Where did the money go?
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We threw it out of planes after the Tsunami, we gave it to Egypt,Russia,China, South Korea,Saddam Hussein for 20 yrs,Spent alot in Afg fighting USSR alongside the same folks we are fighting now...??? Spent alot smuggling cocaine into the states in order to dumb down the populace then got tired and put Manuel in jail,helped alot of folks in Africa,spent billions in space,spent billions and billions and billions on really cool guns and weapons we never get to see on Military channel,then we gave more to Egypt,China, Japan and it never stops...........
Yet I just passed by a guy who claims to be a vet with a sign in his hand on the curb....???
WTF are we thinking ?
Yet I just passed by a guy who claims to be a vet with a sign in his hand on the curb....???
WTF are we thinking ?
jdsbusa
Registered
A lot also had to do with risky investments that were allowed by Clinton in either 1997 or 98 (have to pull up some old docs to get you exact dates). Banks were allowed to purchase into "items" we'll call them, that they normally were not allowed to. Huge risk, high gains, even higher losses when it came full circle. A lot of people lost money they never really had - see NASDAQ or DJIA gains and losses over the past 15 years. The smart ones got out and still have their money but that's a small portion compared to those who lost their ars! Think of how much you have tied up in your retirement portfolio. If the market dropped to say 5000 points overnight how much would you really have? Kind of the same effect - the money wasn't necessarily something that was ever there for a lot of people. Not "liquid" I should say. Then of course on top of that we get these creative lenders making mortgages they had no business doing, people getting "no doc" loans requiring zero documentation or proof of even a pot to piss in. Now you've got sky high foreclosure rates, the banks are dried up of money and will come looking elsewhere to get it (that's where the remaining employed people come in with higher fees and lower investment return rates). The housing market is in full collapse, home sales are down, which affects new construction in turn collapsing a whole other part of the market (supplies and labor). Ugh...the list goes on and on.
Casperle
Registered
Flushed down the toilet.
I wish I had more time for this question. Thanks for taking the time to ask.
In many ways it's not just about the amount of money there is, it's about how fast it moves through the economy. Economists call the movement of money "velocity", and velocity has a powerful impact on the overall health of an economy.
For example, let's say you earn $100 today (let's hope you earn more, but for simplicity's sake work with me here). If in a short period of time, because in large part you have a high degree of confidence that this won't be the last $100 you'll earn for a while, you spend your $100 you've put that money back to work in the overall economy.
That $100 is then split among various merchants, goods and services providers who also use that money to pay employees, pay vendors, pay mortgages, etc.
The pattern repeats itself numerous times. In a healthy economy, your original $100 will change hands several times...providing value to many people.
On the other hand, if that $100 is something you think you'll be less likely to see in the near future, you are more likely to save (or perhaps hoard) it. Because maybe you only spend (or recirculate) $60 or so of that $100, velocity has decreased and the amount of "work" your $100 can do in the economy is reduced...particularly if you stuff it in a mattress somewhere. If you deposit it in a bank or invest in a business venture either directly or through the stock market there will still be some velocity associated.
Let me see if I can get another post in before the wife starts yelling at me to pack for our flight tomorrow...
A lot also had to do with risky investments that were allowed by Clinton in either 1997 or 98 (have to pull up some old docs to get you exact dates). Banks were allowed to purchase into "items" we'll call them, that they normally were not allowed to. Huge risk, high gains, even higher losses when it came full circle. A lot of people lost money they never really had - see NASDAQ or DJIA gains and losses over the past 15 years. The smart ones got out and still have their money but that's a small portion compared to those who lost their ars! Think of how much you have tied up in your retirement portfolio. If the market dropped to say 5000 points overnight how much would you really have? Kind of the same effect - the money wasn't necessarily something that was ever there for a lot of people. Not "liquid" I should say. Then of course on top of that we get these creative lenders making mortgages they had no business doing, people getting "no doc" loans requiring zero documentation or proof of even a pot to piss in. Now you've got sky high foreclosure rates, the banks are dried up of money and will come looking elsewhere to get it (that's where the remaining employed people come in with higher fees and lower investment return rates). The housing market is in full collapse, home sales are down, which affects new construction in turn collapsing a whole other part of the market (supplies and labor). Ugh...the list goes on and on.
+1 Good Summary !!!!!!!!!!!!!
Dozerdriver
Registered
Everywhere else exept where we need it....
