For most people, the first bank account they will have will likely be a savings account. This traditional account pays you interest in exchange for you keeping your money with the institution. Different financial institutions have different rules and interest rates, which can make the world of savings accounts tricky to navigate. However, once you … Continue reading Financial Markets: How Savings Accounts Gain Interest
Do Banks Create New Money out of Thin Air? **Re-posted after the events of the credit crunch and 700 bailout packages, enjoy the read and learn how the banks got themselves in this mess.** Here’s the story. Banks keep on lending money, but where do they get it from? Do they borrow from bigger banks … Continue reading Where Do Banks Get Their Money? Fractional Reserve Banking
Here is a brief explanation on the nature of clearing drains and currency drains. The applications include part of how banks lend and settle account between each other. Put yourself into a context of the major banks and how they move their money between each other and the central bank (the Federal Reserve if you … Continue reading Explaining Clearing Drains and Currency Drains
Here is some brief notes on the function and descriptions of these financial instruments. Treasury Bills (T-Bills) Government of Canada issues T-Bills in certain lengths: 98,182, 364 days – issued in denominations of $1000.00 – bought at a discount – pay no regular interest (no coupons) *When T-bills go up, interest goes down* Some Keys … Continue reading Treasury Bills (T-Bills) and Interest Rates Summary
The prime interest rate that banks can borrow from the Central Bank still sits at 1%. Mortgage rates are generally pegged to bond rates, but the overall economic sentiment around borrowing impacts what consumer pay for their home borrowing. The Investor’s Group rolled out another attempt at 1.99% variable 3 year mortgage in early May. … Continue reading Canadian Housing Market Trends – 1.99% Variable Interest Rates Return
How Banks Create Money continued One of our popular posts located here talks about ‘how banks create money’. You should read that link before this one as it is the necessary part 1 of this series on money creation. A lot of people think it’s a huge conspiracy that banks would create money out of … Continue reading Money Creation – Where Does the Money Come From?
User artp posted this question in the forum and now it’s being republished here. As I read (mostly in The Economist) about the current economic crisis the more I become convinced it is partly a breakdown in the way our economy creates money. This leads to the question: Are there other ways to create money?
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In the free-market enterprise–that which North America is founded on and so cherishes–you’re suppose to permit the market to shed uncompetitive and incompetent firms. When push comes to shove, if you under perform or make huge mistakes that not only make you uncompetitive, but threaten your survival, you’re permitted to die a slow (or sometimes … Continue reading Big Banks Should Fail? Links Collection on the Subject
The Bank of Canada announced today a drop in the interest rate to 1.5% which is the lowest in fifty years to 1.5 per cent this morning. The mark also represents the first time since the global economic slowdown began in September that the central bank has stated Canada is in a recession. However, the … Continue reading 50 Year Low for Canadian Interest Rate