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Av Sunda Pengar - 20 januari 2009 07:36

Fractional Reserve Banking (Part 2 in English)

This English version is written on request of Ellen Brown.

Capital adequacy ratio (CAR) in Sweden and the Basel II Accord.

Basel II is a private initiative that has originated from the banks themselves through BIS (Bank of International Settlements). The committee is comprised of central banking representatives from 10 different nations, among others Sweden, USA, Japan, Germany and so on. They meet four times a year with the goal of conforming reserve requirements globally and a mutual view on how to judge and handle risk.

It was this type of harmonization preparation that pave way for the Euro area in connection to the Maastricht treaty.

The key point of the Basel II accord is the separation between operational risk and credit risk which was not separated in Sweden under the liquidity requirements.

The directive is comprised of three pillars.

Pillar 1. Deals with capital adequacy ratios based on these three main fields of risk; market risk, operational risk, credit risk.

Pillar 2. Deals with regulation to supervise the points in pillar 1.

Pillar 3. Deals with issues regarding increased transparency in the banks book keeping and information supply. This to instill more market confidence.

The accord is implemented in Sweden and supervised by FI (Swedish Finance Authority) under law:

Lag (2006:1371) om kapitaltäckning och stora exponeringar.

The law states that the capital base has to be a minimum of 8% risk weighted exposure.

With the introduction of Basel II, there are now 15 risk groups judged with different risk weight.

The risk weight mechanism is very simple. Say a company wants a loan for 1000SEK. They are given the risk weight of 10%. Total capital base needed by the bank to cover the loan will then be; (10%*8%) *1000 = 8 SEK

I will list some of the actual risk weights for different loan categories in Sweden.

From 1 Jan 2007 enl. BASEL II
1.    State, centralbank 0%
2.    Municipalities and similiar authorities 0%
3.    Companies 4-12%
4.    Households 6%
5.    Households with security 2.8%-8%
6.    Funds 4%-12%

The capital base needed will then be calculated according to this formula.

The size of the loan * (Capital Adequacy Ratio * Risk weight) = needed capital base.

As you may have noticed, the state has a risk weight of 0 which in practise means that a private bank could issue loans towards the government regardless of capital base towards infinity. The bank is required to have close to no reserves for government lending since a states default is mostly a case of theory since it can monetise its debt to pay it off (paying through inflation).

This is also confirmed by FI. The only thing constraining the banks is the limitation stated under operational risk so the bank can have extremely high leverage towards state lending.

As you might have observed, these rules are considerably different from the liquidity rules popularly quoted online as restriction of government lending. With the application of Basel II regulation, private banks are allowed to create much larger quantaties of credit then possible before in relation to its capital base. How it works in practise can most easily be understood with some simple book keeping examples.

The banks bookkeeping, the liquidity requirement

In this simple example, we assume a liquidity requirement of 10%, which means they can lend 90% of current capital. The bank below has a deposit of 200K SEK and isses a loan for 90% of that deposit.

Nr    Description            Debit       Credit
1    Deposit (Asset)    200,000 kr    
2    IOU (Debt)        200,000 kr
3    Creation of loan (Asset)       180,000 kr    
4    Creation of IOU (Debt)        180,000 kr

The banks balance sheet will now look like this.

Money            200,000 kr    Money                                        200,000 kr
Loan              180,000 kr    Money with no covearage (IOU)    180,000 kr
Sum Assets    380,000 kr    Sum Liabilities                              380,000 kr

Please note that the assets and liabilities incrase in proportion to the loan. The depositors money is never used to create the new loan. It only exists as new bank money (BCM) in the book keeping of the bank.

The difference with Basel II and practical bookkeeping

In practical book keeping, the size of the deposits is not an absolute requirement for how large a credit (loan) a bank can issue. In the liquidity requirement, we saw that a loan could grow with 180K with a deposit of  200K. The limitation in Sweden is as earlier described based on the risk weight.

In this example, we say that a bank is going to issue a loan to a company which has been given the risk weight of 4% in total. The capital base of the bank is still 200K.

