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Author Topic: Economic Devastation  (Read 504731 times)
rpietila
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November 28, 2015, 02:14:17 PM
 #2181

If the banks called back all the loans, there would not be enough money in the whole world to pay them. This is not academic exercise, this is a neutron bomb that they possess because they were able to bribe the politicians for centuries, and kill the ones that did not yield.

If QE is debt-based, it does not add a cent to the monetary base.

If it is "equity-based" (printing new money without corresponding obligation to pay back) then monetary base expands.

Central bank do 2 evils, which happen to be diametrically opposite to each other, yet both are evil.

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November 28, 2015, 06:54:59 PM
 #2182

If the banks called back all the loans, there would not be enough money in the whole world to pay them. This is not academic exercise, this is a neutron bomb that they possess because they were able to bribe the politicians for centuries, and kill the ones that did not yield.

If QE is debt-based, it does not add a cent to the monetary base.

If it is "equity-based" (printing new money without corresponding obligation to pay back) then monetary base expands.

Central bank do 2 evils, which happen to be diametrically opposite to each other, yet both are evil.

The banks never never never never ever call back loans, they will give you more loans instead if you ask nicely. So imho even if QE is debt-based effectively monetary base expands because The banks will never never never never ever call back loans.
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November 28, 2015, 07:03:37 PM
 #2183

Remove cash, negative interest rates and other economic crimes
Saturday, November 28, 2015, 00:04

It may sound like a conspiracy theory, but, judging by the growing desperation of governments to control and "push" of the global economy, you see that not far from reality.

I refer to the idea of ​​abolition of cash (dollars, euros, pounds, etc.) in their natural form. And a basic excuse of those who support this extreme measure is to enhance the ability of central banks to impose negative interest rates.

Negative interest rates mean that lenders are literally paying businesses and consumers to borrow money! Also, they punish savers saving for future consumption, investment, or just pension or health security. The Danes and the Swiss have already fallen into negative territory, with interest rates at -0.75%.

This means that 100,000 to an account in Switzerland will be worth 99 250 after one year. Currently these rates apply only to "high reserves" that banks hold with the central bank, but nothing prevents banks to soon require all depositors share the burden.

But these "trivial" rates are not enough, according to some economists. A chief economist at Citicorp, the technocrat Willem Buiter [1], for example, believes that the US needs much lower interest rates to "boost" the economy away from recession. Proposes negative interest rates around 6% "to get the job done." But for this to happen, there is one condition: To operate this project, says Mr. Buiter, the government should abolish the cash.

It's easy to see why Mr. Buiter and proportionate bureaucrats consider "annoying" cash. If your bank grabs 6% of your savings of 100 € in your account would be worth 94 € at the end of the year, 88.36 € after two years, and 83.06 € after three years. Instead, a bank note of 100 € in circulation would still be worth ... 100 €.

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November 29, 2015, 05:50:43 AM
 #2184

Remove cash, negative interest rates and other economic crimes
Saturday, November 28, 2015, 00:04

It may sound like a conspiracy theory, but, judging by the growing desperation of governments to control and "push" of the global economy, you see that not far from reality.

I refer to the idea of ​​abolition of cash (dollars, euros, pounds, etc.) in their natural form. And a basic excuse of those who support this extreme measure is to enhance the ability of central banks to impose negative interest rates.

Negative interest rates mean that lenders are literally paying businesses and consumers to borrow money! Also, they punish savers saving for future consumption, investment, or just pension or health security. The Danes and the Swiss have already fallen into negative territory, with interest rates at -0.75%.

This means that 100,000 to an account in Switzerland will be worth 99 250 after one year. Currently these rates apply only to "high reserves" that banks hold with the central bank, but nothing prevents banks to soon require all depositors share the burden.

But these "trivial" rates are not enough, according to some economists. A chief economist at Citicorp, the technocrat Willem Buiter [1], for example, believes that the US needs much lower interest rates to "boost" the economy away from recession. Proposes negative interest rates around 6% "to get the job done." But for this to happen, there is one condition: To operate this project, says Mr. Buiter, the government should abolish the cash.

It's easy to see why Mr. Buiter and proportionate bureaucrats consider "annoying" cash. If your bank grabs 6% of your savings of 100 € in your account would be worth 94 € at the end of the year, 88.36 € after two years, and 83.06 € after three years. Instead, a bank note of 100 € in circulation would still be worth ... 100 €.

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If they pass it does that kick in after december? or 2016?
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November 29, 2015, 10:09:56 AM
 #2185

If they pass it does that kick in after december? or 2016?

I believe that they will have to wait until the (brand new) recapitalization of the 4 "systemic" banks (aka: the ones which the public owns a big percentage). After that there's nothing much left. I don't know if they will manage to do it before or after the EU upcoming split though. Everything points to that direction that the "economic scientists" have brought us. I expect this to happen roughly after January / February...

