How can we reduce a global crisis like the one we are having
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How can we reduce a global crisis like the one we are havingCan someone please explain simply how it began , and the best way to avoid this. From general reading I've got a rough idea but there seems to be no clear way of explaining it but beside hating on the banks. Surely it can't be all their fault.
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Re: How can we reduce a global crisis like the one we are havingThe problem in my opinion is fractional reserve banking. The essence of the contemporary money system is the creation of credit (money) out of thin air by banks. With a lot of continual help from the state this insane system just about able to hold together.(Original post by falcon pluse)
Can someone please explain simply how it began , and the best way to avoid this. From general reading I've got a rough idea but there seems to be no clear way of explaining it but beside hating on the banks. Surely it can't be all their fault.
The best way to avoid the problems we have is to have a fully fiat currency (where the government makes all the money interest free) and then spends the money into circulation. And to go with that a full reserve banking system. So banks can only lend out money they actually have.
This would kill the threat of bank runs. Governments would not need to run deficits and rack up a national debt. There would be less inflation in certain assets like property (assuming the gov. did not focus its spending in one place). The banking system would not be so unstable. The interest rate on savings and investment would actually represent peoples time preference.
Anyway I recommend you watch the videos on the Khan Academy on banking.Last edited by Classical Liberal; 22-02-2012 at 11:05. -
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Re: How can we reduce a global crisis like the one we are havingFunny you say that. Barclays is currently leveraged at 99.7%(Original post by Classical Liberal)
The problem in my opinion is fractional reserve banking. The essence of the contemporary money system is the creation of credit (money) out of thin air by banks.
The best way to avoid the problems we have is probably to have a fully fiat currency (where the government makes all the money interest free) and then spends the money into circulation. And to go with that a full reserve banking system. So banks can only lend out money they actually have.
