moonbat1775

Celente Flashback: Great Recession Will Maintain Grip for a Generation

All because of an obsolete, crooked banking model invented before 1694.

Silver and Gold Are Money, Not Just a Store of Value

Moonbat will slip in his oar. It turns out, it seems, that an equity-backed money and banking system in which new money is issued at a rate slightly less than the growth in the value of the money backing is stable. The money appreciates at a slight rate as in the case of gold. Though initially, redemptions would be made in gold and shares in the Money Backing, the need for gold would whither away as folks realized that equity is normally stable when based on a stable money and banking system. New Money should only be issued AFTER economic growth and always at a rate less than the growth rate.

FRB issues new money BEFORE growth, which is both dishonest and presumptuous.

And now a rhyme:

<i>FR Bankers

You juggle this, you juggle that,
in your crafty banker's craft.
You loot the poor with fiat.
You know much better?
Is that a fact?

You take their wealth
and give them jobs.
Until you don't!
Sob! Sob!

Will they be ungrateful,
the folks you've robbed? </i>

The Road to Economic Hell

Smarty,
It's good to see you posting again. Your sound thinking is a breath of fresh air.

Both parties should consider:

1. Good ideas do not have to be mandated by government.

2. Bad ideas should especially not be mandated by government.

Too bad politicians can't just be pure passive parasites who left the economy alone other than skim it. Instead they must also try to "help" it.

Pounding the drum, most social and economic evils can be traced to government backed money and banking cartels.

Gold Cannot Be Inflationary, But the Dollar Sure Can

"How does that 'extra' $500,000 ever get removed from circulation? It all got spent building the house, or kept by the builder as profit and became part of the money supply at large.

Is that inflationary? How about if the loan losses amount to trillions of dollars in aggregate? " Smarty

Yes, it normally would lead to price inflation according to MV = PY or P = MV/Y. The inflation was created when the original $1,000,000 loan was made (M = M + $1,000,000). However, as you pointed out, if the net of new FRB loans - repayment of old FRB loans is negative, then M might decrease anyway (M = M - FRB loan repayments).

Yet once again for the benefit of the other folks, the fractional reserve model:

1. Create principal from nothing. This is inflation. The purchasing power of it is stolen from all dollar holders for the sake of the banks, borrowers and governments who tax the phony economic growth.
2. Lend the principal out for interest with IOUs as collateral.
3. As the loans are repaid the principal goes back to nothing. The bank pockets the interest.
4. In the event of default, the money is not destroyed. In addition, new money might be created by new FRB loans to purchase the defaulted collateral.

However, according to MV = PY, or P = MV/Y, the velocity of money (V) as well as aggregate output (Y) also determines the price level (P). Even if M increases, the price level need not rise immediately if people choose to save the new money instead of spending it. As a consequence, even a helicopter drop of new money might end up in saving accounts until such time as public sentiment changes.

Banks Not Lending Anymore? Simply Untrue

" the more I think about it the more the Biblical practice of debt Jubilee makes sense." Smarty

While working on that equity backed money and banking model, I was reminded of several Biblical parallels including zero percent loans between fellow Israelites. However, foreigners could be charged interest. Thus loans to companies wholly owned by a bank's money backing could be considered a "fellow Israelite". The zero interest rate in those cases make perfect sense since the money backing is in effect lending to itself.

Banks Not Lending Anymore? Simply Untrue

Smarty,

"The fox knows many things, but the hedgehog knows one big thing."


You comments have seemed even finer than usual. May God continue to grant you wisdom (and me too, please.) Amen

Banks Not Lending Anymore? Simply Untrue

"Could it be that the entire basis of the economy's "growth" is due to ever accelerating lending and that slowing loan growth rates are resulting in a stagnating economy?" Smarty

The basics of fractional reserve banking are:

1. Create principal from nothing.
2. loan it out for interest
3. As loans are repaid, principal goes back to nothing.

As a consequence, if the amount of new loans is less than the repayment rate of old loans deflation is occurring.

What I Would Do

Allow competing monies and banks. Allow the best ideas to prevail not some government backed banking cartel. And then we would see who understands money best, wouldn't we?

Public Pensions: Rotting from Within

"Since the Shrub (GW) took office it's become entirely blatant. " Smarty

Maybe they actually believe that businessman instead of bureaucrats can turn illegitimate uses of government power into legitimate ones. Does a different rider on the bull in a china shop make that much difference?

There's Unemployment ... And Then There's Unemployment

"The US is going to need to get its act together and figure out how to out produce foreign competition. " Smarty

That answer is simple: economic liberty including this time liberty in money and banking. Let those who depend on government not fight over a shrinking pie but allow American ingenuity to float all boats.

Gold Loses Its Shine

Some would dispute that FRB is a failure or even dishonest if competing banks and monies were allowed. I think it is obsolete but would welcome the chance to compete against it without government favoritism.

Gold Loses Its Shine

When the "modern" fails such as fiat, people will turn to the traditional such as gold. FRB is a failure. Pure fiat could work if for instance only the government could issue it and FRB was banned and/or allowed to be controlled by bank runs with no government backed banking cartel such as the Fed.

Five New Forces to Drive Gold Higher

Gold or fiat,
is there no other way?
Whatever happened
to American creativity?

Take honesty (100% reserve),
add liberty (competing banks and monies),
add creativity (lend to equity)
and for those who can see
you get 100% reserve
equity backed monies.

Target for Inflation: Getting It Right

Consider a money backed by common stocks in certain companies. As those companies prospered the money would increase in value. Now consider that if the bank that issued that money lent it to those companies it would in effect be investing in the value of its own money. So, instead of a stable money as in one backed by gold, we would now have appreciating monies backed by equity. The monies would not be limited in value or quantity since the stock in new companies could be sold to the bank to purchase new money. Click on MyWebsite for an example of such a bank.

One objection raised is that equities are too volatile to be used for backing money. However this is a result of fractional reserve banking (FRB). A stock market based on 100% reserve equity backed monies would be stable and not subject to the deflation inherent in FRB.

The New Normal

"At the end of the day, both inflation and deflation are zero sum games for society as a whole. " prudent investor

Wrong! Both are destructive components of the dishonest fractional reserve banking model. Which:

1. Creates money from nothing and loans it out for interest.
2. Destroys that money as the loans are repaid to prevent runaway inflation. The interest is not destroyed you might notice.

BOTH are destructive. Think of it as a barbed weapon that damages on the way in and on the way out. What would you expect of dishonesty? Do two wrongs make a right?

Is there an honest alternative? Yes. It turns out there is. How surprising. NOT!