Heres a question for you all!

[loki]

Reading this Independent Article:

Central banks pump billions into money markets

PA and Reuters
Thursday, 18 September 2008

The Bank of England today said it would pump 40 billion US dollars (£22.3bn) into money markets as part of a co-ordinated move by major central banks.

The overnight lending by the BoE is being made in conjunction with the US Federal Reserve and alongside similar actions by the European Central Bank, Bank of Canada, Bank of Japan and the Swiss National Bank.

The Bank said: "These measures, together with other actions taken in the last few days by individual central banks, are designed to improve the liquidity conditions in global financial markets.

"The central banks will continue to work together closely and will take appropriate steps to address the ongoing pressures."

The first such lending operation took place today and involved US dollar funds against eligible collateral.

The European Central Bank said it joined forces with the Fed and central banks of Canada, Switzerland, Japan and Britain to boost liquidity in global financial markets.

The ECB and the Bank of England said they would each offer up to $40 billion in overnight funds. The Fed said it would authorise $180 billion expansion of temporary foreign currency swap arrangements and Bank of Japan announced it would launch dollar-supply operations as part of the worldwide effort to tackle the dollar shortage.

"The central banks continue to work together closely and will take appropriate steps to address the ongoing pressures," the ECB said in a statement.

The concerted action follows a rout in financial markets, roiled by fears of more Wall Steet failures after a week that saw Lehman Brothers file for bankruptcy, Merrill Lynch lose its independence and a $85 billion US government bailout of insurer AIG.

Overnight US dollar funding costs fell to 2 per cent after the central bank action, compared with around 5 per cent the previous day in Europe and as high as 8.5 per cent in Asian trading on Thursday.

"Obviously it does not tackle the underlying root causes of the problem, but it does help to release some of those immediate tensions that have been building up in the money market," Ian Stannard, senior currency strategist at BNP Paribas.

Earlier on Thursday central banks in Japan, Australia and India pumped a further $28 billion into money markets while China relaxed its policy for the second time this week.

South Korea sold dollars in the swap market and said it would try to halt the slide in bond prices, the Philippines intervened to support the peso, and Taiwan warned it could use a state fund to prop up stocks as markets whipsawed across the region facing it toughest test since the Asian financial crisis of 1997.

Overnight, news emerged of takeovers involving No. 2 US investment bank Morgan Stanley (MS.N), top US savings and loan Washington Mutual (WM.N) and major UK mortgage lender HBOS (HBOS.L), reflecting the seismic change in the global financial landscape.

Well-oiled money markets where banks lend short term funds to each other to smooth out daily swings in their balances are crucial for the proper functioning of the financial system and the economy at large.

Banks around the world have responded to the squeeze, exacerbated by investors' flight into safe havens of gold and government bonds, by flooding markets with cash and verbal reassurances, but with only limited success.

http://www.independent.co.uk/news/bu...ts-934520.html

Something started to bother me about the amount of money that has virtually dissapeared into the financial blackhole of the money markets, and the fact that printing or even just giving this virtual credit away to the banks/financial institutions, further devalues our own money supply. This will inevitably lead to inflation, as inflation is ultimately due to increased money supply in the system. One thing that no ones asking is, if we have to pump so much money into the system to keep it afloat, where on earth did the original money go, that we're replacing?

Anyway on to the thing thats actually bugging me. I started to add up these vast amounts of money, that have now been used just as the article states, because;

Well-oiled money markets where banks lend short term funds to each other to smooth out daily swings in their balances are crucial for the proper functioning of the financial system and the economy at large.

well the first thing that started bugging me about this statement was the fact that our entire financial system is based on a greedy philosophy of take what you can and fuck everyone else. Those at the lower levels of the system, just have to keep working to create wealth for those above, and now the system has been robbed of these vast sums of money we actually want to pump billions more in to keep the whole thing afloat? WTF.

Tell me if I'm wrong but in just the past few days $372 billion US dollars have been pumped into the money markets. None of which will help those at the lower end, the workers, this will only ever help those at the higher middle to top end of the system, to provide them with lost profits.

