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    (Original post by Polymath0)
    Now you're just being an obtuse literalist, coleslaw.

    In the same way that you can act as a financial intermediary between your friend, as a lender, and I, as a borrower, the bank would act as an intermediary between savers who choose to invest a portion of their savings and those who wish to borrow those savings.

    The primary difference here is that the bulk of savings that are invested in a bank to be on-lent would originate entirely from the creation of money by government.
    You still don't understand this most fundamental principle, do you? How do you think the private banks currently create money if not by creating loans?

    I really suggest you take that monetary economics course I recommended to you. You would only have to watch a handful of lectures to get a far better understanding of how things actually work in reality.
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    Because the government is keeping it for their pathetic silly bonuses for MP's
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    (Original post by cole-slaw)
    You still don't understand this most fundamental principle, do you? How do you think the private banks currently create money if not by creating loans?
    That's the point. The banks actively create that which they loan.
    I'm arguing that money should not be created by banks in the process of loan making. The banks should lend already existing money that has been invested in an investment or savings account.

    I really suggest you take that monetary economics course I recommended to you. You would only have to watch a handful of lectures to get a far better understanding of how things actually work in reality.
    Perhaps you'd like to explain what it is that I don't understand about the current monetary design.

    Think about this logically. Would I speak of an alternative monetary arrangement if I didn't think I understood the way in which it currently works? No.
    So your patronising recommendation can take a hike.
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    (Original post by Polymath0)
    That's the point. The banks actively create that which they loan.
    I'm arguing that money should not be created by banks in the process of loan making. The banks should lend already existing money that has been invested in an investment or savings account.
    This is some kind of Orwellian double think, surely? Its like reading an Abbot and Costello sketch or something. Who's on first? Of course he is.


    Look: "Creating money" and "extending a loan" are two phrases that mean the same thing. You have already argued that every time a bank extends a loan of £100 to a customer, it adds £100 to the money supply. It is impossible for this not to happen.

    You can't loan existing money. Every loan creates new money. If I have £100 in cash, and then lend it to you (ie you now have £100 cash and I have an IOU note worth £100) there is now £200 in the money supply, not £100.
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    (Original post by cole-slaw)
    It is impossible for this not to happen.
    You wilfully refuse to explain how and
    why it is a practical impossibility to have implemented the specific proposal I have described in detail.

    You just dogmatically repeat how it isn't possible in a robotic, unreasoned fashion. I'm done with you.
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    (Original post by Polymath0)
    You wilfully refuse to explain how and
    why it is a practical impossibility to have implemented the specific proposal I have described in detail.

    You just dogmatically repeat how it isn't possible in a robotic, unreasoned fashion. I'm done with you.
    So instead of explain how is it impossible, I explain how it isn't possible? Do you realise you just contradicted yourself?

