I say, if the banks are getting bailed out, why do the banks - Help.com

we have a saying in italy: “luck is blind but bad luck has 20/20″ :P

That of course doesn’t make any sense at all. The banks need to be bailed out because to many people aren’t paying back their debt. So now you want the government to forgive everyone’s debt.

And when they do; how pays for it the tax payer? Which is you. So instead of paying your debt to the banks; you want to pay it through the government in taxes?

Yes the economic system is completely corrupt.
It will soon be replaced with one which is more fair.
We enjoy bananas at 50 cents per pound when the growers get
1 or 2 cents per pound.Its unjust.

Actually I m curious… when the Government says its going to inject 1/2 billion into the economy, where do they get it? Surely not from taxes, budgets are made in such a way to not leave that kind of money lying around. Surely they don’t print it, that’s not how our economy works… so I m guessing from the FED?
But isn’t the Fed just another privately owned bank? And if so, does that mean that the government is taking a loan from the banks to bail out the banks? and they it will have to pay the banks back with interest for having helped them?
Something’s rotten, and it ain’t in Denmark…

aeolian mode wrote:
Who the hell is gonna bail out the banks… you and I……….Through taxes……but when you realize the amount of the stimulus package being given to these loan sharks, you wonder… What about the little person……

What about the little person?

You speak as if the government has an endless money supply; it does not. Any money the government gives out comes from the little person.

Fine the government pays off all your debt. Where does that money come from? It comes from you. So the government hasn’t paid off your debt with a bailout it is just now the conduit in which you pay your debt.

All of the Gold in fort knox is about 200,000 ounces at $1000 per ounce
that is $200 billion they have spent two lots of $700 billion.
The scale is unimaginable.

sorry should be:

All of the Gold in fort knox is about 200,000,000 ounces at $1000 per ounce
that is $200 billion they have spent two lots of $700 billion.
The scale is unimaginable.

azhrar wrote:
Actually I m curious… when the Government says its going to inject 1/2 billion into the economy, where do they get it? Surely not from taxes, budgets are made in such a way to not leave that kind of money lying around. Surely they don’t print it, that’s not how our economy works… so I m guessing from the FED?But isn’t the Fed just another privately owned bank? And if so, does that mean that the government is taking a loan from the banks to bail out the banks? and they it will have to pay the banks back with interest for having helped them?Something’s rotten, and it ain’t in Denmark…

The FED is not just some privately owned bank giving loans to the government. They are a regulatory bank. They print money and inject it into the money system. This adds liquidity but it devalues the dolor.

The government also borrows money from other countries and investors through the offering of treasures.

Actually the Fed is the central bank but it is not a government institution, it is a popular misconception. The Fed is quasi-public, it has a public share but is partially owned by private banking groups…

azhrar wrote:
Actually the Fed is the central bank but it is not a government institution, it is a popular misconception. The Fed is quasi-public, it has a public share but is partially owned by private banking groups…

I know what the FED is; however your assertion that the Government is borrowing from the banks to pay the banks is incorrect and not indicative of how the FED works.

The Government does not owe the FED interest on the money it prints and than circulates.

The banks only follow the saying that Bernard Madoff follows: Don’t leave until tomorrow all the people you can rip off today!

and the bible too: Do onto others before they do you!

azhrar wrote:
Actually I m curious… when the Government says its going to inject 1/2 billion into the economy, where do they get it? Surely not from taxes, budgets are made in such a way to not leave that kind of money lying around. Surely they don’t print it, that’s not how our economy works… so I m guessing from the FED?
But isn’t the Fed just another privately owned bank? And if so, does that mean that the government is taking a loan from the banks to bail out the banks? and they it will have to pay the banks back with interest for having helped them?
Something’s rotten, and it ain’t in Denmark…

they get it from 3 sources:
1/ taxes
2/ borrowing it from whoever e.g. China.
3/ printing it.
A combination of all 3.

The government doesn’t print money! They issue bonds to the Fed who then prints and puts it into circulation digitally. Or am I wrong?
Da-11, you sure about that? Government bonds are issued with interest rates, so since the government issue bonds in exchange for money creation to the Fed, aren’t there interest involved? I m not sure about this, please let me know.
Bai off for a pint!

they pysically print paper as well but I am sure
most of it is simply fake checks on fake fed deposits.

Ideally, wiping the slate clean for everyone would be the solution, almost like the premise of Fight Club. However, that is not possible, since our debt extends not just from within, but throughout the world. I believe the U.S. has discussed in the past erasing debts that some third-world nations have accumulated with us in response to actions by said countries. However, with the trillions of dollars at hand in our own economic struggles and downfalls, that is hardly an option.

azhrar wrote:
The government doesn’t print money! They issue bonds to the Fed who then prints and puts it into circulation digitally. Or am I wrong?
Da-11, you sure about that? Government bonds are issued with interest rates, so since the government issue bonds in exchange for money creation to the Fed, aren’t there interest involved? I m not sure about this, please let me know.
Bai off for a pint!