This got me into a whole 5 minutes of thoughtful tirade about the poor, and how we are always abusing their trust, and getting them in debt so they can ultimately work slave-like for the rest of their lives.

Cut a long story short, i started thinking about the third world debt, and wondered how much this actually came to. I finally found this:

The Scale of the Debt Crisis

Where it states that Third World Debt in 2002 was $592 billion US Dollars, and that this was responsible for thousands if not millions of deaths. Most of this debt could be associated again with bad lending practises, and we still wont let them off, compounding the interest to around 20% a year.

If anyone has some more reliable figures please place them here.

I just thought that in two days, rash descisions were made to flood the market with around $400 billion dollars, just to keep a market from failing, which was ultimately caused by greed. While thousands of people are dying directly caused by a debt of around $600 billion dollars and after years of negotiating of our best financial experts, we still cannot agree to forgive this debt.

Is there any hope for us, as a species that is?, should there be?

[Nostalgia]

One thing that no ones asking is, if we have to pump so much money into the system to keep it afloat, where on earth did the original money go, that we're replacing?

Loki, I have wondered this about bank crashes before this even happened, just where exactly does the money go?
It's not like they would just gather it altogether and say to some people "hey guys, this money is no good to us any more go and throw it in a skip somewhere.
Even though it might just be paper money, albeit fiat currency, it still exists so must end up somewhere,(am I right with this?) but as you ask with your question where?

I just thought that in two days, rash descisions were made to flood the market with around $400 billion dollars, just to keep a market from failing, which was ultimately caused by greed. While thousands of people are dying directly caused by a debt of around $600 billion dollars and after years of negotiating of our best financial experts, we still cannot agree to forgive this debt.

Is there any hope for us, as a species that is?, should there be?

Which financial experts would that be, the experts that everybody listened to that got us into this mess in the first place?
Greed is a weakness that is seen as a strength by many people, and most just cannot resist a slice of the cake.
The world is upside down.... for example if you go back a few hundred years and had been living a nomadic lifestyle, the strength of the tribe wouldn't be in who could make the most money, unlike todays mentality where some think bigger is better is stronger, because you might drive the largest SUV, a black one at that just to add a bit of super duper fucking coolness!
No, the strength of the tribe would be due to reliance upon each other and spotting each persons talent strengths and weaknesses at an early age, then nurturing each child as it grew, so that each would benefit the whole.
That way of living simply does not exist anymore and I have a feeling that we are about to reap the benefits of our own selfishness.
Did a similar scenario happen with the Mayan Empire when their huge city culture began to crumble as they discovered that they had destroyed the very environment they relied on to live?
Eventually every empire dies off, except the problem today is that we have went global, and we may soon find that we have no distant forest to run too when the bankers sticky plaster falls off.

[loki]

And now it looks as if they are maybe thinking about saving the banks up to another $2 trillion dollars:

US pledges financial rescue plan

[Nostalgia]

Originally Posted by loki

And now it looks as if they are maybe thinking about saving the banks up to another $2 trillion dollars:

US pledges financial rescue plan

if that fails then what?

[loki]

With that $2 trillion alone, you could wipe out Third World Debt, saving millions of lives, and give every person in the US the privilege of Universal Healthcare coverage, again saving thousands of lives, still all costing less than a trillion dollars.

[Thinking Man's Idiot]

Idiots guide to debt as money (bank credit).

Sorry for repeating myself folks, but if money is debt, then once the debt is repaid, then it no longer exists. No debt=No money. It is the over-valuation of a house, the loan typed in to your account, and as the over-valuation corrects itself, the 'money disappears' (i.e. a sub-prime crisis- who? holds this over-valuation as the debts are sold between the lenders). Fucking madness, basically. Hence the need for 'permanent' money. Inflation, under this system would be controlled by taxation i.e. 20% inflation is equivalent to 20% taxation. Sorry, again, for the repetition.

