The Parable of the chessboard rice Everyone has probably already heard of the rice chessboard. On the first chess field a grain of rice is placed and on each subsequent field double down as many grains of rice as a field before. So on the second field, two grains of rice and on the third down four, and so on and so forth ... If I ask someone of you now I would give as many grains of rice, as needed for the entire chess board, you think you meant "Yo, no problem" and expects a few Uncle Benc rice packs to come of it. But this one is vastly mistaken! On the need 64.Feld down over 9 trillion grains of rice be! On the whole chess board are at the end of 18 trillion grains of rice, an incredible number! Nobody can deliver that amount.
What has this to do with the financial crisis? It's easy!
on the board has the magic of compound interest and exponential growth. The doubling corresponds to a rate of 100%. Although each field, we predict a growth rate of 4% is required, one is eventually burst. The chess board has to be just big enough! Something similar seems to have happened with the banks. The
1.Gesetz in calculating is assets = liabilities. Under liabilities, the Bank recorded include the deposits of their customers and owners. The assets consist for example of the bank's own securities and awarded Loans. Since the bank promises its customers interest payments on their deposits, the volume of liabilities is constantly growing on how the rice on the chessboard. Since assets equal liabilities must be considered, the bank is forced to increase the asset side. This will happen with interest claims on loans contracted, the rates are usually higher than the promised interest rate to depositors. For the individual bank, this system, therefore, represents no problem as long as the interest payments flow of the active site. But who will pay that interest? These are other banks, homeowners, the state, etc, which are themselves committed the money for the payment of interest to be found.
Globally, the assets of one side the debts of the other side. Due to the compounding effect, the cake puffs up but with time more rapidly, with the bottom line is always a zero!
need To serve the rapidly growing interest owed to the bank of the wealthy are growing rapidly new debtor!
were in the years 2001 to 2006, the banks on this, "Rice Chessboard" so far advanced, that have received loans for people in the U.S. homes that were never able to do this ever repay. These were the so-called NINJA loans (No Income, No Job and Assets). But that was no matter, because at this time, these loans are recorded on the asset side. Well
and 2007 was come. The drawing board has been found to be too large. Many loans have burst and the banks are in difficulty, which means simply that it is now preparing it very difficult to satisfy the equation Assets = liabilities. The countries around the world are now trying constantly to fill the asset side of banks and prevent insolvency. Thanks to compound interest, but this is a gigantic black hole.
