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Originally Posted by Fido2 /img/forum/go_quote.gif
LOL...that's what the FED is. An organization of privately owned banks that monetize debt(turn t-bills or debt certificates into cash). That's all they do. The problem in our country is the federal reserve fiat currency/fractional reserve, monetary/banking system. As long as our country is allowed to borrow and the fed print out unlimited money and flood the world with dollars, inflation and monetary chaos will continue. Some debt can be good but we're WAY beyond "good" now.
This real estate mess is a fall out from that(and unscrupulous lending practices and stock market manipulations, ie criminal greed). The fed system is a win/win for bankers and world controllers but it's not good at all for economic stability and regular people like us.
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Well we may have to agree to disagree on the details...
I'm not one to subscribe to "conspiracy theories," and my expertise does happen to be in economics, finance and the markets.
And... while there has no doubt been some of what you suggest... the real "root cause" has been the result of some aspects of de-regulation since 1999, other aspects of really stupid regulation (such as the blanket application of the mark to market rule), and... perhaps by far the most important "root cause"... the promotion and granting of mortgages to low-income home buyers via the Community Reinvestment Act and Fannie and Freddie.
These buyers, never should have been granted mortgages, and they wouldn't have been, except that the "community organizers" threatened to sue the lenders for discrimination, if they didn't make the loans to unqualified borrowers. The lenders found it a lot more attractive to make the loans, generate their fees, and dump them to Fannie and Freddie, and other investors, than to fight the "PC" law suits. The sub-prime borrowers couldn't afford to pay their mortgages as interest rates rose, and they were unable to either pay their increased mortgage payments, or to refinance their mortgages, because of artificially depressed housing values, resulting from the "mark to market rule," which also prevented mortgage lenders from selling the mortgages to obtain additional funds to lend.
The mark to market rule has artificially impaired the capital of banks, and in combination with more rigorous lending policies, has restricted credit availability, further depressing effective demand for houses, and housing prices.
A vicious downward spiral, that the fools in Washington don't understand, and have not found a way to break, quite yet. Though, the actions recommended by Cramer, as well as other, good economists, who are not "ideological," would do it almost overnight. Unfortunately, the folks in power now, don't understand any of this stuff... and... are "ideological" first, and "practical" last.
But... fiat money and credit is a fundamental requirement to allow the money supply to grow in rough proportion to the growth and productivity of an economy, which is how real wealth is created, and which should not be constrained by lack of availabilty and access to hard assets.
Unfortunately... little of this is reported by the biased media... because they don't understand it either, and because they would never do anything to reflect poorly on the folks who were and are, originally, responsible for the creation and promotion of the Community Reinvestment Act, and the prevention of reforms throughout the 2000s, that would have prevented all of this.
