Peter Schiff- Fucking excellent!
- Thread starter icedancer2theend
- Start date
apple0154
MEOW
Excellent? Mr. Schiff is against the FDIC!
Imagine if bank accounts were not insured. He implies that if bank accounts weren't insured by the Federal Government the bailout wouldn't have happened. While that's true the problem rests with not overseeing the banks.
Look at the people who lost their retirement when companies went bankrupt. Enron, for example.
Mr. Schiff talks about the days before the FDIC (the 20s) when bank depositors took an active interest in their bank and how they made loans. Sure, it was easy to see if "Mr. Jone's" farm was a good investment back then. How is the average person supposed to oversee their accounts/investments when people like Madoff are around? Companies like Enron?
The man is nuts!
Centinel
Tenther
A bank should be insured against loss, just as any bailee ought to insure themselves against loss. If the money being held on deposit is robbed or destroyed in a disaster, this needs to be insured.
The problem is that banks are embezzling people's deposits and loaning them out, creating an untenable situation in which the depositor believes that he has full and immediate access to his funds, yet the funds have been given out to someone else. At this point, the bank is already insolvent. How do you insure against a condition that already exists.
The root of the problem in the banking industry, the problem that spills over to depositors, is that banks loan out deposits. This is the practice that must be stopped to insure bank accounts.
Why in God's name are people investing their savings in stocks? Why do we assume grandma is a financial guru? What ever happened to putting your money in the bank and having it be there when you retire?
The average person is not supposed to make investments, at least not with money they can't afford to lose. Investing in a business is a risky proposition that requires a certain degree of financial acumen.
W
WinterBorn
Guest
Any depositor that thinks all the funds deposited are available are woefully undereducated. Banks loan money. The money they loan is the depositor's money. Thats how it works.
apple0154
MEOW
A bank has to loan out the money so it can collect interest in order to pay interest to the depositors. If banks were owned by the government bankruptcy wouldn't exist. It's an absurd situation today where the government is responsible for the deposits but has little oversight on what the banks do with the money.
I agree. That's why privatizing SS is a crazy idea. People forget retirement plans were all private before SS came into effect and the Depression showed us the error of that idea.
SmarterthanYou
rebel
Whats absurd is you think that banks make their money from loan interest.
apple0154
MEOW
They used to. Of course, now that GS has been repealed the banks can play the casinos.
christiefan915
Catalyst
Get rid of the FDIC, right. I'll be first in line when the bank runs start.
Centinel
Tenther
Yes we all know that banks loan out their depositors' money. I am pointing out that that is what leaves them susceptible to bank runs, and what leaves depositors at risk of being wiped out. When a depositor puts money into his checking account, he expects that money is always and immediately available to pay his rent, groceries, or water bill. If the bank simultaneously loans this money out, who is the legitimate owner of the funds? The lender or the depositor? The bank has created the untenable situation of making two different people believe that they are the owner of the same money.
I realize that banks also can play the role of financial intermediary by loaning out money they themselves borrow. But I am suggesting that we should draw a distinction between a deposit with a bank and a loan to a bank. For example, a CD is a loan to a bank. The buyer of the CD is lending money to the bank and is not under the impression that he also controls the money he lends. He does not expect to pay his rent with this money. He is acting as a businessman when he buys a CD and makes a loan to the bank, and he is taking the same risks as any lender.
A depositor on the other hand rightfully expects that his checking account balance is always as immediately available for him to withdraw or draw checks. He is not making a loan but is keeping his money in the bank for safekeeping.
The banks blur the difference between borrowed funds and deposited funds. The money they borrow is theirs to do with what they will, as long as they are able to pay back their lenders (CD owners) when required. On the other hand, loaning out deposits cannot be seen as anything other than embezzlement and ought to be punishable as a crime.