Fractional Reserve Banking

[AlexLah]

In two states in the US there are plans to introduce money backed by Gold.

Problem is that the senate is a bit scared to sign the plan.

Other city's are using their own alternative money (You can Google that).

So there are other systems, the thing is that MSM is not telling you.

[OriginalPoster]

In two states in the US there are plans to introduce money backed by Gold.

Problem is that the senate is a bit scared to sign the plan.

Other city's are using their own alternative money (You can Google that).

So there are other systems, the thing is that MSM is not telling you.

The Senate is a bit scared to allow States to issue their own currency? Gee, that's a shock, wonder why that would be.

[OriginalPoster]

Ok, so you folks don't like the current banking system. Fair enough. I don't like looking at the topless elderly ladies on patong beach, but I don't have an alternative solution short of giving the old gals some duct tape. Sure there are weaknesses in the current system, sure it has an ability to make a sharp adjustment, but what's the alternative? Is it tested? Is it viable? Would you like to go back to the barter system? It will certainly be interesting to see the collective genius of those that rely on Lyndon Larouche and others for their ideas. I'm just one of those workers that pays the taxes and has watched my retirement savings evaporate, so I am disposed to hearing something more attractive.

Here's Alan Greenspan's vision of an alternative: http://www.gold-eagle.com/greenspan041998.html

[pkrv]

No human should be allowed to be able to make money out of nothing.

Ohh good grief using the most/moist of ancient british politics 'don't be a silly billy'

[LivinLOS]

Ok, so you folks don't like the current banking system. Fair enough. I don't like looking at the topless elderly ladies on patong beach, but I don't have an alternative solution short of giving the old gals some duct tape. Sure there are weaknesses in the current system, sure it has an ability to make a sharp adjustment, but what's the alternative? Is it tested? Is it viable? Would you like to go back to the barter system? It will certainly be interesting to see the collective genius of those that rely on Lyndon Larouche and others for their ideas. I'm just one of those workers that pays the taxes and has watched my retirement savings evaporate, so I am disposed to hearing something more attractive.

Of course theres an alternative.. Its been proven time and time again through history.. Have a currency backed by something (precious metals are a logical choice)..

Restoring Sound Money in America

[hhgz]

"Don't worry so much, gives you headache."

He could give an aspirin a headache.

[EnqueaIstarion]

It would seem dear friends that Hancock would have been proud of many of you:

Do you also expect to deposit your dollar and receive back that same dollar note...

"A pint? That's nearly an armful" - Tony Hancock in "The Blood Donor"

[thaihome]

Don’t you think there is some irony in this thread on an Internet forum that likely would not even exist if it were not for the “easy” credit system that we all enjoy the benefits of? People proposing to go back to gold/silver backed currency system should do a little research on the life of working class people before the current system evolved.

TH

[flying]

Don't you think there is some irony in this thread on an Internet forum that likely would not even exist if it were not for the "easy" credit system that we all enjoy the benefits of? People proposing to go back to gold/silver backed currency system should do a little research on the life of working class people before the current system evolved.

Can you explain? I dont follow your thinking & wondered what you meant by easy credit creating things like this forum?

Also the life of working class folks. Who worked for money that was not fed controlled. Please explain as I am assuming you mean their life was somehow less rich because they lived within their means? Is that it?

Just curious Thanks

Edited January 30, 2009 by flying

[JimsKnight]

I'm interested and waiting hear THs theory as well. Because the commodity based system is one every country should consider if the crisis gets any worse!

[samuibeachcomber]

As i understand it this system of banking has allowed the unsustainable increase in western lifestyle through printing money backed really by nothing i.e to enable us to live beyond our means.When currencies were tied to the gold system,the amount of money allowed into circulation was curtailed by the amount each country held(gold) in reserve,which in turn hampered growth,but allowed everyone to live within his/her means.

The growth over the last 20 years was never ever going to be sustained,new economies like india,china,brazil,also wanted a piece of the action,but the world's resources are finite and would never cope with every country in the world having a lifestyle that we in the west have come to expect and enjoy.This crisis is a reality check,and in general, living standards in the future have to be curtailed for a decent future for all to be had.

[LivinLOS]

Don't you think there is some irony in this thread on an Internet forum that likely would not even exist if it were not for the "easy" credit system that we all enjoy the benefits of? People proposing to go back to gold/silver backed currency system should do a little research on the life of working class people before the current system evolved.

Can you explain? I dont follow your thinking & wondered what you meant by easy credit creating things like this forum?

