ISF Logo   IS Forum
Forum Index Register Members List Events Mark Forums Read Help

Go Back   International Skeptics Forum » General Topics » Economics, Business and Finance
 


Welcome to the International Skeptics Forum, where we discuss skepticism, critical thinking, the paranormal and science in a friendly but lively way. You are currently viewing the forum as a guest, which means you are missing out on discussing matters that are of interest to you. Please consider registering so you can gain full use of the forum features and interact with other Members. Registration is simple, fast and free! Click here to register today.
Reply
Old 16th October 2017, 10:31 AM   #81
Aber
Graduate Poster
 
Join Date: Apr 2011
Posts: 1,044
Originally Posted by psionl0 View Post
For example, central banks could have a policy of lending banks money to make family home loans but not speculative home loans.
Please define the difference between the 2 types of loan.
Aber is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 16th October 2017, 10:47 AM   #82
Tippit
Master Poster
 
Tippit's Avatar
 
Join Date: Jul 2007
Posts: 2,628
Originally Posted by JJM 777 View Post
But their activity adds money into circulation, just like a central bank now prints more money. So there would be some inflation in gold reserve banking too, at least worth the value of new gold minus the costs of mining it. If not indeed the value of new gold without any deductions.
Yes, there is gold inflation, It runs at about 3% per anum. There is also benign deflation that results from real economic growth (ie: real people producing real things that real people need in the real economy). Things getting cheaper is a good thing for everyone.

Quote:

I just opened a new thread on fractional reserve banking vs. gold reserve banking. This topic is interesting, but hardly belongs under the topic "Can a worker owned and managed economy work?"
There is no such thing as "gold reserve banking". There is commodity, fiduciary, and fiat money. Fractional Reserve banking can exist independently of what we call money, but its instability and subsequent crises generally create the premise that we also need fiat money as well.

Quote:

Retroactive punishments are not part of the process. And what comes to the "immoral and injust" part, that should be decided by a democratic decision-making process. Which is corrupt and biased like h*ll, unfortunately, in most countries.
If you understood how much wealth has been looted since the creation of the Bank of England, and the absolute power that these individuals wield due to their endless wealth, you might think twice. In fact, I am convinced there is no political or economic solution to the problems the world is currently facing, without criminal justice, and restitution.
__________________
"The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks."
- Lord Acton
Tippit is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 16th October 2017, 11:11 AM   #83
psionl0
Skeptical about skeptics
 
psionl0's Avatar
 
Join Date: Sep 2010
Location: 3157'S 11557'E
Posts: 11,831
Originally Posted by Aber View Post
Please define the difference between the 2 types of loan.
Which part don't you understand? The money creation aspect, the difference between interest rates or buying to live in vs trading for profit?
__________________
"The process by which banks create money is so simple that the mind is repelled. Where something so important is involved, a deeper mystery seems only decent." - Galbraith, 1975
psionl0 is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 16th October 2017, 11:21 AM   #84
Mycroft
High Priest of Ed
 
Mycroft's Avatar
 
Join Date: Sep 2003
Posts: 18,586
Originally Posted by Tippit View Post
There is no such thing as "gold reserve banking". There is commodity, fiduciary, and fiat money. Fractional Reserve banking can exist independently of what we call money, but its instability and subsequent crises generally create the premise that we also need fiat money as well.
Instability?

Originally Posted by Tippit View Post
...and restitution.
How would restitution work, in your world?

Last edited by Mycroft; 16th October 2017 at 11:23 AM.
Mycroft is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 16th October 2017, 12:26 PM   #85
JJM 777
Illuminator
 
JJM 777's Avatar
 
Join Date: Jun 2004
Posts: 4,016
Originally Posted by Tippit View Post
If you understood how much wealth has been looted since the creation of the Bank of England, and the absolute power that these individuals wield due to their endless wealth
I have heard about the Rothschilds etc. in the Conspiracy Theory section of this website. Wealthy people exist, that is undeniable. And they try to control politics as much as they possibly can, that is also undeniable.

