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(Telegraph)   The IMF makes a suggestion that will cause US libertarians to crawl into a fetal position tightly clutching their copies of Atlas Shrugged softy murmuring "Ron Paul will save us. Ron Paul will save us"   (telegraph.co.uk) divider line 402
    More: Unlikely, Atlas Shrugged, Ron Paul, International Monetary Fund, fiat moneys, intrinsic value, types of business, fractional reserve, money creation  
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25330 clicks; posted to Main » on 22 Oct 2012 at 1:10 PM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2012-10-22 01:48:59 PM
Typical liberals not understanding how the economy works. If you have a debt, that is someone else's asset. If you erase that debt with a stroke of a pen you erase the asset as well.

Also, dumbmitter, libertarians vote are for Gary Johnson, not Ron Paul.
 
2012-10-22 01:49:15 PM
Most people lean libertarian on at least a few issues when you ask them. Most people don't self identify as libertarians. Fine.

Most people appreciate Ron Paul for his honesty and consistency, which is rare for a politician. Most people don't live in Ron Paul's district and can EABOD if they don't like it. He's not some bogeyman.
 
2012-10-22 01:49:30 PM

DerAppie: YixilTesiphon: DerAppie: Elegy: No fractional reserve banking? Good luck getting credit....

Live within your means and you won't need credit.

Right, but how do you start a business without credit?

Put up a decent bussiness plan and look for someone (corporations are people) who thinks that your plan has decent risk:reward ratio. In exchange for money (let us call that "interest" because it is what makes it "interesting" to invest) from your profits they will lend you money.


Interesting.Investors should extend some kind of money or "credit" to the business, correct?
 
d23 [TotalFark]
2012-10-22 01:50:17 PM

RanDomino: d23
Ron Paul libertarians = Corporate Anarchists.

An oxymoron. The internal structure of any corporation is fascism.


This isn't a contradiction of my point. The current Republican "libertarians" only really care that their precious corporations don't have to abide by any rules and that's it. They are as far from classic libertarianism as you can get. They couldn't care less about the liberty of the individual.
 
2012-10-22 01:50:35 PM
1.bp.blogspot.com
 
2012-10-22 01:51:05 PM
What a corporate boardroom plaque might look like.

i1.cpcache.com
 
2012-10-22 01:51:05 PM

lordaction: Also, dumbmitter, libertarians vote are for Gary Johnson, not Ron Paul.


So no true Scotsman, oops I mean libertarian, votes for Ron Paul.

Got it.
 
2012-10-22 01:52:18 PM

skullkrusher: Snarcoleptic_Hoosier: Eliminating fractional reserve banking. Good thing there aren't legitimate, healthy uses for debt that most people/organizations need to function. What's not to love about requiring home buyers to either pay for it all in cash or wait X number of years for the system to expand enough so they can get a loan?

You can eliminate fractional reserve banking and still have bank make home loans. Basically, a 100% reserve requirement only requires banks to maintain 100% of demand deposits on hand. It does not impact things such as CDs, bonds and other time deposits.

If I am a bank and you came to me with $500 and I promised to give you $550 a year from now, I can lend that $500 out without violating the 100% reserve requirement. However, if you came to me with $500 which you could demand at any time, I would be in violation if I were to lend out that money. Basically scenario A doesn't "create" money the way FRB does. The amount of $ in the system remains the same without any additions from the gov.

It would certainly reduce the easy access to credit but it does not eliminate credit.


The problem with the elimination of fractional reserves is that a bank can only expand based on its profits. In the example you provided, if that $500 to $550 transaction was the only transaction in the year, the bank could only lend that extra fifty dollars in year two. Over the course of several centuries, then yes, it could add up to significant results, but the global economy is driven by access to credit. Industry and agriculture would be immediately devastated if everything had to be paid for in cash. Even Apple, with its billions of cash in reserve, would seriously be struggling if it had to pay for all development with cash on hand.

