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Have people started learning about money and banking

 
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krishnarama
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PostPosted: Sun Jul 20, 2008 2:42 pm GMT    Post subject: Have people started learning about money and banking Reply with quote

I can't believe how much the price has gone up for this book written by Murray N. Rothbard .It is called "What Has Government Done to Our Money?".
[url]http://www.amazon.com/What-Has-Government-Done-Money/dp/0945466102/ref=pd_bbs_sr_2?ie=UTF8&s=books&qid=1216563640&sr=8-2
[/url]

I paid less $6.95 on Novermber 3rd,2003. That same book is costing over $40 today. Two things I notice here. First one is obvious. $ is not only losing its value against the commodities, but is also losing against the books these days. What would those senators who claim speculation is driving the commodities higher say about this rise in the price of the book. I mean books are not traded on exchanges. Second one is I think people are realizing the importance of learning about the money and inflation. It is high time they learn.
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admin
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Joined: 14 Jul 2005
Posts: 1826
Location: Greater Boston

PostPosted: Sun Jul 20, 2008 6:43 pm GMT    Post subject: Re: Have people started learning about money and banking Reply with quote

krishnarama wrote:

I paid less $6.95 on Novermber 3rd,2003. That same book is costing over $40 today.


That might be at least partially due to the paperback version of the book being out of print and more scarce now. I noticed that the book was only sold through third party vendors, not Amazon itself, and that all but one of the vendors only had used copies. It also appears that Amazon still sells the hardcover version for only $17.

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balor123



Joined: 08 Mar 2008
Posts: 1204

PostPosted: Mon Jul 21, 2008 10:59 pm GMT    Post subject: Reply with quote

I sold WSJ Guide to Money and Investing from a few years ago for $100! I bought the book for like $5. The authors switched publishers so this is the last edition of this exact book but newer versions exist from other publishers. The versions before and after are all worthless or very cheap. Most of the other sales were for $130+. I emailed the buyer asking why this book is worth so much but sadly did not get a reply. I suppose I don't care - I got $100 for a book I might otherwise have assumed is worthless.
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spork



Joined: 23 Oct 2007
Posts: 25

PostPosted: Wed Jul 23, 2008 3:23 pm GMT    Post subject: Reply with quote

I highly recommend "Web of Debt" by E. H. Brown...unbelievable so far...3/4 of the way through it so far.
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admin
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PostPosted: Thu Jul 24, 2008 7:59 pm GMT    Post subject: Reply with quote

spork wrote:
I highly recommend "Web of Debt" by E. H. Brown...unbelievable so far...3/4 of the way through it so far.


Thanks for the recommendation. It looks like there is a website for the book which includes some sample chapters at:

http://www.webofdebt.com/

I read the intro and the first chapter and it was pretty interesting stuff. It gave me an entirely new appreciation for The Wizard of Oz. It was refreshing to read a critique of our monetary system from someone who isn't trying to sell gold.

I'm tempted to buy a copy. I hesitate for a few reasons, though, one being the claim that banks manufacture money out of thin air. Aren't they required to have a minimum percentage of reserves for credit they extend? It would seem an oversimplification to imply that they operate without constraint, and it makes me wonder what else might be left out. Nevertheless, the historical account in the first chapter was really interesting and worth a read.

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Dorchester Grandma
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PostPosted: Fri Jul 25, 2008 10:54 am GMT    Post subject: Internet sites Reply with quote

There are several Internet sites where you can purchase used books also DVDs. I have bought VHS kids' movies for as little as 75 cents at half.com, also amazon.com and alibris.com (specifically for books). The latter sells a lot of rare and out of print books.

I would never pay full price for a book or movie.
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Guest
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PostPosted: Tue Jul 29, 2008 12:33 pm GMT    Post subject: Scams continue Reply with quote

The rescue of Fannie and Freddie will allow scams like the following to continue, because banks can continue to pass off questionable loans to the taxpayer now. The raising of the mortgage limit to 729K has made this possible. This scam took place early this year, regardless of the hysteria about "sub-prime". Please check the following link:

www.ocregister.com/bus...

The scam works like this:
1. Find someone with good credit and not much knowledge of English or with poor reading comprehension. Tell them they will be able to buy a house and make 50K in cash.
2. Buy the house at auction for 300K after foreclosure, probably close to fair value at this price.
3. Mark up the house to 600K, and loan the buyer 125K to satisfy the 20% down requirement. Cut an appraiser and a loan agent in on the deal.
4. Wells Fargo approves the 500K mortgage since the buyer paid 20% down, and he/she has good credit, and they do not want to seem anti-minority or get sued!
5. The "buyer" pays the scammer 500K - 50K = 450K.
6. The scammer makes a cool 150K profit.
7. Wells Fargo does not care since they are going to bundle up the loan and sell it to Fannie Mae or Freddie Mac, ince their conforming mortgage loan limits went up to 729K for jumbo mortgages.
8. "buyer" goes out and buys a nice 50 inch LCD TV and sends some money home to Guatemala.
9. The "buyer" suffers a job loss/divorce/deportati... problem and the house goes into foreclosure
10. The foreclosed house now ends up on Fannie Mae's balance sheet, and is sold for 325K at auction, and the remaining 275K is added to the US taxpayer account.