(Well, I rule out the WWIII scenario).

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November 29, 2015, 10:23:15 AM
 #2186

I'm skeptical of cash being removed everywhere that fast. Won't people head to dollars or other stable currencies? I mean I can't imagine people standing for negative interest rates, they'd put there money in tinned/dry food anything else that can't be stolen. I think this was mentioned up thread.
In that way wouldn't it artificially stimulate demand to a crack up boom?




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rpietila
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November 29, 2015, 10:29:51 AM
 #2187

If the banks called back all the loans, there would not be enough money in the whole world to pay them. This is not academic exercise, this is a neutron bomb that they possess because they were able to bribe the politicians for centuries, and kill the ones that did not yield.

If QE is debt-based, it does not add a cent to the monetary base.

If it is "equity-based" (printing new money without corresponding obligation to pay back) then monetary base expands.

Central bank do 2 evils, which happen to be diametrically opposite to each other, yet both are evil.

The banks never never never never ever call back loans, they will give you more loans instead if you ask nicely. So imho even if QE is debt-based effectively monetary base expands because The banks will never never never never ever call back loans.

Bullshit. They do, when they have to, or when they are told to. And it destroys the economy. And it has happened in my lifetime with 0.3% of the country killed by suicides alone.

Try educating yourself.

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November 29, 2015, 12:51:33 PM
Last edit: November 29, 2015, 02:05:11 PM by macsga
 #2188

I'm skeptical of cash being removed everywhere that fast. Won't people head to dollars or other stable currencies? I mean I can't imagine people standing for negative interest rates, they'd put there money in tinned/dry food anything else that can't be stolen. I think this was mentioned up thread.
In that way wouldn't it artificially stimulate demand to a crack up boom?

It's a rough estimation but not at all impossible if you ask me. Ever since the beginning of November the newspapers here in Greece have been at it as well:

"Every new company is Mandatory to work with a POS card acceptance system from 01.01.2016"

Ministry of Finance brings measures to expand electronic trading. It was officially announced from the House the Deputy Finance Minister, mr Alexiadis.  


Extension of electronic transactions with compulsory implementation of the terminal card acceptance systems (POS) since the beginning of 2016 for all businesses that make entry announced by Deputy Minister of Finance, Trifon Alexiadis in the House and announced the promotion of measures to facilitate business difficulty procure these systems.
"Our position is the full expansion of electronic transactions. We will not hesitate to clash with any interests about it, "he said. Alexiadis response to a question by Mr ND, Christos Boukorou and announced that from January 1 will become mandatory to use card acceptance terminals.

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https://twitter.com/rogerkver/status/670679725652578304

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November 29, 2015, 02:05:42 PM
 #2189

And it has happened in my lifetime with 0.3% of the country killed by suicides alone.

Which country was this.
  In UK with one of the largest bank failures funded by government, the route they took with loans was not to call them in immediately.  Instead they put pressure on the debtor to accept extra management and 'help' in the debt finance, what this did was milk the businesses with extra bank fees and management assistance labour fees.
    In some cases the business no longer could stay ahead of its costs and the whole lot would be liquidated with the bank getting back their money in that way and in other cases the owners of the business were so upset at the trouble with this loan finance that they themselves took action to close out the debt as fast as possible because of its excessive costs.  Of course when debt is closed out often the bank charges fees for ending the agreement early and so they profited alot from this tactic.

With a mortgage bank in another example, failed bank but not failed debt due to bailout/nationalisation.  Their tactic was to refuse renewal of any debt, so if houses were financed for 5 years with renegoiation of rate after that they would refuse to give any rate close to market competitive so owners were forced to find debt finance elsewhere at any cost.  This resulted in the bank seeing a large amount of mortgages ended, paid off or the keys handed back and the houses sold with profits to the bank.   All of this was required as the money taken from government was making its debt overhang look very bad, not all countries can act like USA and ignore or somehow make it appear a reasonable percentage.  USA has a very large benefit from being a reserve currency for most of the world so I imagine in statistics all things are possible for them

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November 29, 2015, 02:22:25 PM
 #2190

Which country was this.