The system is set up to enable liquidity and transition. Preventing access to debt leads to concentrated and established power tiers that lock everyone else in to where they are. I'm in the bottom quintile for income right now, I know I can get above that in my lifetime (I'm not delusional to think I'll be a 1%er, so I'll cut that troll off at the knees). Buying a house, a car, and funding education are all great examples of WHY some debt is healthy, and all of those would be massively impacted.

Austrian theory only works when all parties start off equal and all labor is fungible.

/Posts like that are why I don't block you
//We may disagree on a lot of issues, but I know you're not a tard
 
2012-10-22 01:53:29 PM

bunner: RanDomino: d23
Ron Paul libertarians = Corporate Anarchists.

An oxymoron. The internal structure of any corporation is fascism.

And this is why you're highlighted in green.


for lulz?
 
2012-10-22 01:54:09 PM

Tat'dGreaser: Arkanaut: Is anyone else annoyed at the British use of "pc" instead of the % sign?

YES


Eh, I figured it out in a few seconds.
 
2012-10-22 01:54:25 PM

slayer199: Kazan: slayer199: 1. Ron Paul is not a libertarian, is not widely supported by libertarians.

the first part of that statement is true, the second part is pants-on-fire bullshiat. every self described libertarian i know is a paul fan

slayer199: 2. Libertarianism is not the same as Randianism.

in theory, no. in practice in the United States? almost every self-described Libertarian (note the Capital L) is a randite.

Uh, no. Ron Paul is supported by libertarian-leaning Republicans, not Libertarians. I don't know any Libertarians that support Ron Paul. He's a Republican with some libertarian-leaning ideas....

GAT_00: slayer199: Ron Paul is not a libertarian, is not widely supported by libertarians.

[i575.photobucket.com image 411x110]

Coming from a guy that thinks Reason is a Republican-backed magazine and is pro-police...I'll sleep well at night knowing you still have no understanding of the LP or libertarianism.


No, we understand the LP just fine: nuts, who used to be Republicans but are now embarrassed to admit it. But mostly nuts.
 
2012-10-22 01:55:06 PM

slayer199: Since subby apparently thinks that anyone that disagrees with larger government and against the fed is either a Ron Paul fan or an Randian, allow me to clarify.

1. Ron Paul is not a libertarian, is not widely supported by libertarians.
2. Libertarianism is not the same as Randianism.

Back to the article. HELL NO. The IMF is farking insane. The solution to irresponsible deficit spending is to take over the private money supply? Like we're supposed to trust the government with money?

Riiiggggghhhhtttt.


We already do. U.S. currency is backed by the "full faith and credit of the United States." We, through the government, already take all of the rish when it comes to economic fluctuations. What we, also throught the government, do not have is control of the money supply. That is in the control of a bunch of private entities who have been gaming the system to their advantage for decades.

Also, as stated in the disclaimer, this is NOT the viewpoint and policy of the IMF. They and the World Bank are all about privatizing state-run entities (like utilities). This is going in the opposite direction: Government comtrol of a currently privately-held entity.
 
2012-10-22 01:55:22 PM

YixilTesiphon: bunner: david_gaithersburg: The ignorance from the left on display here is non-astonishing.

Any time somebody gets all squinty and eye roll-y and "oh, my dear boy, harrumph"y about the minutiae of on the folds in the elephant's skin, they usually have a vested interest in keeping people from noticing the f*cking huge elephant wearing it. The problem *is* fractional reserve banking, non existent money and it being printed like confetti to leverage actual wealth into an ever growing pool that only a few people are allowed to swim in. Amschel Rothschild stated things quite succinctly, years ago and the business plan hasn't shifted since.

Has poverty increased or decreased since the advent of fractional reserve banking?


Heck no! We're farting through silk! As long ans everybody shuts the hell up, eats their gruel and doesn't try to actually call in any of that magically wealth building debt. Did you know that endless growth defies the laws of physics? So far, all this malarkey farming with what money is and isn't has gotten us here. And here ain't so hot. I got a funny feeling that an economy based on mass delusion isn't as workable as it seems.
 