azhrar this is how the FED operates in general

The Federal Reserve System is an independent government institution that has private aspects. The System is not a private organization and does not operate for the purpose of making a profit. The stocks of the regional federal reserve banks are owned by the banks operating within that region and which are part of the system.[29] The System derives its authority and public purpose from the Federal Reserve Act passed by Congress in 1913. As an independent institution, the Federal Reserve System has the authority to act on its own without prior approval from Congress or the President.[30] The members of its Board of Governors are appointed for long, staggered terms, limiting the influence of day-to-day political considerations.[31] The Federal Reserve System’s unique structure also provides internal checks and balances, ensuring that its decisions and operations are not dominated by any one part of the system. It also generates revenue independently without need for Congressional funding. Congressional oversight and statutes, which can alter the Fed’s responsibilities and control, allow the government to keep the Federal Reserve System in check. Since the System was designed to be independent whilst also remaining within the government of the United States, it is often said to be “independent within the government.”[30]

The 12 Federal Reserve banks provide the financial means to operate the Federal Reserve System. Each reserve bank is organized much like a private corporation so that it can provide the necessary revenue to cover operational expenses and implement the demands of the board. Member banks are privately owned banks that must buy a certain amount of stock in the Reserve Bank within its region to be a member of the Federal Reserve System. This stock “may not be sold, traded, or pledged as security for a loan” and all member banks receive a 6% annual dividend.[30] No stock in any Federal Reserve Bank has ever been sold to the public, to foreigners, or to any non-bank U.S. firm.[32] These member banks must maintain fractional reserves either as vault cash or on account at its Reserve Bank; member banks earn no interest on either of these. The dividends paid by the Federal Reserve Banks to member banks are considered partial compensation for the lack of interest paid on the required reserves. All profit after expenses is returned to the U.S. Treasury or contributed to the surplus capital of the Federal Reserve Banks (and since shares in ownership of the Federal Reserve Banks are redeemable only at par, the nominal “owners” do not benefit from this surplus capital); the Federal Reserve system contributed over $29 billion to the Treasury in 2006.[33]

It is not independent from the government; it simply has a mandate to work autonomously with out the distraction of day-to-day political issues. This makes sense because you wouldn’t want a president to be able to increase the money supply making everyone happy short term in order to win an election; an action that would have detrimental long term consequences. Such long term detrimental consequences have happened in other centuries where government had a direct hand in its banks.

However the FED is still directly answerable to the government because the government can pass laws limiting or expanding the powers of the FED.

The FED is privately owned in so far as it is in control of independent banks that make up a membership with in the FED system. These impendent banks make a 6% dividend as compensation for their forced participation in the Federal reserve system. 6% being a modest return for participation when the impendent banks could easily make more than 6% investing the money required held by the fed else where.

Otherwise all money acquired by the FED in day-to-day operations goes back into the US treasury or held as reserves for future governmental use.

The idea that the FED is some supper bank beholden to power investors around the world and not the government is a myth put forth by people wishing to manipulate those who don’t understand how the system works. In truth it is a government institution beholden to the government but saved from day-to-day political manipulation. Private banks are forced to be part of the FED system and are compensated by a 6% dividend.

J.D.B. wrote:
Ideally, wiping the slate clean for everyone would be the solution, almost like the premise of Fight Club. However, that is not possible, since our debt extends not just from within, but throughout the world. I believe the U.S. has discussed in the past erasing debts that some third-world nations have accumulated with us in response to actions by said countries. However, with the trillions of dollars at hand in our own economic struggles and downfalls, that is hardly an option.

whipping the slate clean (as in Fight Club) would cause massive instability. Debt is not just owed to some 10 rich bankers who are pocketing the money at everyone else’s expense. We all have a stake in the pay back of debt in some way or another. Local governments; retirement accounts; little guy individuals all invest in institutions that collect interest on debt. Where would these people by when that income dries up because all debt is forgiven? Small business issue credit and collect on debt; where would they and their employees be if all debt where forgiven? Its not at all practical.

I am an electrical engineer and work for a defense contractor building safety equipment for the US and other nations armed services. I do not work for a bank and would find such a pursuit not to my liking or calling. However I am intelligent and knowledgeable on banking, financing and the economy as they where my specialty while working for my MBA.

Yes; the banks gave loans to people that should not have qualified for them. Now those people can’t pay back those loans and the system is braking down. Which is what I said. The Original Postser Idea that the Federal Government should forgive very ones debt is silly because it is simply more of the same problem; debt not being paid for.

As for your idea that ” People with bad credit because of no fault of their own deserve a bailout” is quite silly as well. There is no possible way for anyone to have bad credit because of “no fault of their own”. The only way for an individual to have bad credit is to not pay on time or default on their debt; this is individual action taken by individuals.

Even when banks where giving loans to people who did not quality; those people themselves should have known they could not make good on the loans. The banks might have been willing to take the risk; but the individual should have known better. They should have known that they couldn’t afford the arm once it reset; they should not have tricked themselves (as so many people do) that in five years they would be doing better financially so they could afford it than if not now. That is a dangerous mind set; one should always assume that in the future they will be doing worse than they are now, this way they are always in a position to take care of them selves.