Let's pop the bubble of Ignorance.........

Originally posted by Off_The_Street
* How can you create wealth without a fractional reserve?

Who needs wealth......Thats right people with no money, how do they get money, by working but they need to pay tax for the interest that the government borrows and where does it borrow from Thats right a central bank, if there was no fractional reserve then there would be no debt. Why do you need debt?? Debt is useless unless you are the one being owed.

* What exactly is wrong with a fractional reserve?

Fractional Reserve Banking

Fractional Reserve Banking

Let's see how the fractional reserve process works, in the absence of a central bank. I set up a Rothbard Bank, and invest $1,000 of cash (whether gold or government paper does not matter here). Then I "lend out" $10,000 to someone, either for consumer spending or to invest in his business. How can I "lend out" far more than I have? Ahh, that's the magic of the "fraction" in the fractional reserve. I simply open up a checking account of $10,000 which I am happy to lend to Mr. Jones. Why does Jones borrow from me? Well, for one thing, I can charge a lower rate of interest than savers would. I don't have to save up the money myself, but simply can counterfeit it out of thin air. (In the nineteenth century, I would have been able to issue bank notes, but the Federal Reserve now monopolizes note issues.) Since demand deposits at the Rothbard Bank function as equivalent to cash, the nation's money supply has just, by magic, increased by $10,000. The inflationary, counterfeiting process is under way.

Murray N. Rothbard (1926-1995), the founder of modern libertarianism and the dean of the Austrian School of economics, was the author of The Ethics of Liberty and For a New Liberty and many other books and articles. He was also academic vice president of the Ludwig von Mises Institute and the Center for Libertarian Studies, and the editor – with Lew Rockwell – of The Rothbard-Rockwell Report.

Need I say anymore

* What would you replace a fractional reserve banking system with -- even if you could somehow get rid of it?

A system that does not create debt for nations indefinatley. Thats all a fractional reserve system does. It does not create wealth, it destroys those who borrow. Especially if 'they' make interest rates higher.

But who control's interest rates. Yep the central banks and whats the central banks of central banks.....The B.I.S (Bank for International Settlements) Which is not a bank but takes deposits and is immune from governments and law enforcement.

How about that secrecy then.............

ORIGINALLY, the central bankers sought complete anonymity for their activities. Their headquarters were in an abandoned six-storey hotel, the Grand et Savoy Hotel Universe, with an annex above the adjacent Frey's Chocolate Shop. There purposely was no sign over the door identifying the BIS so visiting central bankers and gold dealers used Frey's, which is across the street from the railroad station, as a convenient landmark. It was in the wood-paneled rooms above the shop and the hotel that decisions were reached to devalue or defend currencies, to fix the price of gold, to regulate offshore banking, and to raise or lower short-term interest rates. And though they shaped "a new world economic order" through these deliberations (as Guido Carli, then the governor of the Italian central bank, put it), the public, even in Basel, remained almost totally unaware of the club and its activities.

In May 1977, however, the BIS gave up its anonymity, against the better judgement of some of its members, in exchange for more efficient headquarters. The new building, an eighteen-story-high circular skyscraper that rises over the medieval city like some misplaced nuclear reactor, quickly became known as the "Tower of Basel" and began attracting attention from tourists. "That was the last thing we wanted, " Dr. Fritz Leutwiler, current president of both the BIS and the Swiss National Bank, explained to me while watching currency changes flash across the Reuters screen in his office. "If it had been up to me, it never would have been built."

Hmmmm.......nothing secet there.......

peace

Just to throw some more into the mix here


www.monbiot.com...


Check out the categories (right margin) esp
# globalisation
# corporate power
# privatisation
# economic justice

Originally posted by Corinthas
Just to throw some more into the mix here

www.monbiot.com...


Check out the categories (right margin) esp
# globalisation
# corporate power
# privatisation
# economic justice

Thanks, for contrubuting.

I like this quote:

Tell people something they know already,
and they will thank you for it. Tell them
something new, and they will hate you for it.

