A question about the secret $7.77 trillion “loan” to the banks.

[KansDem]

This site offers this graphic as what a trillion dollars looks like, in $100 bills (notice the man standing at the far left).



http://www.pagetutor.com/trillion/index.html

So the "loan" would be almost eight times larger.

Where did this money come from? Was it created and if so, how? I assume this wasn’t “cash,” so did the Feds simply “transfer” this money as numbers via wire?

I'ver read where the banks are "loaning" this money to the Federal Government. The banks are paying a 0.01% "interest" but I imagine the rate they're loaning it back to us is much higher. Who's paying the interest on the loaned loans?

And this $7.77 trillion "loan" is over twice the size of the 2011 national budget of $3.83 trillion.

[Travis_0004]

1. 7.77 Trillion was never loaned out at once.

7.77 Trillion was the grand total of the loans. Not all were loaned out at one time, some loans for very short duration, or even over night.

Also, some of what was counted in the 7.77 trillion is guarantees, which were never actually loaned out.

[hughee99]

8. Yes, it was explained to me this way.

Imagine that I loan you a dollar every morning, and you pay me back a dollar every night. After one week, you've borrowed 7 dollars from me. I've never been more than a dollar "down", you've never been more than a dollar in debt, but it's 7 dollars worth of loans. And sometimes I don't even give you a dollar, I just say that IF you're a dollar short on something, you can send them to me and I'll cover you. Even if you don't end up needing the dollar, I've still made a "loan guarantee" of a dollar, and you could count it as "loaned" money if you want.

Now multiply by a few trillion.

I'm not sure if this is an accurate description of what was going on, but it sounded like a reasonable explanation for the numbers.

[banned from Kos]

2. the low interest rate you cite is for short term only - less than 30 days.

all these loans have been repaid - and the previous comment is right on. Peak loans were $1.2 trillion in Dec 2008.

The money was created out of thin air and then returned to thin air.

[Motown_Johnny]

3. I would refer anyone interested in this to Alan Grayson's Journal

http://journals.democraticunderground.com/Alan%20Grayson

^snip^

Anyway, one of our love children is a massive 251-page GAO report technocratically entitled “Opportunities Exist to Strengthen Policies and Processes for Managing Emergency Assistance.” It is almost as weighty as that 13-lb. baby born in Germany last week, named Jihad. It also is the first independent audit of the Federal Reserve in the Fed’s 99-year history.

Feel free to take a look at it yourself, it’s right here (http://www.gao.gov/new.items/d11696.pdf ) . It documents Wall Street bailouts by the Fed that dwarf the $700 billion TARP, and everything else you’ve heard about.

I wouldn’t want anyone to think that I’m dramatizing or amplifying what this GAO report says, so I’m just going to list some of my favorite parts, by page number.

Page 131 – The total lending for the Fed’s “broad-based emergency programs” was $16,115,000,000,000. That’s right, more than $16 trillion. The four largest recipients, Citigroup, Morgan Stanley, Merrill Lynch and Bank of America, received more than a trillion dollars each. The 5th largest recipient was Barclays PLC. The 8th was the Royal Bank of Scotland Group, PLC. The 9th was Deutsche Bank AG. The 10th was UBS AG. These four institutions each got between a quarter of a trillion and a trillion dollars. None of them is an American bank.

[rgbecker]

4. The key is to realize that cash $100 dollar bills is only a small fraction of the "Money supply."

I go through a couple of thousand dollars every month and never see any $100 dollar bills. All these pictures of $100 bills trying to get everyone upset about the national debt etc. are a bunch of crap for people who are unwilling to think for one minute about what money really is.

[girl gone mad]

5. See "Money is a Spreadsheet"..

http://www.correntewire.com/money_spreadsheet

The money was created out of thin air. The banks get the free money from nothing, you pay the interest to the banks if you require a loan. One hell of a system, huh?

[banned from Kos]

6. they pay it back plus interest - you "forgot" that.

Free money? Please...........

[girl gone mad]

9. Care to explain where they get the money to "pay it back plus interest"?

Did they invent a cure for cancer? Discover a new energy source?

I'll save you the trouble. The banks were allowed to recapitalize and "pay us back" by jacking up fees and lowering interest rates on savings accounts, screwing over their customers, savers and people on a fixed income, forcing up the price of commodities via speculation, engaging in massive foreclosure fraud which screwed over investors and homeowners. In other words, the productive class paid back the money that our government created for the banks out of thin air. Money which could have helped people pay down their own debts, save for retirement or college, or could have simply been used for consumption got soaked up by the bloated financial sector.

That's nothing to brag about. The economy would be better off if they hadn't "paid it back plus interest".

[Bigmack]

7. So... if I have a "cash flow" problem ... short term...

... I can expect a bailout?

I thought Capitalism was like a poker game with table stakes..

If you can't come up with the call... without a government bailout... you're out of the game.

Oh... sorry... I forgot about all that "too big to fail" bullshit.