Reply With QuoteGood old Fractional Reserve Banking. One of the biggest cons of all time. All new money is debt and we wonder why the world is in such a state. Bill Still makes some interesting videos. See if I can find some links
...and the bank creates £100,000 of new money out of nothing.
OR how banks really work...
OR how our present system of money led to the banking crisis.
http://www.positivemoney.org/how-mon...-create-money/
Good old Fractional Reserve Banking. One of the biggest cons of all time. All new money is debt and we wonder why the world is in such a state. Bill Still makes some interesting videos. See if I can find some links
Even more of a reason to invest in crypto currency in my eyes.
It's a nice pyramid scheme though - they should have been forced to maintain the gold standard and simply pay LESS for goods.
It's just a matter of time...
Yes Bill Still is worth listening to and has done some great work.Originally Posted by sidders
But actually fractional reserve banking (or money multiplier models) would entail some limits on the ability of banks to create money out of nothing.
The situation is far worse than fractional reserves or money multiplier models.
In our present system there is no practical limit on banks except their confidence that the loans they create will be paid back. In other words the money supply depends on the mood of the bankers.
That is crazy.
For anyone interested this explains how it works:
http://www.positivemoney.org/how-mon...-video-course/
This documentary: Money as Debt, explains it very well....
http://www.youtube.com/watch?v=jqvKjsIxT_8
Not quite true - there are regulatory limits, which are now quite strictly adhered to.
It's just a matter of time...
Maybe you are right but could you tell us what these are?
The UK banking system has never operated reserve ratios. It used to have liquidity reserve ratios. But these did not limit the size to which the money supply could be extended, only the rate at which the expansion took place. These were, however, abolished (or reduced to 0%) in the 1980s.
The Basle Accords do not and have never been intended to limit the expansion of the money supply. They are about creating cushions against loans going bad.
Even in the US (which does have reserve ratios) various studies have shown that they are ineffective in limiting the money supply. What banks do in practice is lend first and then create reserves afterwards.
So, as I say, you may be right and know of something that I haven't heard of - but what is the regulatory restraint on expanding the money supply that you speak of and how does it work?
Yes I agrre, good video. It also brings out that in the US reserve ratios have been eroded away so as to be ineffective in keeping a lid on the money supply.
...Or turn your back on society and live in the woods....!
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