-—”fractional reserve” banking has been around since the Babylonians, IIRC-—
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Ran across this article this morning that may be relevant to this thread and to those who are seeking to maintain freedom in the face of the economic encroachments by the entrenched Money Guys who would like to fully and finally take away our freedoms.
How strange to me that even Yahoo would post this article which actually smacks of some common sense.
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I think I read a history of the Panic of 1837 and there was fierce opposition to letting banks lend 6 times their deposits. I think 4 or 5 times was the norm at the time.
How does it work?
Thank you, I appreciate the effort that went into posting this information.
A publication from the Chicago Federal Reserve titled "Modern Money Mechanics" confirms and amplifies what you presented.
A short video you may find informative references Modern Money Mechanics and attempts to explain money creation. You may have to view the video several times before it sinks in and even then, you will find yourself hard pressed to believe that a nation could be this gullible.
What is fractional-reserve banking? Its the system America adopted in 1913 through the passage of the Federal Reserve Act.No, but you...you... you're thinking of this place all wrong. As if I had the money back in a safe. The, the money's not here.
Well, your money's in Joe's house... that's right next to yours. And in the Kennedy House, and Mrs. Macklin's house, and, and a hundred others. Why, you're lending them the money to build, and then, they're going to pay it back to you as best they can. Now what are you going to do? Foreclose on them?
It's a lot older than that. Any bank which lends money is participating in fractional reserve banking.
The second step is to increase bank reserve requirements to 100%, as banks should never again be allowed to loan out more money than actually on deposit.
Actually under 100% reserve requirements banks could never lend any money. If I deposit $1000, then $1000 would have to be sitting in the branch's vault or maybe the main vault for the chain of banks. If they even lend out a dollar of it, then they will only have $999 cash to back up my $1000 deposit - thus have a fractional reserve.
I'm of two minds about 100% reserve banking. I lean towards it, but I can sympathize with the argument that fractional-reserve banking should be permitted as long as there is full disclosure to the customer. Let the market decide.
Actually, a system where both options are available would be ideal. Government guarantees for deposits should end, of course (they just print the FDIC money anyway).
People should realize, too, that full-reserve banking would mean that a bank's customers would pay the bank to hold their money. Come to think of it, that's not so different from what we have now.