Friday, July 24, 2009

Can we change banking?

So, last time found Pine bemoaning the fact that knowledge of the problems with banking does not fix them, nor does the weak protests from the site that I last spoke of. Between then and now I did have the oppurtunity to attend a Lending Club "webinar", put on by big-wigs from the internet company. It was all very well done and I have nothing bad to say about it in total. However, putting the two "threads" together did give me an idea. Hold on this is a whopper of a Pine-ism.

So in the Lending Club presentation (in the beginning) they showed how banks did thier lending:
depositors put in money for which they are paid under 2% and borrowers borrow at over 12% with the banks keeping the difference. Gee and I thought I was the only dummy who thought that was how it works! You can go read one of my earlier posts for a full explaination, or heres the short of it:

There is a third party banks use called the FED. The banks put all deposits in the Fed and earn 6% on that PLUS they are allowed to loan 9 times that amount back out. If anything lets say they can do this at PRIME.. but really its more like FREE! So a bank gets money from the Fed currently at 0% percent and loans this at 13%, all while making 6% on the orginal deposit that they pay under 2% for. OK OK; so banks are making a mint .. so what???? Hey I don't really care how much they make .. the problem is each loan creates NEW money, money with no real good or service to back it up (only the PROMISE). Since this fishy money goes into the economy .. all money that was derrived via real goods and services MUST be devalued by the amount of the loan. AND THAT MY FRIENDS IS INFLATION. So the trillions in loans is devaluing the money you WORKED for, your real money buys less. This ONLY occurrs because banks use the FED to loan out money that otherwise does not exist.

BUT Lending Club does not do this. Because Lending Club uses lenders that must fund the loans directly with real cash money, there is no inflationary function called into play. That is to say the Lending Club makes money available without causing inflation which devalues the value of everyones elses money. So that idea of not working for big banks or pulling your meanger sums out, instead use a system such as Lending Club... which does not cause inflation to reduce the loans that do. By golly every true real AMERICAN should endeavor to swich loans and investments to Lending Club.. its the only thing that is GOOD FOR AMERICA!

Yeah, I know.. thats rather over the top. But when even Lending Club is afraid to say the obvious truth its kinda funny ... ole Pine don't care ........ I will.

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