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| User Info | Solution: ONE DOLLAR OF CAPITAL in forum [Ticker] | |||
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Genesis Posts: 71432 Incept: 2007-06-26 
KD^2 
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http://market-ticker.org/archives/1622-S....
---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2009-11-13 12:27:48
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Jal Posts: 47 Incept: 2009-03-25
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Quote:ONE DOLLAR OF CAPITAL FOR EACH DOLLAR OF UNSECURED LENDING, MARKED TO MARKET NIGHTLY. How does the bank hold that dollar? In t-bills? jal Last modified:
2009-11-13 12:38:12 by jal
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Genesis Posts: 71432 Incept: 2007-06-26
KD^2
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Either in cash or short-term fungible-with-cash instruments, which since we're talking about guaranteed good delivery means short-term T-bills.
---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2009-11-13 12:38:47
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Ssg263 Posts: 100 Incept: 2009-01-07 
NY
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Karl, what's the difference between your proposal and 100% reserve banking?
2009-11-13 12:38:59
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Genesis Posts: 71432 Incept: 2007-06-26
KD^2
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Much. 100% Reserve Banking does not permit lending EVEN SECURED against collateral. That's bull****. ---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2009-11-13 12:40:58
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Striker754 Posts: 142 Incept: 2009-07-09
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And if some unforeseen circumstance should put this firm at risk of collapse, I believe we should be allowed to fail. As Treasury Secretary Timothy Geithner recently put it, "No financial system can operate efficiently if financial institutions and investors assume that government will protect them from the consequences of failure." The term "too big to fail" must be excised from our vocabulary. WTF was tarp all about then?
2009-11-13 12:46:27
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Nevertoolate Posts: 826 Incept: 2007-08-26 
San Antonio de Bexar de runover with illegals, Texas
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100% on target KD!. Political contribution (lobbying/bribery) has to be reformed to complete the circle. Off topic slightly but I would love to hear you address an equitable/honest way to finance congressional/sentorial/presidential elections that would keep Dodd/Frank etc. problems from ever happening.
---------- Vote with your $. Buy Non-Union AMERICAN made products. Before you attempt to beat the odds, be sure that you can survive the odds beating you.The only true "Change YOU can believe in" will be when we get 535 (now 534) new CONgresspeople.
2009-11-13 12:46:52
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Genesis Posts: 71432 Incept: 2007-06-26
KD^2
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There isn't one. The final check and balance on law enforcement refusing to enforce the law is the citizens being willing to step up and do it for them - with or without appropriate civil protections such as the right to counsel, the right to face your accusers, and the right to a jury. IT IS ONLY WHEN THE PEOPLE MAKE CLEAR THAT THE GOVERNMENT MUST FEAR THE PEOPLE THAT THERE IS LIBERTY AND LAWFUL BEHAVIOR ON BALANCE IN SOCIETY. All other TINKERING is bull****. ---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2009-11-13 12:48:56
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Mayorquimby Posts: 5868 Incept: 2008-09-18
Ponzi Planet
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Quote:Prohibit as a matter of Federal Law, and enforce it vigorously under pain of immediately dissolution, THE LENDING OF MONEY UNSECURED THAT EXCEEDS THE FIRM'S CAPITAL. How utterly boring. Why eat cake when you can have it too?! Ha! When all common sense (such as the above quote) and decency and morality and logic have been thrown right the **** out the window - well, you're living in really ****ty, primitive times. Seriously Gen - was there EVER a good reason (speaking on behalf of average Americasn) to increase leverage ratios? What good does driving prices up if there are NO WAGES to support that increase? You just robbed the bottom and gave it to the top. HOW CAN THESE PEOPLE BE SO ****ING STUPID AND/OR MALICIOUS?!?!?!? ---------- It's a PONZI ECONOMY and it already HAS collapsed. Now they need more ponzi!
2009-11-13 12:50:02
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Digalert Posts: 60 Incept: 2009-09-19
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...and ZH reports that "mark to fantasy" has been made permanent.
2009-11-13 12:57:04
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Endthefed Posts: 5 Incept: 2009-10-17 Atlanta Suspended
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Karl Great post. Wondering how the other bankster loophole can be closed as well in the are of SECURED LENDING. Example: Bank makes loan of $160,000 on property (allegedly) worth $200,000. Property drops in value (sound familiar). Who would specifically ensure that the banks are marking to market situations like these? Right now, many are insolvent. Even though UNSECURED LENDING above and beyond CAPITAL is a cause, it is not the only one. Ideas? Last modified:
2009-11-13 13:01:11 by endthefed
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Frat Posts: 150 Incept: 2009-07-15 NKY
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Here, here! That was simple enough for even the financially-retarded such as myself. It's also why it'll never happen; if the laws aren't multi-tiered, overly-complex, and exceedingly long, there's no way that lawmakers can hide things to help those who pay their bribes, er, campaign donations. KARL FOR TREASURY SECRETARY!
