Posted 3 years ago on March 30, 2017, 2:42 p.m. EST by agkaiser
from Fredericksburg, TX
This content is user submitted and not an official statement
Take that penny and put it in the bank. Leave it for your great-grandchildren. They'll be millionaires. And all the while the bank will loan it out and good things will be done with it. But don't worry the bank always keeps enough in reserves to take care of demand for withdrawals of savings.
Hmmm - is that the way it works? Let's say that one day the bank doesn't have enough deposits to cover the [lucrative] loan it wants to make. It goes ahead and writes the check anyway and records the debit. The check is cashed at another bank, which records a credit, perhaps wiping out an excess debit of it's own. You see where this is going...
If, at the end of the day, a bank is under-reserved, it can borrow from us [the FED] at the discount rate [Current target rate this week (wk13,'17) 1.00% - www.bankrate.com/rates/interest-rates/prime-rate.aspx] and reloan it to us (if it hasn't already) at a handsome profit. So why can't we borrow from [ourselves] the FED and save us and our government [the biggest debtor] a lot of money? Do you really have to ask? (see "chain of payments" below)
For a more in depth study of the con in economy, always look to Michael Hudson. The article linked below, though longish, is recent and good introduction to economic heterodoxy.
short excerpt: "... In 2007 I published a lead article in Harper’s forecasting this, showing a chart on why the Bubble Economy couldn’t go on for more than a year. And it didn’t. It ended just as everybody thought it would. If you look at the growth of debt compared to the growth in the ability to pay it, you see that many economies already have passed the point of intersection. At the point where debts can no longer be paid, you have a break in the chain of payments. That’s what causes a crash...."