None you would care about. Nothing to see here, go away. Roll Eyes

http://www.pbs.org/newshour/bb/greek-crisis-matter-life-death/
http://www.keeptalkinggreece.com/2015/06/25/study-austerity-in-greece-led-to-tragic-increase-of-35-in-suicides-in-just-two-years/
https://translate.googleusercontent.com/translate_c?depth=1&hl=en&ie=UTF8&prev=_t&rurl=translate.google.com&sl=el&tl=en&u=http://news247.gr/eidiseis/koinonia/h-oikonomikh-krish-efere-kai-aytoktonies-sthn-ellada.3766975.html&usg=ALkJrhgzHQKSalTH8-37HromcsXpXj1o-Q

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November 29, 2015, 02:46:53 PM
 #2191


As I happen to be greek I can tell you no loans have been called back. Instead early full or partial debt repayment is not accepted.
I happened to have a loan of 3K euros, and when capital controls were implaced, decided to close all positions/ fearing a haircut.
So for 3 months I own no debt and yet the bank recently sent me a bill demanding 3 months interest in a loan I have zeroed.
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November 29, 2015, 03:23:13 PM
 #2192

Country was Finland and year 1992-1993

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November 29, 2015, 04:45:10 PM
 #2193

Country was Finland and year 1992-1993

There was a documentary I happened to (partially) watch last night about people committing suicide after a long stressful period in their life; most of them left behind their beloved people (wives, children) because they were unable to fulfill their obligations against them. The main reason is that nobody (or, to be precise, very few) saw this coming.

Unfortunately human brain (especially the male one) has this obligatory feeling embedded that "he is the one that must provide for the rest". Every family has the ability to overcome a year or two of austerity and/or no employment; but SEVEN? Most of our educated brains have fled the country seeking for a better future and a decent (ie: viable) salary.

Germany, NL, France, Australia, USA, Sweden got the best of our doctors, engineers, scientists because they were unable to provide their families with the money for a decent life here in Greece. Those of us who were left behind were people that never got a loan, or they were forced to stay because of family reasons (I speak for myself).

So, all in all, desperation -in any form- is the primary factor for the "final exit". The people who orchestrated this knew what was at stake and didn't care a bit. They're no better than common criminals.

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November 29, 2015, 04:55:05 PM
 #2194

Country was Finland and year 1992-1993

Looking at http://www.europarl.europa.eu/document/activities/cont/200912/20091216ATT66587/20091216ATT66587EN.pdf I see Greece was just a replay of that situation
only diff greece can not use currency depreciation, therefore the crisis burns on.

However I do not see banks calling back loans, all I see is Gov stepping in to clear the mess, Unless you can present us with specifics. I stand on my opinion that banks never never call back loans.
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November 29, 2015, 05:20:17 PM
 #2195

Country was Finland and year 1992-1993 when banks called back the loans.
However I do not see banks calling back loans, all I see is Gov stepping in to clear the mess, Unless you can present us with specifics. I stand on my opinion that banks never never call back loans.

A wolf has teeth and has reportedly attacked people in the past, but I respect your opinion since you know the future.

I don't know the future, so I stay away from the wolf. My relatives were eaten, so perhaps that makes me a bit wary.

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November 29, 2015, 06:10:28 PM
Last edit: November 29, 2015, 06:39:08 PM by CoinCube
 #2196

Country was Finland and year 1992-1993

Looking at http://www.europarl.europa.eu/document/activities/cont/200912/20091216ATT66587/20091216ATT66587EN.pdf I see Greece was just a replay of that situation
only diff greece can not use currency depreciation, therefore the crisis burns on.

However I do not see banks calling back loans, all I see is Gov stepping in to clear the mess, Unless you can present us with specifics. I stand on my opinion that banks never never call back loans.

Historically, banks do call back loans. In the US the signal to do this is a rise in the federal funds target rate.  This target is set by a meeting of the members of the Federal Open Market Committee occurs eight times a year. The federal funds target rate essentially determines the federal funds rate which represents the cost to the bank of procuring more reserves. Typically this rate is increased in response to inflation.

Quote from: Christina D. Romer, Business Cycles
The empirical evidence is strongly on the side of the view that deviations from full employment are often the result of spending shocks. Monetary policy, in particular, appears to have played a crucial role in causing business cycles in the United States since World War II. For example, the severe recessions of both the early 1970s and the early 1980s were directly attributable to decisions by the Federal Reserve to raise interest rates. On the expansionary side, the inflationary booms of the mid-1960s and the late 1970s were both at least partly due to monetary ease and low interest rates. The role of money in causing business cycles is even stronger if one considers the era before World War II. Many of the worst prewar depressions, including the recessions of 1908, 1921, and the Great Depression 1930s, were to a large extent the result of monetary contraction and high real interest rates.

Figure 1: Unemployment Rate and Recessions


Government does step in to clear up the mess. This is the expected outcome of our current system.

Responding to public demand government steps in and tries to halt finance induced crashes. However, government does not simply print money to mitigate the cyclical monetary crunch. True money printing would harm vested financial interests and is taboo. Instead government enters the arena meekly as the sucker borrower of last resort. Once government is ensnared the triumph of finance is complete.  Government debt is paid via taxation and taxation primarily targets the upper class. Thus with the capture of government finance gains the ability to siphon wealth from the upper class.

