Gary gives it a scratch

  By Mystic | July 22, 2012 - 05:25 |

You have all done jolly well to follow the bank scratching presentations, so deserve some light relief.
I loved this ……… hope you do too~!

…………
Well….
Wadya tink~!!??~

Written by: Mystic on July 22, 2012.
Tagged . Bookmark the permalink.
  • CSArichardo

    Accounting is a set of rules to play the current banking game.  Just accept the rules, see how the game plays out, if you do not like the rules, legally change them alittle, keep playing the game, etc.  That is what the banking system is.

      I think Gary missed it when he thought the bank gets a $100k asset if it only loaned out $50k against the house.  The bank only got a $50k asset but highly secured or safe because it only loaned out 50% against the house.  The person taking out the loan should have gotten a really low interest rate because of this safety.  If they did not they were not good negotiators because in real life competition alone does not guarentee you the best deal !!

    • http://overthepeak.com/wordpress/ Mystic

       You are starting to get it there, at the end.
      Putting a gap between the `l` of `deal` and the two exclamation marks.
      Just fill the gap with a little old tilde and you would have it down perfect.
      Like always, thanks for trying~!!

    • Jetser

      As well as the $100000, he missed that Mystics video was very simplified, designed to explain a query about Steve Keen’s recent observation. I was expecting Gary to mention Keen somewhere.

      And what about the idea that there is real money (currency) and fake money (credit). This differentiation comes up a lot in discussions about how banks work. As I see it, credit frees us from having to go to the rich man for some tokens before we can conduct our business, which is a good thing. If it can be used as money then it’s money.

      • http://overthepeak.com/wordpress/ Mystic

         You expected Gary to mention Steve Keen~?~
        That is funny as well~!~

  • Lyle

    I made it half way through. Enough is enough in this case.

    • http://overthepeak.com/wordpress/ Mystic

       Ah, come one Lyle man.
      Maybe I don’t get out enough; but it was the funniest thing I had seen for many a long age.

      • windslice

        You need to get out more.

        2 minutes and 40 seconds was enough for me. And that included a trip to the toilet.

        • amishlandTodd

          wow, my face is red….I made it less than 1 min 45 sec.

          • windslice

            I must have spent a minute in the toilet……………

  • CSArichardo

    A $100k house could have up to $1000k loaned out against it, if the house is considered a reserve asset ?  Right ?  I am playing with your mind there.

    However in the real world of borrowing a $100k house can have up to $100k loaned out against it.  Usually the closer you get to $100k in loans the more expensive because of the default risk increasing.  $80k 1st mortgage would be cheaper to borrow than an additional $20k second mortgage. 

    Now in another world a $100k house could have $120k loaned out against it.  The $20k would be an intangible asset as a consequence of the purchase/loan and is allowed to occur but would probably cost alot more in interest if you were even able to convince the bank.  This is the legal way of playing the game as opposed to over valuing the property which is fraud?  

    Then there is the $100k house that becomes the ATM machine as it goes up $10k/year and the owner borrows another $10k every year to go on vacation, buy new furniture, buy a new car, etc. 

    So again the $100k house is only $100k at some moment in time.  It could be more or less than that in the future.  

  • Lyle

    I think some of you cats should apply for a job at Google. Make lots of monies. Spend 20% of your worktime on your own projects. Rub elbows with fellow brainiacs whilst traveling on Segways and rollerskates.

    I just bought a new building for our business. 165K. Paid 20% down from my savings ( reserves :). Future payments will be made from profits taken from customers $ which came from their pay – which came from their employers – which got their $ from their ‘reserves’ – which came from… ad infinitum – and I’m already lost. :)Me often thinks we’re trying to define the Pacific Ocean by 5 fish.Have a nice day y’all. If’n you a mind tuh.

    • Lyle

      Of course this refers to “horizontal money”. And of course banks are betwext most every transaction in one form or another.

      They can put on my tombstone: He said he new the difference between horizontal and vertical money.

      Oh yeah… oops… I’m gonna be cremated.

      Now back to re-inventing the wheel, creating perpetual motion machines, finding faults in string theory, and discovering singularities among infinite bubble universes.

  • lgrinaker

    Well, I thought this was a valiant effort, ;-).  And my goodness, he even picks up on derivatives and all sorts of things…

    However, because I am still lost via the extremely simple ledger example that Mystic is currently working with – a few 5′s…. I think one can only imagine my lack of “getting it” via Gary’s example, ;-).

    I think I will not add that to my “stew” at the moment.  Maybe in a year or so, but not at the moment, ;-)

    Linda

    • http://overthepeak.com/wordpress/ Mystic

       You are not lost Linda.
      (but you will be, if you ever try and make sense of this Gary mush)

      • lgrinaker

        ;-)

        Linda

  • John_by_the_creek

    Stunning!  Absolutely stunning!   Every bit as coherent an explanation as offered to us by the government, bankers, and financial media, only in a more inscrutable style!  Don’t waste hours and hours with CNBC, Bloomberg, or FT.  Just 20 minutes spent with this video will provide you with a sweeping understanding fully comparable to that of it’s producer!

    • http://overthepeak.com/wordpress/ Mystic

       So glad you appreciated it Johnny~!

