Posts Tagged ‘lend’

Banks are the growth engine of an economy. They make loans to fund new businesses, construction, and consumer spending. And they collect the ‘spread’ between what the short-term rates pay to borrow and the long-term rates they earn when they lend.” -Porter Stansberry

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“Not for nothing do we have such a preposterous financial system.  The borrower buys things he doesn’t need with money he doesn’t have.  The lender lends money that no one ever earned or saved, at the lowest interest rates in history, to borrowers who can’t pay it back.” –Bill Bonner

“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

Mortgage Refinancing

Posted: August 31, 2012 in Mortgages
Tags: , , , , ,

Mortgage interest rates are the lowest ever in the 40-year history of the Freddie Mac Primary Mortgage Market Survey.  Many are eagerly watching the rates, attempting to get the lowest rate possible.  Along with that is the trend to convert to a 15 year mortgage.  Why would banks be so eager to promote lowering interest rates and shortening the term of the mortgage?  Will they not lose money?  It may seem that way on the surface.   The fact is it enables the bank to get their money back quicker; and when they get that money back, they can lend it out again; making more money, faster.  Is it best for the consumer?