Posted on 04/02/2015 7:10:35 PM PDT by aMorePerfectUnion
Who knew that the revolution would start with those radical Icelanders? It does, though. One Frosti Sigurjonsson, a lawmaker from the ruling Progress Party, issued a report today that suggests taking the power to create money away from commercial banks, and hand it to the central bank and, ultimately, Parliament.
Can’t see commercial banks in the western world be too happy with this. They must be contemplating wiping the island nation off the map. If accepted in the Iceland parliament , the plan would change the game in a very radical way. It would be successful too, because there is no bigger scourge on our economies than commercial banks creating money and then securitizing and selling off the loans they just created the money (credit) with.
Everyone, with the possible exception of Paul Krugman, understands why this is a very sound idea. Agence France Presse reports:
Iceland Looks At Ending Boom And Bust With Radical Money Plan
Iceland’s government is considering a revolutionary monetary proposal – removing the power of commercial banks to create money and handing it to the central bank. The proposal, which would be a turnaround in the history of modern finance, was part of a report written by a lawmaker from the ruling centrist Progress Party, Frosti Sigurjonsson, entitled “A better monetary system for Iceland”.
“The findings will be an important contribution to the upcoming discussion, here and elsewhere, on money creation and monetary policy,” Prime Minister Sigmundur David Gunnlaugsson said. The report, commissioned by the premier, is aimed at putting an end to a monetary system in place through a slew of financial crises, including the latest one in 2008.
According to a study by four central bankers, the country has had “over 20 instances of financial crises of different types” since 1875, with “six serious multiple financial crisis episodes occurring every 15 years on average”. Mr Sigurjonsson said the problem each time arose from ballooning credit during a strong economic cycle.
He argued the central bank was unable to contain the credit boom, allowing inflation to rise and sparking exaggerated risk-taking and speculation, the threat of bank collapse and costly state interventions. In Iceland, as in other modern market economies, the central bank controls the creation of banknotes and coins but not the creation of all money, which occurs as soon as a commercial bank offers a line of credit. The central bank can only try to influence the money supply with its monetary policy tools.
Under the so-called Sovereign Money proposal, the country’s central bank would become the only creator of money. “Crucially, the power to create money is kept separate from the power to decide how that new money is used,” Mr Sigurjonsson wrote in the proposal. “As with the state budget, the parliament will debate the government’s proposal for allocation of new money,” he wrote.
Banks would continue to manage accounts and payments, and would serve as intermediaries between savers and lenders. Mr Sigurjonsson, a businessman and economist, was one of the masterminds behind Iceland’s household debt relief programme launched in May 2014 and aimed at helping the many Icelanders whose finances were strangled by inflation-indexed mortgages signed before the 2008 financial crisis.
You understand it well enough to avoid being lied to.
Explain what you think that means.
A bank gets a $1000 deposit. How much can they loan, how much must they hold in reserve?
Yes, a different bank now has a deposit which allows them to loan a portion.
No, you can't try that. What are you, thick headed? Only banks can make up debt out of thin air - they've got a license to do that. Don't you know what fractional banking even is? It means the don't have the money they are loaning out. And it's certainly not funny, not at all.
At least learn the basics about a subject before you post.
Please clarify “creating money”. Printing?
No borrower, no debt.
Don't you know what fractional banking even is?
I do.
It means the don't have the money they are loaning out.
You are mistaken.
And it's certainly not funny, not at all.
Your ignorance is funny.
April Fools!
If "money" could not be printed without any control, what would that do? Government motors, Solyndra, infinite examples of malinvestment, endless "social programs" to keep the natives quiet while the country is gutted: It takes easy money to line the pockets of the oligarchs.
No. I know what you are and won't play your game.
I know, if you learn something, your head might pop.
Serious, I didn’t know any country allowed their bankers to print their money.
I've learned on which side your bread is buttered.
Fractional banking brought the world out of poverty? Gee, and here I thought it had something to do with the Renaissance and the Industrial Revolution and Germ Theory and the US Constitution of Natural Rights.
But yes indeed, private fiefdoms creating trillions of dollars of debt from the cost of printing paper and ink, and the denial of entire countries sovereign powers to monetize the inherent wealth and assets of the People is, indeed, "modern" banking, and it has indeed claimed responsibility for All Good Things.
And no one, anywhere, who doubts that claim lives very long.
Woodrow Wilson signed the 1913 Federal Reserve Act. A few years later he wrote: “I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men.”
Not in the least.
Your ignorance is funny.
Your ignorance is tedious.
I wish I got paid for refuting this silliness.
No, they arrest you if you attempt to be a fractional lender without a banking license.
We gave up debtor's prisons because they were too small - bankers have figured out how to turn the whole country into a debtor's prison - and make the inmates thank them for it, and praise them as saviors. It's actually quite brilliant, in a demonic way.
And BTW, if you're not posting on this thread and defending them from your own private island, then you're one of the prisoners, too. Or maybe a guard. No more than that.
http://en.wikipedia.org/wiki/Fractional-reserve_banking
It's a simplistic explanation. Let me know if it's still over your head.
Don't be humble. Your good at what you do. I'm sure you're well taken care of.
LOL, at last you speak an honest sentence.
Did it burn?
Trying to educate you doesn’t burn. It does get old.
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