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View Poll Results: Is fractional reserve banking a necessity?

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  • Yes

    6 46.15%
  • No

    4 30.77%
  • I don't even know how to use wikipedia

    3 23.08%
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  1. #21
    Senior Member Lateralus's Avatar
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    Quote Originally Posted by Lateralus View Post
    I'm somewhat torn on the issue. Philosophically, I dislike the idea of fractional reserve banking, but I also realize we can't just get rid of it because the worldwide economy is completely dependent on it...To answer my own question, I don't think it's a necessity. I think that we're so accustomed to the current system that it's difficult for people to imagine any other system being successful. I'd like to find a painless way out of it, but I'm afraid economic collapse is the only cure.
    I thought about this some more and I've changed my mind. It's gotta go. It adds nothing to the economy. It only serves as a mechanism to transfer wealth from one group to another.

    I'm amazed at how many 'liberals' support the current system. You would think they would be up in arms over the fact that this system does a great job of keeping the poor down.
    "We grow up thinking that beliefs are something to be proud of, but they're really nothing but opinions one refuses to reconsider. Beliefs are easy. The stronger your beliefs are, the less open you are to growth and wisdom, because "strength of belief" is only the intensity with which you resist questioning yourself. As soon as you are proud of a belief, as soon as you think it adds something to who you are, then you've made it a part of your ego."

  2. #22
    / booyalab's Avatar
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    Quote Originally Posted by Lateralus View Post
    It only serves as a mechanism to transfer wealth from one group to another.
    I'd argue against the oversimplification of that statement, but even simplified you couldn't make it sound like a bad thing.


    These are the main functions of modern banking:
    1. holding only a fraction of the reserves needed to cover deposits
    2. adding to the money supply

    For all of it's flaws, the worst bank failures in our country's history occurred after the Fed was established to fix those flaws.

    And anyway, this part is fucking obvious but the less we use cash as a society the less we should have to worry about the fractional banking worst case scenario. And even if we all thought we needed cash simultaneously at some point, the market would correct itself sooner than the government could.

    Our current banking system evolved over centuries, and it has worked for just as long. The Fed was thought up in an afternoon and was one of the biggest fuck-ups in history. How much more evidence do you need that neither you nor anyone will come up with anything better?
    I don't wanna!

  3. #23
    Senior Member Lateralus's Avatar
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    Quote Originally Posted by Veneti View Post
    Fractional banking will exist simply because any other method would simply replicate the leverage anyway. The Gold standard almost believes we have to throw away financial instruments that we now have (futures trading, consumer debt and so forth) otherwise we'd live in just a risky society as we do now.

    What should happen, is far greater disclosure of federal reserve transactions and interference in the marketplace. This way, any activity such as increasing the money supply would be recoginised by the market and they would be kept in check. At the moment they act as though they know whats best for us... NO, more like whats best for them.
    The gold 'standard', haha. That's just another form of government intervention. Our money troubles are created when government intervenes (usually with the bankers' blessing), trying to 'organize' or 'simplify' things. Government create the inequities they claim they're trying to eliminate. If the government forced everyone on to a gold standard, that would also be exploited. The root of the problem is the government monopoly on the creation of currency.
    "We grow up thinking that beliefs are something to be proud of, but they're really nothing but opinions one refuses to reconsider. Beliefs are easy. The stronger your beliefs are, the less open you are to growth and wisdom, because "strength of belief" is only the intensity with which you resist questioning yourself. As soon as you are proud of a belief, as soon as you think it adds something to who you are, then you've made it a part of your ego."

  4. #24
    Senior Member Lateralus's Avatar
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    Quote Originally Posted by booyalab View Post
    I'd argue against the oversimplification of that statement, but even simplified you couldn't make it sound like a bad thing.
    I think inflation is socially destructive.

    These are the main functions of modern banking:
    1. holding only a fraction of the reserves needed to cover deposits
    2. adding to the money supply

    For all of it's flaws, the worst bank failures in our country's history occurred after the Fed was established to fix those flaws.

    And anyway, this part is fucking obvious but the less we use cash as a society the less we should have to worry about the fractional banking worst case scenario. And even if we all thought we needed cash simultaneously at some point, the market would correct itself sooner than the government could.