Money deposited in a bank grows to many times it's original size. Unfortunately Americans aren't known for saving.
Banks aren't required to keep deposits on hand for every depositor. I'm not certain what the current ratio is, but the government sets the amount of money a bank must keep on hand - and it's a relatively small portion...perhaps 10% or less of total deposits.
The bank lends out the other 90% (in our hypothetical example) to businesses and consumers. Businesses use it to expand, purchase assets, invest. Consumers use it to consume and buy homes. In our example 90% of the money you "have" in your bank account isn't really there...it's out working in the economy...so long as banks are able to loan money.
The money supply expands when banks are loaning money, and it contracts when the cannot. This is one of the big reasons why September '08 had such a disastrous impact on the broader economy.
It's also why we have the F.D.I.C. to insure bank accounts. If depositors get concerned they may not be able to access their capital, long lines will form as people panick because their bank can't pay all the depositors the money credited in their accounts. This happened during the Great Depression...though there was no F.D.I.C. insurance in place to prevent runs on banks.
I'm sorry I don't have time to continue this tonight, and it may be a while before I can return to it. There is a tremendous amount of material that can be covered in this discussion, and I apologize for not being able to devote enough time at present to do it justice.
Banks aren't required to keep deposits on hand for every depositor. I'm not certain what the current ratio is, but the government sets the amount of money a bank must keep on hand - and it's a relatively small portion...perhaps 10% or less of total deposits.
The bank lends out the other 90% (in our hypothetical example) to businesses and consumers. Businesses use it to expand, purchase assets, invest. Consumers use it to consume and buy homes. In our example 90% of the money you "have" in your bank account isn't really there...it's out working in the economy...so long as banks are able to loan money.
The money supply expands when banks are loaning money, and it contracts when the cannot. This is one of the big reasons why September '08 had such a disastrous impact on the broader economy.
It's also why we have the F.D.I.C. to insure bank accounts. If depositors get concerned they may not be able to access their capital, long lines will form as people panick because their bank can't pay all the depositors the money credited in their accounts. This happened during the Great Depression...though there was no F.D.I.C. insurance in place to prevent runs on banks.
I'm sorry I don't have time to continue this tonight, and it may be a while before I can return to it. There is a tremendous amount of material that can be covered in this discussion, and I apologize for not being able to devote enough time at present to do it justice.
Darth Z
Registered
Well, first of all, our idiot government that is supposed to protect our best interest, continuously dumps money into other countries with their own financial problems, and spends billions on fighting wars for years, instead of just bombing the bastard that have the balls to pick a fight with us. As Sam Kinison said, " I think we' ve pretty much GIVEN OUT!" The rest of the money goes to these ultra rich douchebags investors and huge business owners who run and own the businesses that so many of us use on a daily basis. They basically collect the billions of dollars we give them, pay their expenses, and live in luxury. They buy the type of products and services most of us receive no income like huge mansions and yachts built by Mexicans for $3.00/hour. 
F=MA Good info
F=MA wife- Come on, this is good stuff here, can he stay just a bit longer?
F=MA wife- Come on, this is good stuff here, can he stay just a bit longer?
Well I was talking with my mother this afternoon and seems SS or VA isn't giving out a cost of living increase this year? Seem there wasn't an increase of living on such thigs as food,electric,basic necessities need to live to justify one. Anyone else know about this?
Okay...all packed...all these years of living out of a suitcase pay off sometimes...
So far I hope my hurriedly written posts have made sense. I usually do a better job, but the time pressure thing...plus I want to try to get some good information put down before this thread deteriorates so much it has to be locked.
To summarize "where did the money go?" Much of the money was never there to begin with, or it is double and triple counted as it moves through the economy. This will strike many as suspicious, or odd, but in reality the system works quite well most of the time.
When it doesn't work well is when there is a loss of credibility in the banking system. We can debate the root causes for the recent banking system failures, but the basics of how it works is more important to understand...otherwise we're just blowing hot air.
We're all familiar with "liar loans", and perhaps to a lesser extent "collateralized debt obligations" and "credit default swaps". To keep it very simple, banks were able to loan against assets that ultimately proved to have dubious, or no value. Once the overall economy began to slow, in large part to high energy prices experienced in early to mid 2008, defaults began to occur in residential housing. Suddenly banks and investors found themselves trying to figure out how to collect money owed on mortgages, and insurance policies (credit default swaps) that were marketed to protect the lenders.
