studentbob Posted July 3, 2012 Share Posted July 3, 2012 I think you are inventing problems where there need not be any. Banks would be backed by a central bank, and ultimetely the government. People and companies would save and borrow as they do now. There's no limit to the number of banks but they will all work to the same rules and charge the same for credit. Once they've lent 75% of their reserves they stop lending until sufficient previous loans have been repayed. A savings cap may be frowned upon by those who wish to get rich quick, but the rewards for those who work hard and achieve a higher salary than most will still be able to retire with an massive amount. I meant companies will have the same status regarding liabilities, and all would be privately owned. The good ones will succeed and the bad ones will fail, as they do now. Link to comment Share on other sites More sharing options...
MrSmith Posted July 3, 2012 Share Posted July 3, 2012 I think you are inventing problems where there need not be any. Banks would be backed by a central bank, and ultimetely the government. People and companies would save and borrow as they do now. There's no limit to the number of banks but they will all work to the same rules and charge the same for credit. Once they've lent 75% of their reserves they stop lending until sufficient previous loans have been repayed. A savings cap may be frowned upon by those who wish to get rich quick, but the rewards for those who work hard and achieve a higher salary than most will still be able to retire with an massive amount. I meant companies will have the same status regarding liabilities, and all would be privately owned. The good ones will succeed and the bad ones will fail, as they do now. How would you prevent people investing or saving in foreign countries? What would happen if I wanted to borrow money for a house but the banks can’t because they’ve already leant 75% of their money out? Link to comment Share on other sites More sharing options...
Cyclone Posted July 3, 2012 Share Posted July 3, 2012 I think you are inventing problems where there need not be any. Banks would be backed by a central bank, and ultimetely the government. That's effectively the system right now. People and companies would save and borrow as they do now.No they won't, one of the earliest things you said was that savings would be limited. There's no limit to the number of banks but they will all work to the same rules and charge the same for credit. Making it pointless that there is more than one since they can't compete to offer a cheaper loan or better savings rate.Once they've lent 75% of their reserves they stop lending until sufficient previous loans have been repayed. An interesting take on fractional reserve banking, one where the fraction is 1.33 A savings cap may be frowned upon by those who wish to get rich quick Or who don't want to pay interest but would rather save to afford something first. but the rewards for those who work hard and achieve a higher salary than most will still be able to retire with an massive amount. How does the savings cap help to stop anyone getting rich but still allow people to retire rich? I meant companies will have the same status regarding liabilities, and all would be privately owned. The good ones will succeed and the bad ones will fail, as they do now. So there will be no floated companies (the PLCs, public limited companies)? Link to comment Share on other sites More sharing options...
studentbob Posted July 3, 2012 Share Posted July 3, 2012 Nobody's being forced into debt, most people's biggest purchase will be thir home, and most of them take a loan to buy it. The point is to stop the concentration of wealth in the hands of a few - it's quite clear - with the aim of a more sustainable economy. Anyone can stuff banknotes wherever they want, but they will become useless as the notes will be replaced every five years. So you either save it (up to the set amount) spend it or lose it. Profitable companies would expand thus employing more people and increasing their value - like they do now. If someone wants to invest in a good business then they go to the bank. If the bank see it as a good investment they will lend from their business reserves. There's no cap on savings for business accounts, they can still buy or sell other companies if they want, although the opportunity for making a quick profit would be not as great, meaning that investment would based on sound business reasons rather than short term financial gain. Link to comment Share on other sites More sharing options...
MrSmith Posted July 3, 2012 Share Posted July 3, 2012 [ Profitable companies would expand thus employing more people and increasing their value - like they do now. If someone wants to invest in a good business then they go to the bank. If the bank see it as a good investment they will lend from their business reserves. There's no cap on savings for business accounts, they can still buy or sell other companies if they want, although the opportunity for making a quick profit would be not as great, meaning that investment would based on sound business reasons rather than short term financial gain. Why would a business expand, once the owner reaches the amount he can earn and save each year’s wouldn’t they just stop expanding? Link to comment Share on other sites More sharing options...
Sid Umpley Posted July 3, 2012 Share Posted July 3, 2012 Isn't recession just when people aren't spending their money, they're hoarding it in bank accounts? nope, recession for me is that my business has seen its takings drop by over 50% i am not hoarding anything! Link to comment Share on other sites More sharing options...
Cyclone Posted July 3, 2012 Share Posted July 3, 2012 Nobody's being forced into debt, most people's biggest purchase will be thir home, and most of them take a loan to buy it. You've declared that they won't be allowed to save enough to buy it any other way. That is forcing the few who might save enough into debt. The point is to stop the concentration of wealth in the hands of a few - it's quite clear - with the aim of a more sustainable economy. And the ridiculously low value of 25k/annum was supposed to target the super rich was it, instead of merely the middle class? Anyone can stuff banknotes wherever they want, but they will become useless as the notes will be replaced every five years. So you either save it (up to the set amount) spend it or lose it. Profitable companies would expand thus employing more people and increasing their value - like they do now. No they wouldn't, they wouldn't exist at all as there is no incentive for anyone to take a risk by starting the company. If someone wants to invest in a good business then they go to the bank. If the bank see it as a good investment they will lend from their business reserves. So investment can only come from bank loans? You're creating more and more dependency on the banks. There's no cap on savings for business accounts, they can still buy or sell other companies if they want, although the opportunity for making a quick profit would be not as great, meaning that investment would based on sound business reasons rather than short term financial gain. Without the potential for personal gain anyone with a good idea for a company would start it elsewhere, somewhere where they can gain a personal benefit from their risk and hard work. Link to comment Share on other sites More sharing options...
anywebsite Posted July 3, 2012 Share Posted July 3, 2012 An interesting take on fractional reserve banking, one where the fraction is 1.33 Maybe fractional reserve banking would work better than the current system, although that fraction looks very high. Link to comment Share on other sites More sharing options...
Cyclone Posted July 4, 2012 Share Posted July 4, 2012 Maybe fractional reserve banking would work better than the current system, although that fraction looks very high. Fractional reserve banking is the current system. The fraction is currently 6/100 (I think, I'd have to google to check). Which is much lower than 133/100 as is being suggested. Link to comment Share on other sites More sharing options...
Vague_Boy Posted July 4, 2012 Share Posted July 4, 2012 But it looks like we're in deeper than the government are trying to let on http://www.dailymail.co.uk/news/article-2165933/Double-dip-recession-deeper-feared-new-figures-GDP-drop.html We are not in a recession. We're in a depression. Those "green shoots of recovery" in 2009 seem a long way away now. Things haven't gotten better and they won't. Link to comment Share on other sites More sharing options...
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