Thank you for providing an easier swallow introduction to the topic. those video give a good overview of the positive and negatives of our current system. indeed it makes the same point I make here, that we need to scrutinize out current system. He even brings up "A Program For Monetary Reform". which was a majority supported proposal for a transition to Full reserve banking back in 1939.
moving on,
you keep talking about "my solution" as if I've presented one, I haven't. I'm only asking people think on and talk about these issues with me you;ll notice the first question I asked was if another solution was even needed!
Quote from: Ryex on October 07, 2015, 09:45:07 pm
1) There ARE alternative to Fractional Reserve Banking, should they be explored?
But now that we're talking about things even if we're being complacently dismissive of other points of view let us continue.
QuoteA central bank is necessary no matter if there is a fractional reserve system or a full reserve system, with the same purpose.
but what purpose does a central bank serve? lets enumerate the possible purposes:
1) issue money.
do you really need to be a bank to do this? historically money was issued by a sovern power but this was less because only they had the right to issue the currency and more because they had the pull to standardize the units of measure making commerce easier. it was only recently (historically speaking) we moved away from a solid store of value in out money. lets play devils advocate. Crypto-currencies are slowly making a name fore themselves, even banks are jumping on the tech stating an interest in blockchain tech to provide a secure transaction log of money and stock transfers internationally. The idea of a decentralized issue of a common currency wasn't feasible until recently but would it's use not make the purpose of a bank to issue currency irrelevant?
2) Loan money.
Capitalism works best if there are large stocks of capital available for people to use to invest in projects and build. Clearly there is some need for loaning money, indeed fractional reserve banking works quite well for this goal, and as long as the banks don't over leverage themselves on high risk assets it's effective and stable,
Personally I think it's a problem to make the method of issuing money the same method as loaning money but that's not reverent to this particular topic. suffice it to say that some entity like a bank needs to exist in a capitalistic society to loan money.
3) take deposit from customers to keep their money safe.
regardless of what banks do now or even what early banks expanded to do the FIRST purpose of the first banks was to protect their customers deposits. Because they had these deposits they could then leverage the capital they held to make loans. which initially was a secondary purpose. Early banks rarely leverage themselves over 10x because it was risky and dangerous, and if they were to fail law at the time held the bank owners AND it's investors liable for all of their customers deposits. if a bank went under because of bad loans or over levering the customers got paid and the owners/investors wen't bankrupt. Fast forward to now and it's the other way around it not uncommon for a bank to leverage itself over 500x, the owners are only partially liable and investors are exempt from liability. of course the deposit of customers at a given bank are suposibly insured but not from the bankers pockets but from the government's.
putting aside a defunct universal need to secure a deposit in this day in age and the founding reason for the existing of banking is shaken to it's core. if a bank has no assets, and doesn't issue it's own money, then how is it supposed to loan out money it's most useful function?
again, playing devil's advocate. Should we not at least for a moment question the very need for any bank at all? if we conclude that yes we absolutely need banking as it exists to day because no other options could provide it's functions/make them irlelavent then so be it. but if we don't question first then we are failing ourselves.
QuoteThe federal reserve is subject to the laws made by Congress, and is overseen by Congressional committee. The board of governors (like board of directors, except they don't have any ownership), are appointed by the government and confirmed by Congress. So while the federal reserve is a separate entity, it is subject to plenty of oversight from our government.
I think you've been misled. here's an exert from the transcript of the documentary
Quote from: Andrew Gavin MarshallFederal Reserve Board in Washington appointed by the President. That's the only part of this system that is directly dependent on the government for input that's the "federal" part: that the government-the president specifically-gets to choose a few select governors. The twelve regional banks-the most influential of which is the Federal Reserve Bank of New York which is essentially based in Wall Street to represent Wall Street-is a representative of the major Wall Street banks who own shares in the private, not federal, but private Federal Reserve Bank of New York. All of the other regional banks are also private banks. They vary according to how much influence they wield but the Kansas City fed is influential, the St. Louis fed, the Dallas fed, but the New York Fed is really the center of this system and precisely because it represents the Wall Street banks who appoint the leadership of the New York fed.
