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i feel bad for this comment thread... As someone studying Financial Management in a master's degree right now i can say, you did a good job of explaining! Most people here in the comments have no actual idea of how the financial market works and just repeat the same triggerwords, just like in politics. Needless to say, everyone in this thread thats bitching about banks, has surely their own bankaccount. If you are that much agaist it, dont spit out insults, do something productive!
I've studied High school of economics, now I'm first year in Uni. They never taught us this exact patterns. Not in such ways. I hope I find better ways to learn at my new Uni though.
I'm sure I know how banking works. :) It's not too complicated when you think about it and I have to say that from the time I posted my comment, things have changed in uni and I actually found a great teacher who has the ways to explain complicated, as you call them, matters in an understanding ways. Never stop learning.
The explanation of bank lending is wrong.. banks lend more far far more money than they have on deposit. It's called fractional reserve banking. Essentially when you take a loan out, most of the money you get is created out of thin air, and it's your promise to pay it back with interest that brings it into existence. This is of course gives banks huge power.
+Joel Nichols but the main process of how money and credit is created is fractional banking. 97% of all money is created is from fractional banking. so it's quite a big thing to miss out when explaining how banks work.
+Mutton Man The reason why it tends to work is that this new money being lent into existence is going toward both supply investment to make new stuff and/or demand in getting financing a car so you can get to work and do other things you want to do with a car or bike or whatever item. It helps expand the money supply while expanding both supply of stuff and helping demand as well, when both quantity of supplies increase and quantity of goods demanded increase, the overall economy grows, meaning more people have a chance to improve their standard of living. That's the basic concept. The downside to fractional banking is that it can increase risk to banks on default should their be a run on their bank and depositors flee, hence why FDIC was created after the 1929 crash, and also why regulations that put a firewall against investment highly speculative banking and deposit banking. Unfortunately in 2000, the republicans in congress signed by Democrat Clinton in the US repealed this firewall protection. And just 7 years later, we had a meltdown and runs on banks in the US. Also, it didnt' help that new risky financial instruments were never and still are not regulated like credit default swaps. From early 1990's finance sector was only 5.5% of GDP, by 2006 it had grown to over 8% of GDP, financing to be efficient should be too expensive, so it rising in GDP means it cuts other sectors' shear of GDP in producing tangible goods and services.
just sold a property in Washington DC and I'm thinking to put the cash in stocks, I know everyone is saying its ripe enough, but Is this a good time to buy stocks? How long until a full recovery? How are other people in the same market raking in over $200k gains with months, I'm really just confused at this point.
Yes, a good number of folks are raking in huge 6 figure gains in this downtrend, but such strategies are mostly successfully executed by folks with in depth market knowledge
Very true. Despite having no prior investment knowledge, I started investing before the pandemic and pulled in a profit of approximately 950k that same year. In reality, all I was doing was getting professional advice.
how can i participate in this? I sincerely aspire to establish financial future and I am eager to participate . who is the driving force behind your success?
The financial sector and derivatives may have a Hindenburg moment if the US Treasury market collapses. Rising market illiquidity in the $14.8 trillion U.S. Treasury market, according to Bank of America, might affect other financial markets.
There are many opportunities to make fantastic profits, especially in this depressed market, but such complex transactions can only be carried out by seasoned market professionals.
@@tatianastarcic I've been considering taking that path. I've kept a lot of stocks, but they're starting to depreciate, and l'm not sure if I should stick onto them or sell them. I believe restructuring my portfolio would be facilitated by engaging your investing coach.
I'm deeply concerned about the current banking situation. The thought of a bank as large as SVB failing worries me greatly. A close friend who manages a rapidly expanding startup experienced significant setbacks due to a recent bank run. As a precaution, I've withdrawn over $840,000 from my bank. However, with FDIC coverage limited to $250,000, I'm aware that a potential collapse could have serious repercussions. Given these circumstances, I'm considering investing in the stock market. Any suggestions on how I should proceed?
You're not doing anything wrong, you just don't have the required skillset to profit off a down market, folks that are making profit in this market are pros and experts with in-depth knowledge and skillset.