    Our current banking system evolved over centuries, and it has worked for just as long. The Fed was thought up in an afternoon and was one of the biggest fuck-ups in history. How much more evidence do you need that neither you nor anyone will come up with anything better?
    The banking system has 'worked'? I'd like to see you prove that statement. All we know is that the current system has brought us to where we are today. We don't know what the outcome would have been if another system had been in place.
    "We grow up thinking that beliefs are something to be proud of, but they're really nothing but opinions one refuses to reconsider. Beliefs are easy. The stronger your beliefs are, the less open you are to growth and wisdom, because "strength of belief" is only the intensity with which you resist questioning yourself. As soon as you are proud of a belief, as soon as you think it adds something to who you are, then you've made it a part of your ego."

  5. #25
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    The only reason fractional reserve banking is still tolerated is because it's been in use for so long. It is so pervasive that no one really knows what is going on, or indeed that there might even be another way. It is self-perpetuating in that regard, a never-ending story.
    FINIS

  6. #26
    Senior Member Lateralus's Avatar
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    Quote Originally Posted by Veneti View Post
    The problem is, that no matter what system you use its open to manipulation, thats why effective and open disclosure can be the only answer. Just like companies on the stock market must be subject to rules and regulation so too should governments in their handling of the money supply and everything else.

    Isn't the handling of the finances (esp the money supply) and the running of the purse a conflict of interests? You bet.
    Good luck getting any government to agree to full disclosure. You have a better chance of forcing a corporation to do that.
    "We grow up thinking that beliefs are something to be proud of, but they're really nothing but opinions one refuses to reconsider. Beliefs are easy. The stronger your beliefs are, the less open you are to growth and wisdom, because "strength of belief" is only the intensity with which you resist questioning yourself. As soon as you are proud of a belief, as soon as you think it adds something to who you are, then you've made it a part of your ego."

  7. #27
    Senior Member Lateralus's Avatar
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    Quote Originally Posted by JILebedev View Post
    The only reason fractional reserve banking is still tolerated is because it's been in use for so long. It is so pervasive that no one really knows what is going on, or indeed that there might even be another way. It is self-perpetuating in that regard, a never-ending story.
    It's also helps that the math is complicated enough that the average person (assuming they even know we don't have a 100% reserve requirement) doesn't realize what's going on.
    "We grow up thinking that beliefs are something to be proud of, but they're really nothing but opinions one refuses to reconsider. Beliefs are easy. The stronger your beliefs are, the less open you are to growth and wisdom, because "strength of belief" is only the intensity with which you resist questioning yourself. As soon as you are proud of a belief, as soon as you think it adds something to who you are, then you've made it a part of your ego."

  8. #28
    Member Electric's Avatar
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    Quote Originally Posted by JILebedev View Post
    The only reason fractional reserve banking is still tolerated is because it's been in use for so long. It is so pervasive that no one really knows what is going on, or indeed that there might even be another way. It is self-perpetuating in that regard, a never-ending story.
    Yeah, but if we learn to control this power, it won't be a never-ending sad story. Economist do somewhat know about what is going on and I believe that is enough to separate us from ignorance.

    It is not tolerated because it has been used so long. Like booyalab said, the banking system has been evolving for centuries and this is why we accept it. Most other forms of banking have been naturally selected out. Fractional banking does give us problems, but don't forget it gives us benefits too.

  9. #29
    Senior Member Lateralus's Avatar
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    Quote Originally Posted by Electric View Post
    Most other forms of banking have been naturally selected out.
    If by naturally selected you mean forcefully removed by governments, then you are correct.
    "We grow up thinking that beliefs are something to be proud of, but they're really nothing but opinions one refuses to reconsider. Beliefs are easy. The stronger your beliefs are, the less open you are to growth and wisdom, because "strength of belief" is only the intensity with which you resist questioning yourself. As soon as you are proud of a belief, as soon as you think it adds something to who you are, then you've made it a part of your ego."

  10. #30
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    Who benefits the most from this? I think it is a question that bears merit.

    Whatever little evolution has taken place within the banking system has done so through pressure from the outside, through rigorous enforcement of the law, not by the banking system itself. The banking system is a global one, and as such not tied to any single state or supranational organisation. It is an entire system that is self-perpetuating in every sense of the word. It has effectively grown beyond control for all parties involved.

    A fully globalized world will result in total collapse upon system failure. Despite this, and the fact that it is the single most important factor in worldly affairs, criticism of fractional reserve banking is notably absent in all levels of society.

    That said, I realize this is all a rather pointless debate. This is a problem encountered in all systems when faced with the phenomenon of globalization, not just fractional reserve banking. The only stable solution would be to stop globalization itself, which in all reality will only happen after either a system collapse or when the sun falls down from the sky.
    FINIS

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