It soon became clear that there was almost no way to trace CDS's and CDO's back to the underlying mortgages they were written against. Now the balance sheet problems start piling up for the banks. Just a few months earlier, bank A might have had a balance sheet with ten billion dollars in assets. Now there's no way for certain to know how to value these assets. As a result, lending activities by the bank are curtailed because they have to prove to the federal government that they have adequate reserves to meet requirements.
Now we have a big problem. Credit is a necessary tool for businesses and consumers. Credit is oftentimes used improperly, but just as a hammer can make a hole in a wall just as easily as it can drive a nail the borrower is the ultimate arbiter of how effective the tool is.
Credit availability increases velocity. If most of us want to buy a new car, or a late model used one, we finance it. The money we pay for the car doesn't stop at the dealership...it pays a commission to a salesperson who buys gas for his car, pays his mortgage, buys groceries, maybe buys a Hayabusa (of course not all with the commission from one sale). Some of the money goes to pay property taxes the dealership owes, which in turn helps pay the salaries of local teachers, police officers (you, Rev
), and fire fighters. Sales taxes and registration fees help the state and county provide services and jobs for residents.
The cycle continues, and the original car loan, which is made up of the 90% of deposit funds that banks aren't required to keep on hand, provides employment and value to a lot of people by the time it stops circulating in the economy.
But now there is no lending. Banks can't reconcile their balance sheets, and many are undercapitalized with no ability to call in loans made to borrowers. That new car sits on the dealer's lot providing no value to anyone. Velocity slows to a crawl.
Now people who have jobs and good credit can't get loans...period. This makes an already weak housing market even weaker because there effectively are no buyers for properties on the market.
Property values start to fall. This is pretty simple really. If you had to sell your Hayabusa right now, you'd probably have to accept less money for it than it was worth when the economy was good and money was circulating more rapidly. Is your bike actually worth less? Depends how badly you need to sell...because if you aren't willing to sell for what the market is willing to pay, you aren't going to sell it. Here's a perfect example of "where did the money go" on a microscopic scale. Every one of us who owns a Hayabusa...or any motorcycle for that matter, has taken a bit of a loss on the value of the asset simply because money is not moving at the same velocity through the economy that it was in the recent past.
Let me see if I can get more up....
So far I hope my hurriedly written posts have made sense. I usually do a better job, but the time pressure thing...plus I want to try to get some good information put down before this thread deteriorates so much it has to be locked.
To summarize "where did the money go?" Much of the money was never there to begin with, or it is double and triple counted as it moves through the economy. This will strike many as suspicious, or odd, but in reality the system works quite well most of the time.
When it doesn't work well is when there is a loss of credibility in the banking system. We can debate the root causes for the recent banking system failures, but the basics of how it works is more important to understand...otherwise we're just blowing hot air.
We're all familiar with "liar loans", and perhaps to a lesser extent "collateralized debt obligations" and "credit default swaps". To keep it very simple, banks were able to loan against assets that ultimately proved to have dubious, or no value. Once the overall economy began to slow, in large part to high energy prices experienced in early to mid 2008, defaults began to occur in residential housing. Suddenly banks and investors found themselves trying to figure out how to collect money owed on mortgages, and insurance policies (credit default swaps) that were marketed to protect the lenders.
It soon became clear that there was almost no way to trace CDS's and CDO's back to the underlying mortgages they were written against. Now the balance sheet problems start piling up for the banks. Just a few months earlier, bank A might have had a balance sheet with ten billion dollars in assets. Now there's no way for certain to know how to value these assets. As a result, lending activities by the bank are curtailed because they have to prove to the federal government that they have adequate reserves to meet requirements.
Now we have a big problem. Credit is a necessary tool for businesses and consumers. Credit is oftentimes used improperly, but just as a hammer can make a hole in a wall just as easily as it can drive a nail the borrower is the ultimate arbiter of how effective the tool is.
Credit availability increases velocity. If most of us want to buy a new car, or a late model used one, we finance it. The money we pay for the car doesn't stop at the dealership...it pays a commission to a salesperson who buys gas for his car, pays his mortgage, buys groceries, maybe buys a Hayabusa (of course not all with the commission from one sale). Some of the money goes to pay property taxes the dealership owes, which in turn helps pay the salaries of local teachers, police officers (you, Rev
), and fire fighters. Sales taxes and registration fees help the state and county provide services and jobs for residents.The cycle continues, and the original car loan, which is made up of the 90% of deposit funds that banks aren't required to keep on hand, provides employment and value to a lot of people by the time it stops circulating in the economy.
