Gary K
an old small town kid
- Aug 23, 2002
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After reading more of this thread it's pretty clear that most people have very little concept of how large of a economic catalyst the coronavirus is.
Our nation was teetering on edge of financial collapse due to the debt. The Fed has been printing vast amounts of money for years, and our money is based on debt. Therefore our debt has been increasing exponentially for years. In 2008 what happened was there was so much debt that the banks couldn't trust each other so they stopped loaning each other money and also quit lending money for business purposes too. Today the situation is much worse. Liquidity, having the cash to pay operating expenses and buying and selling securities, stocks, bonds, etc.... is basically non-existent in the banking system. The Fed has been making available billions of dollars a day to banks to allow them to pay their overnight debts in something called repurchase agreements. It's not unusual for the banks to borrow $100 billion a day to pay their daily expenses in this regard and this has been going on since September.
Our economy is on the verge of complete collapse to begin with and with all the stress the coronavirus is putting on the economy it's almost a certainty that it will create a credit collapse more serious than in 1929. I'll just look at what a credit collapse means to one part of our economy. Most transportation companies pay all their daily expenses such as fuel on a credit card and then pay the bill at the end of the month. When a credit collapse happens these types of transactions come to an end as the banks will not trust businesses to pay those bills for they will think the business is lying about being sound financially. The bank's own balance sheets are so bad they can't afford to trust the businesses to repay so they put an end to credit. In other words, store shelves will be empty.
This coming depression will make 1929 look like child's play compared to what is coming upon us. Back then our money had real value. Gold and silver have inherent value. Fiat currencies, like the US dollar has no inherent value. It's nothing but debt. So just imagine what happens when all confidence it evaporates.
Our nation was teetering on edge of financial collapse due to the debt. The Fed has been printing vast amounts of money for years, and our money is based on debt. Therefore our debt has been increasing exponentially for years. In 2008 what happened was there was so much debt that the banks couldn't trust each other so they stopped loaning each other money and also quit lending money for business purposes too. Today the situation is much worse. Liquidity, having the cash to pay operating expenses and buying and selling securities, stocks, bonds, etc.... is basically non-existent in the banking system. The Fed has been making available billions of dollars a day to banks to allow them to pay their overnight debts in something called repurchase agreements. It's not unusual for the banks to borrow $100 billion a day to pay their daily expenses in this regard and this has been going on since September.
Our economy is on the verge of complete collapse to begin with and with all the stress the coronavirus is putting on the economy it's almost a certainty that it will create a credit collapse more serious than in 1929. I'll just look at what a credit collapse means to one part of our economy. Most transportation companies pay all their daily expenses such as fuel on a credit card and then pay the bill at the end of the month. When a credit collapse happens these types of transactions come to an end as the banks will not trust businesses to pay those bills for they will think the business is lying about being sound financially. The bank's own balance sheets are so bad they can't afford to trust the businesses to repay so they put an end to credit. In other words, store shelves will be empty.
This coming depression will make 1929 look like child's play compared to what is coming upon us. Back then our money had real value. Gold and silver have inherent value. Fiat currencies, like the US dollar has no inherent value. It's nothing but debt. So just imagine what happens when all confidence it evaporates.
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