The maximum theoretical loan the bank can issue is then:


The balance sheet will then look like this:

                             Assets        Liabilities
Money                200,000 kr    Money                                         200,000 kr
Loan              5,000,000 kr    Money with no coverage (IOU)    5,000,000 kr
Sum Assets    5,2000,000 kr    Sum Liabilities                          5,200,000 kr

Notice the same thing here. Deposited money in the bank is not used to issue new credit. The credit is issued over and above existing money, thus the money supply as a whole has increased in society. This is called the creation of wealth.

The bank has now stretched its capital base to the maximum for loan recipients with this risk weight.

Now the state wishes to take a loan from an additional 5,000,000SEK from the same bank. Since the reserve requirement is 0%, needed additional capital base the bank needs to issue the credit is also 0.

The balance sheet will now look like this:

    Assets        Liabilities
Money             200,000 kr    Money                                           200,000 kr
Loan          10,000,000 kr    Money with no coverage (IOU)    10,000,000 kr
Sum Assets    10,2000,000 kr    Sum Liabilities                      10,200,000 kr

What happens if depositors withdraw money?

The bank has now promised 10MSEK and only has 200K SEK as reserves. What happens if the demand for withdrawals exceeds 200K SEK?

The bank can in the short term borrown on the interbank market. In other words, they can borrow credit from another bank to fill the shortage in their own bank. This only works as long as the bank has trust with the rest of the banking community.

The state or central bank can also intervene and issue loans, usually to a penalty rate to ensure capital adequacy.

It is possible for banks to create this much credit since banks to this in unison. The in flows and out flows in the entire banking network tend to net eachother out and the differences over the medium term is small and easily covered by inter bank lending.

What have we learned?

The restriction is how much money, or credit that can be created in a bank is restricted by the Basel II accord.

A loan is never based on a depositors money, the credit is instead created when you request it.

This means that when you take a loan for your house, you receive a new credit that instantly is balanced by corresponding amounts of new savings.

This means that all savings = loans.

The notion that savings are low is completely impossible. Savings are always the same size as loans within the laws of accounting. The distribution is however not evenly spread out.

A bank note is a proof of debt, not money in the traditional term.

A deposit you have on your bank is not an asset, it is a claim on your bank. The bank never in short term has possibility of paying more than a fraction of its depositors back. This is why bank runs are so feared.

The only way for a depositor to receive full payment on your claim on the bank is to withdraw physical cash.

The fact that money is created when it is borrowed also means that it disappears when it is repayed. This explains the fluctuations in money supply and why the money supply always seems to decrease in a credit crunch and increase in expansionary economy.

A wealthy society is also a highly indebted society.

Key differences for USA and Swedish capital rules

USA is under the Basel accord but has not yet adopted it fully.

There are several things differing in USA banking practise, the key being that capital adequacy ratios are only calculated on deposits. Not loans.

This is also effectively worked around through the practice of Sweep accounts and off balance sheet accounting.

Sources of credit creation

Money Mechanics Federal Reserve

Of course, [banks] do not really pay out loans from the money they

receive as deposits. If they did this, no additional money would be

created. What they do when they make loans is to accept promissory

notes in exchange for credits to the borrowers¡¯ transaction

accounts. Loans (assets) and deposits (liabilities) both rise [by

the same amount

The Chicago Federal Reserve, Modern Money Mechanics (last updated


When a bank makes a loan, it simply adds to the borrower´s

deposit account in the bank by the amount of the loan. The money is

not taken from anyone elses deposit; it was not previously paid in

to the bank by anyone. Its new money, created by the bank for the

use of the borrower.

¨C Robert B. Anderson, Secretary of the Treasury under President


Banks create money. That is what they are for. The manufacturing

process to make money consists of making an entry in a book. That is

all. Each and every time a Bank makes a loan, new Bank credit is

created, ªbrand new money.

C Graham Towers, Governor of the Bank of Canada from 1935 to 1955

Av Sunda Pengar - 19 januari 2009 08:26

Brittiska Telegraph har en extremt läsvärd artikel om det mycket problematiska läget i EMU länderna.

 Då jag nyligt skrivit ett lång inlägg om Euro samarbetet så kommenterar jag inte den här artikeln något djupare men citerar den ovanligt starka slutklämmen på artikeln. 

Traders suspect that investors are dumping their Club Med and Irish debt immediately on the European Central Bank in "repo" actions.

