Trying To Repeat History?

[dreadfulpenny81.livejournal.com]

I'll be the first to admit I don't know EVERYTHING about politics. Financial aspects are not my forte. Last night I was watching America: The Story of Us through the History Channel and something struck me.

According to the documentary, there was an incident with a merchant in New York City who read in the paper about the instability of certain banks, including Bank of United States, where he had his deposit. When he tried to withdraw his funds, the bank was hesitant because they'd apparently been cooking the books and had most of their security tied up in their patron's deposits. Some rumor started that the bank was going to fail and that caused a run where, by the end of the day, over $2 million in cash was taken out by customers closing their accounts. This somehow started a chain reaction of bank runs all over the country. Combined with an already unstable economy, this fueled the Great Depression.

We now find ourselves in a similar situation. We have an unstable economy and recently, groups of people were moving their funds from one institution to another (or possibly closing their accounts all together). This time, banks have been "bailed out" and our government also has the FDIC and other agencies in place. But I have to wonder -- is there a possibility history could repeat itself, and is that what the recent Bank Transfer Day was trying to accomplish?

Comments

[eracerhead.livejournal.com]

Bank transfer day was symbolic. It was to remind those in power that they are dependent upon those not in power and we can hurt them if we want to.

[a-new-machine.livejournal.com]

Unless individuals were transferring more than $100,000 per account, then no, there's no chance. That's why the FDIC exists.

[allhatnocattle.livejournal.com]

FDIC exists to give emotional security. I mean it makes people feel good. I dunno if FDIC is able to actual cover everyone's losses in the event of another huge financial collapse (predicted within 5yrs)

[paedraggaidin.livejournal.com]

Bank transfer day wasn't really analogous to anything in the Great Depression. It was a day for credulous and angry customers to transfer their funds to different institutions because they perceived the banks were "screwing them" out of a hard-earned $5/month because banks are evil because all of their services aren't free.

There are many reasons I don't have accounts with big banks. Tiny monthly fees for services are not among them.

[fizzyland.livejournal.com]

Banks made the move to add fees to personal accounts after legislation passed in Congress limiting how much they could gouge small businesses on per transaction fees with debit cards. So BOA and others decided to protect profit margins by taking that money from individuals, which was received poorly.

(frozen) (no subject)

[meus-ovatio.livejournal.com]

Good god, the shit you people reach for.

(frozen) Excuse me...

[dreadfulpenny81.livejournal.com]

..."you people"? Care to clarify?

[peamasii.livejournal.com]

Only about about 20% of the actual money supply is ever existent in printed currency, of course not all the deposits could be withdrawn at once.

[fizzyland.livejournal.com]

Is our banking system actually just a ponzi scheme?

[peristaltor.livejournal.com]

No, it's more like 3%.

[underlankers.livejournal.com]

No, that would imply OWS leadership had some kind of consistent, coherent understanding of history or of the many presumed causes of the Great Depression that almost invariably overlook the real cause of it. The US government has ensured no repeat of the Great Depression of the 1930s is possible, and a fortunate thing, too. Another division of the USA between a right-wing demagogue of a general who was competent at best and a Communist demagogue like Huey Long might well touch off Civil War Round II: this time it's totalitarian.

The actual cause of the Great Depression was that World War I was really and truly unaffordable as economists before the outbreak of that war had said it would be. European states were unable to figure out how to pay back the debts from the war, and the whole ponzi scheme on the part of the victorious Allies to repay the USA by looting the Central Powers had failed before the Stock Market Crash and no efforts on the part of liberal politicians ever actually fixed it. As with the current Great Recession the causes were global and connected to no one single economy, so blaming actors in any one single economy for it is as much "history" as claiming that the Earth was made in six days and Adam rode a Dodo to work is "science."

[kayjayuu.livejournal.com]

Oh come on. Finland paid up.

/sarcasm

[lions-wings.livejournal.com]

Well, the OWS crowd didn't take the money out and put it under their mattresses, which is what happened in the Depression and which locked the money totally out of circulation. They took it out and put it into other banks... well, credit unions, which are still financial institutions that make loans and suchlike.

The big banks don't depend on small accounts. Not that they're in a hurry to shed them, either, but they're not where the real money comes from.