Here is a quote from another thread, for Tippit's thought that central banking should be based on gold:

Originally Posted by Puppycow View Post
The Gross World Product per year is about $78 trillion dollars. The total value of all the gold in the world (including in jewelery, and all other forms, both publicly and privately held) is estimated at somewhere around $8 trillion.
In the other thread about fractional reserve banking, thoughts have arisen that fractional reserve banking makes loans more easily available and more affordable. If that is the case, fractional reserve banking seems to be very useful for productivity of the society.

Last edited by JJM 777; 16th October 2017 at 12:41 PM.
JJM 777 is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 16th October 2017, 12:41 PM   #86
JJM 777
Illuminator
 
JJM 777's Avatar
 
Join Date: Jun 2004
Posts: 4,016
Originally Posted by psionl0 View Post
There is no such thing as "gold reserve banking".
Oops, my idiocy got revealed.

Originally Posted by Puppycow View Post
I would say it's more the former than the latter
That is my prejudiced and unchecked opinion too. Also the following two quotes seem to favour this interpretation:

Originally Posted by Puppycow View Post
But what would the interest rates be?
Originally Posted by Sceptic-PK View Post
What about "without fractional lending there would be far fewer loans"?
Does a theory exist, how much fractional reserve banking increases the availability and/or affordability of loans?

Originally Posted by Puppycow View Post
The Gross World Product per year is about $78 trillion dollars. The total value of all the gold in the world (including in jewelery, and all other forms, both publicly and privately held) is estimated at somewhere around $8 trillion.
A good point. I will copy this to another thread for Tippit to read, as he has not come to defend his position here.
JJM 777 is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 16th October 2017, 12:46 PM   #87
Loss Leader
Would Be Ringing (if a bell)
Moderator
 
Loss Leader's Avatar
 
Join Date: Jul 2006
Location: Florida
Posts: 24,120
Originally Posted by JJM 777 View Post
Is fractional reserve banking a genious invention to increase the economic productivity of society, or an evil pyramid fraud scheme that impoverishes the population?

Every single capital improvement made today - every factory, every office building, every home - is the result of fractional reserve banking. Borrowing from our future selves allows just about every modern convenience that exists.
__________________
I have the honor to be
Your Obdt. St

L. Leader
Loss Leader is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 16th October 2017, 01:24 PM   #88
psionl0
Skeptical about skeptics
 
psionl0's Avatar
 
Join Date: Sep 2010
Location: 3157'S 11557'E
Posts: 11,831
GOTO 5
__________________
"The process by which banks create money is so simple that the mind is repelled. Where something so important is involved, a deeper mystery seems only decent." - Galbraith, 1975
psionl0 is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 16th October 2017, 01:55 PM   #89
psionl0
Skeptical about skeptics
 
psionl0's Avatar
 
Join Date: Sep 2010
Location: 3157'S 11557'E
Posts: 11,831
Originally Posted by JJM 777 View Post
In the other thread about fractional reserve banking, thoughts have arisen that fractional reserve banking makes loans more easily available and more affordable. If that is the case, fractional reserve banking seems to be very useful for productivity of the society.
Confirmation bias.
__________________
"The process by which banks create money is so simple that the mind is repelled. Where something so important is involved, a deeper mystery seems only decent." - Galbraith, 1975
psionl0 is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 16th October 2017, 04:11 PM   #90
Mycroft
High Priest of Ed
 
Mycroft's Avatar
 
Join Date: Sep 2003
Posts: 18,586
Originally Posted by psionl0 View Post
Confirmation bias.
Is there evidence to the contrary?
Mycroft is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 16th October 2017, 08:18 PM   #91
BobTheCoward
Penultimate Amazing
 
Join Date: Nov 2010
Posts: 10,286
How about we let both exist and people choose which one they want?
BobTheCoward is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 16th October 2017, 08:29 PM   #92
psionl0
Skeptical about skeptics
 
psionl0's Avatar
 
Join Date: Sep 2010
Location: 3157'S 11557'E
Posts: 11,831
Originally Posted by BobTheCoward View Post
How about we let both exist and people choose which one they want?
That could work. We could offer members of the public checking accounts directly with the central bank (or with banks acting as agencies).

