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Originally Posted by TacticalEvilDan  Wow, it's even more fraudulent than I thought. Thanks for pointing that out. |
Yes, there is definitely an attempt by the administration to try to paint the deficit as not being significant.
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I really hate terms like that. They're a really fancy way of saying invent money out of thin air. |
Yes, the Fed has that power. Every Central Bank does, or most every one does.
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Originally Posted by Iriemon
It is true that banks take their deposits and lend it out. That is they way they operate and stay in business.
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Um, no. They operate and stay in business by loaning previously non-existant funds out to people and collecting interest on the repayment on those previously non-existant funds. |
That only happens when the money is borrowed from the Fed, for which the banks pay interest. They do make money on the spread; that is their function.
If you wanted to take a esoteric view, you could say that
all dollars are "previously non-existent funds" and that is true for all currencies.
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Seeing as how the bank is limited to loaning out I believe 9X what their current holdings or assets, they wouldn't loan out their depositors funds. They'd loan out "new" money, using the deposits as a "reserve" to back the "loans."
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A bank is limited to loaning 90% of its deposits, with the current 10% reserve requirement.
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Also, fees are a huge portion of how banks make money. That's why they calculate withdrawals (like checks paid out) before adding deposits (like checks and cash coming in) -- it allows them to maximize the number of people whose accounts are overdrawn on a daily basis.
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No doubt.
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Really? Could you point me the fund of money that the FDIC has set aside for bailing out depositors? As far as I'm aware, the fees banks pay to the FDIC, which are presumably to put money into that fund, are used to purchase bonds. So where, exactly, would the money come from?
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I'm not sure if the FDIC is backed by the Fed or the Govt. But as you have acknowledge, if necessary the Fed can create money out of thin air.
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Simple enough.
It used to be that a recession was clearly defined as 2 consecutive quarters of decline in the GDP. These days, the official definition used is far more vague, and includes words like "significant decline" and "a period of time."
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So what?
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As far as it goes with inflation, it used to be that an increase in the cost of certain staples was used as a yardstick for measuring inflation. These days, if you're forced to purchase a cheaper alternative to a staple you were buying previously, it's said there's no net change in the buying power of the average American, since you're still eating, so inflation, what inflation?
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Inflation for the last quarter was 3.5% I believe, which has a lot of people concerned.