Yeah, financial advisors could make a lot of difference, particularly in a market such as this. Stocks are pretty unstable at the moment, but if you do the right math, you should be just fine. Bloomberg and other finance media have been recording cases of folks gaining over 250k just in a matter of weeks/couple months, so I think there are a lot of wealth transfer in this downtime if you know where to look. I have been using an FA since 2020, and I return at least $30k ROI, and this does not include capital gain.
“Sonya lee Mitchell’’ is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment.
What sets top invest0rs apart from the rest? I've got $345K in equity from a home sale and I'm unsure whether to put it into stocks or wait for a more favorable market condition.
Just because there are opportunities in the market doesn’t mean you should go in blindly. To understand the potential factors that contribute to your financial growth, I'll advise you to seek the help of a professional.
The greatest profitable investments typically fly beneath the radar,' is a statement that resonates with me from Warren Buffett. Firsthand experience has taught me this lesson. I discovered that my own emotional prejudices had influenced my decision-making following a traumatic divorce. I turned to a qualified advisor for advice, and she helped me turn my company around. My assets increased significantly-they went from $175k to $650k-due to their professional advise. This encounter made me realize how important impartial advice is to attaining financial success.
How can I participate in this? I sincerely aspire to establish a secure financlal future and i'm eager to participate. Who is the driving force behind your success?
NYCOLE CHRISTINA VANNATA a highly respected figure in her field. I suggest delving deeper into her credentials, as she possesses extensive experience and serves as a valuable resource for individuals seeking guidance in navigating the financial market.
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Lot of youtubers start to make advertising or product placement. Some of them say "carefull I'm going to do it in this vidéo" some other doesn't say anything and sneak it. We need you, so if you need it, I'm fine. Just be clear, transparent, and please never let sponsor control your content, even youtube. Do what you love, you inspire me, and thank you very very much for the awesome work. I'm helping often by adding subtitles.
I ❤️ your vids! They are so interesting, nice animations, teaching content and BIRDS!!! Keep up the good work. My favourite video is the immune system one!
Personally, I think investors will start to seek more market diversification. can i confidently invest about $350k into the financial markets in 2024? I'm still not sure how rates will effect the market just yet, which worries me a lot.
No doubt, having the right plan is invaluable, my portfolio is well-matched for every season of the market and recently hit 100% rise from early last year. I and my CFP are working on a 7 figure ballpark goal, tho this could take till Q3 2024.
As a newbie about to invest, you must have these three things in mind 1. Have a long term mindset. 2. Be willing to take risk. 3. Be careful on money usage, if you're not spending to earn back, then stop spending. 4. Never claim to know - Ask questions and it's best you work with a financial advisor Chakon Peter...
A lot of complicated mathematics came from accounting and banking since keeping track of numbers is very important for making a buck in those industries. In fact, Euler's constant (e) can be found through compound interest. As you put larger and larger values for n in the equation: (1+1/n)^n, the value gets closer to Euler's constant. So the limit as n goes to infinity for that equation is actually e!
Agree, yet 1:30 of this video is still trying to convince people that banks are using only thier monies. NOPE! Banks have all monies in the world and even more xD
They can borrow as much as they want from the Federal Reserve, as long as they have some marginal percentage of assets in reserve. Money is just created at the push of a button.
@@tomaszskomra1718 well, in fact, when every customer withdraws their money from all banks at the same time, those banks will in fact get bankrupt. They even won't be able to give everyone their money back
I just listened to the full track on Soundcloud, it's pretty awesome! And apparently all the music from their channel is on soundcloud. You can find the link in the video description :)
YES!!! That's exactly his name (Alexander Finely) so many people have recommended highly about him and am just starting with her 😊 from Brisbane Australia🇦🇺
@@wojtekthebear4958 what conspiracys? Do you understand fractional reserve lending? Bank's create money out of thin air my friend,you should educate yourself before talking bollocks next time mate 😂👍
@@azap12 who told you that? They're creating fiat currency out of thin air at an extremely massive rate and that causes the money already in circulation to be worth less so when you say control the economy if you mean by keeping us all poor than YES haha and make a super fat profit for then selves at the same time
No true professionals trick people into registering there children with the goverment with a berth certificate and then turning around and putting them on the stock market as a bond and yes I said berth do your own research
The problem we have is because Most people always taught that " you only need a good job to become rich " . These billionaires are operating on a whole other playbook that many don't even know exists.