We would then no longer have to have tax payers going surety for bank deposits. People would have the choice of risky or risk free bank accounts.
__________________
"The process by which banks create money is so simple that the mind is repelled. Where something so important is involved, a deeper mystery seems only decent." - Galbraith, 1975
psionl0 is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 16th October 2017, 08:31 PM   #93
JoeBentley
Self Employed
Remittance Man
 
JoeBentley's Avatar
 
Join Date: Nov 2009
Location: Jacksonville, FL
Posts: 8,396
Has any country ever tried to run a fiat and backed currency system in parallel to any real degree before? (Honest question)
__________________
"Ernest Hemingway once wrote that the world is a fine place and worth fighting for. I agree with the second part." - Detective Sommerset, Se7en

"Hating a bad thing does not make you good." - David Wong
JoeBentley is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 16th October 2017, 08:55 PM   #94
psionl0
Skeptical about skeptics
 
psionl0's Avatar
 
Join Date: Sep 2010
Location: 3157'S 11557'E
Posts: 11,831
Originally Posted by Mycroft View Post
Is there evidence to the contrary?
Check out my posts in the thread that JJM 777 tried to divert this derail to and tell me what is wrong in them.
__________________
"The process by which banks create money is so simple that the mind is repelled. Where something so important is involved, a deeper mystery seems only decent." - Galbraith, 1975
psionl0 is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 16th October 2017, 10:01 PM   #95
Mycroft
High Priest of Ed
 
Mycroft's Avatar
 
Join Date: Sep 2003
Posts: 18,586
Originally Posted by psionl0 View Post
Check out my posts in the thread that JJM 777 tried to divert this derail to and tell me what is wrong in them.
I'm sure which thread you're referring to is perfectly obvious to some, but I just took a few hits and need help.

Do you have a link?
Mycroft is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 16th October 2017, 10:06 PM   #96
psionl0
Skeptical about skeptics
 
psionl0's Avatar
 
Join Date: Sep 2010
Location: 3157'S 11557'E
Posts: 11,831
Fractional reserve vs. gold reserve banking
__________________
"The process by which banks create money is so simple that the mind is repelled. Where something so important is involved, a deeper mystery seems only decent." - Galbraith, 1975
psionl0 is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 16th October 2017, 10:18 PM   #97
psionl0
Skeptical about skeptics
 
psionl0's Avatar
 
Join Date: Sep 2010
Location: 3157'S 11557'E
Posts: 11,831
Originally Posted by JoeBentley View Post
Has any country ever tried to run a fiat and backed currency system in parallel to any real degree before? (Honest question)
In the past when cash was used to pay for most things, fractional reserve banking was less of an issue (except for businesses). People were free to take a risk with the bank or not.

In more modern times, not so much. The closest we came to a full reserve system was the Chicago Plan in the 1930s which was supported by prominent economists of the time including Milton Friedman. The banks successfully opposed the plan though they had to accept "Glass-Steagall" regulations as a compromise (long since repealed).

ETA From WWII Australia's nationally owned Commonwealth Bank had the dual function of central bank and commercial bank. Whingeing from the other banks saw the central bank role transferred to the Reserve Bank of Australia in 1960.
https://en.wikipedia.org/wiki/Common...2.80.931960.29
__________________
"The process by which banks create money is so simple that the mind is repelled. Where something so important is involved, a deeper mystery seems only decent." - Galbraith, 1975

Last edited by psionl0; 16th October 2017 at 11:08 PM.
psionl0 is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 16th October 2017, 11:43 PM   #98
Puppycow
Penultimate Amazing
 
Puppycow's Avatar
 
Join Date: Jan 2003
Posts: 22,584
Originally Posted by JoeBentley View Post
Has any country ever tried to run a fiat and backed currency system in parallel to any real degree before? (Honest question)
Yes, for example, the United States had both United States Notes and Gold Certificates at the same time, until the latter were abolished.

When the gold standard ended, it wasn't because they wanted to end it, it was because it became untenable to continue. The Federal Reserve could not increase the money supply, which made the Great Depression worse.

