| Subject: | Re: [socialcredit] Replying to Bill Ryan | | Date: | Wednesday, July 4, 2007 07:21:55 (+1200) | | From: | Peter <cymric @.......nz>
|
If fiat money is deposited in a bank, that's notes and coins, and it is
moved to Reserves and replaced by bank credit, then that fiat money has
become the reserve of the bank credit that represents it. The Reserve Bank
is not necessary in this case.
So then the banks are syphoning off fiat money out of circulation and
replacing it with their digital credit.
Ok, that is the case for fiat money, now Joe Bloggs banks bank credit into
his savings account along with some fiat money. Now the bank credit cannot
become a reserve because only a fraction of a reserve exists somewhere in
the banking system. Does the bank apply surplus reserves that exist from
when depositers of fiat money withdraw the bank credit out of their accounts
that replaced the savings of fiat money?
In the system described I see the banks in syphoning off the fiat money out
of circulation, when the saver withdraws he withdraws bank credit not the
fiat money unless they specify fiat money. If the surplus building up in
reserves cant cover the bank credit saved then the Reserve Bank has to have
an abstract role to play.
But saving is a minor part of the money system. How does the whole system
become 100% reserved of the same standard?
In 1914 in England the 'reserve' of last resort was the House of Commons
sanctioning a new piece of paper to bail the banks out when their 100%
reserve ( gold) was found not to be a 100% when tested in practice by a
panicing public.
The lessons of history, represented in the diabolical state of the nations
of today, is that neither the financiers or the politicians have any credit
as being capable of protecting the communities in any system they can
control over and above the citizens. The authority of issue has to be
outside their control is the first requirement of a sound and just system.
Then what reserves are necessary from there will be worked out, if they are
required. Standing inside the leaning tower of Pizza and pushing against
the wall isnt going to straighten it up.
Peter
----- Original Message -----
From: "John Hermann" <hermann@picknowl.com.au>
To: <socialcredit@elistas.com>
Sent: Sunday, July 01, 2007 2:07 PM
Subject: [socialcredit] Replying to Bill Ryan
> At 03:35 AM 1/07/2007, William Ryan wrote:
>>John Hermann has repeatedly stated on this and other lists that bank
>>deposits are bailments. They are not bailments and haven't been bailments
>>for several centuries. That they are not bailments is not a matter of
>>controversy, not in fact--nor in the law. Whether they should be bailments
>>is another discussion. Those, in America, who clamor for one hundred
>>percent reserves, think that they should be bailments for deposits of
>>government created money. ...... As to bailments, I append the text from
>>an "Austrian economics" commentator, who thinks that bank deposits should
>>be bailments, but who admits that they are not bailments under the law,
>>and haven't been since the early nineteenth century, in the British
>>context. I believe the legal citations given are accurate:
>>---------------------------------------
>
> The legal profession has rarely been able to get its mind around the
> subtleties of banking.
>
> Firstly, deposits in customers' accounts are creditary by nature. Whenever
> cash is presented to a bank with a request for a deposit, upon receipt by
> the bank that cash ceases to be accounted as part of the money supply, and
> is transformed into part of the bank's reserve stock. In its place the
> bank inevitably creates a new creditary deposit in one of the customer's
> accounts. Thus the money supply remains unchanged.
>
> If such bank deposits were merely loans, then they would be susceptible to
> on-lending. And the only way in which this could be accommodated would be
> by reducing the accounts of the banks depositors accordingly. But this has
> never happened in the history of banking. If any bank tried it on, and
> such deficits was not corrected by the bank without delay, then
> undoubtedly the bank would be sued for theft. And the depositors thus
> affected would win their case.
>
> In summary, bank deposits are never on-loaned. Banks and other registered
> depositories do not need to on-lend deposits, because they possess the
> power to create new deposits - a very profitable activity.
>
>>Back to one hundred percent reserves, and what John Hermann means by them:
>>He says a system can be one hundred percent reserve if banks may borrow
>>reserves from the central bank to cover their deposits, which they create
>>through loans, one hundred percent. But the central bank is also a bank,
>>which creates credit through loans, as does every bank.
>
> Central banks advance 'reserve credit'. Commercial banks advance
> 'monetary credit'. There is an important difference - reserves are not
> part of the money supply.
>
>>Being also the clearing bank for its member banks, there is no need for it
>>to back up its credit with reserves.
>
> That is a nonsensical statement. Reserves have never been backed by other
> reserves. Nor do they need to be.
>
>> In John Hermann's system, central bank credit, created by a stroke of
>> the pen by the central bank, would back the member bank deposits, one
>> hundred percent.
>
> Correct.
>
>>The banking system as a whole, including the central bank, in John
>>Hermann's system, is very much a fractional reserve system, where loans
>>create deposits.
>
> Not so. It is very much a 100% reserve system where commercial bank loans
> create deposits. And there is no on-lending of deposits. Much thought has
> been directed to the issue of how 100% banking can be made to work. There
> are many variations, however I would refer you to the following section
> from the web site of William Hummel:
> http://wfhummel.cnchost.com/reformplan.html
>
> -- JH
>
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> ---------------------------------------------------------------------
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