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I don’t see the problem here. Creating money isn’t free for private banks, they can’t do it as much as they want. They start rejecting more loans when funding g

• andrepd 4y ago
  Several problems. First, it has been amply demonstrated that (1) the rules aren't as tight as should be and (2) the "punishment" for failure is not strong enough, or should I say, it is non-existent. This means that banks can and will make too risky investments, collect the profits when they succeed, and get bailed out – with no personal or corporate responsibility of any kind – when they fail. Second, this creates a class privilege: while banks can create money at will (and profit from it) as long as they stay within the confines of the regulations, ordinary families and individuals have no such power. There is no mechanism whereby ordinary people and families can do something equivalent to free leveraging through money creation, given similar capital/reserve minimums rules as banks have. Unlike a bank, a person with 10k$ cash on hand cannot credit themselves 100k$ (or 200k$ or 500k$) of money and use it as they please, to spend or to invest. In fact they have to go through the very same middlemen who do *have that kind of power, and which do use that mechanism to credit themselves the money that they will lend you for interest*. This doesn't strike me as fair.
  • plonk 4y ago
    > First, it has been amply demonstrated that (1) the rules aren't as tight as should be and (2) the "punishment" for failure is not strong enough, or should I say, it is non-existent. This means that banks can and will make too risky investments, collect the profits when they succeed, and get bailed out – with no personal or corporate responsibility of any kind – when they fail. The problem in 2008 was subprime loans that should never have been allowed, it wasn’t that banks could create enough money. Inflation after Covid was caused by central banks, not private ones, and it was done on purpose to avoid a recession. I don’t think these things are inevitable consequences of private banks creating money. > Second, this creates a class privilege: while banks can create money at will (and profit from it) as long as they stay within the confines of the regulations, ordinary families and individuals have no such power. Banks are given that privilege in exchange for being regulated to hell. They get a kind of monopoly over these profits in exchange for doing things like being forced to bank everyone, including unprofitable customers. Without this incentive, who would do the banks’ job?