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For a different understanding of the banking "crisis"...

Original post made by Gary, Downtown North, on Apr 15, 2009

We seem to have to listen to a certain paragigm of the banking crisis, yet it does not make a lot of sense, except that it is being driven by those very prognosticators of panic.

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Like this comment
Posted by qq
a resident of Barron Park
on Apr 16, 2009 at 7:26 pm

I'm glad the Federal Reserve hasn't panicked.

Web Link

Remember, this lending is high powered money.

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Once it gets into the system, it is lent out on a fractional reserve basis using a money multiplier. Trillions of dollars are on loan right now. Will it ever get paid back?

Fiji just had to devalue their currency by 20% to try and bring tourism back.

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How would holders of U.S. dollars (Ni hao!) take a similar devaluation? We've done it before, perhaps we will do it again.

qq


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