Of course in my recent post I meant to say when the DJA hit 8500, not 850.
850 would mean back to the Stone Age.
>From: "Richard Cook" <rickycook21@hotmail.com>
>To: socialcredit@elistas.com
>Subject: Re: [socialcredit] U.S. Economics Test
>Date: Tue, 14 Aug 2007 21:31:38 -0400
>
>I don't know how relevant this is to the discussion, but they have done
>almost everything they possibly can to assure that an individual bank
>cannot fail. So much so, that there is hardly anything any more that can be
>called a "bank" in the old-fashioned sense of the word. In other words, the
>bail-out is a way of life. However, the one thing that cannot be protected
>against is when the entire national or even international system is so
>overextended on credit that it makes no difference in shifting reserves
>from one bank to another or from the central bank to individual banks.
>Currently there are differences of opinion as to whether the financial
>crisis is going to reach this level, whether just in the U.S. or farther
>afield due to the role of the U.S. as the worldwide "consumer of last
>resort." We are obviously already in a recession in the U.S. as far the
>producing economy is concerned. It is pulling down the financial economy
>because the parasites are running out of nutritious morsels (consumers,
>businesses, government) to swallow up and digest. I think we can expect a
>stock market decline of 40% because that is what we have had typically when
>recessions begin; i.e., there is a credit bubble that deflates to that
>extent. If the Dow-Jones in the U.S. goes below a 40% decline; i.e., below
>around 850 over the next year or two, look out. That means we're heading
>toward a depression which can be defined as an 80% decline in the producing
>economy. The only question in my mind right now is where it stops on that
>continuum. At 40% they can produce another bubble in 2-3 years. The one
>time in the last 100 years where it hit 80%--1929-33, it took a decade and
>a world war to recover. That war, of course, was monetary in its origins
>and results as Douglas foresaw and warned about.
>
>
>
>
>
>
>
>
>
>>From: "John G Rawson" <johngrawson@hotmail.com>
>>Reply-To: socialcredit@elistas.com
>>To: socialcredit@elistas.com
>>Subject: Re: [socialcredit] U.S. Economics Test
>>Date: Tue, 14 Aug 2007 22:31:49 +0000
>>
>>
>>Two comments:
>>
>>1. Our Royal Commission pointed out that, if there were only one bank
>>operating, there would be no limit to its lending apart from possible
>>shortage of willing borrowers. They thus pointed out that reserves
>>concerned only interbank operations, when one outstripped the others in
>>lending, as Bill commented.
>>
>>2. They regarded reserve ratios as a "blunt instrument", i.e. ineffective.
>>Whether because of that or for other reasons as well, reserve ratios were
>>dropped and our only means of trying to control the volume of money is per
>>changes in the "Official Cash Rate" (Res. Bank to trading banks) which
>>trigger changes in general interest rates. (I am not suggesting that this
>>method is fully effective either.
>>
>>Regards. John R.
>>
>>
>>From: John Hermann <hermann@picknowl.com.au>
>>Reply-To: socialcredit@elistas.com
>>To: socialcredit@elistas.com
>>Subject: Re: [socialcredit] U.S. Economics Test
>>Date: Tue, 14 Aug 2007 09:59:48 +0930
>>
>>At 11:15 PM 13/08/2007, William Ryan wrote:
>>
>> ... Beyond regulatory requirements, a bank needs reserves only to cover
>>deposits lost to other banks, as they are lost.* Banks of course
>>individually gain and lose deposits to other banks, but if a bank has no
>>net loss of deposits as it is granting loans, it has no need for reserves
>>to cover them.
>>Conventional banking wisdom (dogma) holds that a depository needs reserves
>>to "cover" deposits by its own customers. And that any newly-created
>>deposits (i.e., arising from new loans advanced by the depository) require
>>additional reserves.
>>
>>
>>A perfectly coordinated banking system has no need whatsoever for
>>reserves,
>>Yes it does. The reason being that the real purpose of reserves is not to
>>provide backing for deposits (because deposits already perform all of the
>>functions of money and do not need backing), but rather to provide the
>>central bank with additional means (apart from interest rates) of
>>adjusting the overall volume of bank lending, and also the means to adjust
>>the volume of legal tender - according to society's need for cash at every
>>point in time.
>>
>>
>>exactly as if it were one large monopoly bank with many branches. As the
>>banking system becomes increasingly coordinated, the need for reserves is
>>diminishing.
>>
>>* Simple withdrawals are similar. Individual banks do not issue their
>>own banknotes and coins, but must purchase them from the central bank. If
>>deposits of
>>banknotes and coins equal withdrawals of banknotes and coins, there is no
>>need for reserves to purchase them. Regardless of the volume of
>>transactions.
>>This is a thoroughly confused statement. All coins and notes held by a
>>bank ARE reserves. And as such are entirely interchangeable with creditary
>>deposits in the bank's account with the central bank.
>>
>>- John Hermann
>>
>>
>>
>> >> By Mr. McMaster: Q. So they pay three per cent and invite the public
>>to deposit by advertisements just to get a smoke screen?-
>> >>
>> >> A. I should say that.
>> >
>> > That is not correct. Banks and other depositories invite the public to
>>transfer their deposits from transaction accounts to interest-bearing
>>accounts because the latter
>> > generally have a reduced reserve requirement (in the U.S. we find that
>>term deposits have zero mandatory reserve requirement). This action
>>effectively frees up reserves, > which may be used by commercial banks in
>>support of additional lending to the public. In regard to this method of
>>acquiring excess reserves, the interest paid to
>> > depositors is generally a lower cost to a bank than is the cost of
>>borrowing the same quantity of reserves from within the financial system.
>>This
>>explains the incentive
>> > for banks to offer interest-bearing deposits to the public. -- John
>>Hermann
>>
>>
>>
>>
>>
>>
>>
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