How the working person has been ripped off.

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The government has been taxing the savings account of citizens, mostly working people. The economists, business folks and stockbrokers have all conspired against the working person. It is a form of robbery. The reasoning behind the taxation is to people to invest in stocks and build up businesses and benefit the economy.

1. Taxing people to buy stocks only benefit corporations and brokerages that manipulate the stock market. The corporation gets free money and need not give any dividends the first few years if it is newly formed citing growth. Most companies fail i.e. less than half become successful businesses. All the investor gets is a tax break from the loss. The money invested in the company expanded as fast as the successful company’s growth. The money supply does not grow as fast it is dependent of corporate growth.

2. Now look what the money in the bank would have done. For every dollar put in the bank the bank can lend 15 dollars. With all the money not taxed but in savings account businesses would have money to borrow at low interest rate. In the earlier case where the investor bought a dollar’s worth of stock it had only 1 dollar. With the bank it could access 15 dollars. This creates a larger money supply so more people and companies could get loans to start businesses or projects. It is the avoidance of loans in favor of free money in the form of common stock that wealthy people got politicians to tax savings and promote stocks and bonds. Banks also can influence the business climate by giving cheaper loans to their friends, ethnic group or co-religionists. This could end up with the takeover of industries controlled by the banks. A trust is a setup in which a holding company controls various industries by buying up companies thru vertical integration from supplier of raw materials, manufacturing to shops selling the goods. J.P. Morgan was behind this scheme along with John D. Rockefeller. President Ted Roosevelt came up with the Anti-Trust laws to protect consumers. Notice how John D. Rockefeller when forced to split up Standard Oil he still held shares in all the split up oil companies. With his wealth he got control of major corporations like US Steel. Next the Rockefellers got into the banking business with Chase Manhattan and now Chase Manhattan Morgan Bank.

3. The money in the stock market is vulnerable to shysters in the brokerage firms as they can manipulate the market thru false rumors, short sells, etc. Many big companies and corporate raiders use the tactic of a takeover bid but the bid is low. The takeover generate the victim company stocks to rise and the corporate raider sells stocks bought at the high price and then makes a public statement of withdrawal. The selling of the shares and the withdrawal statement cause the victim company shares to fall precipitously and then the raider buys all the controlling shares cheap

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@talk72000,

I had a talk with my banker about paying me 1% on my saveing cd accounts and loaning it out at 6 or seven %. He told me if I want a higher interest I should loan my saveings out to individuals.

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@rabel22,

Start a bank that is the way to make money that is why the Rockefellers went into the bank business.

The government should allow more banks to start to bring more competition so the loans can be more consumer friendly. The oligarchy bank system allowed the banks to create the financial melt down as they felt they could do anything with impunity.

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Buy stocks and stop the crying...

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@Miller,

I tried that and it lost 40% of its value. If your going to give financial advice make it good advice.

1 Reply

@rabel22,

You seem to be in the mindset of the customer. Imagine yourself as a banker. How would you make money with the extraordinary powers. You use the retail customers' deposits of say $1,000 and lend out $15,000. You charge 1% above the Fed rate of 1%. Your customers i.e. corporations are charged 2%. $15,000 x 2% = $300. You pay 410 to the retail customers for the loan of their deposits. You made $290. with the 6% of $1,000 you only make $60 and if you subtract $10 you made only %50 compared to $290. You lost $200. Imagine this in billions of dollars and you will see how the banks make money without inventing any new products or process in industry.

No wonder Goldman Saks wanted to abolish or circumvent the Net Capital Rule so it could lend out whatever they felt they could make money out of nothing ie. on $1 billion lend out more than $33 billion.

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@talk72000,

1. taxing people to buy stock? I have no idea what you are talking about. I pay no taxes when I buy stock.

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The money supply does not grow as fast it is dependent of corporate growth.

No, it isn't. It may be dependent on corporate spending if we assume that the money for stock goes into corporate coffers.

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The corporation gets free money

But that ignores the fact that companies earn and spend money independent of the stock price.

2

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Now look what the money in the bank would have done. For every dollar put in the bank the bank can lend 15 dollars.

Where did you get this?
According to the FDIC in 2010 banks are only loaning out 79 cents on every dollar deposited
http://www.mortgagenewsdaily.com/garrett_watts/137979.aspx

In fact banks are required to keep cash on hand.

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The takeover generate the victim company stocks to rise and the corporate raider sells stocks bought at the high price and then makes a public statement of withdrawal. The selling of the shares and the withdrawal statement cause the victim company shares to fall precipitously and then the raider buys all the controlling shares cheap

This would be illegal under current US law.

2 Replies

@parados,

Net Capital Rule
http://en.wikipedia.org/wiki/Net_capital_rule

The Broker Dealer has that 1:15 ratio and with the merger of banks and brokerage firms they could use the 1:15 ratio. That is where the money is. This is why Rubin from Citibank got Clinton to allow the merger of the financial institutions.

