Pranav wrote:Fractional reserve banking looks like a printing press to folks who only count loans, but don't count the balancing deposits!
I'm afraid you've been taken in by the farce of savings backing the fractional reserve system.
The reality is nothing backs the fractional reserve system other than faith & obscurity and robbery of the productive. Deposits appear out of thin air when the banks park money (itself conjured out of "loans" from the Federal Reserve) back with the Federal Reserve through bond purchases at a higher interest rate than the borrowing rate. Its nothing more than fancy paper footwork to disguise banks getting money aka "deposts" for free with the saver being the loser.
Mostly this is directed at big banks that setup the Federal Reserve as the entire reason the Federal Reserve was setup was to perpetuate their monopoly at all costs.
The point is that I want the bank to put MY money to work, instead of just sitting on it.
The original purpose of a bank is to store the fruits of labor, not to grow anything. Theft through inflation of the worthless paper money system was devised to force people to deposit the fruits of their labor with the useless middleman industry. Maybe you are referring to it from that context.
You surely cannot be ethical in asking for growth of your money while demanding that potential losses be offloaded onto some other sucker via FDIC should the bank go under.
Interest rates are determined by the market; they depend on the rate of economic growth, amongst other things.
If its determined by the market why is a guy like Bernanke fiddling around with it?
Look up deflationary spiral.
Deflationary spiral is keynesian textbook nonsense put forward by the useless middleman industry to justify printing of money - a robbery scheme which they have set themselves up to benefit from. The free market does not need any guidance on how to set prices. That aside, intuitive sense will tell you that its silly to say that higher prices (aka lowering purchasing power) is good for anyone. If it makes no sense on a personal level, it certainly makes less sense on a national level.
The point is that whatever happened happened on the Gold standard.
Taking things out of context produces no point. The point is also that America's fastest economic growth occured under the gold standard. What is the point? Bernanke has vaporized more wealth than just about anyone in recent memory under the fiat standard. What is the point?
I didn't say get rid of it. Nationalize it. The Central Bank guarantee any rate of inflation desired. Even negative inflation i.e. deflation. Though there are advantages in a small positive rate. No 'wise men' required, it can be a transparent algorithm, as first suggested by Milton Friedman.
Sorry I don't agree with nationalising it. Politicians are corrupt and up for auction. Regulators are packed with ex-employees from companies like Goldman Sachs. Lobbies are crawling all over the place. That is the reason only honest money (gold) can be trusted by anyone doing productive work in the economy.
Now if you are part of the useless middleman industry making a living off expropriating other people's wealth through fiat money and other paper scams & schemes, then of course a return to honest money would be against your interest.
As regards the Gold standard, not only is it completely unscientific and irrational (why should production of xyz mineral in the hands of a few super-rich mine owners determine the money supply), but will also allow recreation of 1929 Great Depression conditions.
There is no such thing as "unscientific" when it comes to money. For 5000 years, almost all civilizations have independantly selected gold as money. One does not need a PhD to know why it has been regarded as having value for that long. About 50,000+ fiat currencies have existed during that time and 99.5% of them ended up as worthless toilet paper. Now calculate the statistical odds that gold is not money. Ah! I've found a scientific proof.
That aside, does it strike you as odd that banking goons from the useless middleman industry are eager to have the masses NOT use gold as money - and to instead use paper money & their fee based paper shuffling "expertise". Ever ask yourself why?
What I advocate however is not that govt enforce a gold standard as forcing people to use a certain kind of money be it fiat, gold or whatever is wrong. Rather I advocate a system of privately issued competing local currencies. That allows the market (aka individual) to choose the money and frees society from the useless middleman industry which seeks to monopolise the issuance & control of money. It would of course exist alongside gold which again the market must be free to choose as money which its currently impeded from doing. Anyway much to say on this topic and not enough time.
I'll post my favourite video soon on the Federal Reserve.