" It is remarkable how much long term advantage people like us have gotten by trying to be consistently not stupid , instead of trying to be very intelligent."
The wisest thing that should be on everyone mind currently should be to invest in different streams of income that doesn't depend on government paycheck, especially with the current economic crisis around the world. This is still a time to invest in Stocks, Forex and Digital currencies.
I also keep seeing lot's of people testifying about how they make money investing in Stock, Forex and Crypto Trade(Bitcoin) and I wonder why I keep loosing. Can anyone help me out or at least advice me on what to do.
Even with the right technique and assets some investors would still make more than others. As an investor, you should've known that by now that nothing beats experience and that's final. Personally I had to reach out to a stock expert for guidance which is how I was able to grow my account close to $35k, withdraw my profit right before the correction and now I'm buying again.
If a bank goes under, all the money that innocent people have in it, goes down the drain as well. This is why the banks were bailed out, because if their weren't, millions upon millions of people would lose that entire lives. Riots, anarchy, and end of civilization (for a time) would ensue as a result.
epicpolyphony You can't just let their customers life savings disappear. That would be a bigger problem then what they caused. Before anyone says it I know putting money in the bank is an investment that carries risk but it still would be really bad.
***** Although this is true, what we have instead is injustice. They took huge risks for short term profits in part illegally, and it blew up in their faces... but they got bailed out, the "risk" wasn't really there in the first place. Nothing keeps them from gambling again. When you are too big to fail and too big to jail, you can't become poor and can't get into prison. How is that still a fair society? This is like having a royal ruler class again. Makes my blood boil.
A few years ago I had to go into a Bank of America to cash a customer's check. The teller wanted to sell me a bank account. I tried to decline politely, but the teller just would not give up. After a few civil "no"s, I couldn't resist saying, "Look, your bank just crashed the whole world's economy. I think it would reflect badly on me as a business person to have any kind of business relationship with you. Not to mention, you aren't the most stable institution at the moment."
Yeah, you sure showed that $10 per hour employee who's the boss. Bet you feel really good about yourself, don't you? Maybe next time you're at McDonald's you can scold the cashier who tries to get you to supersize your meal.
Burt1038 Well, that's why I tried to be polite in the beginning. But she just wouldn't take no for an answer. I was embarrassed about it afterward, but it's just so infuriating that, while the economic downturn cost me my start in life (instead of the $60,000 I made in 2007, I only made about $20,000 in 2009, and not much more in '08) these banks and their employees, who're responsible for the whole mess, are just going merrily along as if nothing was wrong.
+TR for life She said something like, "Bank of America is very stable." I didn't respond because I already felt embarrassed by my outburst, but I was thinking, "sure, stable with my taxes."
Josh Bobst Hey, you don't have to convince me that B of A sucks. But they actually did hemorrhage a lot of employees in the process. So much so that they were offering my brother, who hadn't even graduated college yet, a branch manager position upon graduation. I gave him some brotherly advice on that LOL. Needless to say, he did not accept the position.
@@SuSmallville Yes and no. The financial sector is better regulated than it was in 2008. Nowhere near perfect, but better. On the other hands, central banks and governments haven't fully recovered since the last economic downturn.
About the current bank situation, I'm really concerned. I am worried about a lot more if a bank the size of SVB may fail. I have a friend who manages a fast-growing startup and was severely impacted by the bank run. I have taken more than $840k out of my bank. Since the FDIC only provides coverage up to $250K, an implosion could have negative consequences. presently want to invest in the stock market. Does anyone have any ideas on how I might proceed?
We fail to realize that banks are commercial enterprises that are driven by greed as well. The over-leveraging of assets by banks starting in 2020 was one of the factors that led to SVB's collapse. I've never felt secure keeping a large sum of money in a bank. In other words, I invest through my financial advisor, reap the benefits, and then spend the money.
@@martingiavarini Would you mind telling me how to contact this specific coach using their service? You seem to have the solution, as opposed to the rest of us.
@@hermanramos7092 Catherine Morrison Evans, a well-known person in her field, is my advisor. I advise doing more study on her credentials. She is a great resource for anyone looking to understand the financial market because of her extensive experience.
