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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. #31
    Member Electric's Avatar
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    Anyone can benefit directly and indirectly. Usually when government can borrow more money, the can spend more of it to enhance the standards of living such as infrastructure. As a result of this mass purchase, people can capitalize on public stock and securities.

    All evolution takes place from pressures from the outside. How else do they evolve? And it's not only through legislation. We started with a full reserve system until many bankers simultaneously implemented this fractional system since they knew the benefits of having a larger supply of money.

    There has been much criticism on this. Use google to see.

  2. #32
    Senior Member Lateralus's Avatar
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    Quote Originally Posted by Electric View Post
    Anyone can benefit directly and indirectly. Usually when government can borrow more money, the can spend more of it to enhance the standards of living such as infrastructure. As a result of this mass purchase, people can capitalize on public stock and securities.
    Yeah, this is called inflation. In the process of doing this, some people gain (those who receive the money first) and some lose (those who receive the money after prices have already risen). Inflation adds no new resources to the economy. It does cause resources to be wasted, though. Instead of adding to the economy, people try to position themselves to get their hands on that free money. As a whole, society loses, despite the fact that inflation gives the illusion of temporary prosperity.

    All evolution takes place from pressures from the outside. How else do they evolve? And it's not only through legislation. We started with a full reserve system until many bankers simultaneously implemented this fractional system since they knew the benefits of having a larger supply of money.
    Bankers saw how they could benefit personally, yeah. You're not naive enough to think they started using fractional reserves in order to benefit society as a whole, are you?
    "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."

  3. #33
    Senior Member Dom's Avatar
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    Quote Originally Posted by Electric View Post
    Dunno about that. India sounds cheaper and even China.

    EDIT: It's a scary thought thinking that England will try to take over the USA. If it happens, history will repeat itself. We are waiting for you redcoats at Saratoga.
    I'd learn your history right first, this time the french would be with US!!!

  4. #34
    Senior Member Dom'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.
    Who would a governmetn disclose to?

    What power is there above government? The US steadfastly refuses to get too involved in SupraNational insititutions, so who is reporting to who? Government to its self?

  5. #35
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    Electric: since you're obviously so apologetic of the whole thing, I gather you'd be ok with individual people engaging in the same practice as banks do? After all, most banks are private companies owned by individual boardmembers.

    What would happen if I were to engage in the same practice of loaning out what I do not own myself? Say, the White House in exchange for one billion dollars? Would that be ok with you, me engaging in the same practice as banks do, the lending out of what one does not own oneself?
    FINIS

  6. #36
    Senior Member Dom's Avatar
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    Quote Originally Posted by Electric View Post
    Anyone can benefit directly and indirectly. Usually when government can borrow more money, the can spend more of it to enhance the standards of living such as infrastructure. As a result of this mass purchase, people can capitalize on public stock and securities.

    All evolution takes place from pressures from the outside. How else do they evolve? And it's not only through legislation. We started with a full reserve system until many bankers simultaneously implemented this fractional system since they knew the benefits of having a larger supply of money.

    There has been much criticism on this. Use google to see.
    Actually, is there enough raw material value left in the world for a return to full reserve banking?

    The system has always found a way to release itself from constraint. Once manufactorying became of efficent that it was very difficult to continue to make vast gains through investment, the stock market system developed to give the surplus capital something to do. While the value of a stock is pinned on the profitability of a business and its material value, it is not locked to it. Its value is dependent on its perceived worth rather than a real worth, on demand to own that stock not on the 'real' value of a concern.

    This has led to further developments, banks don't tend to break these days, because they are out of reserves or assets. An event occurs which rocks their boat, this shakes consummer confidence and so the ques build up of people want to withdraw their cash. That is what breaks banks most of the time.

    That is what causes stock market crashes, over confidence turning into a rout. All though I happily admit I'm not expert.

  7. #37
    Senior Member Dom's Avatar
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    As for it being a neccesity, no it's not, the world could get by without it. However it obviously allowed a faster pace for development, and as long as it is done carefully and not too much of a banks lending ends up on the same risk, it should be possible to avoid a fatal collaspe.

    However, some disclosure of what proportion is held in reserve and where the lent resources are invested could be beneifical with a mechanism of punishment or requirement to increase reserves or reduce risks at request of this body. Who the hell you'd trust to do that I have no clue, plus they would have the power to release information that coudl break banks and governments alike.

    ick...

    Bring back the gold standard... them were the days.

    To perpetuate the current world system I'd imagine that fractional reserve banking is currently necessary, desireable? I doubt, necessary? probably.

  8. #38
    Senior Member Lateralus's Avatar
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    Quote Originally Posted by JILebedev View Post
    Electric: since you're obviously so apologetic of the whole thing, I gather you'd be ok with individual people engaging in the same practice as banks do? After all, most banks are private companies owned by individual boardmembers.

    What would happen if I were to engage in the same practice of loaning out what I do not own myself? Say, the White House in exchange for one billion dollars? Would that be ok with you, me engaging in the same practice as banks do, the lending out of what one does not own oneself?
    You would be arrested and charged with fraud.
    "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."

  9. #39
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    Quote Originally Posted by Lateralus
    You would be arrested and charged with fraud.
    How sad. And here I thought I'd make a great banker. Oh well.
    FINIS

  10. #40
    Senior Member Lateralus's Avatar
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    Quote Originally Posted by Dom View Post
    Actually, is there enough raw material value left in the world for a return to full reserve banking?
    Yes, there always will be, because the nominal supply of money is not relevant in this respect.

    This has led to further developments, banks don't tend to break these days, because they are out of reserves or assets. An event occurs which rocks their boat, this shakes consummer confidence and so the ques build up of people want to withdraw their cash. That is what breaks banks most of the time.
    Banks don't collapse these days because rather they're allowed to simply not pay.

    That is what causes stock market crashes, over confidence turning into a rout. All though I happily admit I'm not expert.
    Overconfidence is caused by the illusions of inflation. Inflation makes it easier for unprofitable companies to make themselves appear to be profitable.
    "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."

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