In other words, the ECB is already providing a stealth bail-out for Europe's governments – though secrecy veils all.

An EU debt union is being created, in breach of EU law. Liabilities are being shifted quietly on to German taxpayers. What happens when Germany's hard-working citizens find out?

Monetary union has left half of Europe trapped in depression

Av Sunda Pengar - 19 januari 2009 08:02

ABC news avslöjar mer bankkorruption i denna finanskris som än en gång pekar på att den amerikanska övervakningsmyndigheterna inte fungerar som de ska i sin roll att övervaka finansiella instutitioner.

Trenden är minst sagt oroande då det leder till en form av hjälplös het för finansiella kunder då man inte kan lite på bokföringen.

Darrel Dochow föreslog att indymac skulle, citat:

In at least one instance, investigators say, banking regulators actually approached the bank with the suggestion of falsifying deposit dates to satisfy banking rules -- even if it disguised the bank's health to the public.

Resultatet blev att banken såg ut att ha fler depositioner än vad den faktiskt hade vilket är kritiskt för en bank då det räknas med i deras kapitalbas.

Indymac togs över av federala myndigheter i juli förra året efter att deras aktier kraschlandade på börsen när det avslöjades vilken finansiell härdsmälta de befann sig i.

Storleken på bedrägeriet var cirka 18 miljoner USD och genomfördes genom att helt enkelt ändra datum på depositionerna.

Läs mera här: Cook the books

Av Sunda Pengar - 13 januari 2009 06:54

Lloyds har fastnat med fingrarna i syltburken efter att en undersökning visat att de systematiskt har tvättat pengar från Iran genom att ta bort informationen från olika transfereringar som visar var transaktionen ursprungligen komerm ifrån.

De här olagliga transaktionerna upptäcktes och Lloyds har fått böter i 350 miljoner USD klassen för deras penningtvätt i miljard klassen.

Lite om hur det gick till:

Although prosecutors did not identify specific individuals at Lloyds responsible for the fraud, Mr. Castleman said, “It was a systemic, wide-ranging scheme." The training manual given to employees of Lloyds even included a section on how to strip transactions, prosecutors said.

Utöver Lloyds misstänks 9 andra banker för liknande operationer vilket i praktiken skulle innebär att medel har kunna transfereras någorlunda fritt från Iran ut i världen.

Läs mera här: Lloyds tvättar pengar

Av Sunda Pengar - 12 januari 2009 09:29

Amerikanska SEC ar vad vi kan likställa med finansinspektionen i Sverige. De har till uppgift att övervaka de finansiella marknadsaktörerna och ge lämpliga straff och direktiv så att de finansiella lagarna efterlevs.

Låter som att det vore den perfekta organisationen att upptäcka Madoffs pyramidspel?

Ett pyramidspel eller Ponzi scheme är helt enkelt en finansiell investering dar organisationen som tar emot insättningarna betalar avkastningen med de nya depositioner och förklarar tillväxten med någon annan typ av investeringsstrategi.

Pyramidspelet håller så länge investerarna väljer att rulla över sina investeringar och det kommer in nya medlemmar.

Detta är inte olikt Ponzi Borrowing vilket innebär att du lånar mot tillgångens övervärde för att betala din gamla räntekostnader.

In på scenen kommer den ganska okända Harry Markipolos, före detta investerare för Rampart Investement. I över 9 år försökte han förklara för SEC att Madoffs investeringsoperation inte kunde vara något annat än bedrägeri.

I 9 år valde SEC att inte lyssna utan att hellre skydda Wallstreet och dess intressen. Markopolos skrev i rapporten att avkastningen som Madoff skapat var inte bara osannolik, den var också matematiskt omöjlig givet hans investeringsstrategi.

Markopolos drog slutsatsen att Madoff helt enkelt gjorde något annat än han påstod att han gjorde.

I en 17 sidor lång rapport som var minst sagt övertygande skrev Markopolos redan 1995 där han lägger fram två scenarion.

Det osannolika scenariot var att han sysslade med front running. T.ex kunde han få en köp order på IBM till ett visst pris, Madoff kunde då använda sin egen investeringsfirma till att köpa IBM, om kursen gick upp behöll han aktierna, om kursen gick ner så fick kunden betala kundförlusten.