@@martingiavarini Thanks for the advice. The search for your coach was simple. I investigated her well before using her services. Considering her résumé, she appears competent.
The government wants to take control of people, and slowly, you sheep will switch to bitcoin. Banks aren't going to crash anytime soon, big banks know what they're doing.
Once again the visualisations in this episode are astonishing! For every phrase said, there is a great picture shown and therefore even such a complex matter like banks is easily comprehensive. Thanks a lot and keep on the great work!
"Banco" in italian means workbench. It's the place where you trade products in a shop and this is the origin of bank. "Panca" that means bench have no correlation with banks is just a bad translation. Anyway, I love your videos. Keep doing this :)
@@adamsmith21stc "Banco" can mean table or desk depending on context and use, but for the latter we mostly use the word "Scrivania". A word can have multiple meanings.
*I and my family are grateful, we will forever be indebt to you😇 I will continue to preach about your name to the whole world to know you have saved us from a very huge financial debt which just little investment thanks so much Mrs Ava Harry*
she is very popular among brokers and I must say She is an outstanding broker too I saw her once on Chris Hogan channel and contacted her on IG shortly after that, investing in forex has been very profitable to ever since then
I made my first $85k investing in forex trading,As a beginner now I have time for my families and other things in life, thanks so much Mrs Ava you a life changer
+funzy101 It's not that hard to explain, you just reverse the explanation used in the video, rather than banks lending money which is first deposited, customers deposit money which is first borrowed.
The trick is to get your money to do the working, I've read success stories of people that grew a profit of over $3million within 2years and that motivated me to get started as an investor, so I'd appreciate more tips and clues on how to make huge profit.
I agree, just get in touch with a financial consultant or professional to guide you and set you up with really profitable portfolios, I personally got in touch with a consultant and through her assistance, I’ve exponentially grown my portfolio to $380,000 within 4months, far from a million which is my goal but I’m definitely getting there.
You work for 40yrs to have $1M in your retirement, meanwhile some people are putting just $10K in a meme coin from just few months ago and now they are multimillionaires.
I’m celebrating a $30k stock portfolio today. I started this journey with 6k. I have invested on time and also with the right terms now I have time for my family and the life ahead of me
Yep, maybe the channel doesn't know. I'm starting to wonder, just who in the world knows? For example, somebody made a video about money generation in the UK and got out a document from the Bank of England (their central bank or analogous institution), and there was stuff in it that were contradictory to reality apparently. Perhaps the money system is just so big, most people in it only know their part, and so most people aren't aware of the whole effects and nuances of it.
I mean he did. He mentioned that You deposit and bank lend it. So it's obvious that someone who got that money as loan will also deposit the money in bank and cycle will continue.
Stock's are crashing, Bitcoin Investment right now will be at every wise individual list in a month you we be ecstatic with the decision you make today
You guys have such an awesome channel. My english is getting better with your videos and at the same time, I am learning about a wide range of topics. Thank you so so much. Keep it up :)
The Market have been suffering over the past month, with all the three indexes recording losses in recent weeks. My $400,000 portfolio is down by approximately 20%, any recommendations to scale up my returns before retirement will be highly appreciated.
Find stocks with market-beating yields and shares that at least keep pace with the market for a long term. For a successful long-term strategy I recommend you seek the guidance a broker or financial advisor.
Very true , I diversified my $400K portfolio across multiple market with the aid of an investment advisor, I have been able to generate over $900k in net profit across high dividend yield stocks, ETF and bonds in few months.
The investment-advisor guiding me is Diana Luise Hines, she is popular and has quite a following, so it shouldn't be a hassle to find her, just search her
@@Deanswain19 Thank you for this tip. it was easy to find your coach. Did my due diligence on her before scheduling a phone call with her. She seems proficient considering her résumé.
