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Forum Post: The Shadow Banking System: What is it and why does it matter?

Posted 12 years ago on Dec. 29, 2011, 6:49 p.m. EST by valfather (286)
This content is user submitted and not an official statement

I watched this video which someone else posted here:

Inside Job provides a comprehensive analysis of the global financial crisis of 2008, which at a cost over $20 trillion, caused millions of people to lose their jobs and homes in the worst recession since the Great Depression, and nearly resulted in a global financial collapse.

Through exhaustive research and extensive interviews with key financial insiders, politicians, journalists, and academics, the film traces the rise of a rogue industry which has corrupted politics, regulation, and academia. It was made on location in the United States, Iceland, England, France, Singapore, and China.

Released 2010. Director: Charles Ferguson. Documentary film.


I don't believe it actually talked about something called the Shadow Banking System, but it seems to be relevant to the discussion.

I recall coming across the term Shadow Banking System while watching economics lectures online. I'm not finding them right now. All I'm finding are videos by a guy named Max Keiser who seems intelligent, but goes off into Mayan Calenders, 2012, solar flares, etc.

This video talks about the "Shadow Budget", and seems enlightening.

MSNBC Host Cenk Uygur speaks with Rolling Stone Contributing Editor Matt Taibbi on a government "Shadow Budget" that benefited Wall Street


Still trying to get a handle on what this Shadow Banking thing really is, and why it matters. The part I recall is that these are non-bank financial institutions which, unlike banks, are not constrained in the amount of ready reserves they maintain. So basically these "non-banks" are unregulated fractional reserve lenders leveraged at many times the amount permitted by the Fed. But these institutions are on the books of the major banks as assets. Or something like that.



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[-] 2 points by valfather (286) 12 years ago

This is the series of lectures I was talking about:

A complete course in Macroeconomics at the American University in Bulgaria, with a heavy emphasis on money, banking, credit, and business cycles


IIRC, these lectures were given prior to the economic collapse of 2008, and he was saying the system was unstable and in distress.

[-] 1 points by valfather (286) 12 years ago

Ben Bernanke's Macroeconomics Textbook is the one used for this class. Strange how the lectures contradict Bernanke's own assessment of the state of the economy at that time.


Thanks for the links. Perhaps someone should start a collection of relevant links and create a page that doesn't wash away in the stream of discussion.

[-] 2 points by valfather (286) 12 years ago

25 hours of your life, well spent. See above.

[-] 1 points by valfather (286) 12 years ago

In January 2008 he was predicting an economic downturn. See Lecture 02.

[-] 1 points by NationaliseWallst (5) from Belleville, NJ 12 years ago

It is time to arrest the banking elites and nationalise the banks.

[-] 1 points by valfather (286) 12 years ago

And hire Heinz to oversee their management? The problem that I am talking about is that "bank" seems to be an ill-defined term, and much of the worst corruption is outside of the actual banking institutions, though closely connected to them.

One view is that there is a hidden money supply equal to the global annual gross product. This money is then moved around to manipulate markets and economies, world wide.

[-] 1 points by NationaliseWallst (5) from Belleville, NJ 12 years ago

The hypothecation.

[-] 2 points by valfather (286) 12 years ago



With usura hath no man a house of good stone

each block cut smooth and well fitting

that delight might cover their face,

with usura

hath no man a painted paradise on his church wall

harpes et luthes

or where virgin receiveth message

and halo projects from incision,

with usura

seeth no man Gonzaga his heirs and his concubines

no picture is made to endure nor to live with

but it is made to sell and sell quickly

with usura, sin against nature,

is thy bread ever more of stale rags

is thy bread dry as paper,

with no mountain wheat, no strong flour

with usura the line grows thick

with usura is no clear demarcation

and no man can find site for his dwelling

Stone cutter is kept from his stone

weaver is kept from his loom


wool comes not to market

sheep bringeth no gain with usura

Usura is a murrain, usura blunteth

the needle in the the maid's hand

and stoppeth the spinner's cunning.

Pietro Lombardo came not by usura

Duccio came not by usura

nor Pier della Francesca; Zuan Bellin' not by

usura nor was "La Callunia" painted.

Came not by usura Angelico; came not

Ambrogio Praedis,

No church of cut stone signed: Adamo me fecit.

Not by usura St. Trophime

Not by usura St. Hilaire,

Usura rusteth the chisel

It rusteth the craft and the craftsman

It gnaweth the thread in the loom

None learneth to weave gold in her pattern;

Azure hath a canker by usura; cramoisi is unbroidered

Emerald findeth no Memling

Usura slayeth the child in the womb

It stayeth the young man's courting

It hath brought palsey to bed, lyeth

between the young bride and her bridegroom


They have brought whores for Eleusis Corpses are set to banquet

at behest of usura.

Join The War on You


[-] 2 points by shadz66 (19985) 12 years ago

I enjoyed your post of Pound's poem and re. "Usury", please also reflect upon : http://spiritofjubilee.com/bible/bible-verses-on-jubilee-and-debt-cancellation !!!

Happy 2012 ~{;-)