HSBC Bank on Verge of Collapse: Second Major #BankingCrash Imminent - https://t.co/warnqsskJO Kerry-anne Mendoza a writer, blogger and activist & author of the Scriptonite Daily blog explores the reality of a new banking crisis. The #crash is in some ways a replay of the last one. The US dollar is a fiat currency (as is the pound sterling, the euro and most other major currencies). This means, it is #monopoly money. There is no gold reserve that its values are pegged to. It is simply made up. So how does money get made? A private, for profit central bank prints it and lends it to the government (or other banks) at an interest rate. So the Central Bank prints $100, and gives it to the government on the basis that it returns $101. You may have already spotted the first flaw in this process. The additional $1 can only ever come from the Central Bank. There is never enough money. The second issue is that all money is debt. This used to be the way pretty much all of the money in circulation came to be. That is, until Investment and Retail Banks got tired of this monopoly on debt based currency, and kicked off the commercial money supply. You might assume that when you take out a loan or other form of credit, a bank gives you that money from its reserves, and you then pay back that loan to the Bank at a given interest rate – the Bank making its profit on the interest rate. You would be wrong. The Bank simply creates that loan on a computer screen. Let’s say you are granted a loan for $100,000. The moment that loan is approved and $100k is entered on the computer – that promise from you to the bank creates $100k for the bank, in that instant. This ledger entry alone creates the $100k, from nothing. Today, over 97% of all money that exists, is made this way. This is what drove the dodgy lending practises that created the last crisis. But since then, the failure to regulate the markets means that while #bailouts hit #PublicServices and the real #economy – banks were free to continue the same behaviour, bringing the next crash. The world’s second richest man, Warren Buffett warned us in 2003 that the #derivatives market was ‘devised by madmen’ and a ‘weapon of mass destruction’ and we have only seen the first blast in this #debt apocalypse. The news that should have us all worried is: the derivatives market contains $700trn of these debts yet to implode. Global #GDP stands at $69.4trn a year. This means that (primarily) #WallStreet and the City of London have run up phantom paper debts of more than ten times of the annual earnings of the entire planet. Not only can the Bankers not pay it back, the combined earning power of the earth could not pay it back in less than ten years if every last cent of our productive power went solely to pay off this debt. This is why answering the issues with our currencies, our banking practices and economic system are not theoretical or academic – they are a matter of our very survival. The message is simple, get your money out now.
Posted on: Mon, 27 Jan 2014 11:20:18 +0000
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