Don't forget bitcoin, but that probably deserves a video all its own since so many don't understand it. Bitcoin is beginning to appear in countries and regions that don't have access to local banks and credit unions and the technology behind bitcoin is being developed to included things like identifying land and property owners. There are some regions of the world where people are robbed of their land simply because they cannot produce the documents that prove they are the legal owners, this technology gives them a digital record that cannot be altered or forged...great videos
I already know about bit coin... to bad they have nothing to do with my country here.... money crisis hire means a few hundred bit coin can make me a milionare
+manb4war bitcoins aren't really relevant anymore unless you're a libertarian or someone wanting to by chronic og heroin off the deep web. The market is terribly unstable, their value is incredibly high but is also slowly dropping due to everyone getting on the hype train too late.
Agreed, this doesn't really explain banking. Where do the banks get the money from? How is it that they can lend out more money than they actually have?
@@tubularG They don't own the money they lend out, if theres 2 people each with 10 euro in their account, and someones comes and asks for 20 euro loan the bank basically grabs the 20 euro from the people, lends it to the person in hopes of getting 25 euro back due to interests, then deposites the 20 euro back into the person bank and pay them interest, let's say 1 euro and they keep the 3 euro they just made for free by lending out the money they didn't own in the first place. The person with who's money is grabbed doesn't see a chance because that'd be too apparent. That's how people can lose money if the bank goes bankrupt, cause they used all of your money and they have nothing to give back.
I stumbled across your video and instantly knew this was made for me. I'm going through the same thing with my business but just knowing that I'm not the only one who's experienced this just pushes me to go harder. Continue to put out informational content and sharing your story, THAT is what separates you from the rest. Much gratitude Monique and *Linux Tech Corps* was so helpful during the process of boosting my credit
The wisest thing that should be on everyone mind currently should be to invest in different of income that depend on the govt especially with this current economic crisis around the world
The global pandemic shut many financial institutions from functioning thereby rendering most people jobless & investors lost more than they ever thought of losing.
Successful people don't become that way overnight. What most people see at a glance-wealth, a great career, purpose-is the result of hard work and hustle over time.
I began my investment journey at the age of 38, primarily through hard work and dedication. Now at the age of 40, I am thrilled to share that my passive income exceeded $100k in a single month for the first time. This success reinforces the importance of the advice mentioned earlier. It is not about achieving quick wealth, but rather ensuring long-term financial prosperity.
This seems like the worst period.Even the markets are very unpredictable.started investing recently when the market prices were a bit high,today i am more than 60% down
I thought about investing in the financial market, I heard that people make millions if you know the tricks of the trade, but I lack good knowledge and a strategy to outperform the market and generate good yields. I have $160,000 but it's hard to bite the bullet and do it.
Having an investment advisor is the best way to go. Based on a direct encounter with a CFP named Kate Elizabeth Amdall, I can say with certainty that their skills are excellent. She helped raise over $580,000 in 18 months from an initially stagnant portfolio of $150,000
Putting well earned money into the stock market can be over emphasize for first time investors unlike a bank where interest is sure thing. Well basically times are uncertain, the market is out of control and banks are gradually failing. I’m planning on a ballpark figure of $3m for retirement and I have about 550k loaded up for this , could they be any opportunities for a boomer like me?
As a business owner in both the service industry and eBay reseller of all product categories, I can tell you we’re in a deep recession and everyone is running out of money, sincerely your best opportunity is seeking a financial advisor unless you’re canny yourself.
Very true; people down-play the role of a financial advisor until burnt by their mistake. I remember after my layoff early 2020 amidst covid outbreak, I needed to stay afloat, hence researches for registered advisors and I did found someone of practical knowledge, and decades of experience. As of today my stagnant reserves $325k has yielded almost 7-figures after subsequent investments.
Wondering what’s stocks you have in your wheelhouse now that the market have gone berserk! Your invt-advisor must be a mastermind, do you mind sharing info please? I’m in dire need of portfolio assistance for extra income.
Renowned for his proficiency and expertise in the financial market, "COURTNEY HEATH WILLIAMS" my financial advisor, holds a broad understanding of portfolio diversification and is recognized as an authority in this domain. All I can say now is my life has changed since meeting Courtney Heath Williams. He's helped me become debt-free and save for retirement." | made over 80K during the crash in the financial market, which made it clear there's more to the market than we average joes know. Having an investment adviser is currently the best course of action, especially for those who are close to making losses..
@@christianaemilio1Thank you for this tip, it was easy to find your advisor. I conducted a thorough research on his credentials before messaging him. Base on his resume, he appears to possess a high level of proficiency and i am grateful for this opportunity! Thanks once again.