A time honored strategy in war is divide and conquer. It is easier to subjugate a people who are fighting amongst themselves. Finance and fractional reserve divides the public into two competing blocks of victims. The poor as we have seen become ever poorer with each "business cycle". They  look at the relatively well off and cry Thief! The entrepreneurs and productive increasingly suffer under ever higher tax burdens. They point to government and the welfare recipients and cry Thief!

Government does not handle this conflict well. Unable to decide between competing citizen demands it waffles. It spends to support the poor but does not raise taxes. The result is ever larger government debt. Each attempt by government to buffer the finance induced downturn simply delays the liquidation of middle classes assets by transferring that liability to the government and eventually to the upper classes via increased taxation.  Bailouts are thus a transfer wealth from the productive upper classes to well-connected financial interests. Finance uses the business cycle to harvest the  poor, and bailouts to harvest the rich.

The long-term costs of all this are borne out by the majority of the ill-informed public who are too busy fighting over a myriad useless conservative versus liberal disputes to address the root cause of their suffering. Meanwhile government in its misguided attempt to "help" becomes so indebted that eventually it can no longer service its loans.


Now will loans to insolvent governments be called in? Probably not as long as those governments do as they are told. It is the threat of insolvency and being cut off from future loans that will ensure these governments toe the line.

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November 29, 2015, 06:38:22 PM
 #2197

Ok we have gone to deep in the rabbid hole,
Banks will not call back loans en mass as a means of a "neutron bomb" trying to control us. Banks calling back loans as they learned in the 20's is the fastest way to close down shop, it signals that bank has essentially lost control and is on the brink of bankrupcy.

So it's not a choice that they will make hence my "banks never never ever call back loans"
The banks creates loans as a battery creates potential to drive a circuit, when it stops to do that it means you need to change the battery.
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November 29, 2015, 06:53:52 PM
Last edit: November 29, 2015, 07:33:32 PM by CoinCube
 #2198

Ok we have gone to deep in the rabbid hole,
Banks will not call back loans en mass as a means of a "neutron bomb" trying to control us. Banks calling back loans as they learned in the 20's is the fastest way to close down shop, it signals that bank has essentially lost control and is on the brink of bankrupcy.

So it's not a choice that they will make hence my "banks never never ever call back loans"
The banks creates loans as a battery creates potential to drive a circuit, when it stops to do that it means you need to change the battery.

No one ever said banks are going to call back loans en mass globally that would be counterproductive. Selectively cutting off access to the financial markets to rogue nations that threaten the status quo, however, is a powerful tool of control and there is little reason to think it will not be used.  

As you noted above government response to this is will not be to let the system collapse but instead to "charge the battery" via more debt and spending. As earnings are eroded and the economy stagnates governments will simply move on a worldwide basis to supplement incomes and stimulate growth via spending, redistribution, and welfare programs. A small part of this redistribution will occur in the form of higher taxes. However, the lions share will come from increased government debt.

As governments become insolvent they will find markets increasingly unwilling to service debt in their home currencies and will be forced to transition their debt to a supranational one (probably SDR's) subject to the jurisdiction of a foreign court. This will be the only way to continue supportive handouts to dependent populations. Think Greece but on a global scale. Going forward this scenario would result not in immediate catastrophic collapse but rather a slow progressive grind with individual countries going into crisis at different times while being forced to progressively surrender sovereignty.

I believe we are witnessing the gradual but inevitable death of nationalism and the modern nation state. A developing unity through debt if you will.

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November 29, 2015, 08:56:24 PM
 #2199

Regarding malpractice by banks to SMEs, I'd suggest searching "RBS" + "Tomlinson"

Allegedly, 1000's of SMEs were asset stripped by the bank's restructuring office.

I would caution that the bank would argue that the companies were not worth
saving. However, in a financial crisis, the decision to save or to sacrifice can
often be somewhat based on politics. This is unlikely to be confined to just one
bank, it is just a matter of degree and distress.

As a separate issue there is a report on Finland's crises 174043.pdf that suggests
that a failure to moderate the deregulation of Finland's banks and savings institutions
followed by hot money inflows, made worse by the Soviet collapse, caused a sharp
contraction in GDP and jobs.

I'd guess that bitcoin would be unable to mitigate either of these problems.
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November 30, 2015, 09:13:52 AM
Last edit: November 30, 2015, 09:26:49 AM by macsga
 #2200

Last Chance to anyone who has undeclared property in or outside Greece: If they voluntarily reveal them, then they will be able to salvage them.

Taxpayers will have one last chance to register undeclared incomes from mid December, according to Deputy Finance Minister, Tryphon Alexiadis. So whoever has undeclared property in or outside Greece and disclose voluntarily, they will be able to salvage. Otherwise, they risk faced by a confiscation of assets which were acquired with income not taxed.

Story Link.

Chaos could be a form of intelligence we cannot yet understand its complexity.
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