How true this statement is.................

peace

Our friend Soficrow has found a fascinating website dedicated to Monetary Reform including a discussion board called the Peaceful Revolutionary Chat. Thanks Sofi!


I was searching something else and tripped over the XAT site. WOW. ...Always Learning and Parrhesia - you will LOVE this stuff...


XAT3 - THE HISTORY OF MONEY PART 3


The World's Alternative Trading Network and Specialized Direct Democracy (XAT4)

Just popping in to say what a great thread and I've applauded many of the contributions to it!

A thread like this is the reason I like ATS. Those Money Masters videos are great and many good links were provided.

For the record Off_The_Street I did take a few economics courses at University. Unfortunately these courses only thaught widely accepted "theory" as presently practised and did not discusse any alternatives or comparitives to what we already have. I suspect it's much the same in many areas of "higher" learning. Having lived iunder a system all of our lives it's hard to imagine the alternatives especially if they require the dismantling of the system currently in place.

BTW for an example of how the Government works in concert with the FED to mislead the people as to the true state of economic affairs and for political gains, see: Lies, Damned Lies and Statistics - Calculating the Consumer Price Index

Keep up the good work.
.

Originally posted by Off_The_Street
There's nothing wrong with being passionate about a subject, but it helps to at least understand the concepts which you are either for or against.

I will ask you the same questions, because I think we could benefit from a serious discussion here:

* How can you create wealth without a fractional reserve?
* What exactly is wrong with a fractional reserve?
* What would you replace a fractional reserve banking system with -- even if you could somehow get rid of it?

I'm in the learning phase here Off the Street and will not claim to know all the solutions, but I know when things don't seem right and there are the few who gain much much more than the many. I also know that whomever controls the money controls the world.

We have been sold out and we need to get back to simpler times. For example, in Canada, its in our constitution that we can borrow interest-free from our Bank of Canada for infrastructure and social programs, yet we don't. We borrow from private bankers at interest due to an amendment in 1913 to the British North America act, called the Bank Act, that was snuck through without referendum. If it was so good for us, why sneak it through? Same for the Federal Reserve - if it was so good for the American people why did they have to sneak it through with 3 votes (I think), 3 days before Christmas in 1913? What's up with the year 1913 anyway - seems fishy to me that both our countries were sold out in the same year. Today Canadians pay $45B in interest per year and never touch the debt except to increase it. That's a lot of money that could pay for healthcare and infrastructure. Even if we started back doing it today, it would still take years and years to pay off our debt. If we don't start though, it will never end. So we need to talk about it and share what we learn and bounce ideas off of each other.

Fractional reserve banking is a concept that must be reformed. I'm not sure how though. But knowing that it exists and how it operates and sharing that knowledge with anyone who will listen to get them started on their on research is the key that could eventually free us.

I'm trying to simplify my life so that I pay as little interest as possible, though I can't get away from it completely. I find myself less concerned with materialistic things, less concerned with eating at restaurants and paying big bucks when I can make good healthy food here at home for a lot less money. I drive less when possible, I don't turn on the a/c unless its absolutely necessary. I turn off lights when I leave a room. I don't need to be wealthy. I need a roof over my head, clothes on my back, food on my table and an open mind to learn and help others. Our combined efforts can make the difference eventually.

This probably won't help you understand any better, but if you do take an interest, there is a lot to learn about how this world has gotten to be in the mess it is in now. Those that pull the strings and benefit from all the chaos in the world need to be taken down a few pegs...and why not...there are many more of us than them. It all starts with baby steps.

I've found an interesting website of a federal party interested in monetary reform among other things. I'm so excited to have an alternative...I was thinking that in the next election I'd have to vote Green or Marijuana just to make a statement!

Take a look...

Canadian Action Party/Parti action canadienne

Committee on Monetary and Economic Reform

How can you create wealth without a fractional reserve?

The old-fashioned way. With superior products and/or services that are in worldwide demand.