I believe the wisest decision that should be on every individual list is to invest in a different stream of income and don't depend on the government to bring you money. It's always better to work smart and not hard..
Why didn't you mention the fraudulent creation of money and how money is equal to debt? ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-KMtVx7lYVRo.html It's probably the single most important thing to know about our current economic/monetary system.
Hjernespreng It's not a theory if it is proven, Modern Money Mechanics is out there for you to read at your own leisure. Ad hominem does not make a sound argument.
Hjernespreng I'm going to chime in on Sweejit's and TR for life's behalf and concur with their comments. Their statements are rational and factually based. Not based on ignorance and delusion.
The creation of money is explained in this video. The bank stores money from people which it lends to other people. That's a way banks can create money, as suddenly there is double as much money. Inflation is also a good thing, without inflation people wouldn't consume, and without consummation there is no money circulation, which in the end means there is no progress. The video you mentioned also doesn't address the fact that taxes are a redistribution of money between the rich and the poor. A lot of poor people are against taxes though, which isn't a good decision really.
Banks CREATE money when lending out money! This is a fact not many people know or understand. Banks only need a capital reserve, witch got increased after 2008 but is still insignificant in comparison to the money they lend out. Every time they lend out money to you or others they CREATE money "out of thin air".
So, let me get this straight.. this was a video about 'money and credit'... and yet with ZERO mention of fractional reserve banking. You FAILED to highlight the ultimate issue where the bank is legally allowed to counterfeit money... often at a ratio of 10 to 1.. or even higher... - call upon the central bank for such funds in cash (if requested).. lend out, and then charge interest... for money they never had in the first place! - Hey, Kurz Gesagt. your graphics/presentation is colourful and glitzy, but the content is completely.. well, lousy. Oh well, I'm sure the ignorant mainstream will love it though, so congrats... you'll help to reinforce the grossly mistaken beliefs of how banking and credit creation actually works.
LondonCrusader Fractional reserve banking is irrelevant in the modern day. In daily practice banks do not seek deposits first, and make loans later. They make the loans immediately, and then attempt to meet reserve requirements after. The fact that they can meet the reserve requirement by taking credits from the central bank makes the whole thing utterly pointless anyway. Effectively the only limitation to bank loans is finding borrowers. The only reason banks even seek deposits at all is because it its more acceptable to fund their reserve requirements that way than to take central bank credits. When the crisis comes, and it comes again, the banks and the central bank won't even blink before ignoring deposit accounts as a means of meeting reserve requirements.
+Manu Ziux During a long , they were money and no debt, Why? Because it was illegal in most country to make a loan with interest which create money out of thin air. So illegal that peoples was beheaded. Saddly, this mentality changed over the time because of greed.
except it is not even close to how the banks are really getting funds for lending (fractional reserve banking, means they create it at the stroke of the keyboard), and the causes of housing crisis, were artificially suppressed interest rates (thanks to the FED), substandard lending (thanks to semi-government Fannie & Freddie), and government's requirement to lend a mortgage to anyone who can fog a mirror.
Just because you can't understand it doesn't mean it is bullshit. Don't get me wrong, western economics in general is a house of cards, but not because banks are "creating money with a single keystroke."
michbushi Fractional reserve banking means using deposits to finance loans. It expands the nominal money supply without needing to increase real money. But it is not "creating money at a keystroke"
michbushi 90% (9/10) or some other fraction of money is lent, while some amount (1/10 usually) is kept as a "reserve." The determination of how much is kept and how much is lent is made by calculating things like probability of default, amount of money that might be withdrawn on / defaulted at any one time, etc. Anyway, after the 2008 crisis, the Fed now requires banks to keep much large reserves in the event of large defaults and loss of liquidity.
+David n lol, no, and yes, you have no clue about how leveraged banks were in the wake of 2008 crisis, or how they are now. 10% reserve, good grief... Maybe in the fifties of 20st century, lol!
0.55 mmm not true! "Banco" in italian means a sort of table. Back in the days people used to exchange money in this little tables apparently, which makes more sense! I'm italian (and from pisa too :D)
Ignorance is so pervasive on the internet because everyone with fingers can voice their opinion. Some pawn it off as facts. This is why the world is in trouble.
