Fractional Reserve Banking

[Crumb]

I don't think that any bank fuck up has anything to do with the fractional reserve system. I think it has to do with too much high risk credit.

[yguy]

Originally Posted by 1Samuel8

OK, whyGuy (pbuh), for your sake: We are still looking at a banking system that can fuck things up to the point where the tax-payers are expected to bail them out to the tune of hundreds and hundreds of billions of dollars.

Thank you for finally admitting you don't have any idea what the hell you're talking about.

Now, fuck off with your atrocious ignorance of banking.

Hey, at least I'm aware of my ignorance. That makes me practically an Nobel laureate in economics compared to you.

[1Samuel8]

Originally Posted by Crumb

I don't think that any bank fuck up has anything to do with the fractional reserve system.

It is not.
Most of the money has no fractional reserve requirement at all!

Originally Posted by Crumb

I think it has to do with too much high risk credit.

-- which comes about as a result of the implicit government guarantees. Now, we the tax-payers are expect to bail them out.

[Crumb]

And we shouldn't, but that's really a question for another thread.

[1Samuel8]

Sorry for pulling this shit back up from under the trap but this has been bugging me for a while now. I want to re-assert that the banks make money out of nothing. The explanation is so simple: More than one person has spending power from the same money at the same time.

As soon as a loan is made, the borrower now has the ability to spend the same money that the depositor is able to spend. That is making money out of nothing.

The whole system is arithmetically set up that way. The fractional reserve ratio is just a part of the calculations of how they do it. We are just a few steps away from giving them a printing press. Banks are no longer safe-keepers of money -- they are diluters of currency.

[erimir]

We know this. As I mentioned before, that's the whole point of the bank.

What would be the purpose of using a bank rather than a safe if you didn't get interest and other such perks? And how would the bank be able to afford to give you such perks if they didn't make money somehow, such as, say, charging interest on loans?

I don't have a problem with that. It wasn't the mere existence of banking that created the problem.

[Stormlight]

Indeed. It's the incompetent, greedy, shameless bastards that sit in the banks that are the problem.

[Crumb]

Originally Posted by 1s8

Banks are no longer safe-keepers of money -- they are diluters of currency.

No longer? They've been doing this for centuries.

[Ensign Steve]

Originally Posted by Crumb

No longer? They've been doing this for centuries.

I think the difference is they used to invest our money wisely, keeping it "safe" relative to the shit they risk it on today.

[Dingfod]

Is putting money in Mason jars buried in the backyard a safe investment?

[1Samuel8]

Originally Posted by erimir

We know this. As I mentioned before, that's the whole point of the bank.

It is the dilution of the currency and inflation of the money supply that outrages me -- not the fact that they charge interest for keeping money.

Basically, they have a business model that their customers really do not understand. When their business fails, their customers are worse than shit-out-of-luck and they are left with price inflation.

[Dingfod]

I'm thinking Mason jars might be the answer.

[Stormlight]

I work in a bank and I found it always amazing what people thought about banks: it's a very serious business and they work in the best interest of their customers and they make sure that your money is safe.

This, of course, could not be further from the truth. I remember saying about 15 years ago to a friend of mine: if people would know how banks really operate and how laughably incompetent and outrageously dishonest most are, they would take their money and stick it under the mattress.

[Ensign Steve]

Originally Posted by Stormlight

... if people would know how banks really operate and how laughably incompetent and outrageously dishonest most are ...

I used to work for the government.

I imagine the same thing applies to people who work in hospitals, power plants, schools, etc. Human beings are stupid and dishonest. No getting around it.

[mickthinks]

Human beings are stupid and dishonest.


No getting around it.
Maybe we could make fewer excuses for each other when we are caught at it?

__________________
... it's just an idea

[Adam]

Originally Posted by 1Samuel8

It is the dilution of the currency and inflation of the money supply that outrages me -- not the fact that they charge interest for keeping money.

Is that what you meant to type? Banks don't charge interest for keeping money, they do the opposite.

Originally Posted by Ensign Steve

I used to work for the government.

I imagine the same thing applies to people who work in hospitals, power plants, schools, etc. Human beings are stupid and dishonest. No getting around it.

When I was younger, I had this idea in my head that the world was run by intelligent, competent, trustworthy people. After a decade or so out in the corporate world, I'm still trying to figure out where all those people are hiding. It sometimes keeps me up at night when I reflect that our newkyoolur arsenal is in the hands of the same caliber people as the assclowns who run the companies I've worked for.

[1Samuel8]

Originally Posted by Adam

Is that what you meant to type? Banks don't charge interest for keeping money, they do the opposite.

Shit, you are right!
Anyway, maybe I can apply for one of those intelligent, competent, trustworthy jobs in the corporate world!