What exactly is wrong with a fractional reserve?

Fractional banking, in and of itself, isn’t “wrong” or “evil”. It’s simply a poor model. Left to its own devices and merits, it would fail miserably. Would you put money into bank that only guarantees a small portion of that money is actually covered by the bank's "real" assets? I wouldn't think so. However, the power of the Federal Reserve to create money out of “nothing” is able to prevent this from happening. And it certainly isn’t without a price.

We all know it to be true that there are a finite amount of actual resources. Changing the arbitrary numerical monetary value of those resources has no impact on the actual value of said resources. What fractional banking does is continuously increase the nominative value of the resources (by decreasing the purchasing power of the dollar) while at the same time increasing the banking system’s percentage of said resources. This is done by earning money (interest) on money that was previously non-existent, and wouldn’t be in existence were it not for the banking industry creating it from “nothing”. Basically, the industry adds money to society without adding anything of intrinsic value, and takes its cut for doing so. Inflation isn’t a harmless by-product of responsible monetary policy. It’s a direct result of fractional reserve banking, and its inherent inadequacies.

You might think that the FDIC is a safeguard. It really isn’t. The reserve requirements of the FDIC are but a fraction of the reserve requirements of the commercial banks it is insuring. So really, the only “insurance” a depositor has is the ability of the Federal Reserve to put new money into circulation in order to cover the deposits. Any significant “bank run” would lead to some pretty nasty inflation.

What would you replace a fractional reserve banking system with -- even if you could somehow get rid of it?

I would replace fractional reserve banking with 100% reserve banking. More accurately, I would allow the free market to move banking to 100% reserve requirements by turning the industry loose, and removing its government-imposed safety nets.

These are my very humble opinions based on my modest background of a BS in Finance, and some independent reading. I am certainly not an expert in the arena, and would love to hear the thoughts of people far more learned.

[edit on 4-7-2005 by Misanthrope2753]

Monopoly men Repost of previous link
Great monetary documentary.

NBC Dateline - CIA drug trafficking - Contra connection Yet another reason why the US doesn't need the CIA.

[edit on 5/7/05 by Hunting Veritas]

Hunting Veritas, I asked you “How can you create wealth without a fractional reserve?”

And your response, as near as I can figure out, was “who needs wealth?”

Ooookay!

When I asked what exactly was wrong with a fractional reserve, you quoted Rothbard. Now I met the late (and great) Murray Rothbard back in the late eighties, and he is a fine man indeed. Indeed, his work in resuscitating the Austrian School makes him a hero in my book.

But Rothbard was decrying the evils of a state monopoly on banking, which makes sense. When I ask you what you would replace a fractional reserve system with, you – and everyone else I’ve talked to so far -- cop out by saying, in effect, “something else”.

Well, what is that something else?

If I own a bank and I get a thousand dollars of your money and I loan it out to someone else, if I don’t have a fractional reserve, I will not be able to loan out money to anyone else.

If I loan the money out at 6 percent and pay you, say, 4 percent, the 2% I earn on the transaction gets eaten up by my operating expenses. This means that I don’t make any money, so I’m not going to waste my time being in the bank business in the first place!

Further, if I can only loan out the same amount of money as the money I get in, how many businesses will I be able to underwrite for their expansion? How many people will be able to buy a car or a house on time?

If there is no fractional reserve, how can normal people like us get any credit?

You seem to think that a fractional reserve is bad because if everyone came in for their money at once, there wouldn’t be enough cash on hand to cover the demand.

You’re right, but so what? People don’t come in all at once to get their money out, and they haven’t since the nineteen thirties, when confidence was low. Now it’s not, what with FDIC.

The fractional reserve is like a gym selling a bazillion memberships. If everyone who bought a membership came in every morning and worked out like they claimed they’d do, the gym would be so overcrowded that everyone would complain, and the gym would probably go out of business because of customer dissatisfaction.