Money created as value (paper, electronic, digital), given in exchange for labour/work done- i.e. infrastructure, would be permanent and owned by the wealth creators and not the lenders of a future promise i.e.not subject to speculation, interest or perpetual debt. This would be inflationary, if not taken out of use by taxation. But totally stable, void of Brown's (in)famous 'boom and bust'.

[jamiedb]

A newbie, I hope it's not uncouth to post a link I've already posted at another article, but it seems very germane to this discussion - see end of comment.

Banks can create FUTURE money when they issue debt, but money is not debt. Debt is very real, and when it is paid, the creditor gets real money, even if it is simply a computer entry (in our fiat monetary system).

Massive debt means that a massive amount of money will eventually have to be created in order for the debt to be repaid. The ONLY alternative to this is default. The ~$70 trillion US government debt - largely foreign-held - is rapidly becoming the largest elephant in this shrinking room. If foreign entities are no longer willing to continue lending (buying treasuries, etc.) to the USG, as is rapidly becoming the case, the USG won't have the money to continue servicing its debts. The Fed will become "the lender of last resort" - that is, it will have to unleash a blizzard of new money.

That would be on top of the blizzard of new dollars the Fed has undoubtedly created/committed itself to create during the last two weeks of "bailouts".

Shadowstats.com is a great place to get demystified and corrected government economic metrics, which we all know have become massively falsified through decades of bi-partisan manipulation. Perhaps it was you, Loki, who left a link to the site somewhere else recently? (in which case I've created an echo chamber - sorry).

In this cogent, impeccably documented piece from last April, John Williams of shadowstats explains why a hyperinflationary great depression is the only scenario left - and why the Paulson-Bernanke game to rob the country blind will only accelerate the process and deepen the disaster. Read and prepare. See: http://www.shadowstats.com/article/292

The article also makes it clear that this catastrophe has been obvious to financial wizards for a long time. Now consider - why did they let it happen? A culture of political expediency is the knee-jerk response, but it doesn't wash. You don't let a stooge like Bush wreck the economy simply because you like his tax breaks. The political and global implications of the looming bust are at least as frightening as the economic pummeling we're about to take. Think "Weimar Republic", "NWO", and "amero".

[Thinking Man's Idiot]

Good to see you here amongst us , JamieDB. My point about debt as money is that these promises are treated as 'real value' and are traded and profited upon between the holders so, in effect, 'real' (to them). Unsustainable, of course; that's why I get so passionate abut it. Just as 'interest' does not exist. Principle is the total money supply, and the interest forces more debt. Right, now I'll get my head down and check your link.

Here's my idiots guide to debt as money.

Paul Grignon's 47-minute animated presentation of "Money as Debt" tells in very simple and effective graphic terms what money is and how it is being created. It is an entertaining way to get the message out. The Cowichan Citizens Coalition and its "Duncan Initiative" received high praise from those who previewed it. I recommend it as a painless but hard-hitting educational tool and encourage the widest distribution and use by all groups concerned with the present unsustainable monetary system in Canada and the United States.

[jamiedb]

Thanks very much, TMI! The video provides some lessons I sorely needed. I had not considered that debt repayment (with tangible currency) replaces the "virtual" money issued in a bank loan, thereby reducing the money supply by that amount. The vid also makes it crystal clear why capitalism (as we know it) requires an unsustainable 3% growth per year - to stay ahead of the ever-growing debt.

A glaring weakness in the shadowstats analysis I linked is its notion that the gold standard enforced discipline on the system that, if retained, would have made it sustainable. Even if we grant this putative "discipline" of gold, it would merely slow down the rate of theft, delaying but not preventing the inevitable bust. It seems that have arrived at "exponential days", when debt has grown so large each "necessary" annual uptick is large enough to devour a fair-sized country, and the banks are devouring the foolish goose that laid their golden egg - us.

[Thinking Man's Idiot]

You're so much more articulate than I, JamieDB. I'm rather autistic and resort to imagery to compensate. PLEASE come back soon. With much respect, TMI.