epiphany Posted September 17, 2010 Share Posted September 17, 2010 Money creation could almost be considered an occult or esoteric practise. People assume banks lend out their depositors' money, limited by the cash reserves they hold. This is not the case. They in fact lend many times more than that, much of it being accounted for as new money. This legally privileged, inflationary practise is known as fractional reserve lending and many reformists, both "left" and "right", blame the very mechanics of the banking system for encouraging irresponsible, unsustainable lending. In other words, any crisis was just an accident waiting to happen. Most of us know, in the back of our minds at least, that we have been living beyond our means. The climate of easy credit has fuelled the most indulgent excesses of the recent decade's boom. It is fractional reserve banking that has allowed the bubble to inflate beyond all measure in the first place. Even with stricter reserve requirements, the systemic problem remains. It's all very well taxing those evil bankers and giving them a good spanking for their sins, but this really is a screaming case of "what did you expect?!?!" If you give a child some poo and a fan, prepare for a **** storm... The below bill really is a step in the right direction, and quite momentous (despite the sore lack of attendance by MPs), although to fully appreciate its implication, we must first understand how money is created in modern economies, and the compound interest created with it. http://www.positivemoney.org.uk/2010/09/douglas-carswell-mp-introduces-bill-to-stop-fractional-reserve-banking/ Link to comment Share on other sites More sharing options...
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