David sent me the following e-mail:
subject: the elephant in the room
Still trying to puzzle this out.
Banks are failing, not due to lack of regulation (Mish). But the elephant of Fractional reserve lending.
Okay I get that, what I don't get is how can a bank lose liquidity when they never had it in the first place.
They make 'money' by typing it into the computer. Yes, that's simplified, but the money never was there, so how can they lose nothing?
And yet us the 'great unwashed' will 'bail-out' the banks. Would love to see a discussion on your blog around this, maybe someone can enlighten me.
David poses a salient question, that I cannot readily answer - but to say that so much of what we are taught about the world is a bunch of bullshit.
How can a private bank (The Federal Reserve) have such control over Americans' money, and their lives? They just pulled $200 billion out of their asses to "save" the American economy. Where did that $200 bill. come from? That's easy - from interest charged on the (imaginary) trillions that America owes, and so on - back to the days of JC and the boys.
Why did they kill JFK? Maybe because he was going to release America from the strangle-hold of the Fed. Reserve, and re-introduce a government-backed "green back"?
Why is our government - through the Bank of Canada - buying frozen ABCP? I wouldn't buy it, would you? Ah, but we are buying it, and we will be bailing out all the Fucked Buyers, and CIBC, and, and, while we are impolitely raped in many other ways - like carbon taxes, property taxes, and on, and on.
And you thought that feudalism, slavery, oligarchy, and royalty were dead?
Collectively, we are a bunch of under-educated, but over-inculcated idiots. I can never get the image of the deported-to-camps Jews, Communists, Artists, etc. during WWII, who carried their suitcases with them in the belief that everything would be ok.
Man's inhumanity to man has not lessened in any way, and the pendulum is swinging back to very dark days. The Depression was no joke, and we are headed to something much worse.
I hope that people can figure out how to eat granite.