See also:
https://en.wikipedia.org/wiki/Executive_Order_6102
__________________
A fool thinks himself to be wise, but a wise man knows himself to be a fool.
William Shakespeare
Puppycow is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 17th October 2017, 02:14 AM   #99
JJM 777
Illuminator
 
JJM 777's Avatar
 
Join Date: Jun 2004
Posts: 4,016
Originally Posted by psionl0 View Post
"Without fractional reserve banking there would be no loans" is a massive fallacy.
This comes up again and again from someone, and you answer the same again and again. Neither party shows any evidence.

Well, "no loans" is a big claim. Of course there could be _some_ loans, how few they ever might be. But how much is fractional reserve banking to thank for the current abundance of loans?

Last edited by JJM 777; 17th October 2017 at 02:15 AM.
JJM 777 is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 17th October 2017, 02:19 AM   #100
JJM 777
Illuminator
 
JJM 777's Avatar
 
Join Date: Jun 2004
Posts: 4,016
Originally Posted by psionl0 View Post
Check out my posts in the thread that JJM 777 tried to divert this derail to and tell me what is wrong in them.
Well, there you choose to list critical aspects of fractional reserve banking, and you choose not to list any positive aspects of fractional reserve banking, such as suspectedly easier availability or affordability of loans. Then you you suggest that other discussers are biassed.
JJM 777 is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 17th October 2017, 04:52 AM   #101
psionl0
Skeptical about skeptics
 
psionl0's Avatar
 
Join Date: Sep 2010
Location: 3157'S 11557'E
Posts: 11,831
I will answer this in the other thread.
__________________
"The process by which banks create money is so simple that the mind is repelled. Where something so important is involved, a deeper mystery seems only decent." - Galbraith, 1975
psionl0 is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 17th October 2017, 05:05 AM   #102
psionl0
Skeptical about skeptics
 
psionl0's Avatar
 
Join Date: Sep 2010
Location: 3157'S 11557'E
Posts: 11,831
Originally Posted by JJM 777 View Post
Well, there you choose to list critical aspects of fractional reserve banking, and you choose not to list any positive aspects of fractional reserve banking, such as suspectedly easier availability or affordability of loans. Then you you suggest that other discussers are biassed.
Originally Posted by JJM 777 View Post
This comes up again and again from someone, and you answer the same again and again. Neither party shows any evidence.

Well, "no loans" is a big claim. Of course there could be _some_ loans, how few they ever might be. But how much is fractional reserve banking to thank for the current abundance of loans?
What "positives" (other than for the banks) are you talking about? I already outlined how money could be made available for loans without having the banks create new deposits ex nihilo in posts #7 and #11.

Saying that fractional reserve banking makes loans available so that no reforms are necessary is the equivalent of saying that coal fired generators work so there is no need to improve electricity generation. Bank runs and Global Financial Crisis are a fact of life under the current system. As it stands, we privatise bank profits and nationalize their losses ("too big to fail").

And I fail to see why you think that massive amounts of privately held debt is a plus. This is a direct result of the banks pumping up the price of housing until it is almost beyond the reach of individuals. (This also adversely affects rents).
__________________
"The process by which banks create money is so simple that the mind is repelled. Where something so important is involved, a deeper mystery seems only decent." - Galbraith, 1975

Last edited by psionl0; 17th October 2017 at 05:06 AM.
psionl0 is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 17th October 2017, 05:08 AM   #103
Mycroft
High Priest of Ed
 
Mycroft's Avatar
 
Join Date: Sep 2003
Posts: 18,586
Originally Posted by psionl0 View Post
"Without fractional reserve banking there would be no loans" is a massive fallacy.
With fractional reserve lending, the money being lent comes from the deposits being held. Without fractional reserve lending the bank is required to keep all deposits, so where does the money to lend come from?
Mycroft is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 17th October 2017, 05:25 AM   #104
psionl0
Skeptical about skeptics
 
psionl0's Avatar
 
Join Date: Sep 2010
Location: 3157'S 11557'E
Posts: 11,831
Originally Posted by Mycroft View Post
With fractional reserve lending, the money being lent comes from the deposits being held. Without fractional reserve lending the bank is required to keep all deposits, so where does the money to lend come from?
That is a common misconception. Banks don't lend money that has been deposited. They create new deposits ex nihilo (out of nothing) when they make loans. They do this in exchange for an IOU (the promise to repay the loan) by the borrower.

