Friday, January 20, 2012
Bird in hand better than Two in a Bank
All based on nothing, nothing, nothing...
And all the roaches on Wall St are happy, happy, happy..
And Yet, if everything is so great, great, great,
"During the first 10 trading days of 2012, roughly 6.8 billion shares a day changed hands in the United States, down from 8 billion in 2011 and 8.3 billion in 2010, according to the New York Stock Exchange... " -- CNN/Money
"The Federal Reserve is likely to step in with $1 trillion worth of easing that could be announced as soon as this month, according to a growing consensus of economists who see the recent uptick in economic growth as unsustainable." -- CNBC
Huh? Thought everything was going super? Markets keep rising. Traders keep profiting. What's this about "Unsustainable" and trading overall Down? Where's all that money that is supposed to be in the market so professional traders and investors can maximize their profits on the backs of 'mom & pop'?
Nice to see people waking up to the stock market con game. Its a nice start. Eventually people will also wake up to the fact that their excess money shouldn't be in a bank either.
Here's two fun little math problems-- 1) Say you have $5000 in your savings account at 0.1% interest, how much interest do you collect yearly? 2) How much profit does a bank make off your $5k if it lends to others at 6.9% interest?
Give you a moment to think...
OK, answer time:
1) $5,000 x 0.001 = $5.00 Allowing a bank to hold onto $5k of your money for a full year earns you one big fat, crisp Abraham Lincoln bill. You can rent One whole movie and still have 75 cents after taxes to buy some chewing gum.
2) Thanks to fractional reserve lending, a bank is allowed to lend up to 10x what it holds from depositors. So your $5,000 allows Mr. Big Bank to lend out $50,000. The interest based on 1 year works out as this:
$50,000 x 0.069 = $3,450, enough to buy.. well, a whole lot of stuff.
Subtract $3,450 - $5 and Mr Big Bank made $3,445 PROFIT off you
And if you think getting one-tenth of one percent is bad, just you wait!!
"The goal of the ( QE3 mortgage backed securities) purchases will be to drive down interest rates even further from current record-low levels..." (CNBC)
Who knows? Maybe next year at this time $5k brings in a yearly savings return of a Whole Dollar! Imagine what you can do with a buck?!
The government, i.e. Fed or Treasury is going to do absolutely nothing for your financial benefit unless you are extremely obscenely wealthy or are a 'Too Big to Fail'. If somehow it could be orchestrated that tens of millions of people withdrew their non-essential money en masse from banks, it would cause the necessary chaos and fear to cause the Fed to raise interest rates one again to encourage the money to be re-deposited.
But short of something drastic, you, Mr & Ms everyday American will continue getting Bleeped by your government economically.
So really... why is your $$ in a bank?