I'm trying to figure this out, but basically if it comes down to it, they are lending what we ain't got, and what do they call it economy. The only reason it isn't a ponzi scheme, the government endorses it. Credit rating = the risk involved in particular ponzi entity. Instead of going to jail, what they do, they raise interest rates on people that didn't benefit from it.
What are they lending that they don't have? I mean, banks have money. I put money in them, and so do you. So they lend that money. I mean, not to pick at you, but why has the latest economic crisis made anti-fractional reserve and "End the Fed" crap so damn popular? Is it just because of Paul and his spamming? I really don't get it.
why do you think the government doesn't want a run on the banks? I just can't help but think that america's crisis is a bernie madoff script playing out on the economy. Ponzi's are only functional when people are willing to put money in them. Concerning your question, I think that this post was meant to just show the hypocrisy of government. They are no better than madoff and do basically the same thing.
what? a bank uses deposits from customers that they willingly put in. A ponzi scheme tricks an investor into putting money into something they say will turn a profit, when the cash is really just taken by the schemer
fractional banking does seem to operating at some level similar to a ponzi scheme. bottom line, if everyone went to withdraw their money at the same time no bank could fund all withdrawals. legally i think it is 10% ratio right now. you could put your money in an islamic bank (traditional interest is illegal in islam) or some other full reserve bank, though i don't think there are many of those left.
If you would have said that most stocks are ponzi schemes, then I would agree with you. Banks are on the other hand are the opposite of a ponzi scheme. The have assets in the form of deposits and accounts receivables ie loans.
Because bank runs are bad, period? I mean, look at the 19th century when banking wasn't regulated and the bank run was not an uncommon thing. It wasn't good. Besides, the government doesn't force us to deposit money in banks like you seem to think. You do it because it's convenient and you can earn money through interest. And frankly, you are pretty much peddling anti-fractional reserve conspiracy stuff. There's lot of full reserve banks out there. It's called your mattress.
The problem is that market cap and stock price these days have little to do with the balance sheet. Also, most stocks in companies don't provide any value to the owner(unless they provide dividends) while you own it, unlike bank deposits that provide you convenience and interest.
watch the movie "Inside Job (2010)" the banks aren't a ponzi scheme... it is the "investment banks" that have a banking division AND a proprietary trading division that are so called "Ponzi Schemes" These investment banks have, as I mentioned before, a proprietary trading division as well as a client brokerage division aka trading with "their own money" vs. "placing trades for their clients". They use the information from their client brokerage division and place orders on their proprietary trading division in priority AKA INSIDER TRADING. That is all fine and dandy, but what is ILLEGAL is when they use their client's money and lose it all, then the US government has to give money to Goldman Sachs and so on and so forth. The moral of the story: there will never be "freedom" as defined by the Western world in our lifetime unless there is some kind of revolution b/c all the positions in the government are held by people that work for Goldman Sachs. The end.
Most stocks are fairly valued given their risk profile and balance sheet. I mean, you have bubble up and bubble down, but implicitly, all things equal (Arbitrageurs often seize wacky opportunities as they pop up---companies trading below liquidation value etc.), most stocks are a fair value for the aggregate perception of the future assets a company will earn and the future earnings this will bring. Now, whether that perception is right or wrong can be argued. The rational expectations model is something I don't like (it seems to fail to explain systematic movements not taken into account by people), and Fisher theorem of a fundamental splitting between the value of the underlying assets and the equity itself might suggest something akin to what you are saying, but there is still the fundamental fact that a Ponzi scheme is a delusion built on active deceit, while an investment in high-growth, risky shares really is, at best, a delusion built on passive ignorance.
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Investment banks should not be allowed to become depository commercial banks. If you allow this, investment banks are going to essentially be playing with other peoples money at the casino. Even if they are allowed to provide both services, they should have strict regulations on them, this is exactly why you didn't see problems in the Canadian banking system, we don't allow this crap to go on...and its exactly why the mortgage crisis happened.
What Islamic(?) country is it that has this supposedly good bank system? I heard about it on the radio the other day, but only caught parts of it, as I was taking care of some stuff. IIRC it's more restricted and the banks aren't allowed to make profit(?), though they somehow do in a different way, like people buying their cars via banks (???). As you see I didn't catch a whole lot. Any chance anybody got an idea what I'm talking about though?
I believe that under Islamic law, banks are not allowed to take interest for loans. Of course, they have to make their money some other way, so they would declare it as fees or something, I guess.
Mathematically, Ponzi schemes will never work, because you simply run out of people in this world to put money into the scheme. Banks can work indefinitely, as long not everybody withdraws their money.
