The Problem with the Banking System: How Money is Made / Created

[Longcol]

Only that? Really? That might be how a co-op is run (i.e. enough profit just to cover the running costs) but private banks have external shareholders which is what most of their profit margin covers.

 

One key benefit of more social control over banking is that it CAN help reduce the direct tax burden on individuals by funding social projects.

 

That was an illustration that by no means all interest is "siphoned off" and is in fact returned to the economy.

 

External shareholders will often be pensions and insurance companies and central governments.

 

Social products are for the government to pay for from taxation as there would be no return (unless a form of loan).

[syne]

That lending illustrated above only works when the £90, £85, £80 etc are repaid. You are circulating money not creating it.

 

Have a read of this;

 

http://www.ied.info/articles/an-honest-bank-is-so-simple-you-can-run-it/logical-reasons-proving-private-banks-do-not-create-money

 

yes and no

http://www.positivemoney.org.uk/2011/04/monetary-reform-myths-1-10/

 

people argue the speed of transactions is all that's changed.

But money/debt is being created into existence simply proven by the huge debt that we are apparently in outweighs estimates for world gdp.

 

If you can only lend what you have then double entry means they should never be so far out of kilter.

[Phanerothyme]

No, it's easier than that. Companies make profit, individuals are paid for work.

They use this profit or pay to pay down their debts.

Fractional reserve banking allows a certain amount of money to be invented (the M3 money supply isn't it?), it's effectively a loan against future profit or earning, that's where the money 'really' comes from, borrowed from your future.

A certain amount?

 

What about virtually all of it?

[Longcol]

yes and no

http://www.positivemoney.org.uk/2011/04/monetary-reform-myths-1-10/

 

people argue the speed of transactions is all that's changed.

But money/debt is being created into existence simply proven by the huge debt that we are apparently in outweighs estimates for world gdp.

 

If you can only lend what you have then double entry means they should never be so far out of kilter.

i

 

Money is being created by central banks not private banks.

 

Private banks are in trouble because of "toxic debts", governments because they have been spending more than they recieve in tax revenue.

[chem1st]

 

Here is a link to an interesting interest-free bank in Sweden called JAK Members bank.

 

(English translation).

[epiphany]

That was an illustration that by no means all interest is "siphoned off" and is in fact returned to the economy.

 

Granted, not all, but enough to make it unnecessarily parasitic.

 

External shareholders will often be pensions and insurance companies and central governments.

 

Of course, but there is still a large chunk of retained profit, which in theory the banks should re-lend, but as we have learned that doesn't always happen.

 

Social products are for the government to pay for from taxation as there would be no return (unless a form of loan).

 

Again, that's a statist position. I would like to see more social projects funded from more direct-democratic institutions - not central government elites who may be somewhat disconnected from local communities.

[epiphany]

 

Here is a link to an interesting interest-free bank in Sweden called JAK Members bank.

 

(English translation).

 

There's also the state run Bank of North Dakota which has proven a very successful model (no crawling with begging bowl in hand to Washington DC) and has led to many bills being created to consider public banks across the US.

[Longcol]

 

Here is a link to an interesting interest-free bank in Sweden called JAK Members bank.

 

(English translation).

 

So effectively they are replacing interest with a fee - similar to Islamic banks.

 

Something has to pay for the running costs of the bank. And what if someone doesn't repay their loan?

[Cyclone]

A certain amount?

 

What about virtually all of it?

 

it is supposed to be limited though.

[Cyclone]

So what happens when they print a shed load of inflation in a few hours?

It slightly devalues the currency.

 

What about the million youth unemployed (and rising)?

What about them, I'm not sure what you're asking

 

What about the monopoly on money?

The one held by the country? That seems quite reasonable, if anyone could produce their own currency it would make life difficult.

 

What about the monopoly on land and the inverse farm size productivity relationship?

You really must learn what monopoly means.

 

Our economy must be perfectly fine in your eyes.

No, it's suffering a little at the moment, mainly caused by excessive lending to people who couldn't afford it and the subsequent bubble and crash that this created. It's not all down to fractional reserve banking or a land monopoly though.

 

Tell me cyclone, where did you get your tinted glasses, is the government running a subsidy program for them?

I don't think I'm viewing anything through rose tinted glasses, I'm just not looking to discredit the entire system and blame it for every little hiccup in the way you are.