Also the life of working class folks. Who worked for money that was not fed controlled. Please explain as I am assuming you mean their life was somehow less rich because they lived within their means? Is that it?

Just curious Thanks

How about this idea.. Every dollar you earnt in your youth and working life, was a dollar left in spending power when you retired..

See that was how it was when people used a commodity based system, there was no inflation (or not built in inflation, prices rose and fell but in general very stable for 100's of years) there was no stealth tax taken by government so they could spend it on pork barrels and boondoggles, panem et cirensis, to be re-elected..

People have lived with inflation for so long they thing that 'prices always rise' is a fundamental law, its only so in an expanding money supply. How about if the common man didnt need to gamble and invest in things with risk simply to stop his assets shrinking over time ??

[flying]

This crisis is a reality check,and in general, living standards in the future have to be curtailed for a decent future for all to be had.

People have lived with inflation for so long they think that 'prices always rise' is a fundamental law, its only so in an expanding money supply. How about if the common man didnt need to gamble and invest in things with risk simply to stop his assets shrinking over time ??

I really like those quotes Thanks

[gregb]

Ok, so you folks don't like the current banking system. Fair enough. I don't like looking at the topless elderly ladies on patong beach, but I don't have an alternative solution short of giving the old gals some duct tape. Sure there are weaknesses in the current system, sure it has an ability to make a sharp adjustment, but what's the alternative? Is it tested? Is it viable? Would you like to go back to the barter system?

His Majesty the King has one. It's called the Sufficiency Economy. It's been proven for thousands of years. In fact, it is the experiment called fractional reserve banking has only been around for a few hundred, and is in the process of proving itself to be a failure.

Unfortunately, as long as the current system hasn't completely failed (and it likely won't in our lifetimes), the lie that it tells is compelling. The key is to understand that growth has to come from real tangible, sustainable improvements to the economy and the environment, not borrowing from the future as the current system does. That's the essence of the King's message, and it's a good one. This type of growth however, is painfully slow and difficult. But don't think there is any solution which will allow you to continue living as you have. Whether you try to stay within the current system or not, you need to accept you will have alot less for the rest of your life. Your wealth was an illusion that is now over.

No system is ideal, but some are less ideal than others. Our current system combined with fossil energy has allowed us to live in a dream world for the last few centuries that will need to be repaid in the coming ones. Eventually our descendants will return to sound money and living within their means. Let's hope that we provide them a legacy they can be proud of.

[AlexLah]

Wheeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeee

So we can no longer by flatscreens and Ipods and labtops.

We have to go back to living under a palmtree, using horses for transportation?

What do we tell the kids with x-mass when they are searching for their gifts under the tree and all they find are mudpies?

Just kidding.

[thaihome]

Don't you think there is some irony in this thread on an Internet forum that likely would not even exist if it were not for the "easy" credit system that we all enjoy the benefits of? People proposing to go back to gold/silver backed currency system should do a little research on the life of working class people before the current system evolved.

Can you explain? I dont follow your thinking & wondered what you meant by easy credit creating things like this forum?

Also the life of working class folks. Who worked for money that was not fed controlled. Please explain as I am assuming you mean their life was somehow less rich because they lived within their means? Is that it?

Just curious Thanks

I was, of course, referring to the Internet itself, which is in current form almost completely due to venture capital, which I think would be extremely limited (as it was historically) in a commodity based currency system. Even before the evolution of the fractional reserve system, booms and bust happened, and the busts were much worse.

This was what a working class person started out and likely how he ended up under the system you people think is so great (only because you don’t have to live in it today)

TH

[gregb]

I was, of course, referring to the Internet itself, which is in current form almost completely due to venture capital, which I think would be extremely limited (as it was historically) in a commodity based currency system. Even before the evolution of the fractional reserve system, booms and bust happened, and the busts were much worse.

Actually, TH, fractional reserve banking was well established by the time those pictures were taken. You need to go back to the Middle Ages to get a good idea of what a commodity based system really looks like.

And we all know the results there will look even worse than your pictures. However, you have entirely missed the point. The point is, the current system is a ponzi scheme, and won't be continuing no matter how much you like it. The bust coming is going to be epic, because it will be coupled with a bust in geology that makes economic growth (the thing that allows it to work at all) impossible.

It is not "us" who think the previous sytems were so great. It is simply a recognition that they will work in the future in some form, where the current system is a guaranteed failure. It doesn't matter what you do. You have to accept you're going to be poor. Kiss your wealth goodbye, because it is now and always has been an illusion. This is already reality. It's just that most people haven't accepted it yet, and they'll happilly kill their grandmother and children before admitting it.