But the gym knows that only about a third of all the people who say they’re going to go actually do, so they’re perfectly safe in overbooking.

The banks know this too, and they have some very heavy-hitting statisticians to determine what the chances are of people coming in to get more cash than the bank has on hand. The statisticians are satisfied, and they have convinced both the government and the bank managers, that such a chance would be close enough to zero to not matter, and whadduhyuh know! They’ve been right for about 75 years!

So near as I can see, your argument against the fractional reserve fails on two counts.

First, none of you have been able to tell me what kind of system which loans money so that people can buy stuff like cars and houses (that they’d never be able to save up for) you would come up with that would actually work. I mean you duck around and say things like “a system which won’t …” but you never come out and say what you do propose to replace fractional reserve with.

Second, you aren’t really able to make a case against the fractional reserve as far as safety to the investors is concerned, because I’m not aware of any modern bank which has failed due to a run on its cash.

Come to think of it, I can’t even think of a bank which has had a run on its deposits since I saw Jimmy Stewart try to stop it in “It’s a Wonderful Life”.

Originally posted by Off_The_Street
Hunting Veritas, I asked you “How can you create wealth without a fractional reserve?”

And your response, as near as I can figure out, was “who needs wealth?”

Exactly. Who really does need wealth I guess its easier to avoid poverty and increase the wealth for already wealthy nations. Show me how to grow food and build shelters and use of advanced electronics like Zero point, solar, wind and water energies in self sufficient communities. There becomes no reason to have enormous wealth and power. In fact there is no need for banks, multi-billion fortune 500 companies or corrupt politicians and international bankers. Case closed. Therefore all you need is a medium in which people can trade. Nothing more nothing less.

When I asked what exactly was wrong with a fractional reserve, you quoted Rothbard. Now I met the late (and great) Murray Rothbard back in the late eighties, and he is a fine man indeed. Indeed, his work in resuscitating the Austrian School makes him a hero in my book.

But Rothbard was decrying the evils of a state monopoly on banking, which makes sense. When I ask you what you would replace a fractional reserve system with, you – and everyone else I’ve talked to so far -- cop out by saying, in effect, “something else”.

Well, what is that something else?

100% Gold reserve system.

We need not have controlled central banks. We not not have out rent, food, water and lights all controlled by the central banks because they fund these services, 'they' also funded communism so there really is no way out unless WE as a people are WILLING to give up the materialistic value of money and change for the greater good.

Further, if I can only loan out the same amount of money as the money I get in, how many businesses will I be able to underwrite for their expansion? How many people will be able to buy a car or a house on time?

Well if you change the system sooo (stay with me here, its waaaaay out there). You have no companies who create vast amounts of wealth and no banks to create the loans, the companies cannot be created in the first place. Oh no we have no companies and no banks.......whatever shall the human race do................We're doomed!!!!!

Yeah, give me a break. Do you know how easy it is to build a house with say 30 builders. Now say you have 100 builders although not fully qualified and pushed through the education process but have learnt how to build stable, secure structures through personal experience could you not build self sufficient communities at NO PRICE! No debt, no war, no interest. No worries.

If there is no fractional reserve, how can normal people like us get any credit?

You seem to think that a fractional reserve is bad because if everyone came in for their money at once, there wouldn’t be enough cash on hand to cover the demand.

No, I believe the Fractional reserve has quite a few bad points. 1 of which it removes freedom in which people could expand quickly as it costs too much to research and develop ideas and theories ie. Solar power.

You’re right, but so what? People don’t come in all at once to get their money out, and they haven’t since the nineteen thirties, when confidence was low. Now it’s not, what with FDIC.

So what would people do if for some unknown reason the ENTIRE banking system collapsed. No body can get money out, we all need money for everything in out lives. WE HAVE NO INDEPENDENCE!

The fractional reserve is like a gym selling a bazillion memberships. If everyone who bought a membership came in every morning and worked out like they claimed they’d do, the gym would be so overcrowded that everyone would complain, and the gym would probably go out of business because of customer dissatisfaction.

