Posts Tagged ‘central bank’

“Commercial banks operated on sound classical principles. It’s a different story these days. Central banks and commercial banks are essentially Ponzi schemes, and engines of inflation. It’s a major reason the rich are getting richer—which is OK, except that today it’s at the expense of the middle class.” -Doug Casey

“Sound principles of banking are identical to sound principles of warehousing any kind of merchandise, whether it’s autos, potatoes, or books. Or money. There’s nothing mysterious about sound banking. But banking all over the world has been fundamentally unsound since government-sponsored central banks came to dominate the financial system.  Banking all over the world now operates on a “fractional reserve” system.  A banker can lend out a dollar, which a businessman might use to buy a widget. When that seller of the widget re-deposits the dollar, a banker can lend it out with interest again. The good news for the banker is that his earnings are compounded several times over. The bad news is that, because of the pyramided leverage, a default can cascade.

In 1934, to restore confidence in commercial banks, the U.S. government instituted the Federal Deposit Insurance Corporation (FDIC) deposit insurance….  FDIC insurance covers about $9.3 trillion of deposits, but the institution has assets of only $25 billion. That’s less than one cent on the dollar.” -Doug Casey

Printing Money

Posted: September 26, 2015 in Money Matters
Tags: , , , ,

“But here’s something most people miss.  When a central bank prints money, it is not an asset, it’s a liability.” -Jim Rickards

“Because the central bank is always standing by with credit, bankers are free to make promises they know they might not be able to keep on their own.” -Doug Casey

Central banks have not been attempting to manage an economy for very long.  But there is no experience we know of that shows us that interest rates set by a group of bank industry insiders are better than those discovered by honest outcry in an open market….  Nowhere in the history books is there an example of it.” -Bill Bonner