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> Get rid of fractional reserve banking while you're at it. And replace it with what? The barter system?

wallace_f 9y ago
Normal banks that hold money. 100% reserve banking. Something Milton Friedman and Paul Krugman agree on, at least at times, is that commercial banks should be like utility companies.
- candiodari 9y ago
  Luckily it's not like that was ever tried before, or we would have some idea of what will happen. Oh ... wait ... https://www.foreignaffairs.com/articles/1932-01-01/crisis-gold-standard https://www.foreignaffairs.com/articles/1932-01-01/crisis-go... The problem, at its root, is that we have large parts of the world with negative trade balances. What that boils down to is that there are large parts of the world that don't have any economic use but get included anyway. Those parts represent interruptions to an economy that only works long-term if it's a circle. Now just so we're clear: the problem is overcapacity, and a demand-limited economy. The solution is obviously not to cut parts out and lower demand further (why not ? Because anyone doing that will get outcompeted in a credit-based economy and therefore doing this is not a Nash equilibrium).
- ganeshkrishnan 9y ago
  >Normal banks that hold money. 100% reserve banking. Loans and Home mortgages would be impossibly difficult to get. You do realize that when we get a loan from the bank, the loan amount minus the down-payment exists only electronically? The balance is supposed to be wiped out if we repay the loan but that never happens. I am not saying fractional reserve banking is perfect but what are the alternatives?
  - wallace_f 9y ago
    Nothing is for free. There are no magic tricks that create free money. If you think about this, home loans (and moreso the banking empires) are subsidized by the average worker and money-holder. However, with a k-percent rule keeping inflation at 0.5-1% it would not be that much harder to get financing. I do agree we need monetary growth to avoid commodity money. In other words, we don't want people holding money because it grows in value--we want people to have some incentive to invest it. If you want to give people free money to buy houses, just give them free money. Wall St & the Fed are a criminal middleman profiting off everyone else's expense. The real question is how do you fairly grow the money supply if we cut out the Fed? Maybe finance national healthcare this way. Hospitals could issue currency and buy securities on the open market. We could even restrict it to treasuries to subsidize the national debt like we do now.

Normal banks that hold money. 100% reserve banking. Something Milton Friedman and Paul Krugman agree on, at least at times, is that commercial banks should be like utility companies.

candiodari 9y ago
Luckily it's not like that was ever tried before, or we would have some idea of what will happen. Oh ... wait ... https://www.foreignaffairs.com/articles/1932-01-01/crisis-gold-standard https://www.foreignaffairs.com/articles/1932-01-01/crisis-go... The problem, at its root, is that we have large parts of the world with negative trade balances. What that boils down to is that there are large parts of the world that don't have any economic use but get included anyway. Those parts represent interruptions to an economy that only works long-term if it's a circle. Now just so we're clear: the problem is overcapacity, and a demand-limited economy. The solution is obviously not to cut parts out and lower demand further (why not ? Because anyone doing that will get outcompeted in a credit-based economy and therefore doing this is not a Nash equilibrium).
ganeshkrishnan 9y ago
>Normal banks that hold money. 100% reserve banking. Loans and Home mortgages would be impossibly difficult to get. You do realize that when we get a loan from the bank, the loan amount minus the down-payment exists only electronically? The balance is supposed to be wiped out if we repay the loan but that never happens. I am not saying fractional reserve banking is perfect but what are the alternatives?
- wallace_f 9y ago
  Nothing is for free. There are no magic tricks that create free money. If you think about this, home loans (and moreso the banking empires) are subsidized by the average worker and money-holder. However, with a k-percent rule keeping inflation at 0.5-1% it would not be that much harder to get financing. I do agree we need monetary growth to avoid commodity money. In other words, we don't want people holding money because it grows in value--we want people to have some incentive to invest it. If you want to give people free money to buy houses, just give them free money. Wall St & the Fed are a criminal middleman profiting off everyone else's expense. The real question is how do you fairly grow the money supply if we cut out the Fed? Maybe finance national healthcare this way. Hospitals could issue currency and buy securities on the open market. We could even restrict it to treasuries to subsidize the national debt like we do now.