[underlankers.livejournal.com]

Ah, no, what happened in the Depression was that the ponzi scheme to repay WWI debts owed by the victorious Allies to the USA collapsed into rubble and smithereens and this was because when pre-WWI economists said a long general European war was unaffordable, they were right. The war was long, and it was unaffordable. Expecting Germany to repay British and French debt owed to the USA so the UK and France had an easier time repaying it was a bad idea, and this, not any action in any pre-WWI Great Power in itself that caused the Great Depression.

There was no cause in the USA of the Great Depression that would alter its international roots, the thing was after all international.

Are you really that paranoid?

[squidb0i.livejournal.com]

You're honestly asking if Bank TRANSFER day was about re-crashing the economy via bank runs?

Do you really attribute that much malice to people with whom you disagree?

Re: Are you really that paranoid?

[lions-wings.livejournal.com]

We gotta get the zombie apocalypse started somehow, and it's taking too long for actual zombies. They'll have to catch up.

Re: Are you really that paranoid?

[dreadfulpenny81.livejournal.com]

I believe I said right off the bat that I'm not great with finance. I know how to balance my own checkbook and keep my household in order. That's really enough for me.

Yes, I asked if Bank TRANSFER day was about causing another crash because I haven't seen any stats on how many accounts were actually transfered vs. how many were just closed. That's not exactly information the banks would be willing to disclose either, I'm sure.

I didn't mention anyone specific, so I'm not sure what people I supposedly disagree with that you're referring to.

[telemann.livejournal.com]

That's a good series btw, I saw it a year or two ago when it first aired on the History Channel. They provide a lot of neat information that you typically don't hear about (e.g. the studies that show how much healthier the American colonists were within 20 years of settling in the New World, due to better nutrition and healthier environments. Most European cities were literal shit holes during that period).

[dreadfulpenny81.livejournal.com]

I've been watching it on Netflix. Yeah, it is really interesting, especially the fund-raising campaign to assemble the Statue of Liberty in NYC.

[allhatnocattle.livejournal.com]

Bank Transfer Day was more about choosing your lions. $4.5billion entering the credit unions (http://bostonherald.com/business/general/view.bg?articleid=1379155) is no small amount, yet it is easily managed by big banks that supposedly would have lost that amount. Certainly not significant enough to cause bank runs.

[badlydrawnjeff.livejournal.com]

Meanwhile, Black Friday sales were over $11b, it appears.

[yes-justice.livejournal.com]

is that what the recent Bank Transfer Day was trying to accomplish?

No. More that people were walking the "you don't have to put your money in a big bank if you don't like it" talk. I think I recall you saying the same thing a week or two ago.

[dreadfulpenny81.livejournal.com]

What I said was people are misguided to blame banks for their financial problems when they're willingly putting their money in those same institution.

[peristaltor.livejournal.com]

Economists have a real blind spot when it comes to money, regarding it as a medium facilitating barter. This is wrong. That blind spot means warning signs are ignored or overlooked. Both this crisis and the Great D. were brought on by over-inflation of the money supply through debt that could not be attached to objects of real and lasting value. Period.

The Glass-Steaggall Act closed the loophole that had previously allowed banks to create money for speculative investments. The loophole was reopened by lax enforcement in the early '80s, and officially repealed by the Gramm-Leach-Bliley Act of 1999. This started an artificial inflation of the money supply that doubled the amount of dollars in the world in 6 years.

So, credit unions. They don't create money to self-perpetuate their profits, so they get my money now. While I would personally love my pitifully small bank transfer to bring down Chase, it won't happen, not as long as Chase can play fast and loose with prudent banking practices and metastacize the money supply in the process.

[il-mio-gufo.livejournal.com]

3 cheers for credit unions! i have a couple friends who helped to start one some time ago & kudos to them! using a credit union for you finances is like buying local for your produce; it's a good thing :)

[kylinrouge.livejournal.com]

I have no idea why people do things, or I just listen to my talk show pundits over the reasons stated by the people who did it, so I'll just make up my own narrative.

[dreadfulpenny81.livejournal.com]

Do what you feel, man.

[il-mio-gufo.livejournal.com]

didn't something similar happen to the Goldsmiths once upon a time?