Money As Debt (4 of 5)

everything starts from the classroom, schools devide children so half of them go into crime and the other half go on to do good things, this keeps a balance in society, it also keeps people in work such as police because if there was no crime there would be no need for police , but hey, rules are there to be broken.

This video's explanation of the fractional reserve banking system is correct, but It's suggestions on how to fix the problem are clearly flawed.

What are your suggestions on how to fix the problem?

These videos already give the answer. Fractional reserve banking is unsustainable for individual banks unless they have a 'lender of last resort', which can only be the government since no sane person would insure fractional reserve bank deposits with their own money.

Interest itself is not really the problem. And certainly zero interest loans are not a pratical solution. (For more info i recommend irwin schiff's how an economy grows and why it doesn't)

Apparently Judaism didn't ban usary. Which explains were the classic Jewish stereotype comes from.

In the end, if you agree with me, great, if not, oh well. I can't seem to tell. In the end, ventures in a free market system detail an element of risk involved. Giving heavy-interest loans with a guaranteed return on your principle (through collateral) is impossible to sustain for the very reason that the lack of risk means guaranteed profits, which in turn, and over time, guarantee who will end up with all the money.

The idea is that you profit from work and a service.

Any profit-making venture simply redistributes the wealth to those who successfully predict the needs and wants of the populace.

The difference between that and the banks method is that bank has guaranteed principle and near-guaranteed interest on a little-to-no risk investment. The structure of profit-making ventures and wealth redistribution disappear when institutions gain guaranteed returns on a risk-less investment.

I see the errors in your example...

Money lending is just an instance of "making a profit out of doing something people want". Profit-making in general is stable because the profits a person makes get spent on things - the money gets put back into the economy, whether it was made by creating loans or sandwiches.

In principle there's no reason why a society couldn't remain in equilibrium indefinitely, even with money being lent at interest.

To be fair, Grignon does at least acknowledge this in "Money as Debt II".

In regards to the equilibrium that Grignon acknowledges in Money as Debt 2, there is no room for a guaranteed rate of expansion or inflation or profits or whatever, only an equilibrium of success and failure. The successful businesses would expand and those that aren't successful would fail, roughly balancing out. Of course, expansion is necessary with a growing labour market, so the money system would have to expand; the way to do that is not, however, through the bank's methods.