Why Banks Aren't Lending: The Silent Liquidity Sqeeze.

[Ponce]

They are buying gold in order to keep control of the "future" economy.......simple.
=================================================


Why Banks Aren't Lending: The Silent Liquidity Sqeeze.

Why aren’t banks lending to local businesses? The Fed’s decision to pay interest on $1.6 trillion in “excess” reserves is a chief suspect.

Ellen H. Brown
Web Of Debt

Where did all the jobs go? Small and medium-sized businesses are the major source of new job creation, and they are not hiring. Startup businesses, which contribute a fifth of the nation’s new jobs, often can’t even get off the ground. Why?

In a June 30 article in the Wall Street Journal titled “Smaller Businesses Seeking Loans Still Come Up Empty,” Emily Maltby reported that business owners rank access to capital as the most important issue facing them today; and only 17% of smaller businesses said they were able to land needed bank financing. Businesses have to pay for workers and materials before they can get paid for the products they produce, and for that they need bank credit; but they are reporting that their credit lines are being cut. They are being pushed instead into credit card accounts that average 16 percent interest, more than double the rate of the average business loan. It is one of many changes in banking trends that have been very lucrative for Wall Street banks but are killing local businesses.


Why banks aren’t lending is a matter of debate, but the Fed’s decision to pay interest on bank reserves is high on the list of suspects. Bruce Bartlett, writing in the Fiscal Times in July 2010, observed:

Economists are divided on why banks are not lending, but increasingly are focusing on a Fed policy of paying interest on reserves — a policy that began, interestingly enough, on October 9, 2008, at almost exactly the moment when the financial crisis became acute. . .
Historically, the Fed paid banks nothing on required reserves. This was like a tax equivalent to the interest rate banks could have earned if they had been allowed to lend such funds. But in 2006, the Fed requested permission to pay interest on reserves because it believes that it would help control the money supply should inflation reappear.
. . . [M]any economists believe that the Fed has unwittingly encouraged banks to sit on their cash and not lend it by paying interest on reserves.
At one time, banks collected deposits from their own customers and stored them for their own liquidity needs, using them to back loans and clear outgoing checks. But today banks typically borrow (or “buy”) liquidity, either from other banks, from the money market, or from the commercial paper market. The Fed’s payment of interest on reserves competes with all of these markets for ready-access short-term funds, creating a shortage of the liquidity that banks need to make loans.

By inhibiting interbank lending, the Fed appears to be creating a silent “liquidity squeeze” — the same sort of thing that brought on the banking crisis of September 2008. According to Jeff Hummel, associate professor of economics at San Jose State University, it could happen again. He warns that paying interest on reserves “may eventually rank with the Fed’s doubling of reserve requirements in the 1930s and bringing on the recession of 1937 within the midst of the Great Depression.”

http://www.activistpost.com/2011/07/why-banks-arent-lending-silent.html

[mick silver]

banks are not loaning because they need more bailout whick is coming for them . wait an see

[BillBoard]

Historically, the Fed paid banks nothing on required reserves. This was like a tax equivalent to the interest rate banks could have earned if they had been allowed to lend such funds. But in 2006, the Fed requested permission to pay interest on reserves because it believes that it would help control the money supply should inflation reappear.
. . . [M]any economists believe that the Fed has unwittingly encouraged banks to sit on their cash and not lend it by paying interest on reserves.



Not "unwittingly", but by design!

You cannot keep expanding credit for ever, you also need the contraction to consolidate the wealth. The Fed fully knows what they are doing, it is the stupid and ignorant that think that the Fed actions are made in error.

[Hatha Sunahara]

The quickest way to kill an economy completely is to reduce the money supply. The way to do that deliberately is to create a 'credit squeeze'--where the banks are not lending money to businesses that employ people. The banks and Bernanke are doing this deliberately to destroy the US economy. In 1929, after the Stock Market crash, it took the banks 3 years to choke off the money supply, so that by 1932 there was a full blown depression. They want that because everybody gets desperate, and starts selling off valuable assets at ridiculously low prices to have enough money to live. They are in line to buy those assets because they are the only ones who have cash.