I am arguing that banks should lend money that has been deposited but only from savings accounts (85% of all bank deposits). The responsibility for adding new money into circulation should be the responsibility of the central bank and not be the prerogative of commercial banks. There are better ways of adding money into circulation than increasing private debt.
__________________
"The process by which banks create money is so simple that the mind is repelled. Where something so important is involved, a deeper mystery seems only decent." - Galbraith, 1975

Last edited by psionl0; 17th October 2017 at 05:58 AM.
psionl0 is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 17th October 2017, 06:27 AM   #105
BobTheCoward
Penultimate Amazing
 
Join Date: Nov 2010
Posts: 10,286
Originally Posted by Mycroft View Post
With fractional reserve lending, the money being lent comes from the deposits being held. Without fractional reserve lending the bank is required to keep all deposits, so where does the money to lend come from?
People who want to lend out their money.
BobTheCoward is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 17th October 2017, 08:18 AM   #106
Tippit
Master Poster
 
Tippit's Avatar
 
Join Date: Jul 2007
Posts: 2,628
Originally Posted by BobTheCoward View Post
How about we let both exist and people choose which one they want?
Under 100% reserve banking, people would have to pay banks in order to deposit their money, and bankers would be relegated to the equivalent of public storage employees, or loan brokers, as they should be.

Given the choice of whether to have to pay for deposits in a 100% system, or to receive interest in a fractional system, the public will probably choose to receive interest every time, being completely unaware of the monumental costs of such a system, both in terms of inflation, asset price inflation, privatization of the public's money supply, and undue wealth and status afforded to bankers versus everyone else.

The ability for private banks to create new money is fraud, and it should be outlawed on that basis, if for no other reason. It remains fraud even if a portion of the loot is kicked back to the public to make it appear beneficial.
__________________
"The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks."
- Lord Acton
Tippit is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 17th October 2017, 08:22 AM   #107
Tippit
Master Poster
 
Tippit's Avatar
 
Join Date: Jul 2007
Posts: 2,628
As far as the total value of world gold being "insufficient" for its use in commerce, that is utterly ridiculous. Gold would simply be revalued upwards in order to account for all of the inflation that bankers have created previously, and, since the price is being actively suppressed to this day via naked short selling and ETFs, that suppression would have to end.

But the idea that there is not enough gold (or silver) or that its value is insufficient is silly.
__________________
"The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks."
- Lord Acton
Tippit is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 17th October 2017, 12:15 PM   #108
psionl0
Skeptical about skeptics
 
psionl0's Avatar
 
Join Date: Sep 2010
Location: 3157'S 11557'E
Posts: 11,831
Originally Posted by Tippit View Post
Given the choice of whether to have to pay for deposits in a 100% system, or to receive interest in a fractional system, the public will probably choose to receive interest every time, being completely unaware of the monumental costs of such a system, both in terms of inflation, asset price inflation, privatization of the public's money supply, and undue wealth and status afforded to bankers versus everyone else.
Yeah. That 0.1% pa is a deal breaker for me.

Seriously though, tell the public that the taxpayers won't bail them out if their bank gets into difficulty and I'm sure that you would get more than a few takers for accounts directly with the central bank. This would especially be true if the central bank didn't levy fees on these accounts.
__________________
"The process by which banks create money is so simple that the mind is repelled. Where something so important is involved, a deeper mystery seems only decent." - Galbraith, 1975
psionl0 is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 17th October 2017, 12:55 PM   #109
lupus_in_fabula
Graduate Poster
 
lupus_in_fabula's Avatar
 
Join Date: Nov 2006
Posts: 1,529
Most developed nations provide their citizens with a social security number. They might as well provide every citizen with an account at the central bank. That account would be the main vehicle for monetary transactions between the state and the citizenry. If someone wants to keep an extra account at a private institution; then that would be fine… but no deposit insurance by the state or any other bailout guarantee should be provided for such investment decision.