      • John_by_the_creek

        …I’m quite confident you got as much from it as I did!

  • doc

    Nice one, Gary (longest running undefeated champ in innernuttin’ history – fuckin’, eh~!)~!

  • badartdude

    The world turns to shit,but the stock market is still up. Gary may not be right , but he has a point.

    • http://overthepeak.com/wordpress/ Mystic

      The `stock market` is up from 2 years ago, but down from 12 years ago.

      Finding a `point` in that video, is like searching for nice bit of carrot in a splash of vomit. 

      • Andrew

        I think the stock market/ bond market is key and they are both spinning plates on long thin sticks.
         I think Gary put in a fantastic effort compared to Keens vague simplistic thesis that debt levels are way too high and a debt jubilee will fix it! hooray problem solved …throwing in some usless historical facts and  getting his knob polished by the host( he might actually believe he is a profit…wow) …Steve Keen your a brilliant pompous idiot! and you make Gary look like a genius.. 

        Andrew

  • Blackstone100

    Dave’s definition of a Bank
    Bit Iffy I think.
    from 20:00min
    http://www.channel4.com/programmes/bank-of-dave/4od 

    He made a profit of roughly £8000 in first six months.
    note the regulators were looking for a reserve of  £10m

    Bank on Dave
    http://www.guardian.co.uk/money/2012/jul/06/bank-of-dave-small-business-finance-dave-fishwick?newsfeed=true 

    • http://overthepeak.com/wordpress/ Mystic

       Yes ….. and I don’t even know how fractional reserve banking works.
      This whole thing is making a chump out of me~!

      • Blackstone100

        not sure if you are winding me up or not.

        this simple calculator is interesting,I am sure its more complicated in real life.

        “Obviously, for the banks to make a profit, the Deposit Interest Rate must be lower than the Loan Interest Rate. In fact, for a bank to break even, the relative percentage by which the Deposit Interest Rate must be lower than the Loan Interest Rate turns out to be equal to theReserve Ratio percentage (try it!). This is because the reserve amounts are, as their name suggests, reserved; they are safely put away and are not available for commercial investment purposes.”

        so for a loan interest rate of 6% and a deposit rate of 5%      relative difference of 20%
        Any reserve rate above 20% would produce a loss.
        Also it appears that the lower the reserve rate is, the more cash there is floating about in in the system.

        http://www.novapoly.com/articles/finance/fractional-reserve-banking-model/ 

        • Blackstone100

          bugger above should should read  5% loan interest rate, and 4% deposit rate.

        • http://overthepeak.com/wordpress/ Mystic

          I’m not winding you up.  I just to get moments when I don’t think I know anything.
          This one has been going on for a few days now.
          Thanks for your efforts …….. but I don’t believe anyone right now~!

  • snedmeister1

    Sigh….
    I got to about 9 mins… And then sat `thinking` for the next 20 mins….I don’t think Gary has taken any notice of any conversations here ref banking….
    It is a similar situation to my discussion with Nick, yesterday…

    Sometimes ( maybe all the time ) people have a learned way of thinking, a learned behaviour, it doesn’t matter what you say, they just think along the same lines again…

    This similar pattern shows in comments here too…
    It can quite often be quite obvious, the person you are conversing with has not read your reply…
    They just write something back, based on what they thought you were going to say…
    ( Even if they did read it, they skim read, and assume what you mean anyway )

    This vid is going along similar lines, Gary has assumed he knew what the topic was about, without actually listening or reading, and dived straight into wrong theories about the FED giving money to the banks for them to lend out… 

    Our friend here, is obviously an intelligent man, and quite capable of complex thinking, and dare I say, sometimes he is really quite good at cutting through crap, so what is happening..???

    All I can think of, is that we all probably do it, especially as it has occurred to me, that I too have not watched all of Gary’s video, and am basing an assumption of content on the first half…!!! :)

    Time for some serious self analysis too, eh..??? 
    ( Do I present the same behaviours, that piss me off so often in others )..??

    Sadly, I probably do…….. 

    • http://overthepeak.com/wordpress/ Mystic

       I just wrote the intro to the posting of Gary’s next video …… I mention much of what you comment here.

      It is very hard to give people the time they deserve …. as in, really reading their comments and trying to work out what point they are trying to make.
      And yes, we are all guilty of not putting in the necessary amount of time.

      The best I can say is, that I think, in general, we are better than most forums (fora~?).

      It is easier (and probably more fun) to just watch sport on the telly.
      That is the fact of the matter.
      Thinking where fives go, just ain’t much fun.

      • snedmeister1

        Yes, I will watch the next one this evening, I started it, but it is 20 mins long and I have another to-do list today….

        I am giving myself a self-improvment task, trying to rectify my self observed errors..!!! 
        That means watching the whole vid, and giving proper thought even if Gary starts ranting and has a lot of the mechanics wrong…..

        This is the crux of it for me, Gary is very apt at explaining the symptoms, but not so much the mechanics, and it is frustrating for me, to see someone get so frustrated…!!!

  • joebhed

    Sorry Nick
    I stayed with Gary for 3 minutes and knew he’d make me crazy if I stayed any longer.
    I’ll check out the update.

    • http://overthepeak.com/wordpress/ Mystic

       You are excused Joe ….. really.