soltheman
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- Jun 1, 2008
I completely agree with the first half of your post. That what my point was. That banks don't actually have the money that they claim to. On an investment of $10 they create an additional $90 out of thin air. My argument wasn't meant to be contradictory to that point. I concur with you on that.Originally Posted by FrankMatthews
Originally Posted by soltheman
No, but that's not the point. You say a bank is to not have anymore than 10% of their deposits on hand at any time. That makes sense, as it's a deterrent for theft, keeps peoples' money safe, etc. However, my point is that they probably don't have even half of the money in their possession. Having things on hand and having things within possession are two very different concepts. A bank can have their money in a safe location and still have it be accessible to them. My point is that most of them don't.
What fueled this country's economy is not the banking system. It's not. Stop thinking that. Without money already being within this country, we wouldn't have had a need for banks. What fueled America's economy (and what is now missing from America) is production, and not only production but the different branches of the corporations that did said production being housed in the U.S. What stopped the growth of the economy is the consolidation and removal of production, and what really hit the general population is the outsourcing of jobs to other countries. But that's another topic for another time.
It's true that our lives would be extraordinarily different without the banking system, and it does have it's conveniences. But, banking existed before the Federal Reserve. The centralization of banking in the U.S. is what led to it's decay. It's not the concept of a bank that is now holding back the American people, it's how that concept is executed.
There can be no perfect system set in place. Why? Because a perfect system changes when the wants and needs of its people change. There isn't a system in existence that exploitation won't occur in. Exploitation is the oldest profession in human existence. However, we can help move towards a system that limits exploitation, keeps wealth distributed more fairly, and forces people to accept the higher responsibilities that come along with belonging to a higher socioeconomic class.
And there already is a single world currency; precious metal (such as gold.) Most people just haven't figured that out yet.
Not to sound arrogant but you really have no idea what you are talking about. For the most part I agree with people that the system is f'ed up but I would like people to actually know the ins and outs about how stuff works. It's like the blind leading the blind in here.
When you say on hand or in possession it really means the same thing to me. It has very little to do with theft deterrents and very much to do with maximizing profits. When you deposit money into a bank they don't burn your cash or check and they don't directly lend your cash to others, in other words they have it on hand, they may send a certain amount to the fed reserve for safe keeping if they are getting too many deposits but they have it. What they don't have or actually what doesn't even exist is the money they loan out. Your deposit of $10 allows them to make loans up to $100 with that $10 as a reserve, hence fractional reserve. They are not lending out peoples deposits. When you ask for a home loan the bank calls up the fed reserve and says so-and-so needs $300k for a house and then the fed, electronically, creates that money out of thin air and it goes on the banks books provided they have at least 10% of that 300k in deposits. When you pay that loan off that $300k disappears back into thin air, all that remains is the interest the bank earned. In other words, all deposits are accounted for either in the banks vault or through their account with the fed. It's the loaned out money that they don't have and never had to begin with except for the fractional reserve they must have to make those loans.
It is actually the banking system that provided this growth. Production provided our growth throughout the industrial revolution but sine the 1940s-50s it is the banking system described above that created our massive growth. We have produced next to nothing in the last 30 years but we still have significant growth. When you can create money out of thin air then of course you are going to grow. A fractional reserve of 10% means that it only takes 1 million in actual earned money (or profits from actual production) to create financing up to 100 million for small or large business, to buy houses or cars which in turn provide jobs and economic growth and to research and develop new technologies. In other words, the banking system allows us the financing to "produce" more than we would otherwise be able to.
Yes banks have been around forever and yes it is the way the banking system is set up that makes it "bad". When I say our lives would be different I was referring to the fact that we would not have been able to produce or grow as much as we did based on the example above. You are right, the problem is not the concept of a bank it is the use of interest. Interest is an exponential equation in a world of finite people and resources, in other words it's unsustainable. Fractional reserve only amplifies this problem.
I'd like to hear how you would limit exploitation and keep wealth distributed more fairly in todays world. Wouldn't be too hard in a vacuum, but in todays world with todays people and how they are used to living, I really doubt it is possible.
Oh and you might wanna check the definition of the word "currency" because metals certainly are not a currency. There seems to be this misguided notion that gold is going to become an actual circulated currency in the future which is virtually impossible. There is not enough gold in existence to account for the wealth we think we have even at $2k an ounce. Were this too happen everyones net worth would take a serious haircut. Talk about a great depression, this would be cataclysmic. I can elaborate on this and the many other issues that make PM's as a currency impossible if you are interested. How do you price goods in gold without the dollar or some other currency as a reference point?
My contention is that the recent "growth" due to banking wasn't really growth, but rather a void that went relatively unnoticed up to this point in our society. I don't think that there can be growth on top of a fictional foundation (i.e. the money that the banking system created out of thin air.) I believe that it is this imaginary growth and a capitalization upon funds that didn't really exist that has caused the rut that we are currently in. While it's true that we wouldn't have been able to grow so quickly without the use of fractional banking, I don't think we were supposed to. Actually, I know we weren't supposed to. Our growth has spawned from deceit. I don't consider it growth. I consider it a get rich quick scheme, so to speak, only on a much bigger level.
How I would limit exploitation? Make taxes unavoidable, and proportional to the amount of money that an individual or corporation makes. There's no reason why a person making 40k a year should pay the same percentage of taxes that a person making 400k does. Secondly, I would withdraw the military installations across the globe that are a continuous drain of resources. Thirdly, I would take money from the military and other foreign endeavors and refocus it into the educational system and domestic security. Fourth, reform the medical, prison, and insurance institutions of the nation to be more efficient, fair, and work on ways to make them profitable rather than a money hog. It's fairly vague because I haven't actually thought it out (as it's not my job,) but those are the first points that come to mind.
Lastly, I know what currency is. And gold, by the technical definition of currency, is a form of currency. It is a generally accepted medium of exchange. You can take a bar of gold to just about any country and exchange it for paper money. It's not that we use currency as a reference point of worth for gold, we use gold as a reference point for our currency. It's not that the price of gold is getting higher, it's that the value of our currency is decreasing. I don't mean to say that gold is a save all, and that its the only thing worth something. The value of every form of currency is simply perceived. They weren't using dollar bills in the dark ages. But, I think gold is a standard in which most (if not all currencies) can be translated to.
I'd love to PM you, but let's keep this debate friendly and open. I'd like to see input from other NTers, and I really liked your first rebuttal and I'm hoping to learn more from you because you seem very knowledgeable -- despite my disagreement.