How true, but everyone wouldn't complain because the company wouldn't be stupid enough to give out more memberships than it can take. Unlike the banking system.....

But the gym knows that only about a third of all the people who say they’re going to go actually do, so they’re perfectly safe in overbooking.

Don't Airlines do this exact same thing. They overbook in case some people miss the flight or don't turn up. Well the airline has some explaining to do when everybody turns up.

The banks know this too, and they have some very heavy-hitting statisticians to determine what the chances are of people coming in to get more cash than the bank has on hand. The statisticians are satisfied, and they have convinced both the government and the bank managers, that such a chance would be close enough to zero to not matter, and whadduhyuh know! They’ve been right for about 75 years!

Fair enough, no one takes the money out at one time but what if the bank system collapsed. No one could take ANY money out. The entire nation would fall into poverty, economic stress and unable to carry out ANY monetary transactions. Again its full of dependence.

So near as I can see, your argument against the fractional reserve fails on two counts.

First, none of you have been able to tell me what kind of system which loans money so that people can buy stuff like cars and houses (that they’d never be able to save up for) you would come up with that would actually work. I mean you duck around and say things like “a system which won’t …” but you never come out and say what you do propose to replace fractional reserve with.

Basically I propose cities or smaller communities become self sufficient in water, power and food. This cannot be achieved with the central banking fractional reserve in place. AND YES IT IS 100% POSSIBLE.

Second, you aren’t really able to make a case against the fractional reserve as far as safety to the investors is concerned, because I’m not aware of any modern bank which has failed due to a run on its cash.

No case. I've seen, Millions and thousands dying on a daily basis due to extreme poverty because of nationwide debt and political corruption. ALL IN THANKS TO FRACTIONAL RESERVE BANKING! Even in nations such as the US, Canada or even the UK. Where the healthcare is in enourmous debt. Debt created by International bankers. With nothing to back the debts.

peace

[edit on 6/7/05 by Hunting Veritas]

Money, Banking and the Federal Reserve
Thomas Jefferson and Andrew Jackson understood "The Monster". But to most Americans today, Federal Reserve is just a name on the dollar bill. They have no idea of what the central bank does to the economy, or to their own economic lives; of how and why it was founded and operates; or of the sound money and banking that could end the statism, inflation, and business cycles that the Fed generates.

Dedicated to Murray N. Rothbard, steeped in American history and Austrian economics, and featuring Ron Paul, Joseph Salerno, Hans Hoppe, and Lew Rockwell, this extraordinary new film is the clearest, most compelling explanation ever offered of the Fed, and why curbing it must be our first priority.

Alan Greenspan is not, we're told, happy about this 42-minute blockbuster. Watch it, and you'll understand why. This is economics and history as they are meant to be: fascinating, informative, and motivating.

Highly informative documentary. I suggest EVERY American watches it.

Hunting veritas, I asked you what you would replace fractional reserve with, and you say, "100% Gold reserve system.".

And you reiterate that wealth is not needed!

HV. gold is a good way to eliminate inflation if the inflation is caused by the government printing reams of money which is backed by nothing ...

...but it doesn't have a thing to do with fractional reserve.

You can have fractional reserve banking whether your paper is backed by gold, the full faith and credit of the United States of America, goose feathers hidden in a pillowcase down in the basement, or a bucket of warm spit.

I don't think you understand economics at all. I suggest that, rather than waste your time here, you go out and take a basic macro course at your local community college.

The U.S. is a "British" Financial Colony

On Independence Day, it is sobering to remember that the U.S. has been a financial colony of Britain for almost 100 years. This is confirmed by the "Col. E.M. House Report", a chilling 10-page "progress report" dated June 10, 1919, which portrays the United States in exactly these terms.