That, I think, would be a decent start. Let's see how the rest will play out henceforth (even if lending might be fractional, banking needn't be fractional).

I.e., there's no reason why the function of private banking should always have to encompass both the payment system and the provision of the means of payment.
__________________
...Forever shall the wolf in me desire the sheep in you...

Last edited by lupus_in_fabula; 17th October 2017 at 12:57 PM.
lupus_in_fabula is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 17th October 2017, 03:05 PM   #110
Tippit
Master Poster
 
Tippit's Avatar
 
Join Date: Jul 2007
Posts: 2,628
Originally Posted by psionl0 View Post
Yeah. That 0.1% pa is a deal breaker for me.

Seriously though, tell the public that the taxpayers won't bail them out if their bank gets into difficulty and I'm sure that you would get more than a few takers for accounts directly with the central bank. This would especially be true if the central bank didn't levy fees on these accounts.
NIRP/ZIRP are central bank policies, so you would be directing savers out of the frying pan into the fire.

I don't see how abolishing private banks while granting a monopoly on money creation *and* all banking transactions accomplishes anything other than making the elites who run the central banks even more powerful and wealthy.
__________________
"The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks."
- Lord Acton
Tippit is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 17th October 2017, 05:14 PM   #111
Hans
Philosopher
 
Hans's Avatar
 
Join Date: May 2007
Posts: 6,720
Originally Posted by Tippit View Post
As far as the total value of world gold being "insufficient" for its use in commerce, that is utterly ridiculous. Gold would simply be revalued upwards in order to account for all of the inflation that bankers have created previously, and, since the price is being actively suppressed to this day via naked short selling and ETFs, that suppression would have to end.

But the idea that there is not enough gold (or silver) or that its value is insufficient is silly.
Trivia question just how much would 'expanding' the gold value cause the price/value of gold to increase by? An estimate?

Edited to add: did some research and I see figures like 10k to 40k per ounce.

Last edited by Hans; 17th October 2017 at 05:26 PM.
Hans is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 17th October 2017, 09:17 PM   #112
psionl0
Skeptical about skeptics
 
psionl0's Avatar
 
Join Date: Sep 2010
Location: 3157'S 11557'E
Posts: 11,831
Originally Posted by Tippit View Post
NIRP/ZIRP are central bank policies, so you would be directing savers out of the frying pan into the fire.

I don't see how abolishing private banks while granting a monopoly on money creation *and* all banking transactions accomplishes anything other than making the elites who run the central banks even more powerful and wealthy.
I don't know which post you have been reading but it certainly isn't the one that you quoted. There is no mention of "abolishing" private banks nor giving the central bank a monopoly on anything.

The only thing that a CB would offer would be a transaction account. It probably wouldn't even have branches. Everything else would still be a function of private banks. They would probably offer full reserve checkable deposit accounts themselves to compete (or act as a CB agency for these accounts).
__________________
"The process by which banks create money is so simple that the mind is repelled. Where something so important is involved, a deeper mystery seems only decent." - Galbraith, 1975
psionl0 is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 17th October 2017, 11:50 PM   #113
Tippit
Master Poster
 
Tippit's Avatar
 
Join Date: Jul 2007
Posts: 2,628
Originally Posted by psionl0 View Post
I don't know which post you have been reading but it certainly isn't the one that you quoted. There is no mention of "abolishing" private banks nor giving the central bank a monopoly on anything.

The only thing that a CB would offer would be a transaction account. It probably wouldn't even have branches. Everything else would still be a function of private banks. They would probably offer full reserve checkable deposit accounts themselves to compete (or act as a CB agency for these accounts).
It's implied. If you allow central banks which have a monopoly right on money creation to conduct business with consumers, what's the point of having private banks at all? Beside the fact that government would be omniscient, and privy to everyone's transactions.
__________________
"The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks."
- Lord Acton
Tippit is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 17th October 2017, 11:54 PM   #114
Sceptic-PK
Illuminator
 
Join Date: Jun 2010
Posts: 3,634
Originally Posted by psionl0 View Post
That is a common misconception. Banks don't lend money that has been deposited. They create new deposits ex nihilo (out of nothing) when they make loans. They do this in exchange for an IOU (the promise to repay the loan) by the borrower.