I det sannolika scenariot skrev Markopolos:

In the Highly Likely scenario, Madoff Securities is the world¹s largest Ponzi Scheme

Markopolos hade inget direkt intresse att avslöja Madoff annat än att han inte ville se ett enormt pyrmidspel på Wallstreet.

SECs utredning av denna rapport kom fram till att Madoff var oskyldig.

Utöver  det banala faktumet att SEC misslyckades med att sätta dit Madoff tidigt så visar det tydligt vad den här myndigheten har degragerats till.

Från Financial Times om SECs reglering av värderingsinstituten.

These oligopolies, which are actually sanctioned by the S.E.C., didn¹t
merely do their jobs badly. They didn¹t simply miss a few calls here and
there. In pursuit of their own short-term earnings, they did exactly the
opposite of what they were meant to do: rather than expose financial risk
they systematically disguised it.

Faktum är att SEC är fullt av moral hazard. SEC är en välkänd språngbräda för att komma in i ett välbetalt jobb på wall street. Att sitta och outa olika finansfirmor finns helt enkelt inte i kulturen då det förstör den framtida karriären.

Resultatet är alltså för wall street, om du är stor nog så låter SEC dig vara, oavsett hur kriminell din verksamhet är. Det har i alla fall Madoff bevisat och det kanske är det positiva som kommer ut av den här affären.

A casual observer could be forgiven for thinking that the whole point of landing the job as the S.E.C.s director of enforcement is to position oneself for the better
paying one on Wall Street.

And here¹s the most incredible thing of all: 18 months into the most
spectacular man-made financial calamity in modern experience, nothing has
been done to change that, or any of the other bad incentives that led us
here in the first place.

SEC ska övervaka de kriminella, men vem övervakar SEC?

Av Sunda Pengar - 9 januari 2009 06:34

Följer en diskussionsgrupp av akademiker som diskuterar pengar och Ellen Browns arbete angående principerna bakom krediter är ibland diskuterad.

Kritiken mot henne är att hon inte har fullt grepp på hur pengaprocessen fungerar utan utgår från 10% reservkravs modellen med krediter som ökar efter dess cirkulation.

Hennes nya artikel är dock ett avbrott mot denna och hon har börjat titta på Basel ackordet som är grunden för hur utlåning fungerar internationellt.

Återger hela hennes artikel här, klart läsvärd.

Ellen brown – Web of debt.

Letter to the bank ­
Dear Sirs, In light of recent developments, when you returned my check
marked ³insufficient funds,² were you referring to my funds or yours?

Economist John Kenneth Galbraith famously said, ³The process by
which banks create money is so simple that the mind is repelled.² If banks
create money, why are we suffering from a ³credit crunch²? Why can¹t banks
create all the money they can find borrowers for? Last fall, Congress
committed an unprecedented $700 billion in taxpayer money to reversing the
credit crisis, and the Federal Reserve has already fanned that into $8.5
trillion in loans and commitments. 1 But the bank bailout has proven to be
no more than a boondoggle for a handful of lucky Wall Street banks, without
getting credit flowing again.
To understand the real cause of the credit crisis and how it can
be reversed, it is first necessary to understand credit itself ­ what it is,
where it comes from, and what the real tourniquet is that has limited its
flow. Banks actually create credit; and if private banks can do it, so
could public banks or public treasuries. The crisis is not one of
³liquidity² but of ³solvency.² It has been caused, not by the banks¹
inability to get credit (something they can create with accounting entries),
but by their inability to meet the capital requirement for making loans.
That inability, in turn, has been caused by the derivatives virus; and only
a few big banks are seriously infected with the it. By bailing out these
big banks, the government is actually spreading the virus by furnishing the
funds for them to take over smaller banks.
A more effective alternative than trying to patch up the
hopelessly imperiled derivatives books of these few banks would be to create
a parallel credit system with a pristine set of books. A network of public
banks (federal and state) could create ³credit² just as private banks do
now. This credit could be extended at low interest rates to consumers and
at very low interest to local governments, drastically reducing the cost of
public projects by reducing the cost of funding them. This is not a radical
proposal. It is what private banks themselves do every day. But most people
have trouble believing it, and bankers will dispute it. So the first thing
to be established is that . . .

