Banks don’t actually need any capital base at all, they can make money up from the thin air at will (setting aside the dictates of the BIS which is biased on the side of the banks) and gift it or loan it at .01% interest to deserving business and so promote the creation of wealth. It’s the natural way of doing things. We’ve been bought up with a set of beliefs themselves entirely artificial and wholly against our interests so that an artificial economic elite may be created and sustained. This is what’s causing the the current poverty and this is what’s going to have to end. We are witnessing a global banking dynasty, its very existence unsuspected by the majority, in its death throes. I don’t know what the immediate future might hold but I’m sure of one thing; it ain’t gonna be pretty 🙁
It’s suggested that the banks have had a stern warning from the Toronto G20. I say that’s nonsense. What would really upset the banks is the re-introduction of narrow banking, and I see no signs of that, or genuine competition like encouragement of public bank ownership and I see no signs of that either. I think that FRB is outmoded, any kind of reserve is outmoded and unecessary for a public bank as business needs what it needs and an enlightened culture will understand that it can be funded by the printing press without limit so long as money is created to support sound business in appropriate amounts. Any inflation would be technical not functional, and transient. Anyway, the banks have survived the G20 with their government guarantees intact, have they not? They can still take customers’ money, put it on the financial equivalent of the 3.30 at Kempton, award themselves huge bonuses if they win and apply for the taxpayer to bail them out if they lose. Banks uber alles! This is anti-social nonsense and it needs to end.
The phrase ‘fractional reserve banking’, together with a reference to banks lending more money than they actually have, has finally appeared in a UK mainstream paper. Edmun Conway in the Telegraph recently penned the following:”Capitalist societies chose some decades ago to have a “fractional reserve banking” system – where banks lend out more cash than they have in their vaults – because this helps provide money for companies and households to invest.”
Well. that does change things, doesn’t it…. its a first so far as I know. Good stuff – the more these things are bought out into the open and properly discussed, the sooner we can end the banking oligarchy and get community banking set up and bring wealth back to the people who earn it. More please!
Here’s former financial services minister Paul Myners in the house recently, attacking the government of which he was a part;
“There is nothing progressive about a government that consistently spends more than it can raise in taxation…” he says and goes on to criticise Labour’s economic policies as “flawed economic thinking”.
Um. Would consistently spending money created out of nothing either by quantitative easing or fractional reserve banking and using it to fund business endeavours, the kind large and small that at the moment are either never getting past the conceptual stage or being starved of funds into administration, that would be regarded then by the great Lord Myners as nothing progressive? I think that for a time at least it’s exactly what this country needs, an alternative money supply to the private banks, one readily available and quite prepared to lend cheaply to foster business creation and support until businesses are bringing in enough mony (and so taxation) for the stimulus to be withdrawn or reconsidered… bring it on, I say, and the sooner the better. Such a shame there’s no discussion of this in the House…
Fractional reserve banking, where in theory the banks don’t actually have to have the money they lend you and in practice means they don’t actually have to have any at all, doesn’t just apply to money. They can do it with gold too;
Proof once again that while it might make the mattress lumpy keeping gold where you can get your fist on it in an emergency is the only way to buy gold.
This is how it all began with the original goldsmiths, so we seem to have come full circle.
Here’s something we very rarely see; open mention in a mainstream national newspaper (albeit the online version) of the true nature of banking; http://www.independent.co.uk/news/business/news/king-calls-for-radical-banking-reform-in-uk-1879931.html
Bankof England governor Mervyn King offers his views on current banking practices; saying among other things,”Whatever the pros and cons of various alternatives, the system that has the least going for it is the present system”. I have to disagree with him there. The present system works great for the people in charge of it, the banks themselves. It works, if it can be said to be working at all, really badly for the rest of us, denied as we are whenever it suits the banks access to our own money (that generated by our own government for our benefit), and thus denied the chance to build our own wealth. King goes on to suggest that he favours the ideas of little-known Laurence Kotlikoff, an academic who favours scrapping fractional reserve banking. I think this is the wrong way to go myself, I favour authourity-controlled infinite funding for genuine wealth-generating schemes, but the real significance of what’s being discussed here in virtual print is that fractional reserve banking and what it means are themselves being discussed openly. It isn’t overt, it’s not glaring headlines in a red-top, but it isn’t covert either. We need to see more and in-depth examination, dissection if you will, of fractional reserve banking in the media and the sooner the better. There’s an election coming up; how are the public to know which way to vote if they have no grasp one of the major issues of the day even exists?
New banks are being created to buy the old ‘Good Bank’ formed form the ashes of Northern Rock. A good thing? Not in my view, simply more of the same. We don’t need more private banks operating for private profits, we need genuine competition to the existing cartel not additions to it. We need banks that work on favour of the public, effectively distribution outlets for government-created money to the little guy. I note no-one seems to be interested on making loans/creating money (using fractional reserve principles) for the smaller business. They’re onlyinterested in the big fish. Where are the big fish going to be coming from if the small fish areen’t ever allowed to develop? All the proposals seem to suggest is more business as usual and frankly, that’s no good for anybody.
I notice too that Mr. Chen’s bank formerly tried operating under the moniker of ‘The Bank of Britain’ until the Bank of England reportedly objected. Hey, at least we knew who was behind the Bank of Britain!
There’s an interesting interview you can read with James Jaeger, (creator of the Fiat Empire movie, available online at http://www.fiatempire.tv/ ) over at
Some good stuff there.
Banks or their equivalent can’t be allowed to make a profit at the expense of the rest of the community. This has been recognised for thousands of years. Old-time religions are recorded as being against it. I suspect there was wisdom behind this thinking, it was better understood then that within a community you cannot have one small section effectively running the rest because then you have two societies, the morlocks and the elois, effectively. We’ve grown up in a culture where that awareness has not so much been lost sight of but comprehensively buried. We’re taught nothing of this in our so-called education but it influences every facet of our lives. Everything we buy is loaded with a huge premium that consists of nothing but profits for the banks, profits on loans consisting of money not garnered by prudence and thrift but made up out of thin air. We’ve been had, and we continue to be had.
Much in the news lately about unfair bank charges. Plenty about overdraft charges – but what about interest?
Let’s examine why we have interest on loans. If you borrow 500K from your mate, while you have it, he doesn’t have use of it. He can’t use it to further his own interest and so it isn’t in his interest to loan it to you. In order to make it in his interest, you have to offer him compensation. You not only agree to return his money after a set time, then, but with extra money on top as compensation. That extra money is, quite literally, his interest in doing the deal.
All fair enough.
When you get money from a commercial bank, though, none of this applies as you aren’t loaned anything. Instead the banks create new money in your account. This isn’t the same thing as lending you what’s theirs and so being deprived of the use of it. They aren’t deprived of this money in any way; they never had it in the first place. Why should they have any compensation then? They didn’t lose out in any way. There is no actual or potential loss.
I’m aware that it is recorded in their accounts as a debit, (or whatever), but that’s just the way banks choose to do their accounting. They can just as easily decide not to. That’s the way things developed because it suited the banks, not because it was fair or appropriate.
So where’s all the complaining about that?