2012-10-22 01:55:43 PM

YixilTesiphon: iq_in_binary: CruJones: iq_in_binary: Kazan: slayer199: 1. Ron Paul is not a libertarian, is not widely supported by libertarians.

the first part of that statement is true, the second part is pants-on-fire bullshiat. every self described libertarian i know is a paul fan

slayer199: 2. Libertarianism is not the same as Randianism.

in theory, no. in practice in the United States? almost every self-described Libertarian (note the Capital L) is a randite.

If they are self described libertarians that support Ron Paul, they are Republicans. Find an actual libertarian and you'll find that they usually think he is a racist steeplechaser with Alzheimer's.

I'm an actual libertarian and not a Paul fan. I do like some of his ideas, but many are completely batshiat crazy. But I was actually a Philosophy major, and understand what libertarianism is, not just someone who thinks it means "less gubmint".

/actually has a real job with that degree
//basically works out to social liberal, fiscal conservative

So basically, you're intelligent enough to know that libertarianism and socialism are not mutually exclusive.

How are you defining socialism here? I am guessing that CruJones believes that private property is a good thing.


I also understand the differences between ideals and reality. Sometimes spending a dollar here saves five later. But all it really means is I don't care who you fark, marry, or what you ingest into your body. It's none of my business, and it's not the government's either.
 
2012-10-22 01:56:27 PM

Snarcoleptic_Hoosier: skullkrusher: Snarcoleptic_Hoosier: Eliminating fractional reserve banking. Good thing there aren't legitimate, healthy uses for debt that most people/organizations need to function. What's not to love about requiring home buyers to either pay for it all in cash or wait X number of years for the system to expand enough so they can get a loan?

You can eliminate fractional reserve banking and still have bank make home loans. Basically, a 100% reserve requirement only requires banks to maintain 100% of demand deposits on hand. It does not impact things such as CDs, bonds and other time deposits.

If I am a bank and you came to me with $500 and I promised to give you $550 a year from now, I can lend that $500 out without violating the 100% reserve requirement. However, if you came to me with $500 which you could demand at any time, I would be in violation if I were to lend out that money. Basically scenario A doesn't "create" money the way FRB does. The amount of $ in the system remains the same without any additions from the gov.

It would certainly reduce the easy access to credit but it does not eliminate credit.

The problem with the elimination of fractional reserves is that a bank can only expand based on its profits. In the example you provided, if that $500 to $550 transaction was the only transaction in the year, the bank could only lend that extra fifty dollars in year two. Over the course of several centuries, then yes, it could add up to significant results, but the global economy is driven by access to credit. Industry and agriculture would be immediately devastated if everything had to be paid for in cash. Even Apple, with its billions of cash in reserve, would seriously be struggling if it had to pay for all development with cash on hand.

The system is set up to enable liquidity and transition. Preventing access to debt leads to concentrated and established power tiers that lock everyone else in to where they are. I'm in the bottom quintile for inc ...


an elimination of FRB would be a dramatic change to current global credit markets. However, that elimination is also necessary to take the business of "creating" money out of the hands of banks as TFA suggests. I was just pointing out that it doesn't mean the end of credit.
 
2012-10-22 01:56:37 PM

fireclown: Actually, that's kind of one of the suggestions of the Austrian School 'O Economics. If you want to spin up your libertarian friends, tell 'em you are in favor of "Fiat Currency"/


I drove a Fiat Currency for a couple of years. Thing went bust all the time

hat4uk.files.wordpress.com
Plus, it wasn't a convertible.
 
2012-10-22 01:57:09 PM
Sometimes I try to play nice with the internet and leave my adblock off, but then shiat like this convinces me that all browsers should come with ABP pre-installed just out spite.
 
2012-10-22 01:57:49 PM

david_gaithersburg: Slaves2Darkness: nmemkha: Does anyone know how we got into this mess?

Umm...what makes you think this is a mess? US deficit funding has created the greatest amount of wealth spread to the largest amount of people in the history of the world. It has funded low tax, large military, and world domination that Caesar could only dream about. Deficit spending defeated the last of the great enemies and proved once and for all that a Republic is the best government ever. It has funded decadence, sloth, corruption that would make Caligula drool.

