joewp wrote:As I keep asking people, why do banks get that privilege and we (as individuals or government) don't?
So start-up Joe's Bank. You might consider a fancier name, like "First National Bank of Joe".joewp wrote:Whatever you call it, or whatever you think it does, the basic fact is that banks create money (as "bank credit", aka what a bank says it owes you in your account statement).
As I keep asking people, why do banks get that privilege and we (as individuals or government) don't?
Keith_McClary wrote:So start-up Joe's Bank. You might consider a fancier name, like "First National Bank of Joe".joewp wrote:Whatever you call it, or whatever you think it does, the basic fact is that banks create money (as "bank credit", aka what a bank says it owes you in your account statement).
As I keep asking people, why do banks get that privilege and we (as individuals or government) don't?
Alfred Tennyson wrote:We are not now that strength which in old days
Moved earth and heaven, that which we are, we are;
One equal temper of heroic hearts,
Made weak by time and fate, but strong in will
To strive, to seek, to find, and not to yield.
Tanada wrote:I would love too, but the banks in the USA at least require a government charter and have a stack of compliance regulations as tall as I am or taller.
To customers in the eastern city of Nanjing the interior looked like any other state-owned bank, with uniformed clerks working behind the counters, the Southern Metropolis Daily website reports. Almost 200 people deposited their cash, including a businessman who handed over 12m yuan ($1.9m; £1.3m) in 2014. But he grew suspicious when he wasn't paid the promised interest on his money, and went to the police after the bank refused to return his savings. A police investigation found that it was actually a rural cooperative, which had none of the accreditations required to operate as a bank. It had been promising interest rates of 2% per week and high interest subsidies, police say.
The fact the "bank" was able to operate for so long has left some Chinese social media users incredulous. "More than a year, it looks like the authorities have gone blind," says one user on the Weibo social network. "Fake banks, and a fake local government," comments another user. Police have arrested five people over the scam, including a woman who reportedly high-tailed it to Macau, China's famous gambling centre, with the customers' money.
Tanada wrote:Keith_McClary wrote:So start-up Joe's Bank. You might consider a fancier name, like "First National Bank of Joe".joewp wrote:Whatever you call it, or whatever you think it does, the basic fact is that banks create money (as "bank credit", aka what a bank says it owes you in your account statement).
As I keep asking people, why do banks get that privilege and we (as individuals or government) don't?
I would love too, but the banks in the USA at least require a government charter and have a stack of compliance regulations as tall as I am or taller.
evilgenius wrote:Tanada wrote:Keith_McClary wrote:So start-up Joe's Bank. You might consider a fancier name, like "First National Bank of Joe".joewp wrote:Whatever you call it, or whatever you think it does, the basic fact is that banks create money (as "bank credit", aka what a bank says it owes you in your account statement).
As I keep asking people, why do banks get that privilege and we (as individuals or government) don't?
I would love too, but the banks in the USA at least require a government charter and have a stack of compliance regulations as tall as I am or taller.
That never stopped the mob, which ought to put paid to the idea that banks function as an arm of some kind of conspiracy. They are simply the most transparent means by which banking activity can take place. You know what you are getting into with a bank, even if you shouldn't be getting into it.
I despair, what with all of the anti-banking hype so popular these days. Does no one have a memory? Can't you hear George Bush riding on the back of the 'more people own a house now' horse into his second term as president? What you sad sacks are blaming on the banks is really down to political shenanigans. The bankers largely hopped on in order to comply with the power. Of course they also engaged in the feeding frenzy when the orgy really got going, so did most of those bitter borrowers who willingly took out loans that they should have known they would never be able to pay back under any kind of return to normal housing market expectations, let alone a crash.
At the height of the Great Depression a number of leading U.S. economists advanced a proposal for monetary reform that became known as the Chicago Plan. It envisaged the separation of the monetary and credit functions of the banking system, by requiring 100% reserve backing for deposits. Irving Fisher (1936) claimed the following advantages for this plan: (1) Much better control of a major source of business cycle fluctuations, sudden increases and contractions of bank credit and of the supply of bank-created money. (2) Complete elimination of bank runs. (3) Dramatic reduction of the (net) public debt. (4) Dramatic reduction of private debt, as money creation no longer requires simultaneous debt creation. We study these claims by embedding a comprehensive and carefully calibrated model of the banking system in a DSGE model of the U.S. economy. We find support for all four of Fisher's claims. Furthermore, output gains approach 10 percent, and steady state inflation can drop to zero without posing problems for the conduct of monetary policy.
davep wrote:
It envisaged the separation of the monetary and credit functions of the banking system, by requiring 100% reserve backing for deposits.
radon1 wrote:davep wrote:
It envisaged the separation of the monetary and credit functions of the banking system, by requiring 100% reserve backing for deposits.
Why would the banks be taking deposits then?
davep wrote:radon1 wrote:davep wrote:
It envisaged the separation of the monetary and credit functions of the banking system, by requiring 100% reserve backing for deposits.
Why would the banks be taking deposits then?
Banks would become equity deposit banks (as a lot of people used to think they were).
radon1 wrote:Well, yeah... But how the banks would be making money, and how the depositors would be earning interest, if any?
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