Economic Collapse

boardsie08

I'd like to learn more about this and the ins and outs of it.

What exactly would need to happen to lead to an economic collapse?

Are we in danger of this happening?

What exactly are the ramifications of a collapse?

How bad do things have to get before we could reach a point whereby money could become "worthless"?

Thanks guys

SoCal90046

A complete loss of consumer confidence would lead to a collapse; if the credit system seized up, that could ultimately lead to a collapse too.

I think we started to come close to a collapse of the credit system a few times since September 17; governments stepped in and helped protect the system, but I think when we look back at what has occurred over the past few months, it's likley that history will record that the US in particular didn't react quickly enough.

The best analogy that I can give for what happened in the US is that the system suffered a stroke; it was close to a heart attack. It will take a few months to figure out how much, if any, damage was done with this stroke!

I'd read up on the Great Depression: high unemployment, a challenging environment for fund raising; a lack of consumer confidence which results in an inability on the part of those that manage fiscal and monetary policies to jump start the system.

Money is worthless when people stop accepting it.

Minder

The following exchange was published in Punch, the satirical magazine, on April 03rd 1957. Sorry to post it again, but I think it is relevant.

Q. What are banks for ?

A. To make money.

Q. For the customers ?

A. For the banks.

Q. Why doesn’t bank advertising mention this ?

A. It would not be in good taste. But it is mentioned by implication in references to reserves of £249,000,000 or thereabouts. That is the money they have made.

Q. Out of the customers ?

A. I suppose so.

Q. They also mention Assets of £500,000,000 or thereabouts. Have they made that too ?

A. Not exactly. That is the money they use to make money.

Q. I see. And they keep it in a safe somewhere ?

A. Not at all. They lend it to customers.

Q. Then they haven’t got it ?

A. No.

Q. Then how is it an Asset ?

A. They maintain that it would be if they got it back.

Q. But they must have some money in a safe somewhere ?

A. Yes, usually £500,000,000 or thereabouts. This is called Liabilities.

Q. But if they’ve got it, how can they be liable for it ?

A. Because it isn’t theirs.

Q. Then why do they have it ?

A. It has been lent to them by customers.

Q. You mean customers lend banks money ?

A. In effect. They put money into their accounts, so it is really lent to the banks.

Q. And what do the banks do with it ?

A. Lend it to other customers.

Q. But you said that money they lend to other people was Assets ?

A. Yes.

Q. Then Assets and Liabilities are the same thing ?

A. You can’t really say that.

Q. But you just said it. If I put £100 into my account the bank is liable to have to pay it back, so it’s Liabilities. But they go and lend it to someone else, and he is liable to have to pay it back, so it’s Assets. It’s the same £100, isn’t it ?

A. Yes, but……

Q. Then it cancels out. It means, doesn’t it, that banks haven’t really any money at all ?

A. Theoretically……

Q. Never mind theoretically. And if they haven’t any money where do they get their reserves of £249,000,000 or thereabouts ?

A. I told you. That is the money they have made.

Q. How ?

A. Well, when they lend your £100 to someone they charge him interest.

Q. How much ?

A. It depends on the Bank Rate. Say five and a-half percent. That’s their profit.

Q. Why isn’t it my profit ? Isn’t it my money ?

A. It’s the theory of banking practice that…..

Q. When I lend them my £100 why don’t I charge them interest ?

A. You do.

Q. You don’t say. How much ?

A. It depends on the Bank Rate. Say half a percent.

Q. Grasping of me, rather ?

A. But that’s only if you’re not going to draw the money out again.

Q. But of course, I’m going to draw it out again. If I hadn’t wanted to draw it out again, I could have buried it in the garden, couldn't I ?

A. They wouldn’t like you to draw it out again.

Q. Why not ? If I keep it there you say it is a Liability. Wouldn’t they be glad if I reduced their Liabilities by removing it ?

A. No. Because if you remove it they can’t lend it to anyone else.

Q. But if I wanted to remove it they’d have to let me ?

A. Certainly.

Q. But suppose they’ve already lent it to another customer ?

A. Then they’ll have to let you have someone else’s money.

Q. But suppose he wants his too…. And they’ve let me have it ?

A. You’re being purposely obtuse.

Q. I think I’m being acute. What if everyone wanted their money at once ?

A. It’s the theory of banking practice that they never would.

Q. So what banks bank on is not having to meet their commitments ?

A. I wouldn’t say that.

Q. Naturally. Well if there’s nothing else you think you can tell me….?

A. Quite so. Now you can go off and open up a bank account.

Q. Just one last question ?

A. Of course.

Q. Wouldn’t I do better to go off and open up a bank ?

luckat

Classic!

EGaffney

Yes, welcome to fractional reserve banking. "Q. Wouldn’t I do better to go off and open up a bank ?" You could be if you could be bothered to arrange your own loan schedule with others, risk your own liquidity with no pooling from others to compensate, etc. But hey, when have things like facts ever mattered to economic populism?

Stabshauptmann

boardsie08 wrote: »

I'd like to learn more about this and the ins and outs of it.

What exactly would need to happen to lead to an economic collapse?

Insufficient levels of production ie businesses closing down. Due to either businesses unable to access the resources to produce (materials, labour or NB to current conditions finance), consumers unable to purchase, the market place not being able to operate eg rioting, hyperinflation (currencies being worthless)

Are we in danger of this happening?

No, I dont think so. We are in for a recession, maybe a severe one, but I dont think we are in for a depression

What exactly are the ramifications of a collapse?

High unemployment, severe inflation, lower standard of living, increased social unrest (homelessness, crime, migration, revolution).

How bad do things have to get before we could reach a point whereby money could become "worthless"?

When there is no hope in sight. I would buy any Icelandic Króna right about now :pac:

JohnOwonga

Beating The Bailiffs? Credit Card Debts? etc

Hello whats the situation in Ireland where you have credit card debts and cannot meet the minimum payments?

They send you a letter for payment as well as interest aswell as bailiffs fees ?

Can they break down your door to gain entry obviously with a court order
to seize goods?
I was watching a TV Programme where the Bailiffs entered the address the credit card holder gave and entered the property where 2 other people lived
the bailiffs made a list of all the property he thought he could sell with exception of the childrens toys and by law they have to leave 1 way of cooking food in the kitchen

The majority of the property seized did NOT belong to the person who owned the Credit Card Companies Money the only way they could claim it back is by presenting RECEIPTS (who keep receipts for all the stuff they have purchased )

The Bailiff then valued the property at extremely low rate to its real commercial value.

In the end the person in question was advised to File for Bankrupry in the United Kingdom this would have consequences on future employment ,she could get credit later on but only at a much higher rate.

She would have her name published in the the newspaper.

If you have no assets the Bailliffs can take away is possible for them to put a charge with interest on your house when its sold a lien its called.


Credit Unions are fairly nasty too any one know what the procedure is here?

High Street Banks.

Thanks.