In short US deficit spending and the debt is the greatest thing we the people could have ever done.

The only problem we have now is convincing the retarded right that taxes must increased to reduce the deficit, so the party can continue. The retarded right are the douche bags who never pony up a couple of bucks for the beer run, so the party can continue.

But you, the retarded left, just said that deficit spending is a good thing. Make up your mind child.


Child? Who is the child here, I mean you apparently can't hold two thoughts in your head at the same time, so I'll explain it.

We do both, deficit spend and reduce the deficit through increased taxes. Yes, those ideas seem to be in opposition, but one reduces the impact of the other.

Personally I feel we should not be reducing the deficit at this time, but expanding it greatly. Currently interest rates on new debt are at the lowest they have been, and when combined with the effects of inflation are at negative rates. (Yes the US can borrow free money right now.)

We could do two things with this to help the economy and relief the debt. The first of course is to stimulate the economy through a jobs bill, creating an increase in both demand and GDP growth. Sadly the retarded Republicans have blocked any and all efforts in this direction and made it toxic for Speaker of the House Boehner to even try to reach a deal on this issue, while the farking Senate Democrats are being cowards on this issue.

The second is to retire higher interest rate debt. I know it is really confusing to people who can't who can't hold two thoughts in their head and don't understand economics at all, but essentially the US borrows money to pay off debt. The trick here is that the money borrowed is at a lower interest rate, and currently a negative interest rate, then the debt being paid off. It reduces the overall debt load and can reduce the deficit by reducing the interest payment necessary to service the debt.
 
2012-10-22 01:57:51 PM
RON PAUL saved himself. And that's the only person--except maybe his son--he was interested in saving.

Unless you believe multi-celled fetuses are persons. No strike that. Unless you believe the instantaneous product of a sperm and ovum uniting is a person. Then of course RON PAUL is willing to save millions of persons. By telling women they have no control over their reproductive system.

Does RON PAUL care that raising an unwanted child, forced by the government to be carried to term, costs $300,000 to raise? NOT IN THE LEAST. His morality ends at the north end of the vagina. In the land of the totalitarian baby-factory.
 
2012-10-22 01:58:31 PM
Money, you see, the thing about money, money is IOUs. And that's all it *ever* was designed to be. You can only pass the buck and print IOUs against nothing until either the buck stops or you have to admit you're dealing with really snazzy toilet paper.
 
2012-10-22 01:58:46 PM

bunner: YixilTesiphon: bunner: david_gaithersburg: The ignorance from the left on display here is non-astonishing.

Any time somebody gets all squinty and eye roll-y and "oh, my dear boy, harrumph"y about the minutiae of on the folds in the elephant's skin, they usually have a vested interest in keeping people from noticing the f*cking huge elephant wearing it. The problem *is* fractional reserve banking, non existent money and it being printed like confetti to leverage actual wealth into an ever growing pool that only a few people are allowed to swim in. Amschel Rothschild stated things quite succinctly, years ago and the business plan hasn't shifted since.

Has poverty increased or decreased since the advent of fractional reserve banking?

Heck no! We're farting through silk! As long ans everybody shuts the hell up, eats their gruel and doesn't try to actually call in any of that magically wealth building debt. Did you know that endless growth defies the laws of physics? So far, all this malarkey farming with what money is and isn't has gotten us here. And here ain't so hot. I got a funny feeling that an economy based on mass delusion isn't as workable as it seems.


"Incoherent gibberish" wasn't an option; your options were "increased" or "decreased".
 
2012-10-22 01:58:52 PM

d23: RanDomino: d23
Ron Paul libertarians = Corporate Anarchists.

An oxymoron. The internal structure of any corporation is fascism.

This isn't a contradiction of my point. The current Republican "libertarians" only really care that their precious corporations don't have to abide by any rules and that's it. They are as far from classic libertarianism as you can get. They couldn't care less about the liberty of the individual.


Successful troll will be successful.
 
