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Greed on Wall Street

道,领导也。一个领导要不断呼唤以及教导其下属。下属的错与过,皆因领导懒惰。

 
 
 
 
 

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24 interesting findings on how Wall Street destroyed itself.

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When the US FED reduces the interest rate, inflation robs you of your money- part 3  

来自浪里行舟   2011-10-08 13:16:45|  分类: The veiled US FED |举报 |字号 订阅

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In the good old days your bank savings account earned you at least 3% annual interest, you understand the virtue of saving for the rainy days. However, when the US Fed reduces the bank savings rate and favored a gradual rise in the rate of inflation, it is telling you this message: Do not save, go spend it all. This is because money in your bank today is worth much less tomorrow. Inflation shrinks your money.

When the US Federal Reserve reduces the interest rate, the 99% will spend and spend generating ever more profits for the businesses. These business profits need not be shared with the 99% since the bank savings rate is near zero. The only party that the businesses share their profit is with the banks who always take their share in the form of interest spread.

When millionaires turn into hundred-millionaires or billionaires, they just park their money with the banks and let the banks lend out the money to generate ore profits for them.

How does the bank lend out the money to the 99% who are the consumers who drives the US economy?

Credit loans, mortgage loans, credits cards are all made freely available to anyone who wants to take it up. The unknowing consumers finding that it is so easy to reach out their hands to easy credits, they just grabbed these offers of easy credits and spend and spend. More money chasing after the same amount of goods certainly leads to inflation.

Housing is the biggest ticket item. When more money spent in buying up homes, housing price shot up. As the housing prices crept up, more people feared that they will never be able to buy a roof over their heads. The banks knew that they can offer higher interest rates on home loans to people who had little means to pay their installment. However, blinded by the higher interest spread on sub-prime mortgage loans, these mortgage loans were given out with no due diligence whether the borrowers can repay their loans or not. 100% of the fault MUST lie with the lending banks and not the borrowers.

The sub-prime mortgage loan debacle came crashing on the banks. Who should bear the full responsibility? The poor borrower who in the first place could not afford to buy a house and not being made to pay their outstanding mortgage loans will never have the money to pay up. The banks must eats up the shit they left behind.

However, the Federal Reserve knows too well, if the banks were to default, the shareholders of the banks will lose everything. The same top 1% will lose their money because the banks are not able to repay them. The Federal Reserve who only cares about the top 1% used the people’s money to shore up the banks with US$1.3 trillion dollars. Ha! Ha! Ha! Again the top 1% was on the receiving end and the 99% got to foot the bill of saving them. This is another way of robbing the poor to give to the rich.

  

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