Simone Wapler – La Chronique Agora (France) –
Financial markets are in the limelight. The financial bubble continues to inflate without limit and the definition of the capital of the banks escapes the regulators.
Markets are stealing from record to record. At this rate, the CAC 40 could regain its level of the Internet bubble (6,000 points in 2000). All the speakers are frightened of the separatist wills of Catalonia that will join the camp of the grumpy Brexit.
This euphoria allows me to tackle today a particularly boring and tangled subject: banks and their own funds. I feel, dear reader, that arrived at this stage you wish to leave me immediately. You are wrong.
By focusing on the monetary, banking and financial system, you could become ultra-rich. Not necessarily by buying shares or bonds,as Bill Bonner explains
But you could also avoid a disaster.
We live in a system that has nothing to do with capitalism. Capitalism reinvests honestly earned profits in competitive markets to make productivity gains, that is, to have more and better with less effort.
If every day you get much more than you can produce yourself, it is thanks to this wonderful organization, this refined specialization that capitalism allows. From your first coffee and toast to your last thought at the bottom of your bed, everything around you is the result of cumulative investments for centuries: bulb, textile, automobile, food, entertainment … You yourself can devote yourself to what you do best to exchange it for what others do best.
Creditism does not work like that.
Creditism depends on equity, whose definition is fuzzy
Credit creates money according to the banking principle that “credits make deposits”. Money no longer comes from past successes, it falls from heaven. If you have a bank license, 1 € of equity allows you to create 20 € or 30 € credit, to grant loans.
Whether or not to grant these loans and to whom, for what activity, has become the preserve of the banks.
Formerly, capital represented the accumulation of past successes. Today, it is mostly a privilege.
Of course, the saying “we only lend to the rich” remains in force. For a banker, the most comfortable loan is one that is leaned on to something already existing. This explains why the credibility enriches the already rich and the financiers who receive interest on the loans granted. These interests will in turn increase the equity and allow for more lending.
The keystone of this system? Equity, you understand. It is clear to you, dear reader, that the definition of capital is the subject of intense discussion within the “regulatory bodies”.
Agefiof 19 September on this subject:
In reality, the concept of “own funds” is as clear as classical juice.
“Own funds” may begoodwillor goodwill *, of the debt of a State …
It is important that the banks’ own funds inflate because so more and more credits can be granted. Deflation, the fall in the amount of credit, is not possible because this would lead to cascading bankruptcies. Hence the fall in interest rates that allows to continue to inflate credit, borrow to repay an old loan.
The conclusion is necessary.
Regulators claim to regulate a system that knows no physical limit (since money no longer has material anchorage and is pure credit) and is based on a scam since your sight deposits are supposed to be permanently available.
This is obviously not the case and any leakage of deposits triggers solvency crises, as was seen recently in Spain.
Doug Noland is a clairvoyant accountant. He denounced the bubble of 2000, the bubble of 2008 and it holds the blog “Credit Bubble Bulletin“.
“We are in a global financial bubble that I call the ‘mother of all bubbles’. Economists can not see it. They can not model currency and credit. However, for those who are out of the system, the facts are becoming clearer”
Compare this to this article:
It is becoming increasingly imprudent to leave your savings at the mercy of the financial system even if, for the moment, the markets do not cure and soar.
* This reasoning consists in giving an asset a value greater than its purchase value because it has been “well” purchased.