2012-10-22 01:59:38 PM

ghare: No, we understand the LP just fine: nuts, who used to be Republicans but are now embarrassed to admit it. But mostly nuts.


nope...keep telling yourself that if it helps you to sleep.

we are against both governmental and corporate tyranny with the knowledge and understanding that both organisations are needed at some minimum level for a society to function.
 
2012-10-22 02:00:02 PM

lordaction: Typical liberals not understanding how the economy works. If you have a debt, that is someone else's asset. If you erase that debt with a stroke of a pen you erase the asset as well.

Also, dumbmitter, libertarians vote are for Gary Johnson, not Ron Paul.


That's kind of the point.
 
2012-10-22 02:00:34 PM

probesport: IMF? Unbelievable.


OH!
 
2012-10-22 02:01:11 PM
The people who made this movie have been promulgating this plan for decades.
 
2012-10-22 02:01:49 PM

genepool lifeboat: probesport: IMF? Unbelievable.

OH!


WTF?
 
2012-10-22 02:01:55 PM

mr lawson: ghare: No, we understand the LP just fine: nuts, who used to be Republicans but are now embarrassed to admit it. But mostly nuts.

nope...keep telling yourself that if it helps you to sleep.

we are against both governmental and corporate tyranny with the knowledge and understanding that both organisations are needed at some minimum level for a society to function.


But you characterize anything you thing is a step too far as "tyranny," so it makes you hard to negotiate with.
 
2012-10-22 02:02:00 PM

YixilTesiphon: "Incoherent gibberish" wasn't an option; your options were "increased" or "decreased".


So not only are you a condescending prat, but you think I work for you? Oh, Prunella. You are a caution. : )
 
2012-10-22 02:02:24 PM

Old Smokie: Most people lean libertarian on at least a few issues when you ask them. Most people don't self identify as libertarians. Fine.

Most people appreciate Ron Paul for his honesty and consistency, which is rare for a politician. Most people don't live in Ron Paul's district and can EABOD if they don't like it. He's not some bogeyman.


The problem is that Ron Paul is actually dishonest and stupid, though I will give him credit for consistency. He either doesn't understand economics, refuses to understand economics, or is lying to people about economics.

And I'm a supply-side classical economist.
 
2012-10-22 02:02:35 PM
Actually, the headline is in total reverse.

Right now, If Comrade Obamavich needs $1 trillion, he goes to the fed and borrows it, say at 6%.

That gives him his trillion, but he owes $60 billion in interest; for 5 minutes' paperwork, the fed profits $60 billion.

If the Treasury creates the mnoney, therre is no debt, but if they create too much it will cause inflation and we would vote them out. I would gladly pay 6--12% of my income to get rid of the bastards right now.

Read a book called "Creature From Jekyll Island" by D. Edward Griffin, it will open your eyes.
 
2012-10-22 02:03:01 PM
P.S. Your posture of authority™ sucks fat hippo ass. I thought you should know.
 
2012-10-22 02:03:57 PM

LasersHurt: But you characterize anything you thing is a step too far as "tyranny," so it makes you hard to negotiate with.


life is hard
 
2012-10-22 02:06:46 PM

CruJones: iq_in_binary: Kazan: slayer199: 1. Ron Paul is not a libertarian, is not widely supported by libertarians.

the first part of that statement is true, the second part is pants-on-fire bullshiat. every self described libertarian i know is a paul fan

slayer199: 2. Libertarianism is not the same as Randianism.

in theory, no. in practice in the United States? almost every self-described Libertarian (note the Capital L) is a randite.

If they are self described libertarians that support Ron Paul, they are Republicans. Find an actual libertarian and you'll find that they usually think he is a racist steeplechaser with Alzheimer's.

I'm an actual libertarian and not a Paul fan. I do like some of his ideas, but many are completely batshiat crazy. But I was actually a Philosophy major, and understand what libertarianism is, not just someone who thinks it means "less gubmint".

/actually has a real job with that degree
//basically works out to social liberal, fiscal conservative


How about we focus on the ideas and not what group of people support them. This party bickering over the meaningless details is what keeps our shiatty two-party system alive. I would think the more intelligent among us could avoid such nonsense.
 