Banks Create the Money They Lend
Bankers will tell you that they do not create money. At a 10%
reserve requirement, they simply lend out 90% of their deposits. The catch
is that their ³deposits² include the money they have written into their
customers¹ accounts as loans. That is how loans are made: numbers are
simply written into the accounts of borrowers, as many reputable authorities
have attested. Here are two of them, dating back to when officials were
either more aware of what was going on or more open about it:
³[W]hen a bank makes a loan, it simply adds to the borrower¹s deposit
account in the bank by the amount of the loan. The money is not taken from
anyone else¹s deposit; it was not previously paid in to the bank by anyone.
It¹s new money, created by the bank for the use of the borrower.²
­ Robert B. Anderson, Treasury Secretary under Eisenhower, in an
reported in the August 31, 1959 issue of U.S News and World Report

³Do private banks issue money today? Yes. Although banks no
longer have the right to issue bank notes, they can create money in the form
of bank deposits when they lend money to businesses, or buy securities. . .
. The important thing to remember is that when banks lend money they don¹t
necessarily take it from anyone else to lend. Thus they Œcreate¹ it.²
­ Congressman Wright Patman, Money Facts (House Committee on
Banking and Currency, 1964)
The process by which banks create money was detailed in a
revealing booklet put out by the Chicago Federal Reserve titled Modern Money
Mechanics.2 Periodically revised until 1992, when it had reached 50 pages
long, it is written in somewhat difficult prose; but here are a few relevant

³The actual process of money creation takes place primarily in
banks.² [p3]
Translation: banks create money.

³In the absence of legal reserve requirements, banks can build
up deposits by increasing loans and investments so long as they keep enough
currency on hand to redeem whatever amounts the holders of deposits want to
convert into currency.² [p3]
Translation: banks can create as much money as they want by writing loans
into their borrowers¹ accounts, limited only by (a) legal reserve
requirements (money that must be held in reserve ­ traditionally about 10%
of outstanding deposits and loans) or (b) the amount of money they will need
to keep on hand to pay any depositors who might come for their money (also
traditionally about 10%).

³Banks may increase the balances in their reserve accounts by
depositing checks and proceeds from electronic funds transfers as well as
currency.² [p4]
Translation: the ³reserves² that count toward the reserve
requirement include currency, deposited checks, and electronic funds
transfers. (Note that the ³deposits² created as loans are excluded from
this list: the bank cannot just keep bootstrapping loans on top of loans but
must keep money from external sources on reserve equal to about 10% of its
loans and deposits.)

³The money-creation process takes place principally through
transaction accounts [accounts that can be drawn on without restriction] . .
. . With a uniform 10 percent reserve requirement, a $1 increase in reserves
would support $10 of additional transaction accounts.² [pp 2, 49]
Translation: $1 deposited by a customer can be fanned into $10 in loans.

³In the real world, a bank¹s lending is not normally constrained
by the amount of excess reserves it has at any given moment. Rather, loans
are made, or not made, depending on the bank¹s credit policies and its
expectations about its ability to obtain the funds necessary to pay its
customers¹ checks and maintain required reserves in a timely fashion.²
Translation: In practice, banks issue loans without worrying too much about
whether they have the reserves to cover them. If they come up short, they
can just borrow them:

³[Since] the individual bank does not know today precisely what
its reserve position will be at the time the proceeds of today¹s loans are
paid out. . . . many banks turn to the money market - borrowing funds to
cover deficits or lending temporary surpluses.² [p50]
³[A] bank may [also] borrow reserves temporarily from its Reserve Bank. . .

[However], banks are discouraged from borrowing [Reserve Bank]
adjustment credit too frequently or for extended time periods.² [p29]
Translation: If the bank finds at the end of the accounting period that its
reserves do not come to the required 10% of its outstanding loans and
deposits, it can simply borrow the reserves it needs from the money market
or its Federal Reserve Bank.