I am arguing that banks should lend money that has been deposited but only from savings accounts (85% of all bank deposits). The responsibility for adding new money into circulation should be the responsibility of the central bank and not be the prerogative of commercial banks.
:/ In recent posts on this topic I thought you'd at least changed your language a bit; you even used "deposit expansion"!

You know very well that banks ultimately lend the money that has been deposited with them (ignoring money market borrowing etc for simplicity). You make that clear in your post about "nationalising losses"; if banks aren't lending customer deposits, a) there can be no losses (they can just create more money), and b) there's no need for government insurance of deposit customers.

You also know that (for explanatory purposes) if every borrower took their loans in cash and set it on fire, a bank's reserves would be depleted on a permanent basis. I think it's disingenuous to imply to someone who is probably unfamiliar with the topic, that the speed at which these loans tend to come back to a lending institution equates to not lending the bank's reserves in the first place.

I have a follow up point but will make a separate post for that.
Sceptic-PK is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 17th October 2017, 11:59 PM   #115
Aber
Graduate Poster
 
Join Date: Apr 2011
Posts: 1,044
Originally Posted by psionl0 View Post
Which part don't you understand? The money creation aspect, the difference between interest rates or buying to live in vs trading for profit?
Oh I understand them all, just wondering how you define the difference between "buying to live in vs trading for profit".
Aber is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 18th October 2017, 02:33 AM   #116
psionl0
Skeptical about skeptics
 
psionl0's Avatar
 
Join Date: Sep 2010
Location: 3157'S 11557'E
Posts: 11,831
Originally Posted by Sceptic-PK View Post
:/ In recent posts on this topic I thought you'd at least changed your language a bit; you even used "deposit expansion"!

You know very well that banks ultimately lend the money that has been deposited with them (ignoring money market borrowing etc for simplicity). < ... the rest is snipped ...>
Don't tell me you are going to rehash this ancient argument again? That is how I got to be a cretin in the first place.

FYI each new deposit increases the customers' claims on the bank's reserves. It does not mean that the banker rushes to their vault and takes out an equivalent amount of cash. At worst, when the bank makes a new loan, it may have to transfer the same amount of reserves to a different bank when the borrower spends the money. This is just part of the back and forth movement of reserves between banks.

The rest of your post is too illogical to comment on.
__________________
"The process by which banks create money is so simple that the mind is repelled. Where something so important is involved, a deeper mystery seems only decent." - Galbraith, 1975
psionl0 is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 18th October 2017, 02:39 AM   #117
psionl0
Skeptical about skeptics
 
psionl0's Avatar
 
Join Date: Sep 2010
Location: 3157'S 11557'E
Posts: 11,831
Originally Posted by Tippit View Post
It's implied inferred (by me). If you allow central banks which have a monopoly right on money creation to conduct business with consumers, what's the point of having private banks at all? Beside the fact that government would be omniscient, and privy to everyone's transactions.
ftfy

You are still making unwarranted assumptions. The CB would only offer checkable deposit accounts. It would not make loans to private citizens nor would it offer interest bearing savings accounts. That's why we would still have private banks "at all". It goes without saying that the CB would have to offer the same level of privacy as any other bank.

Originally Posted by Aber View Post
Oh I understand them all, just wondering how you define the difference between "buying to live in vs trading for profit".
Maybe the "living in" part confuses you but it doesn't confuse the Australian tax man.