The author is Col. Edward Mandell House (1858-1938), the Rothschild agent who secretly directed U.S. affairs during the Woodrow Wilson administration. Col. House was known as Wilson's friend and "alter ego." (He had not served in the military and the term "Colonel" was merely honorary.) The report is addressed to British Prime Minister David Lloyd George, whose career was made as a lawyer for the World Zionist Organization.

(...)

British bankers took over the U.S. during the Teddy Roosevelt Administration (1901-1909) when Rothschild front J.P. Morgan alone controlled 25% of American business.

"Crown" refers to the owners of the Bank of England. Their identities are an official secret. According to E.C. Knuth, the "international financial oligarchy uses the allegoric 'Crown' as its symbol of power and has its headquarter in the ancient city of London...the giant Bank of England, a privately owned institution... is not subject to regulation by the British parliament and is in effect a sovereign world power."

The "Jewish" Conspiracy is British Imperialism

Conspiracy theorists like myself believe modern history reflects a long-term conspiracy by an international financial elite to enslave humanity.

Like blind men examining an elephant, we attribute this conspiracy to Jews, Illuminati, Vatican, Jesuits, Freemasons, Black Nobility, and Bildersbergs etc.

The real villains are at the heart of our economic and cultural life. They are the dynastic families who own the Bank of England, the US Federal Reserve and associated cartels. They also control the World Bank and IMF and most of the world's Intelligence agencies. Their identity is secret but Rothschild is certainly one of them. The Bank of England was "nationalized" in 1946 but the power to create money remained in the same hands.

England is in fact a financial oligarchy run by the "Crown" which refers to the "City of London" not the Queen. The City of London is run by the Bank of England, a private corporation. The square-mile-large City is a sovereign state located in the heart of greater London. As the "Vatican of the financial world," the City is not subject to British law.

On the contrary, the bankers dictate to the British Parliament. In 1886, Andrew Carnegie wrote that, "six or seven men can plunge the nation into war without consulting Parliament at all." Vincent Vickers, a director of the Bank of England from 1910-1919 blamed the City for the wars of the world. ("Economic Tribulation" (1940) cited in Knuth, The Empire of the City, 1943, p 60)

The British Empire was an extension of bankers' financial interests. Indeed, all the non-white colonies (India, Hong Kong, Gibraltar) were "Crown Colonies." They belonged to the City and were not subject to British law although Englishmen were expected to conquer and pay for them.

Does anyone remember what I was saying about Lions being portrayed in front of banks meaning king of the jungle, well the below picture say's it all.



Peace

[edit on 6/7/05 by Hunting Veritas]

Originally posted by Off_The_Street
Hunting veritas, I asked you what you would replace fractional reserve with, and you say, "100% Gold reserve system.".

And you reiterate that wealth is not needed!

HV. gold is a good way to eliminate inflation if the inflation is caused by the government printing reams of money which is backed by nothing ...

...but it doesn't have a thing to do with fractional reserve.

Then how do the Banks get away with printing reams of money without being noticed......by using a fractional reserve system. If all the money was backed 100% by gold. The banks are on a leash and cannot print anymore money than it has in its reserves. The government does not print reams the banks do.

You can have fractional reserve banking whether your paper is backed by gold, the full faith and credit of the United States of America, goose feathers hidden in a pillowcase down in the basement, or a bucket of warm spit.

Yeah, would you like you money backed by a bucket of warm spit?

I don't think you understand economics at all. I suggest that, rather than waste your time here, you go out and take a basic macro course at your local community college.

I'm not here to discuss economics. Yes I admit when you start talking about fractional reserve it does go into the direction of economics. Economics does not explain how it allows Banks to print money backed by nothing and change interest rates.

Both the Federal Reserve and Bank of England set the Interest rates for the banking system in those countries. Those interest rates will directly affect the economy. It does not take a college course to work that out.

If I was taught from a young age how to build secure stable structures. Grow natural food and use of free energy. Not given a book and told to read and write paragraphs from it. I would not need a bank, I would not need the companies that supply my electricity etc.

It's all a money-go-round but if you took money away, EVERYTHING would still be here.