J
Fractional reserve banking is the ability of banks to create money out of thin air for their own benefit. This is our current system of banking.
Full reserve banking is when the Government issues 100% of the money supply credit as well as cash.
Full Reserve Banking means no more banking crises, no more booms and no more busts.
I can explain more if you wish
I disagree with you on that one. Even gold standard can't procect you from booms and busts. They are just a part of free market economy and change of trends.Full Reserve Banking means no more banking crises, no more booms and no more busts.
Fractional reserve banking is the ability of banks to create money out of thin air for their own benefit. This is our current system of banking.
Full reserve banking is when the Government issues 100% of the money supply credit as well as cash.
Monetary reformers are calling for an increase of at most 3% per annum in the money supply, which would be alot less historically than under fractional reserve banking and would herald in a new era of almost 0% inflation.
Hi Chris,
what we are proposing is to first of all stabilise the money supply. Currently the money supply is falling in Ireland, because people who can are repaying loans and banks are reluctant to lend causing the money supply to drop. The evidence for this is that house prices continue to fall and further job losses and bankruptcies are inevitable. We are in a deflationary spiral.
The proposal is to increase the money supply by spending it on creating new infrastructure, schools roads ports rapid transport etc. By creating new goods and services with the increase in the money supply there will be no inflation.
I am familiar with the UK figures and the money supply there increased by 10% year on year every year for 40-years up till the end of the boom in 2007.
Monetary reformers are calling for an increase of at most 3% per annum in the money supply, which would be alot less historically than under fractional reserve banking and would herald in a new era of almost 0% inflation.
Hi Chris,
what we are proposing is to first of all stabilise the money supply. Currently the money supply is falling in Ireland, because people who can are repaying loans and banks are reluctant to lend causing the money supply to drop. The evidence for this is that house prices continue to fall and further job losses and bankruptcies are inevitable. We are in a deflationary spiral.
The proposal is to increase the money supply by spending it on creating new infrastructure, schools roads ports rapid transport etc. By creating new goods and services with the increase in the money supply there will be no inflation.
I am familiar with the UK figures and the money supply there increased by 10% year on year every year for 40-years up till the end of the boom in 2007.
Monetary reformers are calling for an increase of at most 3% per annum in the money supply, which would be alot less historically than under fractional reserve banking and would herald in a new era of almost 0% inflation.
I disagree with you on that one. Even gold standard can't procect you from booms and busts. They are just a part of free market economy and change of trends.
What would be completely eliminated is inflation though.
The ECB lends money to private banks. They make money on this. The private banks dont profit from seignorage.
Ireland is not in a deflationary spiral, everything except houses are up. My car insurance renewal came today and it's up, my health insurance is up, I've been monitoring food prices for 9 months by keeping receipts and they are up a lot more than what the government figures show, my tank of oil is up 15%, coal is up 8%, petrol is up, taxes are up, the list goes on.
It is total nonsense to suggest that we are in price deflation. But even if we had price deflation then why on earth would that be a bad thing for the cash strapped public? When prices fall then more people can afford to buy stuff, which especially affects those least well off.
Your recommendation is create inflation and drive prices even higher. That is the last thing this country needs.
I had a quick look (3 hrs.) at the Positive Money website also (UK). It doesn't say that the central bank should create the money. It says an independent, accountable body with full transparency should create it. Government should have no influence as well as the Central Bank (as vote seeking politicians and profit seeking bankers can not be trusted) using all of the tools available to monitor the inflation rate (including mortgages) with a target set at (0% to 2%). I don't see how you can see this as inflationary let alone hyper inflationary. As the inflation rate rises, they stop creating currency. End of. The money will be created and spent democratically for social benefit, or it could be used to make up for a lessened tax revenue when regressive taxes are abolished (VAT)or tax being completely removed from the poorer in society, thus creating more spending power for the public at large to pay down debt or to spend. You advocate backing a currency with something that cant be easily created, but if the currency itself cannot be easily created, would it not make a reserve system obsolete and out dated?I had a quick look at the site you refer to and I do not believe that your propositions would make any difference.
Quite: "The central bank would decide how much to create and the Government would decide how best to spend. This is the main safeguard against hyperinflation."
Do you honestly believe that a government controlled central bank first of all knows how much more money is needed and secondly would not create more money than needed to keep politicians happy? And the statement about government deciding how best to spend it just made me laugh. What you are advocating is exactly how the biggest hyperinflations of world history happened, i.e. central banks directly monetizing government debt and spending.
The main safeguard against hyperinflation is to physically back money with something that cannot be easily created.
As the inflation rate rises, they stop creating currency. End of. The money will be created and spent democratically for social benefit, or it could be used to make up for a lessened tax revenue when regressive taxes are abolished (VAT)or tax being completely removed from the poorer in society, thus creating more spending power for the public at large to pay down debt or to spend.
Could you give me your source on the ECB lending money to the private banks of the EU? I dont believe this to be true. I think they only have control of the base rate and the responsibility for bank bailouts(lenders of last resort). The private banks create their own 'credit' money. Your right though, banks don't profit from seignorage. Only the treasury/government of a sovereign nation would. As Ireland has given up their sovereignty to the technocrats of Goldman Sachs, Im not sure who would take the profit. But I would still guess that it would be the governments of the nation states of the EU. Not sure
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