2012-10-22 02:07:05 PM

DerAppie: Elegy: No fractional reserve banking? Good luck getting credit....

Live within your means and you won't need credit.


Oh really? You paid cash up front for your home? For your last car that you bought? For that next round of capital investment in your small business?

Fractional reserve banking makes credit possible, and we're not talking about "revolving door" credit like credit cards, we're talking about the sort of credit that 99% of Americans use for big ticket items.

How? You deposit 100 dollars in the bank. If, by law, I (the bank) need 10% of deposits on hand, I turn around and lend out the other 90 dollars to someone needing a mortgage at interest. Or a car. Or someone looking to expand their business. The interest on that loan then pays the interest that you accrue on your deposited savings, with some left over as a profit for the bank.

Now eliminate the fractional reserve requirements, and change the law so that I (the bank) now have to have 100% of deposits on hand. Surprise! Now no one can get credit, because I have no money to lend, instead I have to have all sit idling in my vault, by law. Good luck buying that house.

Simple math, how does it work?
 
2012-10-22 02:07:07 PM

Ricardo Klement: And I'm a supply-side classical economist.


There is no such thing as "supply-side" or "demand-side" economics. Only Capital-side economics.
 
2012-10-22 02:07:42 PM
lh6.googleusercontent.com
 
2012-10-22 02:08:44 PM

mr lawson: Ricardo Klement: And I'm a supply-side classical economist.

There is no such thing as "supply-side" or "demand-side" economics. Only Capital-side economics.


The only important kind of capitalism is "INSIDE" capitalism.

/insider, that is
 
2012-10-22 02:08:50 PM
It's simple: One country gets all our debt. They buy it for pennies on the dollars so that they're holding all the liability. Then we nuke that country. Doesn't have to be a big country. Preferably an island nation that can take a nukking without hurting anyone downrange.

With them gone, so goes our debt. We'll all be real careful and not borrow anymore money than we actually need. But since we're out of debt, why not celebrate with some tax cuts and trip to Aruba. Put it on the card. They have a zero balance. We'll pay it off next month.
 
2012-10-22 02:08:53 PM
Just as an aside people, remember that we have to pay interest on the debt, and there will be a point where it'll swallow up the bulk of taxes if we keep going this way.
 
2012-10-22 02:09:41 PM

Elegy: You paid cash up front for ... your last car that you bought?


Yes. Is it so hard to save money?
 
2012-10-22 02:09:57 PM
Anyone else point out that subby is a tard?
 
2012-10-22 02:09:58 PM

ourbigdumbmouth: Slaves2Darkness: This is a really stupid idea because we would be bankrupting ourselves.


Here's a quick and fascinating breakdown by total amount held and percentage of total U.S. debt, according to Business Insider:

The U.S. Treasury: $1.63 trillion (11.3 percent)
Social Security trust fund: $2.67 trillion (19 percent)
U.S. households: $959.4 billion (6.6 percent)
Private pension funds: $504.7 billion (3.5 percent)
State and local governments: $506.1 billion (3.5 percent)
Mutual funds: $300.5 billion (2 percent)
Commercial banks: $301.8 billion (2.1 percent)
State, local and federal retirement funds: $320.9 billion (2.2 percent)
Money market mutual funds: $337.7 billion (2.4 percent)


Hong Kong: $121.9 billion (0.9 percent)
Caribbean banking centers: $148.3 (1 percent)
Taiwan: $153.4 billion (1.1 percent)
Brazil: $211.4 billion (1.5 percent)
Oil exporting countries: $229.8 billion (1.6 percent)
United Kingdom: $346.5 billion (2.4 percent)
Japan: $912.4 billion (6.4 percent)
China: $1.16 trillion (8 percent)

We owe foreign firms, countries, and other entities about 4.5 trillion dollars and we owe US firms, people, and entities 9.8 trillion dollars.

Why the fark would we the American People cancel the debt or default? How does that make any sense at all?

Now that is a good question.


