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HI John
Thank you
for that clarification, but I still believe that the 100% reserve system is
still only a modification of the fractional reserve System, Furthermore any
reserve system must, by definition, be a modification of the fractional reserve
system.
Bill
McG
----- Original Message -----
Sent: Sunday, May 17, 2009 3:02 PM
Subject: Re: [socialcredit] 100 percent
reserve system
At 05:42 PM 16/05/2009, William
McGunnigle wrote:
HI
John
OUR financial
system depends on an ever increasing money supply to endsure ir
continues to function. The source of the extra finance is the banking
system. Unless that system is allowed to continue to provide that funding
commercial activity will cease. ALL systems that assume that banks lend out
their deposits are missing the point, and the 100% reserve system makes that
stupid assumption.
Sorry
Bill, but you have badly misinterpreted what I said in my previous response to
you and also the original article by William Hummel. There was no
statement or assumption that commercial financial institutions would lend out
their deposits. You read that interpretation into it for some
reason.
It is still a Fractional Reserve system,
No it is not. In the
proposed system, commercial banks would no longer exist. They would be
transformed into commercial on-lending institutions, which would no longer
have the power to create credit money. They would behave as true
intermediaries, and would simply on-lend existing funds (as finance companies
currently do). These commercial financial institutions would not be
depositories in the payment system, but would simply borrow and on-lend
existing money. In place of a multitude of depositories, as we have at
present, there would be a single national depository which might be called the
national bank. The national bank would NOT make loans to business or the
public.
Many existing bodies could act as agents of the national bank,
including post offices and even the new intermediaries. However it's
important to recognize that no deposits would be on-loaned in this system,
only pre-existing money borrowed by the commercial finance companies would be
on-loaned.
I will repeat what I said earlier. In any workable
payments system deposits cannot be on-loaned. A commercial
financial institution cannot act as both a depository and an intermediary,
otherwise there would be corruption and financial chaos. The two
functions need to be clearly demarcated. Which is why I said that a
commercial finance company could act as an agent of a single national
depository, but could not be a depository in its own right. I hope that
important distinction is clear enough.
John Hermann
a
system that has been discredited and mainly abandoned by most International
Banks. You must not confuse the two functions of banks deposits are
inviolate and cannot be on loaned they are safeguarded unless the depositor
specifically places them in an account that allows the bank tp speculate
with them. EXtending Bank loans at interest is the secondary banking
function where the bank acts as a security for a loan issued to people or
institutions for commercial purposes. The two purposes are distinct and
seperate, unfortunately the fractional reserve system connected the
two
to the confusion of everyone attempting to reform the monetary
system. In Theory Banks could "lend out" any anount of money without holding
any deposits at all. In reality banks could cancel all the loans it has
without any real loss because it did not have the money to start off with.
IT created those "loans " out of in air. It took me a long time to realise
the significance of that fact. Banks are never really at risk because
they don't have the money to start off with and so cannot actually become
bankrupt as a result of the loans it has issued. Only the central banking
system which regulates the amount of credit a bank can issue can stop a bank
from doing this function. I believe that under SC this issuing of credit
should be controlled by an agency outside the banking system, and that the
free slather that we are seeing at present has to be regulated far more
stringently.
Bill Mc
G
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