I heard an interesting anecdote just today, a company couldn't make payday because the automatic transfers weren't going through from the "too big to fail" category of banks to local community banks used by a lot of their workers. In other words, they theoretically had funds in the "to big to fail" banking system to cover their worker's pay, but when they tried to transfer those funds into the accounts of their workers, their TBTF bank told them that they couldn't complete the transfer outside the TBTF bank on time.
Simply put, that means that the TBTF system doesn't really have the money, they can pretend to shuffle it around internally, but when it comes to making it into real money outside their system, it's not real money. This has been a problem for years, the TBTF system was propped up with huge injections of 'theoretical money' to strengthen their balance sheets to avoid a panic, but the TBTF system agreed that they would carefully restrict that 'theoretical money' from ever actually entering the larger economy, because it would cause hyper-inflation and destroy confidence in the dollar. So they presented economic numbers based on their possession and intra-TBTF 'cash' flows of this 'theoretical money', while operating with their much smaller reserves of legitimate money.
I don't know long or widespread this problem of not having to delay transfers to non-TBTF banks has been. But it means that the TBTF banks are at the point where they either have to admit that they only have 'theoretical money' left (sparking a financial collapse) or go ahead and starting to transfer that 'theoretical money' into the real economy, where it will cause hyperinflation and destroy the dollar.
"Bubble, bubble, toil and impending trouble."
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I heard an interesting anecdote just today, a company couldn't make payday because the automatic transfers weren't going through from the "too big to fail" category of banks to local community banks used by a lot of their workers. In other words, they theoretically had funds in the "to big to fail" banking system to cover their worker's pay, but when they tried to transfer those funds into the accounts of their workers, their TBTF bank told them that they couldn't complete the transfer outside the TBTF bank on time.
Simply put, that means that the TBTF system doesn't really have the money, they can pretend to shuffle it around internally, but when it comes to making it into real money outside their system, it's not real money. This has been a problem for years, the TBTF system was propped up with huge injections of 'theoretical money' to strengthen their balance sheets to avoid a panic, but the TBTF system agreed that they would carefully restrict that 'theoretical money' from ever actually entering the larger economy, because it would cause hyper-inflation and destroy confidence in the dollar. So they presented economic numbers based on their possession and intra-TBTF 'cash' flows of this 'theoretical money', while operating with their much smaller reserves of legitimate money.
I don't know long or widespread this problem of not having to delay transfers to non-TBTF banks has been. But it means that the TBTF banks are at the point where they either have to admit that they only have 'theoretical money' left (sparking a financial collapse) or go ahead and starting to transfer that 'theoretical money' into the real economy, where it will cause hyperinflation and destroy the dollar.
September 14, 2015 at 4:29 AM