Banks make money FOR FREE!
By Daniel at 2 January, 2010, 1:45 am
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The Federal Reserve allows the banks to “borrow” money at 0%. The banks then “deposit” this money with the Federal Reserve as a “savings account” for which they collect interest, while paying no interest on the “loan”. In other words the Federal Reserve is simply giving the banks free money. But the money doesn’t actually sit there; the Fed uses that money to buy U.S. mortgage bonds to keep the U.S. mortgage rates artificially lower. The current U.S governments scheme to prop up the housing market will seize to work and the housing market will implode as soon as the U.S. government stops “buying” its own mortgage bonds.
Obviously, even the U.S. government can only soak-up so many trillions of dollars in this manner without taking the U.S. dollar down to zero. The U.S. government is initiating millions of new mortgages, to questionable buyers, at interest rates which can only remain artificially low for as long as the U.S. keeps “buying” all of its own mortgage bonds.
Banksters argued “free market” to justify risky loans — and all kinds of bogus derivatives — from which they made huge profits.
When the loans collapsed — and the banksters could not cover the derivative agreements for which they were being richly paid — banksters argued economic collapse to get trillions — much more than just TARP — from the Fed/Gov — a very un-free-market thing.
The general public will ultimately pick up the tab for the Fed/Gov give aways to the banksters. Blankfein and his like will walk off with their billions. It’s grossly unfair, and perhaps even worse, it is bad for the long-term health of the economy. It’s very bad resource allocation.
Good resource allocation is of course a reason for choosing relatively free markets. But the banksters are just using free market rhetoric — and the economic-collapse boogyman — to scam money away from the hard working general population and into the bankster’s crooked pockets — rather than having the money efficiently allocated as should happen, more or less, in a competitive market system.
Goldman Sachs - “Hardly Working to do God’s Work™.”
- Prophecy
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