Two things: No matter what a video on banking sponsored by a bank is shady as hell! Secondly, at 1:27 "A small amount of interest" This actually happens to me, the bank will put $0.02 into my account at the start of the month worth of interest, but in the very next line of the statement they have taken $19.95 in account fees!
I don't understand. Why bail out banks to stop them from going bankrupt? If a bank makes terrible decisions which land it billions of dollars in debt, why not let it take the fall and have to answer for that debt itself?
No Sorry, this was how banking worked in the US BEFORE the federal reserve act of 1913 and the development of other central banks in western countries in the 17th and 18th centuries. Now the lending of savers money is incidental to the banks function which is the issuance of currency in the form of loans through double entry book-keeping. This has caused important changes in the way banks operate and the kind of risks they take as well as the distribution of financial capital in the economy. This video is a couple centuries out of date and represents a faulty understanding of how the financial crisis developed and how it was ameliorated.
nosuchthing8 Actually, no, that is not how lending works today. That was what it was like before the central banks and the federal reserve act over a century ago. The bank is allowed to write loans through a process called double entry book keeping at a multiplier of their credit limit set by the central banks. No money is taken from the bank from lenders. It is simply giving the borrower credit. This limit is set by a combination of the the strong money deposit by the bank at its foundation, the reserve multiplier set by teh central bank, the credit created by the policy makers of the central bank, and lastly the discounted deposits of savers. Basically 95% of the money in circulation was never printed. It was the product of credit extended by banks in teh form of loans with nothing backing it, and only limited by federal reserve policy. I am a math teacher that has been studying economics for years and I found this confusing. I used to think that was the way it worked, but no. Its not like banks are a clearing house for lending savings, they are a clearing house for money creation de novo from federal reserve policy. Their role as a place to put savings is very small. That is why the federal reserve prime rate so tightly controls what the interest rate is for bank loans. If the banks got their money from savers, it would be the interest rate they were paying savers that would dictate the bank rate.
michalchik The money IS loaned out. Or at least most of it. Simply google CNN money. Focus your mind on the question posed to you, again : 1 thousand people walk into the bank with 5k in cash. Where does the money go? Answer : Most is loaned out.
nosuchthing8 Please explain how the amount of money saved has been dropping at the same time the amount of money loaned out has been increasing globally. Please explain why the Federal reserve prime rate sets the bottom limit of what lender can loan out to their borrowers, rather than the interest rate that the savers pay. You have a grade school understanding of this system; it does not work that way anymore. The advent of central banks changed everything. Here is an official statment from teh Bank of England; it works pretty much the same way in the US. I know its hard to believe, but it does not work the way it should. "Whenever a bank makes a loan, it simultaneously creates a matching deposit in theborrower’s bank account, thereby creating new money. The reality of how money is created today differs from the description found in some economics textbooks: • Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits. www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q1prereleasemoneycreation.pdf
michalchik Find ONE source that says banks don't lend out the depositor money. ONE. Otherwise have nice day. I can send you then that ay they DO. Google glass steigall, the law (that was overturned) that PREVENTED banks from gambling with depositor money. Why overturn a law and then not run with it? SIGH.
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No mention of fractional reserve system, and bringing up the 2008 crisis, explaining as a result of "gambling", withou questioning "hey, why suddenly so many bad house loans were given?" --> government intervention via Freddie Mac and Fannie Mae. Was expecting more! :-(
We don't use the fractional reserve system any more, and reserve requirements only apply to checking accounts for the most part. The main practical limits are capital requirements. While reserve and capital requirements might help in a crisis when liquidity is needed, it's not going to do much about banks making bad loans and doing things that lead up to a crash.
Dimitri, what portion of subprime mortgages was held by Freddie Mac and Fannie Mae in 2008? I believe it was was well under half, more like 30%. So you give a pass on the other 70% because it doesn't fit the agenda you are pushing. Yes, it was gambling, they all were. BofA was leveraged out to something like 50:1. I know the right likes to claim that a law requiring non-discrimination in loans is at fault, but that law didn't require giving out bad loans, just they not discriminate on the basis of race.