A 2002 article posted on the website of the Federal Reserve Bank
of New York noted that today, few banks are constrained by reserve
requirements at all:

³Since the beginning of the last decade, required reserve
balances have fallen dramatically. The decline stems in part from regulatory
action: the Federal Reserve eliminated reserve requirements on large time
deposits in 1990 and lowered the requirements on transaction accounts in
1992. But a far more important source of the decline in required reserves
has been the growth of sweep accounts. In the most common form of sweeping,
funds in bank customers¹ retail checking accounts are shifted overnight into
savings accounts exempt from reserve requirements and then returned to
customers¹ checking accounts the next business day. Largely as a result of
this practice, today only 30 percent of banks are bound by a reserve balance
requirement.² 3
Even without official reserve requirements, however, banks must
keep enough money on hand to meet withdrawals or checks written against the
accounts of their depositors; and that generally means about 10% of
outstanding deposits and loans, as moneylenders discovered centuries ago.
But if the banks come up short, they can borrow this money from the money
market or the Federal Reserve; and if the Fed comes up short, it can create
new reserves.4 So why the current credit crunch? What is limiting bank
lending? One answer is that borrowers are simply ³tapped out² and not in a
position to take out as many loans as they used to. When housing and the
stock market crashed, consumers no longer had home or stock equity to borrow
against.5 To the extent that the blockage is with the banks themselves,
however, it is not caused by the reserve requirement. Something else is
putting the squeeze on credit.

The Real Tourniquet: Capital Adequacy and the Marked-to-Market Rule
What banks can¹t get around with ³overnight sweeps² and the like
is the capital adequacy requirement; and the capital requirement is imposed,
not by our own central bank, but by the Bank for International Settlements
(BIS). Called ³the central bankers¹ central bank,² the BIS pulls the
strings of the private international banking system from Basel, Switzerland.
How the capital requirement is determined is even more
complicated than the reserve requirement, but here is a simplified version.
A bank¹s ³capital² consists of its assets minus its liabilities. The
capital adequacy rule imposed by the Basel Accords requires that the ratio
of a bank¹s capital to its ³risk-weighted² assets be at least 8%. That
means the bank must have $8 in capital for every $100 in ordinary loans
having a ³risk weighting² of 1.0 Mortgage loans (which are secured by real
estate) have a risk weighting of .5. That means they need only $4 of
capital per $100 of loans. Other bank exposures given risk weightings
include such things as derivatives and foreign exchange contracts.6
(Interestingly, the $700 billion committed by Congress to bailing out the
financial system is approximately 8% of the $8.5 trillion the Fed has now
promised in loans and commitments. Even the Federal Reserve evidently feels
constrained by the BIS capital requirement. )
One of the most important accounting rules imposed on a bank for
its capital ratio calculation is the ³mark to market² rule for valuing
assets. This rule requires banks to revalue all of their assets each day as
if the assets had to be sold that day. Capital calculations thus fluctuate
with the market; and in today¹s volatile market, all asset classes have
plunged at the same time. Since assets get marked to market but liabilities
don¹t, a bank may suddenly find that its assets are insufficient to support
its liabilities, rendering it insolvent and unable to make new loans. The
balance sheet instability caused by the marked-to-market rule is compounded
by the fact that bank balance sheets include derivatives, which are very
difficult to value reliably.