But now there is no lending. Banks can't reconcile their balance sheets, and many are undercapitalized with no ability to call in loans made to borrowers. That new car sits on the dealer's lot providing no value to anyone. Velocity slows to a crawl.
Now people who have jobs and good credit can't get loans...period. This makes an already weak housing market even weaker because there effectively are no buyers for properties on the market.
Property values start to fall. This is pretty simple really. If you had to sell your Hayabusa right now, you'd probably have to accept less money for it than it was worth when the economy was good and money was circulating more rapidly. Is your bike actually worth less? Depends how badly you need to sell...because if you aren't willing to sell for what the market is willing to pay, you aren't going to sell it. Here's a perfect example of "where did the money go" on a microscopic scale. Every one of us who owns a Hayabusa...or any motorcycle for that matter, has taken a bit of a loss on the value of the asset simply because money is not moving at the same velocity through the economy that it was in the recent past.
Let me see if I can get more up....
stangman35
Registered
all of our money went to oil companys and the people who buy oil and other commodities that needs to be regulated.
Its no longer based on supply and demand,people blame the housing market but alot of the banks were pushing up the price of oil and when everything crashed we gave them more money in the bailouts.
When it costs $100 a week to fill up you truck it doesnt take long to eat up the avarage persons take home pay.People put all the money in there tank to get to work and have to let other bills go.
If they would go back to supply and demand for oil prices the economy would improve.Fuel is back up to almost $3.00 heating oil is like $2.60 and there is no reason for it.
Its no longer based on supply and demand,people blame the housing market but alot of the banks were pushing up the price of oil and when everything crashed we gave them more money in the bailouts.
When it costs $100 a week to fill up you truck it doesnt take long to eat up the avarage persons take home pay.People put all the money in there tank to get to work and have to let other bills go.
If they would go back to supply and demand for oil prices the economy would improve.Fuel is back up to almost $3.00 heating oil is like $2.60 and there is no reason for it.
The downward spiral in housing values is a closed loop circuit. Without financing available for new buyers, or move-up buyers, home prices continue to fall. As home prices continue to fall, more borrowers default on their mortgages...making banks less well capitalized, and less likely to lend money to prospective buyers.
"Where did the money go?" A home that three years ago sold for $300k was a $300k house at the time simply because that is what the market would bear. Today that home may be worth $200k...again simply because that is what the market will bear. Is the home any different today than it was three years ago? Of course not, but because of frozen credit markets, and the inability to secure financing for 95% of potential buyers, the demand for the house has fallen to zero.
It is estimated that Americans collectively lost twelve trillion dollars in this recession...most of us primarily through the value of our homes. We can't eat our house, and shouldn't use it as a piggy bank, though many of us have. That said, we tend to spend more freely (increasing velocity) when we "feel" wealthy. When we learn we're underwater on our mortgage through no fault of our own, we're much less likely to spend freely, and velocity decreases.
All this directly impacts demand for goods and services and, as a result, employment. Now we have another closed-circuit loop operating where those of us who are still employed begin fearing (with good cause in many cases) that we may be the next ones to get pink slips. As a result, we go into survival mode (as we should on an individual level), and velocity decreases further. The cycle repeats itself until something comes along to break it.
...will continue...
"Where did the money go?" A home that three years ago sold for $300k was a $300k house at the time simply because that is what the market would bear. Today that home may be worth $200k...again simply because that is what the market will bear. Is the home any different today than it was three years ago? Of course not, but because of frozen credit markets, and the inability to secure financing for 95% of potential buyers, the demand for the house has fallen to zero.
It is estimated that Americans collectively lost twelve trillion dollars in this recession...most of us primarily through the value of our homes. We can't eat our house, and shouldn't use it as a piggy bank, though many of us have. That said, we tend to spend more freely (increasing velocity) when we "feel" wealthy. When we learn we're underwater on our mortgage through no fault of our own, we're much less likely to spend freely, and velocity decreases.
All this directly impacts demand for goods and services and, as a result, employment. Now we have another closed-circuit loop operating where those of us who are still employed begin fearing (with good cause in many cases) that we may be the next ones to get pink slips. As a result, we go into survival mode (as we should on an individual level), and velocity decreases further. The cycle repeats itself until something comes along to break it.
...will continue...
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