be with us for years and years. It could be five or ten years; it could be longer, depending on how long it takes us to recognize our mistakes so that we can begin to reverse them”
9. New York Times columnist Paul Krugman….“There are a lot of ugly forces being unleashed in our societies on both sides of the Atlantic because our economic policy has been such a dismal failure, because we are refusing to listen to the lessons of history. We may look back at this thirty years from now and say, ‘That is when it all fell apart.’ And by all, I don’t just mean the economy.”
10. IMF Managing Director Christine Lagarde….
“In the last few months, the global outlook has been more worrying for Europe, the United States and large emerging markets”
11. Andrew Kenningham, senior global economist at Capital Economics….
“With euro break-up risk likely to rise in the second half of the year and monetary policy looking increasingly impotent, things could get much worse before they get better.”
12. Zero Hedge….
“We now have 80% of the world posting a contraction in industrial activity.“
13. Lakshman Achuthan, the co-founder of the Economic Cycle Research Institute….
“What we said back in December was that we thought the most likely start date for the recession would be in Q1, and if not then, by the middle of 2012. I’m here to reaffirm that.
In other words, I think we’re in recession already. As I said back there, it’s very rare that you know you’re going into recession when you’re going into recession. It often takes some big hit on the top of the head. In the last recession it took Lehman to wake people up. In the recession before it took 9/11.
When you look at the data today, you see industrial production is off of its April high. Manufacturing and trade sales – much broader than retail sales – is off of its December high.
Real personal income growth, which doesn’t always go negative during a recession, has been negative for several months.”
14. Priya Misra, head of U.S. rates strategy at Bank of America Merrill Lynch….
“The global economy is in the midst of a synchronized slowdown, as reinforced by the recent spate of weak economic data”
15. Chris Williamson, the chief economist at Markit….
“Companies are clearly preparing for worse to come, cutting back on both staff numbers and stocks of raw materials at the fastest rates for two-and-a-half years”
16. Howard Archer, chief European economist at IHS Global Insight….
“With the eurozone likely having suffered appreciable GDP contraction in the second quarter and in grave danger of contracting again in the third, and with eurozone business confidence generally low and fragile, the likelihood is that the eurozone unemployment rate will move significantly higher over the coming months”
17. Karl Denninger….
If we keep deficit spending we are simply debasing the purchasing power of the common man in a puerile attempt to pacify the people and avoid holding the financiers who were responsible for this debacle, including Bernanke, Greenspan, Paulson and Geithner along with both Obama and George W Bush to account. This attempt is mathematically doomed to fail as median family income has not moved which means that we’re shifting an ever-greater part of the population to social programs like food stamps and other handouts while the taxpaying productive population continues to shrink.
This is exactly how Greece and Spain went down the bowl and we’re right behind them unless we stop this crap right now.
We cannot “bend the curve” or look toward the “intermediate term”; that was exactly the siren song in Europe and it has led to catastrophe as “tomorrow” never comes! The “intermediate term” is usually defined as three to five years out — we heard of the “intermediate term” in 2008 but now it’s 2012 and none of the retractions in that spending have occurred — the claim that they would be undertaken was a lie.
We must stop the stupid right now!
Arithmetic is a bitch. It’s politically agnostic and cold-hearted. Exponential growth, as I have repeatedly pointed out, is utterly unsustainable over the long term. It doesn’t matter if you want these sorts of schemes to work or not; the longer you continue to pretend that there is some path forward that achieves these goals the worse the outcome is when you discover that you’re wrong.
“LEAP/E2020 has never seen the chronological convergence of such a series of explosive and so fundamental factors (economy, finances, geopolitical…) since 2006, the start of its work on the global systemic crisis. Logically, in our modest attempt to regularly publish a “crisis weather forecast”, we must therefore give our readers a “Red Alert” because the upcoming events which are readying themselves to shake the world system next September/ October belong to this category.”
19. Steve Quayle’s anonymous international banking source….
“The Bond market is finished, We all knew that there is a bubble in the bond market, This is the coup de grace that will not pop the bubble, but make it explode with the force of a thousand suns. America will be broke and barren in a blink of an eye! These are two events that I have been warning about are ones that will end your life on this planet as you know it. Your cash will be worthless, your country at a standstill, No money, No food, no essential services, AND WHEN IT ALL STOPS….. YOU STOP.”
So what do you think about these warnings?
Are you concerned that a global financial catastrophe is coming?
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