Politics and Money

[properlynumb]

A generation ago, banks made money by lending it out.
It's the Fractional Banking System. Or Money as Debt, the Debt-Based Monetary system.
As a simple explanation:
Banks lend to borrowers and secure the asset of the loan.
That asset is considered an asset of the bank and 90% of the cash value is available for new loans.
90% of the new assets from new loans can be lent again.
The simple business model is for a bank to lend long term and borrow short term from the Fed for cash flow.

The Volcker Rule would eliminate 'Priority Trading'.
Such trading, the banks say, is with our own money.
But the rule would bring back the division of Investment banking and Fractional Banking for the public.
http://www.bloomberg.com/news/2012-02-15/making-the-volcker-rule-better-for-markets-and-the-economy-view.html

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Derivative trading in the interest rate market is very speculative.
Banks involved in this market can make a lot of money fast and loose it quick.
It's unregulated.
More than that, the 5 major banks doing most of the trades are under the security of the US GOV and the tax payer.
If Greece were to find a rare earth mineral or perhaps, a wealth of natural gas under Her control,
the bond and interest market would dramatically change.
You say that won't happen?
I say the system that relies on austerity as insurance is doomed to fail.