Why has Capitalism failed to produce optimal value everywhere?

[giblets]

1. Less deposits wouldn't mean a lower reserve to deposit ratio. Reserve to deposit ratio = (quantity of deserves/quantity of deposits)
2. Paying off interest doesn't necessarily mean there are less deposits. I have less deposited money, but someone else receives the money and either deposits it or spends it.

[giblets]

It's true that when a bank's loan gets repaid, it could decide not to make another loan and just hold onto its reserves and have a higher reserve to deposit ratio. But that's not how banks make money. They would only do this if they don't have anything to invest in. That's a Keynesian situation which has nothing to do with whether fractional reserve banking exists or not.

[Elok]

Elok is a nerd.

Gribbler is apparently an AAHZ wannabe, and I can't think of a bigger insult than that.

[giblets]

You're an AAHZ wannabe. You wandered into a thread without having read any of it and started attention whoring.

[Elok]

If that's your definition of AAHZ-wannabe, half this site are his groupies.

EDIT: With that said, I guess it's a fair enough analysis.

[Elok]

Anyway, the OP question is nonsensical. All I had to say.

[pchang]

You can tell Fake Boris is an expert on money because he has so much of it.

[Elok]

Economics professors are typically poorer than NBA players.

[pchang]

Economics professors are typically poorer than NBA players.

Untrue if you include retired NBA players. But also proof that most economics professors don't know squat about money either.

[giblets]

I'm sure lots of sexologists have trouble getting laid.

[Kidlicious]

While I have not read this thread, I'd just like to express my unreserved confidence that every poster in it has been working from the same clearly-stated and agreed-upon definition for "capitalism," knows what exactly "optimal value" would be, and has reasons for believing it has or has not been reached.

You don't have any idea about what you're talking about.

[Kidlicious]

A collapse in the money supply associated with fractional reserve banking was a major problem in the early 1930s but that problem was solved a long time ago.

Please just shut up dude. You make my head hurt.

[giblets]

Not as much as the OP made people's heads hurt, of course.

[Aeson]

The fundamental aspect is debt-currency. All currency is issued as debt, however the interest on the debt is not issued with the debt itself. This is a significant and purely artificial factor in economic cycles. There are others, but eliminating this imperfection would do a great deal to improve everyone's lot in life.

People and natural events cause boom-bust cycles, because we're social creatures who take into account evaluations by others in our own evaluations, and we are physically tied to this world. Until those things change, trends will continue and often accelerate until they become perceived as unsustainable, at which point a correction will occur. Because of that, shifts in resource availability (or predictions in availability) will cause swings in evaluations.

These swings happened before we had fiat currency or fractional banking. Some of these swings were more dramatic than those we've seen under the current system. So your point doesn't have anything tangible to back it up.

What we can say for sure:

a) fractional reserve banking has demonstrably not stopped us from reaching our current level of wealth creation.

b) all the remaining important problems in the world are biological or due to our choices as to how to distribute wealth. (Technically, many of the biological problems are also about how to distribute wealth.) Wealth creation and maintenance is not a limiting factor. (A very recent development historically speaking.)

c) full reserve banking does nothing to alter the will of people, and has not demonstrated an ability to maintain our current level of wealth creation. It is rolling the dice at best for no actual gain.

d) any action that could be taken under full reserve banking to address wealth distribution can be taken under fractional reserve banking to address wealth distribution.

That leaves us with full reserve banking bringing nothing of use to the table except a lot of risk. (I can say this without even considering my own take on the wealth creation effects of full reserve banking. Which are of course negative.)

[Aeson]

3) to prevent deflation, either (a) new loans have to be issued (b) the bank's profits have to be socially distributed. B is not the case, therefore A is the case until a credit bubble busts.

B demonstrably happens with less political capital than a change to full reserve banking requires. B also has to happen under full reserve banking to address the problems that remain in the world. So any sane distribution of political capital should be towards B, not towards implementing full reserve banking.