The problem is the amoral "culture" that's gaming "credit" into irrevocable systemic corruption.
Posted on 02/02/2017 12:42:10 PM PST by Lorianne
You want to fix the economic system, reduce political bribery and reduce rising income inequality? Shut off the cheap unlimited credit spigot to banks, financiers and corporations.
Cheap credit--newly issued money that can be borrowed at low rates of interest--is presented as the savior of our economic system, but in reality, it's why our system is broken. The conventional economic pitch goes like this: cheap credit enables consumers to buy more goods and services (and since the system needs growth or it implodes, that's good).
Cheap credit also enables companies to invest in new productive assets (capital).
Last but not least, low rates of interest enables the government at all levels to borrow money at relatively low cost.
That all sounds good in theory, but let's see how cheap credit works in the real world.
The first thing we observe is those closest to the central bank credit spigot get the lowest rates and nearly unlimited lines of credit. J.Q. Citizen may be thrilled to get a 4% annual-rate mortgage, but the mega-millionaire closer to the credit spigot can borrow 10 times as much as J.Q. can, and at half the rate of interest.
Mega-corporations and financiers can borrow billions at rates as low as 1%, which given an official inflation rate of 2%, is actually a negative rate of real interest.
Money-center banks own the credit spigot, so they can create money out of thin air at .5%.
In other words, cash isn't king in this perverse system: cheap credit is king. Those with access to cheap unlimited credit can scoop up all the productive assets, greatly increasing their wealth--and they can buy the political class, too, with campaign contributions and donations to false-front foundations.
SNIP
I think we were all quite clued in how effed up QE 1, 2, 3, 4, etc. is.
The underlying problem is that the federal government needs cheap interest rates because it is so indebted.
When I was young, houses were financed by saving and loan associations.
The traditional English ‘Building Society’ model was even better.
People would open up an account and deposit money. After a few years of regular, substantial deposits, the ‘Building Society” would consider granting you a mortgage.
This is a rather simpleminded solution to a complex problem. Audit the Fed and get rid of it. Build refineries and power plants. Get rid of oppressive government regulations. Drill baby drill. It will not solve all the problems but it will put the people back in charge and give them jobs for their right of pursuit of happiness.
In the old days, housing finance was local.
Local housing finance meant that there was a limited amount of financial fuel for housing price increases.
In 1975 I bought a new three bedroom home (27K) in Tacoma, WA with a zero down FHA loan - you just paid closing costs of around $800. However, the interest rate was 9.25%. A few years later, home loan rates were as high as 12% and up.
Broken because of government (Congress mainly). Ruled by greedy, selfish, incompetent and ignorant politicians who care more about perks, pleasure and power more than they do about America.
The problem is the amoral "culture" that's gaming "credit" into irrevocable systemic corruption.
HA!
I was thinking of exactly this when I responded to your Hanjin post.
Our present monetary system is the absolute foundation of the progressive-left state. Cheap/free Federal Reserve money for government to spend on #BLM, public-sector everything, refugees, procurement of all kinds, ... which creates its own interest groups. Do this for several decades and you have a leftist nanny-state leviathan
Cheap/free money for huge banks (who get bailed out by Fed.gov and the Fed) and corporations as well. Its why big business is now in bed with progressive ideology.
Yup. Un-equal weights and measures are against the instruction of YHVH. It has, and is destroying USA. Money creation from thin air for some and others supposedly owe them all that...
A loan is a liability, not capital.
USA was founded on free-enterprise, _capitalizatism_ is a subset of it, which devolved into a child of the bank and USGov.
mortgage rates generally aren’t tied to the prime.
credit is more easy than cheap.
Not in our system.
Debt goes in the asset side of the ledger nowadays.
At least for the big players.
Precisely
I don’t understand why. Maybe I’ll learn why later on.
A loan is a liability to the borrower, but a loan is an asset to the lender.
Late, but thank you.
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