[ExI] Money Games

[BillK]

On Mon, Dec 15, 2008 at 4:10 AM, Damien Broderick wrote:
> Barbara Lamar the tax lawyer comments:
>
> I don't buy Paul Grignon's statement that if interest is charged on loans of
> "real" money, the bankers end up with all the money. This would only be true
> (even on a theoretical level) if the banks could loan money in excess of
> their reserves.
>


Errr, I don't want to criticize your better half, but that is exactly
what the banks did.

The banks lent out many multiples of their reserves during the bubble
period. Money was lent, assets were bought and went up in 'price', so
more money was lent based on higher valuations, etc, etc, It was twin
bubbles of asset value and debt. When the bubble burst, the banks had
to go to the government and explain that they had given away billions
and now they couldn't get their money back because the assets had
collapsed in value.

See  The New Capitalism
   * Robert Peston    8 Dec 2008

A new capitalism will emerge from the rubble.
Please click here [6 page pdf]
<http://www.bbc.co.uk/blogs/thereporters/robertpeston/newcapitalism.pdf>
for my thoughts on how we got into this mess and what the re-made
economy will look like.
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BillK