Can The Monetary System Regulate Itself? (by Lawrence White)

[godenich]

1) Balanced money supply needs to expand and contract with productivity(assets,goods&svcs­).

2) Banking is needed for exchange of currency in open market.

2) Fractional lending is future prediction of increased productivity with or without use of interest to increase money supply beyond present productivity level.

4) Interest is temporary drain on money supply that chokes productivity until it is circulated back into open market.

5) More interest and circulation-delay-time cause more choking.

[djsherin]

Fractional reserve banking allows banks to loan deposits, not money set aside specifically for loans. Loan banking is totally different than deposit banking, and fractional reserve banking is the illegitimate mixing of the 2.

[JessicaBelle81]

Good lecture. I still think fractional reserve banking is a fraud though.

According to White Fractional reserves are ok as long as the banks don't expand it too far.

I don't think it's fair for banks to be able to expand the money supply at the expense of other peoples purchasing power.

Loan banking is totally legitamate as long as the depositor understands that the total balance of the loaned money won't be available for withdrawl until it is repaid.

[latewire]

>Loan banking is totally legitamate as long as the depositor understands that the total balance of the loaned money won't be available for withdrawl until it is repaid.

That is ALWAYS the understanding... unless you're stupid.

People just don't give a shit because the FDIC distorts the market

[Americaisgreat123]

FRB only increases the price level to a new equilibrium. It never causes the inflation we think of as sustained inflation.

If you know that the banks lend out your money, how is it fraud? It is an assault on the freedom to contract to say people can't agree to this. I doubt most depositors think their money goes into their own personal vault waiting for them.

If you hate FRB, use a safety deposit box - of course, you'll need to pay the bank for that.

[blaziermissy]

@JessicaBelle81 It's amazing what people accept when they're born into it and it's all they know, myself not excluded. But I'm solution-oriented, future oriented, and advocates what is rationally best for humanity and the planet...and monetarism/the world price system is a failure and it's got to go.

[Myndir]

@JessicaBelle81 That's a pecuniary externality argument. On that basis, you could say that it's unfair for a car company to greatly increase their production of cars, since that lowers the cost of cars and thereby reduces the profit margins of other car producers.

I don't think that there is anything fraudulent about fractional reserve banking, unless people are culpably stupid. The problem is with fiat currency, where the supply of base money is determined not by the market but by the state.

[vorbeigehende]

could you post this video as response to

watch?v=fv6h5iPAxxE

?