If i was running a country that has debt it can never payback, here is what i would do:
1. Borrow as much money as you can sucker out of the rest of the world
2. Use it to build a military that rivals the rest of the world combined
3. Use the military to secure key resources needed by my country
4. Tell the creditors to fark off, and send a nice care package of high-explosives to whoever complains
 
2012-10-22 02:10:16 PM
If you need a slew of spectators with doctorates spewing endless volumes and cautions as to how something as relatively simple as commerce works, you're probably already well past the point of delusional as to what commerce and or value is, or is not. If this move makes all the economists redundant, it's already a useful idea.
 
2012-10-22 02:11:02 PM

PsiChick: Eh, I figured it out in a few seconds.


Well so did I but that doesn't mean they can just do what they want and throw extra "u's" anywhere they want
 
2012-10-22 02:11:37 PM

ghare: No, we understand the LP just fine: nuts, who used to be Republicans but are now embarrassed to admit it. But mostly nuts.


mr lawson: man...don't even try. The left will never understand and the right just thinks we are godless heathens.


Good advice.
 
2012-10-22 02:11:53 PM

Ricardo Klement: AAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAARRRRGGGHHHHH!
*sploosh*

Now that my head exploded, fractional reserve banking is not some magical power to conjure forth money. It is a mathematical side-effect of lending out money and accepting deposits. If I lend Bob $20, and he buys a bottle of cheap whiskey from Jack, who then asks me to hang on to the cash for him because he doesn't have pockets, and then I lend that $20 to Bill, I just created money. And I am not a bank, and I am not regulated by the feds.


No you didn't! You just gave Bill the money Jack told you to hang on to even though it wasn't yours to give. You're not a money creator, you're a jerk who spends other people's money! Go get Jack's money back before he hears about what you did and deposits his fist into your face.
 
2012-10-22 02:12:27 PM

Elegy: DerAppie: Elegy: No fractional reserve banking? Good luck getting credit....

Live within your means and you won't need credit.

Oh really? You paid cash up front for your home? For your last car that you bought? For that next round of capital investment in your small business?

Fractional reserve banking makes credit possible, and we're not talking about "revolving door" credit like credit cards, we're talking about the sort of credit that 99% of Americans use for big ticket items.

How? You deposit 100 dollars in the bank. If, by law, I (the bank) need 10% of deposits on hand, I turn around and lend out the other 90 dollars to someone needing a mortgage at interest. Or a car. Or someone looking to expand their business. The interest on that loan then pays the interest that you accrue on your deposited savings, with some left over as a profit for the bank.

Now eliminate the fractional reserve requirements, and change the law so that I (the bank) now have to have 100% of deposits on hand. Surprise! Now no one can get credit, because I have no money to lend, instead I have to have all sit idling in my vault, by law. Good luck buying that house.

Simple math, how does it work?


What makes you think any of that couldn't happen with direct federal control of the monetary supply? You'd get your mortgage from the Federal revenue cabinet (or whatever they decided to call it), and pay them directly. Interest rates would be lower, as there is no privately-owned bank that needs to profit.
 
2012-10-22 02:12:50 PM

YixilTesiphon: DerAppie: Elegy: No fractional reserve banking? Good luck getting credit....

Live within your means and you won't need credit.

Right, but how do you start a business without credit?


By having actual investors who put up their own real money and have to actually care if the business success in order to make a good ROI, vs. blowing it up with fake inflated money to get a quick profit off the sale of stock.
 
2012-10-22 02:15:26 PM

jaytkay: DerAppie: YixilTesiphon: DerAppie: Elegy: No fractional reserve banking? Good luck getting credit....

Live within your means and you won't need credit.

Right, but how do you start a business without credit?

Put up a decent bussiness plan and look for someone (corporations are people) who thinks that your plan has decent risk:reward ratio. In exchange for money (let us call that "interest" because it is what makes it "interesting" to invest) from your profits they will lend you money.

Interesting.Investors should extend some kind of money or "credit" to the business, correct?


I'm not the one claiming it would be impossible to get credit, just that it isn't necessary for day to day living. Nor did I make the claim that getting credit wouldn't be more difficult in case you were wondering.
 
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