Chinese and Vietnamese language newspapers are full of these ads where a "buyer" is solicited and a cash offer is made. Now if Fannie and Freddie Mac were private entities, they would not ask for an independent appraisal and reject the loan. Still wonder why you pay taxes?
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spork



Joined: 23 Oct 2007
Posts: 25

PostPosted: Wed Jul 30, 2008 1:39 pm GMT    Post subject: Reply with quote

admin wrote:

I hesitate for a few reasons, though, one being the claim that banks manufacture money out of thin air.


They do.

Quote:

Aren't they required to have a minimum percentage of reserves for credit they extend? It would seem an oversimplification to imply that they operate without constraint, and it makes me wonder what else might be left out.


sort of, but reserves are not exactly what you would think. Not much is left out, well i am sure some things are but arguements presented are pretty comprensive

I already knew alot of things presented in this book (ie money creation, discontinuation of M3, derivatives mess, etc), but not all. Very interesting and alternative historical perspective and I am having a hard time disagreeing with most of her main points-which many others have presented. Maybe others can find some flaws in the major arguements-if so i would love to hear them and discuss.

bigger govt controls bothers me but the lowering or elmination of taxes is not a bad thing.

Very good citations (except for wikipeida ones but those are usually common knowledge or definition of terms)...some consipracy theory which might not be true, but overall, it will probably completely change how you look at the financial system. basically financial pornography and i would guess, even if you disagree, it will widen your perspective.

i stumbled upon this book b4 i began to read "the creature from jekyll island"
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admin
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PostPosted: Wed Jul 30, 2008 2:02 pm GMT    Post subject: Reply with quote

spork wrote:
admin wrote:

I hesitate for a few reasons, though, one being the claim that banks manufacture money out of thin air.


They do.


What's to stop them from printing a nearly infinite amount of money and hording it? I assume there is something stopping them (like reserve requirements and maybe other things too) given that they haven't actually done this yet - I think the temptation would be too great. Also, how is it that banks fail (e.g., IndyMac) if their money creation is unconstrained?

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PostPosted: Wed Jul 30, 2008 3:00 pm GMT    Post subject: Only the Federal Reserve can print money Reply with quote

No entity other than the Fed Reserve, can print money in the United States. Regular banks cannot print money. Banks cannot lend more money than they accept as deposits. The concept of reserve ratio works like this. If a Bank (Citizens Bank for example), has 100 billion dollars in deposits, then they can lend out 90 billion dollars out to companies and individuals . They need to keep only 10 billion dollars in a place where it can be accessed readily. The statutory reserve ratio is usually 6-10% for banks. This covers contingencies like withdrawals, loss provisions, and other types of redemptions.

In an emergency, regulated banks can request funds from the local Federal Reserve to cover short-term redemption pressures. The banks, however, cannot lend out more money than they have in terms of assets. So in the example above, the bank cannot lend out more than 100 billion dollars in total.

Of course, the banks are making a profit from the spread between the deposit and loan rates. This accrues as earnings to the bank. Now, if the bank suffers losses on the loans, it can choose to cover those losses with those earnings. However, if the losses are substantial, then the bank becomes insolvent. FDIC then takes over the bank, and tries to collect on the remaining good loans, and also reimburses the depositors upto the 100,000 dollar limit.

Make no mistake, many regional banks will go under since the loans they handed out to builders are piling up losses. When a rumor starts going around that the bank may become insolvent, this triggers a run on the bank, which makes it even more likely that the bank goes under. If the bank is able to hold off the rumors, it allows the bank time to make good the losses by cutting costs, raising loan rates, or lowering deposit rates or other means. Indymac was in the process of doing the latter, until the rumors became so prevalent that a classic run on the bank was initiated, leaving the bank no option but to go under because of the relentless redemption pressures.

The US financial system is fundamentally insolvent, and hence the US govt is going to do whatever it takes to put a floor under housing prices.
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guest 2
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PostPosted: Sat Aug 09, 2008 1:47 am GMT    Post subject: Don't forget multiplier Reply with quote

You are write about the reserve ratio---BUT when they make the loan what do the person do with the money.

You deposit the money you received in your bank. Which means your bank can (and will) loan it out again (minus the reserve requirement.

And the person that receives that loan will deposit the money it his/her bank. And that bank.... I think you get the idea.
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admin
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PostPosted: Sat Aug 09, 2008 1:40 pm GMT    Post subject: Re: Don't forget multiplier Reply with quote

guest 2 wrote:
You are write about the reserve ratio---BUT when they make the loan what do the person do with the money.

You deposit the money you received in your bank.


Why would somebody take out a loan in order to save the money, especially at a bank? The rate you can earn on savings at a bank is invariably lower than the rate you can borrow at. Maybe that would make sense if you did it for the sake of short term liquidity (e.g., creating a 6 month personal emergency fund), but that would be small in scale and not explain a larger chain reaction like you described.

Maybe you meant that when somebody takes out a loan, the eventual recipient of the money will put it in the bank. For example, if you buy a house, the seller will put the profit in the bank (assuming there is a profit and not a loss). I'm not convinced of that either. The seller has to live somewhere and may be trading up, in which case the money will get plowed into the next house. What if they're trading down or renting? Why would they let a large chunk of money that they don't need for awhile sit in the bank? I think that most people would want better returns and would look for it in stocks, bonds, or treasuries.

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