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How Wordwide Economic Collapse Was Avoid...

At 2 minutes, 20 seconds into this C-Span video clip, Rep. Paul Kanjorski of Pennsylvania explains how the Federal Reserve told Congress members about a "tremendous draw-down of money market accounts in the United States, to the tune of $550 billion dollars." According to Kanjorski, this electronic transfer occurred over the period of an hour or two.

  • Pfeil
  • posted by Pfeil
  • Date 2/11/2009 10:57:46 PM
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15 Comments

Current View: 15 / Show all Comments

Pfeil : LVL 33: VP 4.2: said:

Pfeil

19 votes NegativePositive

287 days 19 hours ago...

Skip to 2:20 (I didnt feel like editing, sorry)


"The Treasury opened its window to help. They pumped a hundred and five billion dollars into the system and quickly realized that they could not stem the tide. We were having an electronic run on the banks!

They decided to close the operation, close down the money accounts, and announce a guarantee of $250,000 per account so there wouldn`t be further panic. And that`s what actually happened.

If they had not done that their estimation was that by 2pm that afternoon, 5 1/2 trillion dollars would have been drawn out of the money market system of the United States, it would have collapsed the entire economy of the United States, and within 24 hours the world economy would have collapsed."



The questions is ... Who was withdrawing the money?

thinkbolt : LVL 34: VP 4.2: said:

thinkbolt

-5 votes NegativePositive

287 days 19 hours ago...

He`s just talking in circles, like they all do.

Diashan : LVL 41: VP 4.9: said:

Diashan

17 votes NegativePositive

287 days 18 hours ago...

such a fragile system, only a matter of time before it folds.

Sir spanks-a-lot : LVL 39: VP 4.7: said:

Sir spanks-a-lot

-3 votes NegativePositive

287 days 17 hours ago...

yeah, "we don`t know" whether or not to makes things so that ultimately, the big corporations are the ones that really benefit.

mcbarker : LVL 38: VP 4.6: said:

mcbarker

7 votes NegativePositive

287 days 12 hours ago...

@ Pfeil
I was! The U.S. only backed $100K prior to the new legislation. I had a business to run. If the banks were going to fail what else would you do?

Tada : LVL 42: VP 5: said:

Tada

26 votes NegativePositive

287 days 10 hours ago...

"Who was withdrawing the money?"

People, corporation and countries that have banks accounts. Basically the way a bank works it hold money for people, lends that money to other people while taking interest on those loans to make money. This system works fine as long as people keep their money in the banks. However people who have huge accounts, in the million dollar region, have accountants that keep track of movements in the economy, basically their job is to make sure your money is safe. If they notice that bigger accounts are pulling out their money out of the banks, they`ll know that something is up and they`ll do the same.

Basically a chain reaction starts where the highest level accounts withdraws their money, then it wave moves down in the ranks. After a while what you get is a banking system that is unable to lend any money or pay interest on the remaining savings, basically it`s like as if people just stopped buying Coke because they heard it contained cyanide.

You see the same thing with the stock market. It`s not that everyone is in on the deal, the bad news travels down the ranks and people simply wants to get out as fast as possible, because they know that if they don`t they are going to lose all their money. A kind of circular logic is there since people know that people know that people know.

This is exactly why a totally free market is simply not possible, if there is no one in control, to make those "horrible socialist moves", when shit hits the fan the system crashes because the whole system survives on the idea that paper value is actual value, i.e. a stock worth 1 USD will be treated as if it was 1 USD by the owner, if the owner has a million of those stocks then that person has in theory 1 million USD. Then if that stock falls in value to 1 cent, that man has lost 99% of his wealth and it is as if that money has never existed.

Now just to make one thing clear. If this crash this dude is talking about, would have happened, pretty much no one would have benefited from it. Perhaps as people started coming out of that global disaster, a small group of smart/lucky investors would become super rich but as a whole this would be like blowing up your home town with a nuke just so you could buy the land to build a football stadium. YOu`re basically going to lose more money than you could possibly make from the whole thing

Arcturus519 : LVL 53: VP 5: said:

Arcturus519

19 votes NegativePositive

287 days 8 hours ago...

Tada: what you fail to realize is there is absolutely 0 need for the entire stock market.

The stock market does nothing but steal money from business`s and regular people then spend it flying around in jets with coke and hookers. Seriously.

No-one who works for or in or with the stock market provides and + to any nations GDP or welfare in any way. They are all crooks, modern snake oil salesmen, stocks are the snake oil, people and companies buy them like the gold miners used to run to the hills for fools gold...

Banks are another matter, if they didn`t lend out 10X`s what they took in in saving then they would have enough money to cover themselves.