The initial capital of stock distribution is what I am talking about. Those who buy stocks don't get anything till the company grows big. They could sell the stocks when the company does well. But if the money went to a savings account would have collected annual compund interest thru the years. That money has already been taxed in the initial income tax so the frugal worker has that savings taxed again in the savings account.

The stock market could not be trusted.

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The takeover generate the victim company stocks to rise and the corporate raider sells stocks bought at the high price and then makes a public statement of withdrawal. The selling of the shares and the withdrawal statement cause the victim company shares to fall precipitously and then the raider buys all the controlling shares cheap This would be illegal under current US law.

That is good to know but I have read articles on Icahn and I am wondering if it is enforced especially during the Bush era.

1 Reply

@parados,

parados wrote:

1. taxing people to buy stock? I have no idea what you are talking about. I pay no taxes when I buy stock.

This was, and probably still is a part of the new banking bill, so hasn't happened yet. I don't recall the percentage, and since it applies to those with earnings over $250,000/year, I didn't pay much attention. Sorry for being vague, but I believe it applies to dividends and interest, and also stock transactions. I have no idea how it could be implimented as stock transactions are not guaranteed to be sold at a profit.

Sorry for the lack of specific knowledge, but something of the sort has been under consideration. If I run across anything specific, I'm sure I will remember to send you a heads up.

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@talk72000,

The net capital rule has nothing to do with banks you can deposit money in.

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@parados,

Could that be an answer to my post as well?

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@parados,

It opens up a lot of avenues. Brokerages merged with banks essentially are banks and the back door dealings would be hard to follow. Goldman Saks is a good example. It is a bank too.

There is also the fractional reserve system:
http://en.wikipedia.org/wiki/Fractional-reserve_banking

The Fed is a private institution. Who are the owners?

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Wall Street could also play with the banks shares. They could even be owners of the banks. They could use the normal banks deposit expand that using the 1:15 ratio and finance takeovers. All that money could be siphoned into private funds or hedge funds by executives and get into all kinds of activities.

1 Reply

@talk72000,

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Goldman Saks[sic] is a good example. It is a bank too.

It is an investment bank. It doesn't have the same rules as a bank since it doesn't take deposits. You seem confused as to what is and isn't a bank.

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The Fed is a private institution. Who are the owners?

It was obvious from the start, this is where you are going. The conspiracy nuts tend to throw out a lot of stuff that they think sounds intelligent but on examination it doesn't make any sense.

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@talk72000,

Quote:

Wall Street could also play with the banks shares. They could even be owners of the banks. They could use the normal banks deposit expand that using the 1:15 ratio and finance takeovers. All that money could be siphoned into private funds or hedge funds by executives and get into all kinds of activities.

No, banks are required by law to keep a certain amount of cash on hand compared to deposits. You aren't making any sense at all.

There is no 1:15 ratio in a US bank that takes deposits. If it is a bank it can't do that. Your saying it, doesn't make it so.

Banks loans are also scrutinized by regulators. They have to meet certain requirements.

Again, you don't know the difference between a bank and an investment bank.

1 Reply

@parados,

The last bit I was speculating as one cannot trust Wall Street.

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@talk72000,

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Fractional reserve banking necessarily occurs when banks lend out any fraction of the funds received from deposit accounts, and is practiced by all modern commercial banks.

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Fractional reserve banking necessarily occurs when banks lend out any fraction of the funds received from deposit accounts, and is practiced by all modern commercial banks.

DUH.. that's what banks do. They lend out a portion of their deposits. They can't lend out 1500% of their deposits however.

1 Reply

@parados,

I was talking about Wall Street banks. What about the ownership of the Fed? Who are the owners?

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@talk72000,

Quote:

2. Now look what the money in the bank would have done. For every dollar put in the bank the bank can lend 15 dollars. With all the money not taxed but in savings account businesses would have money to borrow at low interest rate.

So which investment bank would allow me to open a savings account?

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What about the ownership of the Fed? Who are the owners?

That is an easy one, but one I doubt you will believe.

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Who owns the Federal Reserve?

The Federal Reserve System is not "owned" by anyone and is not a private, profit-making institution. Instead, it is an independent entity within the government, having both public purposes and private aspects.

As the nation's central bank, the Federal Reserve derives its authority from the U.S. Congress. It is considered an independent central bank because its decisions do not have to be ratified by the President or anyone else in the executive or legislative branch of government, it does not receive funding appropriated by Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms. However, the Federal Reserve is subject to oversight by Congress, which periodically reviews its activities and can alter its responsibilities by statute. Also, the Federal Reserve must work within the framework of the overall objectives of economic and financial policy established by the government. Therefore, the Federal Reserve can be more accurately described as "independent within the government."

The twelve regional Federal Reserve Banks, which were established by Congress as the operating arms of the nation's central banking system, are organized much like private corporations--possibly leading to some confusion about "ownership." For example, the Reserve Banks issue shares of stock to member banks. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year.

How the working person has been ripped off.

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