The Derivative Virus
Of particular concern today are ³credit default swaps² (CDS), a
form of derivative widely sold as insurance against default. CDS have
allowed banks to lighten up the risk-weightings on their balance sheets by
eliminating the risk of default from their loans. At least, that is how
they have been sold to investors; but this unregulated form of insurance is
now known to have been based on faulty mathematical models. When AIG, the
world¹s largest insurance company, ventured into CDS in the late 1990s, the
presumption was that ³housing always goes up² and that the risk of default
was so remote that selling ³credit protection² was virtually ³free money².7
But this free money turned into a serious liability to the protection
sellers when the ³remote² actually happened and a flood of defaults struck.
The value of the derivatives protecting securitized mortgages became so
questionable that they were unmarketable at any price. Banks counting these
derivatives as assets on their books then had to ³mark them to market²
effectively at zero, reducing the banks¹ capital below the levels called for
in the Basel Accords and rendering them officially insolvent. When AIG went
broke in September 2008, banks heavily involved in derivatives faced double
jeopardy: not only did they have to write down the derivative protection
they had sold to others and counted as assets on their books, but they could
no longer count on the derivative insurance they had bought to minimize the
risk of default on their other assets.
Derivatives have introduced a lack of transparency into bank
portfolios, creating fear and uncertainty on the part of lenders, depositors
and investors alike. This uncertainty has prevented banks from raising
capital by selling stock or meeting reserve requirements by getting
interbank loans, and it has discouraged investors from being invested in the
money market. Banks don¹t know whether the money they lend to each other
will be repaid, since they don¹t have a clear view of the value of the
assets carried on bank balance sheets. The result is a crisis of
confidence: the players are all eying each other suspiciously and holding
their cards close to the chest.
Fortunately, according to a recent study using the Treasury
Department¹s own data, the banking crisis is not widespread but is limited
to only ³a few big, vocal banks.²8 It is with the banks with significant
derivative exposure that the real credit problem lies; and most of this
liability is carried by only a few big Wall Street banks. Outstanding
derivatives on the books of U.S banks are now reported to exceed $180
trillion; and by the first quarter of 2008, $90 trillion of this was carried
on the books of JPMorgan alone, while Citibank and Bank of America each
carried $38 trillion.9 Needless to say, these are also the banks that are
first in line for the Treasury¹s bailout money under TARP (the Troubled
Asset Relief Program). Rather than excising this relatively contained tumor,
the Treasury and the Fed are feeding it with trillions in taxpayer money;
and this money is being used not to make loans but to buy up smaller
banks.10 That means the derivative cancer, rather than being excised, is
liable to spread.
We the people and our representatives in Congress have allowed
Wall Street to call the shots because we think we are dependent on their
credit system, but we aren¹t. There are other ways to get credit ­ ways
that are fair, efficient, transparent, and don¹t encourage greed. Some of
these alternatives are operational now and have a long track record of
success. More on this subject to follow; stay tuned.

Av Sunda Pengar - 6 januari 2009 09:11

Eurosamarbetet har varit verklighet nu i ett decennium och har gått igenom prövningar, speciellt 2008 både i form av nya medlemsländer som har valt att gå med och stora motsättningar inom EU som gör det problematiskt för ECB att sätta en monetär policy som kan fungera för alla medlemsländer på ett konstruktivt sätt.

Spanien, ett av EUs stora problembarn i nuläget med 12.8% arbetslöshet och produktionsbortfall på 11% under föregående år vill givetvis se betydligt mera generös stimulans från ECBs sida jämfört med till exempel Tyskland som går starkare med 7.5% arbetslöshet och 3.9% produktionsbortfall.

En del ekonomer, speciellt Amerikanska har varit pessimister till samarbetet ända sedan det startade och röster hörs att 2009 kan bli året då medlemsländer börjar gå ur EMU.

Jag uppfattar dock den mediala bilden i Europa och då Sverige som pressen i de flesta fall prisar Eurosamarbetet som en hamn av trygghet i denna finansiella tsunami, även om det mer är en kollaps istället för en våg av krediter som sveper över finansmarknaderna.

Danmark har starka röster för att gå med och Island som nu ligger riktigt risigt till för landet som helhet inför nästa år har tryck på att gå med och överge deras nationella valuta. Det kan dock inte ske förrän de blir medlem i EU vilket inte verkar troligt på ett tag.

Förutsatt att samarbetet inte kollapsar av någon oväntad effekt, som t.ex inbördeskrig eller något annat osannolikt så är inte EMU samarbetet något egentligt val för medlemsländer i det långa perspektivet vilket Svenska politiker inte heller har hymlat med i någon större utsträckning. Svensk media är positiv överlag till samarbetet och någon egentlig debatt av motspråkare har inte någon större plats utöver notering att majoriteten av Svenska folket är fortsatt negativa till Euron.

Det går, lite felaktigt att dra paralleller till Lissabonfördraget som kommer att bli våran nya konstutition om inte Irland modigt står upp som land igen och definitivt dödar förslaget. Om sådant blir fallet så kommer Sverige kortsiktigt att stå som ett av mycket få länder i Europa med en någorlunda fristående ekonomisk politik som man kan se om en konkurrensfördel mot resterande medlemsländer.

När väl ett medlemsland har valt att ratificera fördraget och infört Euron så är den indirekta demokratin i det närmaste att vara total. Vi kommer inom alla områden att ställas inför frågeställningen, vid varje EU direktiv och monetär policy, antingen accepterar vi eller så går vi ut ur EU. Få sakfrågor är för små för att personer vill ta det så långt om man inte är EU motståndare i grunden. Ska demokrati fungera så?