2009-11-13 13:02:24
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Genesis Posts: 71432 Incept: 2007-06-26
KD^2
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Quote:Example: Bank makes loan of $160,000 on property (allegedly) worth $200,000. Property drops in value (sound familiar). Who would specifically ensure that the banks are marking to market situations like these? Right now, many are insolvent. Even though UNSECURED LENDING above and beyond CAPITAL is a cause, it is not the only one. It is the only cause. No bank can ever cost the deposit fund one penny nor can it impose systemic risk (although itself can fail) if it NEVER has more than one dollar of unsecured credit out for each dollar in excess capital. It really IS that simple. ---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2009-11-13 13:04:15
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Signas Posts: 609 Incept: 2007-06-26 Reno
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So where is this Capital to come from? Americans long time ago (1982 if you were smart) learned that saving from your labor and production in a negative real interest rate environment is no win ie leech****s abound. The Chinese are selling bonds to finance the stimulus so guess not there either. We are supporting Europe with swaps and the Arabs are in a busted property bubble and floundering looking to excommunicate from the dollar. Maybe if we start a war in South America stealing the resources and throw in Africa, well maybe. We still have all the drugs coming out of Afganistan killing American children. The humongous tax increases with Carbon Tax, Healthcare and letting the Bush tax cuts expire takes away from available funds for saving. So just were does this capital come from to fund the banks to do the 1 Dollar lending ---------- Carbon Credits "FOR SALE" Bring a wheelbarrow full of money!!
2009-11-13 13:10:03
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Mondocondo Posts: 3143 Incept: 2007-12-03
Miami
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How nice that Jamie can bull**** about not wanting to be saved, knowing the government will never let him fail. Empty words that sound good so he can get what he wants. I can see it now. In the next financial crisis, after the government bails out JP Morgan, Jamie will say: "I am on record as saying I didn't want the government to bail us out. But the government thought our failure would pose a systemic risk, so they bailed us out anyway, despite my protestations. What was I supposed to do, stand on principle and prevent the government from doing what it thought was best to save our beloved country?"
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2009-11-13 13:32:33 by mondocondo
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Statusquojoe Posts: 2397 Incept: 2008-11-20
Land of the fees Home of the slaves.
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They think they have the capital already to make unsecured loans, its quantified by a 9 digit number that makes us a taxable commodity. Err rather in this case its future nine digit numbers.
---------- "In short, you are the definition of moral hazard." Senator Bunning to Bernanke
2009-11-13 14:05:47
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Signas Posts: 609 Incept: 2007-06-26 Reno
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9 digit don't mean **** without a just above broke
---------- Carbon Credits "FOR SALE" Bring a wheelbarrow full of money!!
2009-11-13 14:11:40
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Oxfordrick Posts: 2685 Incept: 2007-07-09
san diego
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And if some external event diminishes the value of the collateral held at all banks do you close them all down simultaneously or is there a lender of last resort to keep commerce going?
2009-11-13 14:15:38
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Genesis Posts: 71432 Incept: 2007-06-26
KD^2
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Banks determine the risk of being closed down due to some "external event" by determining ON THEIR OWN how close to zero (that is, how much they wish to carry in reserves BEYOND the mandated minimum) they wish to operate. We DO NOT need any specific bank. There are ALWAYS people who will set up a new bank to replace the failed on. The key is to prevent SYSTEMIC damage, which is, quite simply, the inability to meet obligations - that is, your failure ****s other people by virtue of your inability to pay. If you never lend beyond excess collateral for unsecured loans, THAT CAN NOT HAPPEN. ---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2009-11-13 14:26:54
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Robert17 Posts: 70 Incept: 2009-03-15 Judsonia, Arkansas
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I watched Ron Paul on CNBC earlier telling us that FRB is evil.
2009-11-13 14:55:48
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Nuke_engineer Posts: 774 Incept: 2007-08-19
NC
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The University of North Carolina is issuing $200 million in bonds next week. In spite of the inherent dangers we all know about, they are attractive to NC residents because of their tax free status. I walked away from them the moment I saw JPM was one of the key underwriters. I've asked Merrill to give me the results of their legal review of the offering since they are part of it and if they think the fees are in line with the market for these bonds. Let's see what they come back with.... ---------- HAL, All trespassers and pigmen vampires must be shot. Survivors will be shot again. I need to buy more ammunition! Scotty, Beam Me Up to the Land of Glass-Stegall! Last modified:
2009-11-13 14:59:05 by nuke_engineer
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Arkady Posts: 123 Incept: 2009-10-19
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This was asked earlier, but I would love to hear an explanation of the unsecured lending proposal. This definitely seems more robust than 100% reserve banking, but am unclear as to how it would work. Are we just eliminating marked to credit or something more involved? Would this insure that banks will always have money on hand in case of a "run"? I am only sympathetic to 100% reserve banking because it appears to be safe, but the safety also prohibits lending and growth - so an alternative is welcomed, as long as I can wrap my head around it. As of now it still seems the banks can fail and some people will lose out. Something that could not happen in 100% reserve banking, not to mention the invariable booms/busts that go along with this proposal. Last modified:
2009-11-13 15:26:58 by arkady
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Oxfordrick Posts: 2685 Incept: 2007-07-09
san diego
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The only way for a bank to ensure that it does not lend in excess of marked to market collateral plus reserves is to accept only collateral which cannot fall in value past the level of loans plus excess reserves. Last modified:
2009-11-13 15:25:37 by oxfordrick
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Arkady Posts: 123 Incept: 2009-10-19
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So mortgages are out, a massive source of collateral.
2009-11-13 15:25:44
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Oxfordrick Posts: 2685 Incept: 2007-07-09
san diego
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And everything else that can change in value.
2009-11-13 15:27:32
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