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You have to understand that banks make the money they lend. Banks do not lend against reserves. https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/mone

You have to understand that banks make the money they lend. Banks do not lend against reserves. https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/m... Giving this control to the government is a bad idea and will lead to the solviet-zation of the banking industry.

toomuchtodo 5y ago
I am familiar with fractional reserve banking. Banks can obtain capital through other mechanisms than deposit accounts (CDs, bonds, etc) to enable their lending operations (mortgage debt, credit card debt, and auto loans are already securitized on the bond market, for example) and profit off of the (hopefully properly risk managed) spread. Commercial banks are not entitled to the deposits of citizens, nor should citizens have their financial lives beholden to commercial banks rent seeking off of their deposit accounts and cashflow. To your point about "giving this control to government", they already have it; they are the ones who set reserve requirements and oversee commercial banks (by way of the Fed and the OCC). Wells Fargo, Chase, and Bank of America are what soviet run banks would look like; wide spread abuses without sufficient repercussions to disincentivize reoccurrences (Wells [1]) and poor service for customers with the spoils funneled to the top (JPMC and BoA). [1] https://www.yahoo.com/now/wells-fargo-scandals-the-complete-timeline-141213414.html https://www.yahoo.com/now/wells-fargo-scandals-the-complete-...
- selimthegrim 5y ago
  When’s the last time you heard of anyone setting up a CD ladder? 1995?
  - toomuchtodo 5y ago
    Sounds roughly the same time a checking account earned interest? My point was that banks have other avenues of obtaining operating capital for lending operations.

4 ms·

You have to understand that banks make the money they lend. Banks do not lend against reserves. https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/mone

by alexnewman 5y ago

toomuchtodo 5y ago
I am familiar with fractional reserve banking. Banks can obtain capital through other mechanisms than deposit accounts (CDs, bonds, etc) to enable their lending operations (mortgage debt, credit card debt, and auto loans are already securitized on the bond market, for example) and profit off of the (hopefully properly risk managed) spread. Commercial banks are not entitled to the deposits of citizens, nor should citizens have their financial lives beholden to commercial banks rent seeking off of their deposit accounts and cashflow. To your point about "giving this control to government", they already have it; they are the ones who set reserve requirements and oversee commercial banks (by way of the Fed and the OCC). Wells Fargo, Chase, and Bank of America are what soviet run banks would look like; wide spread abuses without sufficient repercussions to disincentivize reoccurrences (Wells [1]) and poor service for customers with the spoils funneled to the top (JPMC and BoA). [1] https://www.yahoo.com/now/wells-fargo-scandals-the-complete-timeline-141213414.html https://www.yahoo.com/now/wells-fargo-scandals-the-complete-...
- selimthegrim 5y ago
  When’s the last time you heard of anyone setting up a CD ladder? 1995?
  - toomuchtodo 5y ago
    Sounds roughly the same time a checking account earned interest? My point was that banks have other avenues of obtaining operating capital for lending operations.