Så för att knyta till början av mitt inlägg, att EU går under nästa år ser jag som väldigt osannolikt. En fiatekonomi har obegränsade resurser att trycka pengar för att hålla igång ett konkursat finanssystem. ECB har också varit betydligt mera ansvariga än FED vilket talar för dess starka utgång ur denna kris när den väl ebbar ut om några år.

Sakfrågan för framtiden blir vid nästa val om EMU som kommer förr eller senare att handla om vad för typ av statsskick du vill ge dina barn.

Ett Sverige där lagar och monetär policy sätts centralt, sällan på svenskt initiativ och under begränsad insyn eller lokalt folkligt förankrade initiativ med svagt tryck från lobbying grupper. (Riksbanken är oberoende av regeringen men inte av Sverige)

Eller ett Sverige där vi väljer att optimera våran ekonomi efter våra förutsättningar och förbehåller oss rätten att genomföre monetär reform om det skuldbaserade samhället driver en för stor mängd människor in i marginalisering.

Av de som styr Sverige idag står det dock klart att demokratin ska ”outsourcas” till en valuta som ingen garanterar, världens enda herrelösa valuta, Euron.


Av Sunda Pengar - 5 januari 2009 10:51

En av det mest seglivade myterna som banker gärna befrämjar, antingen av ren okunskap eller med intentionen att desinformera är att du kan låna pengar i banken för att någon annan har valt att spara i samma bank. I essens skulle du låna din grannes pengar för att köpa ditt hus.

Myten har mycket troligt sitt ursprung i den populära FRB pyramiden där depositionen vandrar runt i ett banknätverk och växer så över tiden då ”samma” pengar lovas gång efter gång till nya låntagare. Krediten kan då maximalt växa enligt kreditmultiplikatorn minus allmänhetens propensitet till att hålla likvider som jag beskrivit i tidigare avsnitt.

Den stora nackdelen med den här missuppfattningen hos kritiker är att illusionen om att banker i sig inte skapar mera pengar, utan bara registrerar redan existerande krediter som cirkulerar runt i banknätverket.

Den andra nackdelen är teorin inte tillnärmelsevis korrekt återspeglar verkligheten och gör ett för många komplicerat ämne, osammanhängande i en del aspekter som kreditens natur och funktionalitet.

I praktiken så är det enda banken gör (utöver den viktiga funktionen som betalningssamordnare) vid skapande av lån är att registrera nya pengar/krediter i sin bokföring. Svårare än så är det inte. En bank lånar aldrig ut existerande pengar, den lånar i effekt ut nya pengar som inte existerat förut.

Några bra källor som citerar detta fenomen:

Money Mechanics Federal Reserve

Of course, [banks] do not really pay out loans from the money they
receive as deposits. If they did this, no additional money would be
What they do when they make loans is to accept promissory
notes in exchange for credits to the borrowers¡¯ transaction
accounts. Loans (assets) and deposits (liabilities) both rise [by
the same amount
The Chicago Federal Reserve, Modern Money Mechanics (last updated

When a bank makes a loan, it simply adds to the borrower´s
deposit account in the bank by the amount of the loan. The money is
not taken from anyone elses deposit
; it was not previously paid in
to the bank by anyone. Its new money, created by the bank for the
use of the borrower.
¨C Robert B. Anderson, Secretary of the Treasury under President

Banks create money. That is what they are for. The manufacturing
process to make money consists of making an entry in a book. That is
all. Each and every time a Bank makes a loan, new Bank credit is
created, ªbrand new money.
C Graham Towers, Governor of the Bank of Canada from 1935 to 1955

Så det rätta sättet att svara på hur pengar skapas och hur lån kommer till är helt enkelt att Centralbanken skapar den monetära basen genom att registrera nya pengar som den sedan lånar ut till bankerna.

Bankerna skapar sedan nya pengar/lån utöver centralbankens pengar som säkerhet och på så sätt cirkulerar pengar ursprunget som krediter i samhället.

Lånet skapas genom att skriva in ett nytt verifikat i bokföringen och samtidigt öka tillgångs och skuldsidan.


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