So the New York fed has a lot of public power, but no public accountability or oversight. It does not answer to Congress the way that the chairman of the Federal Reserve Board of Governors does and even the chairman of the Federal Reserve board who is appointed by the President, does not answer to the President, does not answer to Congress. He goes to Congress to testify but the policy that they set is independent. So they have no input from the government. The government can't tell them what to do legally speaking, and of course they don't.
The Federal Reserve is governed by a committee of chair members appointed form each of the branch Fedral Reserve Banks across the country. The Federal Reserve Board of Governors is only part of that comity. the majority of the committee consists of the heads of the twelve Federal Reserve banks. And even then that Federal Reserve Board of Governors does not answer directly to anyone in government it is it's own power unto itself. A new law would have to be passed be ore any member of that Federal Reserve Board of Governors could be ordered to do anything by congress or the president.
That hardly sound like "plenty of oversight" to me but if you believe it's sufficient your welcome to tell me why and we can have a debate about how much direct control and oversight the FED should have like I intended form the beginning.
QuoteI know that they will make persuasive arguments based on incomplete information and flawed logic. While you derived your perspective from the video, that does not make it relevant to the discussion I am having with you.
good to know we're staring the straw-man arguments early. And again, what conversation are you having with me, so far all you've done is give a superficial summery of items only partially relevant to the discussion I want to broach and then dismiss the entire topic out of hand as if it's a settled manner. I'm not saying your ignorant or stupid, I'm asking for intelligent conversion, I want people thinking. If you don't want to think that your decision, please refrain from distracting from the discussion. Also, please don't talk down to me like your communicating some higher truth that I in turn am failing to comprehend. That's what your tone seems to convey.
Quoteagree that the federal reserve has made some bad decisions at great economic cost, but it has also made some good decisions as well, and many more decisions that are sort of in the gray area that are hard to judge
I'm interested to know what these good decisions are, no really there is a sad lake of any published positive commentary of their actions. I want to know, that whats this is all about. I'll admit this "quantitative easing" farce had done an good job of appearing to work while prolonging the inevitable but the GDI (Gross Domestic Income, the GDP's flip side) has been flat for over half a year which means no growth what so ever for over half a year, that's BAD (as in, 2008 is here again bad). QE doesn't and was never designed to stimulate the economy it only lightens the risk load of banks, they get to sell off risky debt at interest.
Quotebut when the bubbles collapse, it is the banks that they collapse on, and they suffer huge losses
again, how is making record profits through the 2008 financial crisis "huge losses"? it hurt the little guys banks and credit union sure. but the bank that actually had the capital necessary to manipulate the market like that came out with a handsome profit. Bad actors ruin it for everyone.
QuoteAh yes, the "too big to fail" banks. This was the big issue that became widely publicized, and caused everyone to hate banks for different reasons. Some think they should have let the banks fail, take the economic hit, and then rebuild. Some think the should have punished the banks greed by going after their profits. Some called for increased regulation to prevent the situation from occurring in the first place. The point of the bailout was to stop banks from losing too much money, with the idea that it would mitigate some of the effects of the recession. Did it achieve its purpose? Yes it did. Was there a better decision? We can argue that out, but there is no clear cut answer.
Your right, we could sit for years asking "what if" question about a better way to have handled 2008, it's pointless. but we dam well better be sure we never HAVE to ask out selves this question again. the part I have a problem with is that people seem to think the banks actually had losses that needed bailing out. Of the "too big to fall" banks all of them had "record profits" that year AFTER the bailout, as in, higher than any previous year. if they were really "bailed out" from a critical situation where they would of gone under then the only profit they should have had after payroll should be equal to inflation that year. Now to be fair of the 30 trillion that went to bail out banks only 4 trillion went to these "too big to fail" banks, that only 13%. 13% sounds a number that would pop up in an embezzlement case. No matter what the final answer is we can't be bailing out the banks every time they make a bad decision. And if that's the case why are the "to big to fail" banks bigger now (as in hold a larger share of the market, not just richer) then they were before 2008? "Why are we letting ourselves be held hostage?" that's the question the documentary asks. I'm asking "are we being held hostage?" as a starting point.
We should not be leaving this kind of thinking solely to the economists, politicians, an lobbyists. that would be a great disservice to both ourselves and our communities.