| Subject: | Re: [socialcredit] Re: Are bank deposits loans? | | Date: | Thursday, June 21, 2007 18:40:37 (+1200) | | From: | Peter <cymric @.......nz>
|
I put John's response in quotation marks and by replies in brackets-
"It is not clear to me why you are posing this hypothetical question Peter."
(P- I thought that one of the aspects that was being queried following the
quotes from Vic re the money supply in place of the current banking system
as to what effect it would have on savings as we have known it. It seems to
have developed into two issues, one about deposits/savings and also 100%
reserve banking. I am not interested in the latter and I think it would be
as simple as you have put it. ( I believe Friedman advocated a 100% reserve
banking) )
"Firstly, it is most unlikely to occur in the present circumstances."
(P- Is that ever relevant on this thread? Nor is 100% reserve banking.)
"Secondly, it seems to me quite possible to construct a 100% reserve system
without the necessity of having a public sector entity create the
community's stock of credit money. All one requires in principle is a
mechanism which would allow banks to borrow the excess reserves they require
for their volume of business, from either the central bank or from within
the other parts of the financial system. There would of course be a major
problem to be solved - effecting the transition from a fractional reserve
system to the new system. But I see no reason in principle why the
transition could not be phased in over a suitable time span."
( P- it should be as easy as creating paper-gold under the IMF. The real
credit still belongs to the community regardless of the methodology by which
the technicians design the records)
> What is the normal status of savings/deposits where the public 'lend' if
> one likes to them. They would need to put those funds to work in the
> market to create assets greater than their liabilities.
"It seems to me that there would be little incentive, under a 100% reserve
system, for banks to offer term deposits, or indeed any deposits which
return interest. They could offer the public other products (actually
investments) which would provide a financial return, but at a much higher
risk to the customer than do savings deposits and term deposits. However
such a substitute would be unacceptable to mutual funds, pension funds,
superannuation funds, etc which require a low-risk investment vehicle to
counterbalance the high risk associated with property and shares. That's
where the government could step in with a low-risk investment product made
available to the public, e.g. infrastructure bonds."
(P- I wasnt thinking 'interest' but rather a share in the profit. I
expected the same as you have indicated as new alternatives under a social
credit system in which the current orthodox banking system is transformed.
If we move away from fractional reserve banking the nature of 'risk' should
change and the inherent inflation may become much less so that it may be
acceptable to certain 'funds'. The practice today is to mix the nature of
the 'investments' in order to achieve a slightly higher average return
inspite of some loss. )
> Also what is the issue regards 'reserves' or some other form of security.
"For government infrastructure bonds, which would make public money
available
for investing in those public works or environmental projects likely to
return a profit, the "security" would be the stability of the government
itself along with its power to raise revenue from taxation."
( P- it seems that the issue of 'reserves' is virtually limited to
fractional reserve banking. Move away and the term seems to become
'security' rather than 'reserve'.
Thanks for your replies John)
John H
----- Original Message -----
From: "John Hermann" <hermann@picknowl.com.au>
To: <socialcredit@elistas.com>
Sent: Thursday, June 21, 2007 3:36 PM
Subject: [socialcredit] Re: Are bank deposits loans?
> Peter wrote:
>> What I would like to know John H is the situation if the banks loose
>> their charters and become finance companies, ie a autonomous entity in
>> the public sector created the community credit and fractional reserve
>> banking is no more.
>
> It is not clear to me why you are posing this hypothetical question Peter.
> Firstly, it is most unlikely to occur in the present circumstances.
> Secondly, it seems to me quite possible to construct a 100% reserve system
> without the necessity of having a public sector entity create the
> community's stock of credit money. All one requires in principle is a
> mechanism which would allow banks to borrow the excess reserves they
> require for their volume of business, from either the central bank or from
> within the other parts of the financial system. There would of course be a
> major problem to be solved - effecting the transition from a fractional
> reserve system to the new system. But I see no reason in principle why the
> transition could not be phased in over a suitable time span.
>
>> What is the normal status of savings/deposits where the public 'lend' if
>> one likes to them. They would need to put those funds to work in the
>> market to create assets greater than their liabilities.
>
> It seems to me that there would be little incentive, under a 100% reserve
> system, for banks to offer term deposits, or indeed any deposits which
> return interest. They could offer the public other products (actually
> investments) which would provide a financial return, but at a much higher
> risk to the customer than do savings deposits and term deposits. However
> such a substitute would be unacceptable to mutual funds, pension funds,
> superannuation funds, etc which require a low-risk investment vehicle to
> counterbalance the high risk associated with property and shares. That's
> where the government could step in with a low-risk investment product made
> available to the public, e.g. infrastructure bonds.
>> Also what is the issue regards 'reserves' or some other form of security.
>
> For government infrastructure bonds, which would make public money
> available for investing in those public works or environmental projects
> likely to return a profit, the "security" would be the stability of the
> government itself along with its power to raise revenue from taxation.
> John H
> ---------------------------------------------------------------------
> Some introductory materials to the discussion topic of this list are at
> http://www.geocities.com/socredus/compendium
> You're subscribed to this list with the email cymric@xtra.co.nz
> For more information, visit http://www.eListas.com/list/socialcredit
>
|
Re: [socialcredit]
Reply to this message