The Mudcat Café TM
Thread #140645 Message #3239705
Posted By: ollaimh
16-Oct-11 - 12:49 AM
Thread Name: BS: Wall Street Protesters...
Subject: RE: BS: Wall Street Protesters...
and furthermore, without getting into the theory of money, not monatary theory, i am no monatarists. money is over ninety per cent held in financial forms other than specie. that is other than coins bills gold silver.
banks and other financial institutions keep most money in records with no actual folding money form. the money supply therefore is greatly affected by loans debentures bonds and other financial instruments. the more issued the more inflation of the money supplu and a rise in prices. so what i am getting at is the five fold increase in bank created securities done on wall street in the post 1999 "creative" financila boom following deregulation resulted in a significant increase in the money supply. however the inflationary effect were slow in the non financial economy. the prices of securities rose percipitously due to the increase in the money supply then as the price raises flowed into the main economy the "bubble" stableized then burst.
the investmnent bankers who created all these new bundled securities, options, derivitives and debentures, and even credit default swaps sold off their own holding before the boom hit the regular economy. in other words they created the boom , sold near the high but enough before the bust to avoid being asked too many questions, then sold off these inflated securities to the unsuspecting.
essentially,this was the largest ponzie scheme in history. and the smart guys were long gone by the time people were getting nervous. and long before the bust. most of the really big profiteers were the very same people who created these new financial instruments in the first place.deregulation handed controll over the money supply to the profiteers who knew how to manipulate the m oney supply. moreover these new securities were created with no deposit hedge that used to be put into the investments by backs before deregulation. in other words the banks stopped putting any of their own money into these securities they were selling. an example is credit default swaps, which used to be a kind of insurance when offered by investment banks who financed them themselves, but the ones out there now have to issuer deposit. they depend entirely on market psychology for their value and are pure specualtion. rather than the insurance they used to be. they were used to spread ones risk over several sectors of the securities market by swapiing with other investement banks . now they are purely speculative instruments.
the biggest ponzie scheme in history , with the tax payer stuck with the bill.