The options right now are between accepting living in squalor, or living in a perpetual state of war. My guess is the bankers are going to lead us to war, but eventually perpetual squalor will win out.

Now, my question for you TH is, do you believe the internet, which was built by all this venture capital, is going to continue functioning in the future? My own personal belief is that anything built by venture capital is by definition not sustainable, and will necessarily degrade into oblivion as soon as the continuous venture capital stops flowing to maintain it.

My prediction is this glorious thing we call the internet is going to become more expensive in the years to come, and eventually cease to exist altogether. Sad, but most likely true.

[flying]

I was, of course, referring to the Internet itself, which is in current form almost completely due to venture capital,

TH

I thought the Internet was the out crop of the Military

Did it not start out as ARPA/ Arpanet?

If so I would say we paid it with our taxes.

The pictures of the coal miners probably look about the same today....

Or worse ?.... They now have higher tech things that give off their own toxic by products that the workers have to suck up.

Then again Im sure I could also find some pictures of very well dressed working class from the gold backed ages as well as the fractional backed ages....What is the point?

Edited January 30, 2009 by flying

[VegasVic]

Nice piece, but

A: Hmm, yes we are having a bit of a difficulty here. But no problem, we are saved! The government is going to print some nice new money and give it to us so we are back to square one again. This is such a relief as I was worried I might not get a bonus.

Q: But don't you then owe this money to the government?

A: Not anymore! We are nationalised and the government can't owe money to itself! And I might get a State pension too, whippee!

Q: Hold on there. This is getting confusing. So the government can actually create more money than you have lost. WOW! What is this wonderful generous government that has come to save my $100? Who owns it? Who pays for it?

This bit needs revising.

It states the government prints/creates money and that is incorrect.

Money is created by the Federal Reserve Bank and the government is borrowing it to bailout the banks who can then use it to (un)balance their books. The government then has to pay interest to the Federal reserve bank. That means your tax money which is from your salary which comes from your employer who probably borrowed the money and has to pay interest.

Note that the Federal Reserve Bank is not Federal but privately owned, and it does not have reserves only a computer terminal where they can input numbers for creating money. No printing required.

K.J., I am glad you clarified that for 12 I wonder just what type of post 12 would have made if he really understood the full scope of the CDO, CDS, SIV mess and that these prepackaged trachces were leveraged at 40:1 and then sold off and releveraged

[thaihome]

Actually, TH, fractional reserve banking was well established by the time those pictures were taken. You need to go back to the Middle Ages to get a good idea of what a commodity based system really looks like.

And we all know the results there will look even worse than your pictures. However, you have entirely missed the point. The point is, the current system is a ponzi scheme, and won't be continuing no matter how much you like it. The bust coming is going to be epic, because it will be coupled with a bust in geology that makes economic growth (the thing that allows it to work at all) impossible.

It is not "us" who think the previous sytems were so great. It is simply a recognition that they will work in the future in some form, where the current system is a guaranteed failure. It doesn't matter what you do. You have to accept you're going to be poor. Kiss your wealth goodbye, because it is now and always has been an illusion. This is already reality. It's just that most people haven't accepted it yet, and they'll happilly kill their grandmother and children before admitting it.

The options right now are between accepting living in squalor, or living in a perpetual state of war. My guess is the bankers are going to lead us to war, but eventually perpetual squalor will win out.

Now, my question for you TH is, do you believe the internet, which was built by all this venture capital, is going to continue functioning in the future? My own personal belief is that anything built by venture capital is by definition not sustainable, and will necessarily degrade into oblivion as soon as the continuous venture capital stops flowing to maintain it.

My prediction is this glorious thing we call the internet is going to become more expensive in the years to come, and eventually cease to exist altogether. Sad, but most likely true.

I tend to agree that the current system is not sustainable in the long run, problem I have is how long is the long run? This year? Next year? 20 years? Who knows? There have been people proclaiming the end of the world financial system for a very long time. I know for a fact there are people on their third generation hiding out in Montana waiting for it to come.

Me, I'm not going to lose sleep over it, because if it comes in the form you say, and I cannot argue with you on that, it really won't make a lot of difference how much gold or anything you have, everyone will be fuc_ked.

TH

[flying]

http://www.japanfocus.org/_K_Takahashi___R...llar_Seignorage

[12DrinkMore]

http://www.guardian.co.uk/business/dan-rob...nancial-pyramid

But why did he stop, just as it was getting interesting?