The following vid made the hair on the back of my neck stand up. Granted, there is likely a measure of posturing going on to convince countries they’d better seriously step up … but neither do I think for a moment these people are being frivolous. Kinda made me want to learn how to hunt and grow my own food. DISCLAIMER: I’m not an economist! Just took a couple courses waaaaay back in the day. So this is just my armchair take.
A super important thing to understand: Bank Capitalization
When you give your $1 to the Bank, they then can invest that $1 to make profit (of which a teensy portion goes to you as interest).
Usually, banks invest that $1 by loaning to Joe the Pizza Man down the street so he can buy a second pizza stand, or to Cindy so she can buy a bungalow.
But here’s the super-important bit: The Gov’t allows the bank not to simply lend out that $1, but perhaps $8 or more. Why? Because of faith.
Faith that Joe probably will succeed in his biz and pay back not just that $1, but the full $8.
Faith that Cindy will pay her mortgage as agreed upon every month.
Faith that those effing bastards on Wall Street would similarly use the money with integrity as they select investments. They didn’t.
Bank Capitalization refers to how many $1s they in fact have. In short, how much that have that is real, not faith-based. That faith is well and truly shaken.
And all our intricate webs between banks and businesses and countries are seriously frayed.
Photo Credit: komodoro