If you buy your home and live in it continuously then there is no capital gains tax when you sell it. But if you rent out the home for any part of the time that you own the house then you have to pay CGT on any value increase that occurred during the time you weren't living in the house.
__________________
"The process by which banks create money is so simple that the mind is repelled. Where something so important is involved, a deeper mystery seems only decent." - Galbraith, 1975
psionl0 is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 18th October 2017, 04:25 AM   #118
lupus_in_fabula
Graduate Poster
 
lupus_in_fabula's Avatar
 
Join Date: Nov 2006
Posts: 1,529
Originally Posted by psionl0
FYI each new deposit increases the customers' claims on the bank's reserves. It does not mean that the banker rushes to their vault and takes out an equivalent amount of cash. At worst, when the bank makes a new loan, it may have to transfer the same amount of reserves to a different bank when the borrower spends the money. This is just part of the back and forth movement of reserves between banks.
Anyone who implicitly assumes there's some causal relationship between central bank reserves and the amount by which commercial banks can create new deposits, needs to come to terms with the following empirical findings: Between 1981 and 2006 (just before the financial crisis), total credit market assets increased by over $32 trillion (744%), while commercial bank reserves held with the central bank decreased by $6.5 billion. Loans in bank credit grew from $1trillion to over $9 trillion during the same timeframe (i.e., during a timeframe when reserve balances declined).
__________________
...Forever shall the wolf in me desire the sheep in you...
lupus_in_fabula is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 18th October 2017, 09:44 AM   #119
psionl0
Skeptical about skeptics
 
psionl0's Avatar
 
Join Date: Sep 2010
Location: 3157'S 11557'E
Posts: 11,831
Originally Posted by lupus_in_fabula View Post
Anyone who implicitly assumes there's some causal relationship between central bank reserves and the amount by which commercial banks can create new deposits, needs to come to terms with the following empirical findings: Between 1981 and 2006 (just before the financial crisis), total credit market assets increased by over $32 trillion (744%), while commercial bank reserves held with the central bank decreased by $6.5 billion. Loans in bank credit grew from $1trillion to over $9 trillion during the same timeframe (i.e., during a timeframe when reserve balances declined).
I understand that since that time, the opposite has been happening. In spite of the Fed's QE programs since the GFC, private loans have not increased significantly. It seems that indebtedness has reached such a level that banks can't find enough customers that they can reliably lend money to.
__________________
"The process by which banks create money is so simple that the mind is repelled. Where something so important is involved, a deeper mystery seems only decent." - Galbraith, 1975
psionl0 is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Old 18th October 2017, 09:53 AM   #120
JJM 777
Illuminator
 
JJM 777's Avatar
 
Join Date: Jun 2004
Posts: 4,016
Originally Posted by psionl0 View Post
What "positives" (other than for the banks) are you talking about? I already outlined how money could be made available for loans without having the banks create new deposits ex nihilo
In the OP I hoped, and still I hope, to create a fair and complete list, side by side, of all pros and cons of fractional reserve banking and 100% reserve banking. But the rule of thumb seems to be that the more a discusser knows about the topic, the more strictly he refuses to mention any other aspects than his favourite ones.

Originally Posted by psionl0 View Post
As it stands, we privatise bank profits and nationalize their losses ("too big to fail").
If something is too big to fail, sounds like it should be state-owned then. But this reveals that Capitalism is more correctly just selfishness. The dogma of the state helping bends when it is the rich who need state aid, but less so when it is the poor who need welfare. Even without such spectacular bailouts, big companies happily receive state aid all the time.

Originally Posted by psionl0 View Post
I fail to see why you think that massive amounts of privately held debt is a plus.
If (for once, please notice the word "if") that enables people to have a house and car, rather than not having either of them, many (probably most) people see a plus there.

Last edited by JJM 777; 18th October 2017 at 10:14 AM.
JJM 777 is offline   Quote this post in a PM   Nominate this post for this month's language award Copy a direct link to this post Reply With Quote Back to Top
Reply

International Skeptics Forum » General Topics » Economics, Business and Finance

Bookmarks

Thread Tools

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Forum Jump


All times are GMT -7. The time now is 10:51 AM.
Powered by vBulletin. Copyright ©2000 - 2017, Jelsoft Enterprises Ltd.
2014, TribeTech AB. All Rights Reserved.
This forum began as part of the James Randi Education Foundation (JREF). However, the forum now exists as
an independent entity with no affiliation with or endorsement by the JREF, including the section in reference to "JREF" topics.

Disclaimer: Messages posted in the Forum are solely the opinion of their authors.