This is all an exercise in fleecing the sheep. In redistributing wealth from people who create it to people who live from money itself--the usurers. Why do you suppose Mayer Amschel Rothschild said 'If you give me control of a nation's money supply, I care not who makes the laws.'? We (congress) gave him control of our money supply in 1913. We need to take it away from him if we want our laws to mean anything.

Hatha

[Hatha Sunahara]

Here is a pretty good summary of what is happening by Dennis Kucinich. He's one of the few who isn't being fooled, or isn't fooling anyone else.

http://globalresearch.ca/index.php?context=va&aid=25652


Debt Political Theater Diverts Attention While Americans’ Wealth Is Stolen

by Rep. Dennis Kucinich


Text of Congressman Kucinich’s Remarks:
The rancorous debate over the debt belies a fundamental truth of our economy -- that it is run for the few at the expense of the many, that our entire government has been turned into a machine which takes the wealth of a mass of Americans and accelerates it into the hands of the few. Let me give you some examples.
Take war. War takes the money from the American people and puts it into the hands of arms manufacturers, war profiteers, and private armies. The war in Iraq, based on lies: $3 trillion will be the cost of that war. The war in Afghanistan; based on a misreading of history; half a trillion of dollars in expenses already. The war against Libya will be $1 billion by September.
Fifty percent of our discretionary spending goes for the Pentagon. A massive transfer of wealth into the hands of a few while the American people lack sufficient jobs, health care, housing, retirement security.
Our energy policies take the wealth from the American people and put it into the hands of the oil companies. We could be looking at $150 a barrel for oil in the near future.
Our environmental policy takes the wealth of the people -- clean air, clean water -- and puts it in the hands of the polluters. It’s a transfer of wealth, not only from the present but from future generations as our environment is ruined.
Insurance companies, what do they do? They take the wealth from the American people in terms of what they charge people for health insurance and they put it into the hands of the few.
We have to realize what this country's economy has become. Our monetary policy, through the Federal Reserve Act of 1913, privatized the money supply, gathers the wealth, puts it in the hands of the few while the Federal Reserve can create money out of nothing, give it to banks to park at the Fed while our small businesses are starving for capital.
Mark my words -- Wall Street cashes in whether we have a default or not. And the same type of thinking that created billions in bailouts for Wall Street and more than $1 trillion in giveaways by the Federal Reserve today leaves 26 million Americans either underemployed or unemployed. And nine out of ten Americans over the age of 65 are facing cuts in their Social Security in order to pay for a debt which grew from tax cuts for the rich and for endless wars.
There is a massive transfer of wealth from the American people to the hands of a few and it's going on right now as America’s eyes are misdirected to the political theater of these histrionic debt negotiations, threats to shut down the government, and willingness to make the most Americans pay dearly for debts they did not create.
These are symptoms of a government which has lost its way, and they are a challenge to the legitimacy of the two-party system.

[mick silver]

Fifty percent of our discretionary spending goes for the Pentagon. A massive transfer of wealth into the hands of a few while the American people lack sufficient jobs, health care, housing, retirement security .... but people are getting jobs . fighting the wars were in .

[Twisted Titan]

In 1929, after the Stock Market crash, it took the banks 3 years to choke off the money supply, so that by 1932 there was a full blown depression


DING! DING! DING!! DING!! DING!! DING!!!


It was a well known fact that less then 3% of the population was involved in the stock market so when the crash hit only a tiny portion was affected but under the deversion of the crash JP morgan set memo's out to all charter banks to call in over 80% of their loans irregardless of the timely payment history.

So if you are doing everything right and still get your card pulled a collaspe is absolutely certain. Which is just what they got.

[Joe King]

Only a fool lends to those without apparent ability to re-pay. That applies to anyone. From the banks, all the way down to you and I.


System wide credit contractions happen when lenders suddenly have their eyes opened to the fact that future production will be insufficient to support the promises to pay that have already been made.