I don't know the ratio, but I'm surprised if the 30% ratio is accurate, you talk about it as peanuts, this is a huge manipulation of the market. I assume you remember the wrong number, but regardless. Put on top the mandates around discrimination, which very much reduce the standards for loan-giving. Reduced downside, cheap money, more incentives to take risk, what would be the result? Oh, I guess we can always blame the profit incentive ("greed") of the private players, even if that was forever there. Maybe their "super greed" genes were mysteriously activated, who knows, some cosmic radiation excited them.
It's also worth mentioning that, acting as the lender of last resort, the Federal Reserve allows credit expansion far beyond what a natural market would ever allow. In a competitive system, banks have to use this unlimited leverage to find investments, and that always leads to poor investments, because there's only so much demand out there for the final produce of those investments. If the Fed didn't exist, credit expansion like this would be impossible and bubbles would also be impossible.
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There is a certain way Italian was spoken, that it no longer sounds the same as today. As recently as the massive immigration of Italian and Sicilian nationals to the US. A lot of people think the Italians spoken in the US is "Americanized" when in reality, it was the way people spoke Italian. It was isolated into it's own communities and never evolved the way that it did in Italy.
@@aflow- I asked a question. If you know the answer, the proper thing to do is provide it. You could even have said nothing. Instead, you chose to be an asshole. Perhaps you ought to reflect on this.
Middle English: from Old Norse bakki, of Germanic origin; related to bench. The senses ‘set of things in rows’ and ‘tier of oars’ are from French banc, of the same ultimate origin. Google it first. Baal pakna papa sala
Yup a quick research on the internet and my Petit Robert confirm it. Initially i thought 6 centuries appart might have modified the meaning but nah, they actually meant tables over which they did exchanges.
Well in german it's the exakt name for bench. So maybe the language changed, or it was just taken from german language. Lets face it, german words sound better than italian :>
+IWasHereFirst2 Well... some countries do not have a reserve requirement at all. Like the UK. They do have capital requirements under Basel III... ...which was delayed until 2019 (or until "Basel never"?) to not hurt the party nor the bonuses from all the casino free-leverage for a single year.
The banking system does not operate the way that is claimed in this video. The critical part omitted is the fractional reserve nature of the process which is more-or-less synonymous with the privatized printing of unlimited amounts of money for usury (interest collection), as has been adequately explained by former finance chiefs from international merchant and central banks.
Yes and no, it's isn't completely private as the Federal Reserve has a lot of regulations dealing with it and makes sure to know exactly how much money is being created through this process, and this is the only reason banks can be profitable in the first place. Finally, fractional reserve banking is a net benefit, not a negative. and doesn't involve printing money at all. At least know what you're talking about before you talk about a topic.
Please read positivemoney.org to understand the subject, sir. Privatizing the money supply is the most terrible thing neoliberals have done; it has allowed them to convince people they are always broke and in debt as all their services are stolen out from under them and homes become unaffordable. It's just like previous presidents said would happen. Twenty different brands of shorts, Starbucks on every corner, a hundred different boxes of soap powder, etc., haven't really served as a decent tradeoff for what has been swindled away by an elaborate shell game mixed with some musical chairs.
The real banking (Fractional Reserve Banking doesn't exist): Banks lend out their own IOU's/loans. They never use your deposit to "lend" to someone. They don't need to. They are not financial intermediaries between depositors and investors. Don't believe me? Read *Money* *Creation* *In* *The* *Modern* *Economy* by *Bank* *of* *England*
Do you go to the membership meetings? Do you read every flier in your statements (or memebrs only section of website these days)? Those are usually where the candidates are listed and/or the voting happens.
I like how people think that if we somehow go back to the way things were, that things won't simply repeat itself. This is a systemic failure, not a failure of policy.
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The start of this video where banks are described as intermediaries between savers and borrowers is painfully incorect. When banks lend money they do not get that money from savers. They create it out of nothing. The act of Lending by private banks is what brings money in the modern economy into existance. Check out positive money uks videos for a much more accurate picture.
Thank you for putting together a great video explaining how the banking system works, with interesting graphics and narration that captures the attention of my daughter with ADHD. I have tried, but my patience ran out. Any chance you have one on interest and/or TFSAs?
