| Subject: | Re: [socialcredit] monetary =?utf-8?B?InJlZm9ybSI=?= confusion | | Date: | Sunday, June 10, 2007 11:10:15 (+0930) | | From: | John Hermann <hermann @............au>
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Martin Hattersley writes:
> Yes, John, but in "100% reserve banking" we are thinking of setting up a
> system that is different from what we have at present. Bank lending would
> be similar to the operation of a lawyer's trust account. I can't see that
> your comments would apply in such a case.
>
> Martin Hattersley
Of course it all depends on what one means by "100% reserve banking". What I
mean is that the reserves needed to accommodate bank lending would no longer
come from the reserves received with deposits. They would come from another
source, and ultimately from the central bank. And since commercial banks
would no longer need to use deposits as a source of reserves, they would no
longer have an incentive to offer term deposits to the public, at least not
as we currently understand the meaning of the term. However banks might be
willing to offer other financial products providing a return, but these
would necessarily entail a much higher risk than would term deposits.
Genuinely low-risk financial products could be offered by the government if
required by pension and mutual funds, etc. (to counterbalance the higher
risk associated with shares and property investment), e.g. infrastructure
bonds.
JH
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