Shit needs to be backed by real value, real something. Constant inflation is a tax on everyone and it serves no purpose, other than allowing people to get yearly raises and `feel good` while actually losing money on a 3% fucking raise. Thanks corporate asswipes.


edit: P.S. what my point is, that a free market works perfectly fine. Let the idiots who buy snake oil learn the fucking hard way, if we didn`t bail these fuckers out etc etc in a generation that shit would never happen again people would learn in grade school to not be fucking morons.

swords : LVL 46: VP 5: said:

swords

11 votes NegativePositive

287 days 2 hours ago...

Advice: Take your income check, buy a gun, sup up your car because in a few years you will be roaming the post apocalyptic desert with your dog. MAD MAX STYLE!!

exploder : LVL 49: VP 5: said:

exploder

12 votes NegativePositive

287 days 1 hour ago...

^ "The stock market does nothing but steal money from business`s and regular people then spend it flying around in jets with coke and hookers. Seriously."

AMEN! That is EXACTLY what I have been saying, word for word, for years. Let`s not forget the top end of the music industry, and 90% of the corporate CEO`s, and politicians... It a long list of useless ripoff assholes, sucking our blood.

We need to realise that NOBODY can honestly earn over a million bucks a year. We don`t need many rules about how or why. The point is, anything more than that is theft, one way or another.

If people had no way to profit from excessive greed, we could skip alot of other problems easily (and all the halfassed rules against them), because nobody would have any real reason to do lots of bad things.

It`s too bad the rich make all the rules.

We are at a point in history when we need to recognise a new type of crime: excessive greed. It has very real consequences, even though it`s hard to single out the individual victims. The results are mass slavery, mass poverty and abuse, mass destruction of the foundations of civil society, and mass murder (to name a few).

I`m not saying nobody gets rich, or can`t make it big. But we need to honestly admit that there is such a thing as TOO MUCH, and that we need to draw a line.

ps. The stock market actually does do something very good and valuable. It is supposed to be our capitalist free market way of organically funding and taking on risky ventures. The alternative being something like having the government decide everything, which is obviously a bad idea. But that purpose is truly eclipsed by the wholesale theft and uncontrolled greed nowadays (it`s always been probalmatic).

Tada : LVL 42: VP 5: said:

Tada

-2 votes NegativePositive

286 days 23 hours ago...

Arcturus519: Yeah yeah, stock people evil, Michael Douglas in Wall Street, Lex Luthor, etc I get it.

So what should we replace the stock market with then?

pdub : LVL 37: VP 4.5: said:

pdub

6 votes NegativePositive

286 days 17 hours ago...

"So what should we replace the stock market with then?"

Super markets.

:P

Pfeil : LVL 33: VP 4.2: said:

Pfeil

2 votes NegativePositive

286 days 8 hours ago...

Tada: I dont think you realise exactly how many millionaires or large accounts it would take to withdraw 500+ billion dollars in less than two hours. Also, the money being taken out of the system only stopped because the treasury decided to close money accounts. We are talking about 5 1/2 trillion dollars in the matter of about four hours if it had not been stopped. This means it would have kept going until the system collapsed.

I would also like to point out that corporations DONT keep large amounts of money in their banking accounts. In fact most corporations only keep enough in cash to cover new loans that they get from banks to expand their business. Some corporations even take out loans for their payroll, thats how little cash some corporations keep. The reason for the bank and auto bailouts was because they lacked money. How can corporations that lack money withdraw money they dont have?

Also, this doesnt have squat to do with the stock market.

Khollest : LVL 40: VP 4.8: said:

Khollest

2 votes NegativePositive

285 days 14 hours ago...

Once again, the obvious course is over-looked because it involves a radical change to the system. Let the fucker crash. The system, while currently screwed, still has a pseudo-self regulating nature about it. Right now, it wants to crash. According to this guy, it was supposed to crash at 2pm that day. This also has to do with the reducing of standard FDIC insurances to accounts from 250k to 100k.

Too much of the economy is based on what a few hundred asshole millionaires/billionaires are doing on some street in New York.

Let it crash. I am aware that the ramifications are wide reaching but it is inevitable. That opinion could stem from my personal independence from the stock market. My employ, currently posting just over a billion/Y privately owned on pace to break growth records and double its earnings in 2 years.

/end

neon neophyte : LVL 27: VP 3.6: said:

neon neophyte

0 votes NegativePositive

285 days 14 hours ago...

i should probably sink all my money into gold.

360SNaKe : LVL 17: VP 2.6: said:

360SNaKe

1 votes NegativePositive

285 days 12 hours ago...

It could have been avoided but no one cared. Greed by corporations and the consumers. Loans... spend , loans and spend!

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Entry Dates: 9/8/2007-9/14/2009