MUST WATCH: Money as Debt

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The bankers exposed!

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MUST WATCH: Money as Debt

Unread postby Christine on Sun Mar 02, 2008 11:40 pm

Money As Debt (47 minutes)

This MUST watch video explains how the banks create money by lending, about FIAT money, fractional reserve banking, etc.

And while these words may sound intimidating, this movie explains how money works in an entertaining and very easy to understand cartoon. It’s actually humorous.

The money to pay the INTEREST on all the loans does NOT exist!

To create money to pay interest, we need more DEBT. And eventually the debt bubble bursts.

Why does the government BORROW money?

The LENDERS end up with all the MONEY.

My blog posting about the video

The SOLUTION to all problems?

1) The government starts creating the money and STOPS paying interest on new debt.

There is absolutely NO reason for the government to PAY INTEREST to banks and investors for money created by the banks. Once the government creates money as the banks do now, we at least won't increase the national debt.

Over time, the government can create enough money to slowly buy back the national debt and eventually much of our LOWERED tax payments will actually be used to benefit us instead of the banks.

2) The banks operate as NON PROFITS and return their profits to society.

In Damanhur the bank provides the funds for community projects.

Please sign up for the Common Good Bank with the first branch scheduled to open in 2009.

Even when banks ARE in business to profit, they SHOULD be required to lend locally. Of course the flawed FICO scores should be prohibited and an experienced underwriter should be analyzing the borrower's application and use common sense.

When I was a California mortgage broker in the early 90s, I learned about the 4 "C"s of underwriting:

Credit
CHARACTER
Capacity (includes not only income, but reserves)
Collateral

Character has been entirely ELIMINATED.

And the credit analysis was replaced by buggy FICO scores. It's time to get back to basics.

Not all 4 Cs need to be present to make a good loan.

*** A borrower may not have collateral, but good credit, capacity and character.

*** Another borrower may be a criminal in jail, but with sufficient collateral, all other Cs can be absent.

It is a HUGE mistake to no longer make loans to homeowners with no income.

Even with the current falling housing values, mortgages should be originated based only on collateral. Whether that's 20% or 70% of the value depends on the property location and type. If a lender correctly estimates that the value may drop by 50%, a 30% LTV would still make a very good loan and either buy the owner time to create income (get a new job, recover from illness, etc.) or have some stress free time to die in peace.

Why SHOULD someone with cancer have to sell their house in this horrible market to be able to afford treatment and groceries?

The house used to be the home owner's "reserve" and having equity meant being able to pull out cash in emergencies. Now, an emergency means handing the keys to the banks.

And that's of course EXACTLY what the bankers want.
Christine
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