Full Reserve Banking

[Fake Boris]

Well, you could look up "appeal to authority fallacy," or whatever it's called. Isaac ****ing Newton loved alchemy; why are you wasting your time here instead of refining the Elixir?

I've provided arguments, moron.

[Fake Boris]

OB proposing full reserve banking is really breathtaking, it is true that the extreme loony ends of the political spectrum loop around and form a circle.

Please enlighten us with your knowledge on the topic.

[Elok]

I've provided arguments, moron.

No, you've provided claims, and a link I can't be arsed to click on, and finally an appeal to authority. The claims, AFAICT, involve banks taking people's money and doing nothing with it, and the government printing money to pay its debts, and those two somehow cancelling each other out. In short, your claims are apparently gibberish. Nor am I clicking the link; if I don't take the word of "Nobel Prize winners," I'm certainly not buying whatever heresacranktheory.com is selling.

[Fake Boris]

You can take austerity down your anus instead; a much better prospect indeed.

[Dinner]

Because you think causing all the banks to collapse would be so much better economics than austerity, eh?

You don't even have a clue what you are babbling about. Not even the most basic hint. All you have done is latched on to buzzwords and woo.

[Felch]

The gold standard is a form of full reserve banking (in that case the reserve is, of course, made up of gold).

Yeah, but OB didn't mention the gold standard, and N35t0r wasn't advocating either of those things.

[Pedotard]

The gold standard is a form of full reserve banking (in that case the reserve is, of course, made up of gold).

The gold standard just means the value of money is pegged to gold. Full reserve banking means that when you put money in your checking account all the money just sits there and the bank doesn't derive any benefit from it. For some reason people think that would work.

[Fake Boris]

The gold standard just means the value of money is pegged to gold. Full reserve banking means that when you put money in your checking account all the money just sits there and the bank doesn't derive any benefit from it. For some reason people think that would work.

The bank would charge for checking services like any business. Typically, 100% proponents also say that fractional reserves should be allowed on fixed term savings deposits.

[Fake Boris]

Because you think causing all the banks to collapse would be so much better economics than austerity, eh?

You don't even have a clue what you are babbling about. Not even the most basic hint. All you have done is latched on to buzzwords and woo.

All right. How would the banks collapse?

[Fake Boris]

The gold standard is a form of full reserve banking (in that case the reserve is, of course, made up of gold).

The gold standard is not the same as full reserve banking. It was dollars that were exchangeable for gold, not bank deposits (which are only a promise to pay a certain amount of dollars, not the dollars themselves).

[Dinner]

All right. How would the banks collapse?

All of the banks currently have loans valued at 10-20 times deposits. If you switched to full reserve banking they wouldn't be able to magically come up with that much cash. Further more their financing of operations assumes they are still making money off of those loans (via credit card, car loans, mortgages, small business loans, student loans, etc...) but that wouldn't be the case in full reserve banking. Basically, banks would have, at best 1/10 to 1/20th as much money to loan so they would have to charge much, much, much higher interest rates after a 95% reduction in their business. Hell, they'd still have to keep money on hand to pay depositors who want to withdraw money so really they could only loan out 50% of the money on hand so really we are talking 2.5% of business remaining (meaning a 97.5% reduction in the amount of credit available).

That you don't understand that a 97.5% reduction in business for banks will cause them to collapse and not be able to pay their debts really does make you clueless.

[Dinner]

Not to mention the disaster it would cause to the economy when no one e was able to get credit or financing. Your idea is beyond just clueless and into the moronic.

[Fake Boris]

All of the banks currently have loans valued at 10-20 times deposits. If you switched to full reserve banking they wouldn't be able to magically come up with that much cash.

Read the freaking OP - everything's in there. The fed creates the money and uses it to buy public debt owned by the banks. In turn, the banks are forced to hold onto that cash because their reserve requirements have increased.

Further more their financing of operations assumes they are still making money off of those loans (via credit card, car loans, mortgages, small business loans, student loans, etc...) but that wouldn't be the case in full reserve banking. Basically, banks would have, at best 1/10 to 1/20th as much money to loan so they would have to charge much, much, much higher interest rates after a 95% reduction in their business. Hell, they'd still have to keep money on hand to pay depositors who want to withdraw money so really they could only loan out 50% of the money on hand so really we are talking 2.5% of business remaining (meaning a 97.5% reduction in the amount of credit available).

a) Banks can still engage in the credit business, but only with money frozen in fixed-term savings accounts. There is still some credit
b) The State funds its operations with monetary creation, lessening the need for public credit, freeing up some for businesses and individuals
c) The fact that billions of debt have been effectively canceled by the creation of money means that rising interest (if it does happen) is less harmful

If you're concerned about the future of your country and its middle class, look up full reserve banking. It's a simple and elegant solution to the debt crisis.

[Pedotard]

The bank would charge for checking services like any business. Typically, 100% proponents also say that fractional reserves should be allowed on fixed term savings deposits.

Why would I want a bank account that costs money to use? No thanks.

[Fake Boris]

Why would I want a bank account that costs money to use? No thanks.

2/10