Did We Need TARP?

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And when you take out the loan, and buy my used car, I don't stuff it in my pillow. I bring it to the bank where it is "safe". I make the deposit. It may be in the same bank or a different bank.

But how long is it before you use that money as a down payment on a new car, or to purchase a refrigerator? Yes, you may deposit the money, but that deposit tends to be for a very short period of time. Most of us spend most of what we get - I think that the savings rate is only something like 5% - and most of that savings is done by the upper middle and rich class.

Iagree 100% that banks are not creating money.

Thank you!

Bank loans do is allow those who do not have enough money to buy things that they can't afford on cash alone. It is those who have the money, or collectivly those who have the money who allow the individual the purchasing power...Money pasing through the system with the use of banks or without banks is esentially the same, but there are more transactions because of access to capital which banks allow.

Exactly, banks facilitate transactions. That helps our economy and increases velocity of money.

That sale otherwise would NOT have occured in the economy without being facillitated by banks/lending institutions.

Maybe they would maybe they wouldn't. If people didn't store their money in banks, some of them would directly lend it to people who wish to borrow, so I would assume that at least some of these transactions would still take place even if we did not have banks. A lot of borrowing and lending takes place between individuals and between businesses without any banks being involved. Again, banks facilitates lending, but lending can happen without banks.

 

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Has it? Because apparently it's not any better than what we had before.
For all of the cuts in productivity that come along with these measures, it sure doesn't seem worth it.

If "before" means prior to modern banking laws that were brought about from 1929-1933, then the security of our banking system is MUCH better than "before". Due to the system and safeguards that were put into place way back then, I didn't loose a dime when my bank failed a few months ago.

Runs on banks have been far fewer during the past 80 years than before the start of the Great Depression. Ever notice how bad points in our economic history prior to the Great Depression are typically called "The Panic of XXXX"? We no longer have "panics" due to our modern banking system although we nearly had one in Sept of 2008, but that one was intentionally manufactured by banks so they could manipulate the system (resulting in TARP).

 

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But how long is it before you use that money as a down payment on a new car, or to purchase a refrigerator? Yes, you may deposit the money, but that deposit tends to be for a very short period of time. Most of us spend most of what we get - I think that the savings rate is only something like 5% - and most of that savings is done by the upper middle and rich class.

My primary savings accounts have not been touched in 3 years... My money market accounts also have not been touched. Checking accounts are where the spending occurs...

I don't consider myself rich. I do think it is very important keep a portion of money liquid for emergencies, or other large purchases. You're probably right, it is unfortunate that you are right that most people don't keep money available. A savings rate of 5% is positive but horrible. It still would represent a growth of savings not a depletion from the account as you described above.

Maybe they would maybe they wouldn't. If people didn't store their money in banks, some of them would directly lend it to people who wish to borrow, so I would assume that at least some of these transactions would still take place even if we did not have banks. A lot of borrowing and lending takes place between individuals and between businesses without any banks being involved. Again, banks facilitates lending, but lending can happen without banks.

Very little of my assets are in the bank. There are a lot of ways to store capital. Stocks, real estate, metals, diamonds, art, baseball cards... Banks are not the only storage game in town.

Lending can happen without banks, but it doesn't matter if you originate the loan from the bank of ME, or the bank of YOU or the bank of HSBC. The difference is the bank of ME and YOU don't have the same access to customers. We the average person typically doesn't have 30K laying around to lend someone to buy a car never the less the assets to be able to lend 400K to several individuals to buy homes. So, no those transactions would NOT take place if not facilitated by a bank. The only recourse would be if the owner of the item held the note and accepted payment from the individual, but in most cases it is not practicle to conduct non-business transactions, or small transactions in that manner.

Could you imagine a gas station keeping track of who it lends gasoline to without the assistance of master/visa/discover?