    I think the problem here is that you don't understand what money is and what the money supply is. Hence the reason you keep making nonsensical statements.
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    (Original post by cole-slaw)
    So instead of explain how is it impossible, I explain how it isn't possible? Do you realise you just contradicted yourself?
    But you don't explain how it isn't possible. You just assert that it is this way and can't be otherwise. An assertion has no explanatory power.
    But you do it anyway, with complete oblivion, in your usual arrogant and unreflective style.
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    http://positivemoney.org/2015/12/qe-...e-part-3-of-8/
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    This article was written by Michael Taylor, commissioned by Fabrica Art Gallery, Brighton. This article takes inspiration from Beautiful Horizon by No Olho da Rua (In the Eye of the Street), a photography exhibition resulting from a collaborative project between a small group of artists and a number of young people who live on the streets of Brazil. The project allows these young people who are socially and economically excluded from mainstream society to express themselves and make connections with the wider world. This article considers how different economic and monetary policies can either widen or narrow the divide between the richest and poorest people. In particular, it considers the systemic failings of a debt-based money supply.No Olho da Rua is a long-term collaboration between artists Julian Germain, Patricia Azevedo and Murilo Godoy and young Brazilians living on the streets of Belo Horizonte. Since 1995, the artists have worked with young, marginalised children to offer them the chance to express themselves, through photography, writing and interviews. Beautiful Horizon showcases a selection of this work. It was the intention of the artists to fully include the young Brazilians in the whole production process and, in so doing, give them the sense that someone cares about something they do, making them visible. In effect, by including them fully in the project, the artists give a wider sense of inclusion to people who have been excluded socially and economically from mainstream society. In a recent interview, the artists describe the project as “… a response to people’s exclusion founded on principles of inclusion, collaboration, sharing and respect”. These core principles that underpin the work all relate to how people are connected to each other – the real-world networks which form the infrastructure through which we exchange emotions, ideas, information, money and much more.The images captured by the young Brazilians are intimately familiar yet shockingly alien. The themes are universal – recognisable to any human living at any time during the history of our race. Themes of beauty, friendship, love, birth and death. But the setting of these universal themes is a world away from the safe and well-connected environment with which many people reading this article will be familiar.The photos show a world of extreme poverty, but one that exists within one of Brazil’s richest cities, literally a stone’s throw from a world of cars, computers and fresh linen that many take for granted. These young people are in absolute poverty, an inability to meet their basic needs that is so severe as to be life threatening. As Richard Murphy points out, absolute poverty may not simply be the inability of a person to meet their material needs, but also their emotional, intellectual and social needs [1]. There is stark evidence highlighting the outcome of this kind of poverty from the artists themselves. When they started the project 17 years ago, they were collaborating with a group of 55 young people. Today 40 of the original group have died, disappeared or been jailed.The stark contrast of universal scenes of human triumph and tragedy framed by a backdrop of extreme poverty is clear to all who visit the exhibition, and these contrasting images resonate far beyond the borders of Brazil. In the words of the artists, the project shows “the human condition within a context of extreme poverty in modern society. This is not in anyway exclusive to Brazil, but points to the lives of millions of people, an underclass, living on the margins of big cities around the world” .We have to look no further than our own backyard to see the truth of this statement. Research carried out by the Department for Work and Pensions finds that 3.6 million children are living in poverty in the UK. In other words, 27% of all UK children are classed as living in poverty, with 1.6 million of these classed as living in severe or absolute poverty. Work by the Institute for Fiscal Studies projects that, under current economic and social policies, this figure is set to increase significantly to 4.2 million by 2020 [2].These shocking figures become even more outrageous when we take into account that the total amount of money in circulation in the the UK has quadrupled in just 15 years, rising from around £500,000 million in 1992 to around £2,000,000 million in 2007 [3]. It is alarming that this dramatic increase in money has coincided with a dramatic increase in poverty. Just as Beautiful Horizon bears testament to the lives of a group of young people who live on the streets of Brazil, it also stands as a challenge to capitalism, consumerism and monetary policy that resonates throughout the whole world.The current financial crisis in Europe and the US has given rise to a lot of finger pointing. Some blame unwise government spending, some the culture of greedy banking and some the foolish borrowings of the public. This culture of blame is unproductive and misleading, for this dramatic divergence of rich and poor is not the direct fault of any individual group of people, rather it is an inevitable outcome of the current way money itself is created in the first instance. It is a systemic failure of the monetary system.The process by which money is created is still poorly understood, even by politicians, bankers and economists, but recently things have started to improve. The 2011 book ‘Where does money come from?’ is a comprehensive guide to the UK monetary and banking system and clearly explains how money is created and enters circulation. The importance of this piece of research cannot be overestimated, as the process of money creation is rarely included in economic models and theory. The dominant school of economic thought today is neoliberalism, and its ideas and theories are widely accepted as fact by many economists and politicians. It views money as neutral, a veil over the real economy. But money is far from neutral. It is born with its own nature, its own properties that dictate how it flows around the economy.It is only by understanding the nature of money itself that we will begin to be able to deal with the pressing economic, social and environmental problems we face today.Thanks to the hard work of awareness group Positive Money and others, it is now an established, if little-known, fact that over 97% of all money in circulation today was created by private banks as debt. It is beyond the scope of this article to describe the mechanics behind this process, but I point the reader in the direction of the Positive Money website initially and to the work of Ryan-Collins et al. [3] for an in-depth analysis.In broad strokes, whenever a bank extends credit through agreeing overdrafts, mortgages, credit cards or any other form of credit, this money is not lent, but rather it is created out of thin air. It is recorded as both an asset and a liability on the bank’s balance sheet and, hence, the banks say that they have not created any money as their balance sheets still sum to zero, with the asset offsetting the liability. But try telling that to the person who has just spent the newly-issued credit, or better yet try telling the person who has just been paid with this newly-created credit that it is not real money. Crucially, this process is not how people intuitively understand lending and credit from their everyday experience. If I lend some money to my friend, I give up access to that money for a period. There has to be money in the first place for a loan to take place but this is not the case with banks. Money doesn’t lead to a loan, but rather a loan leads to money. The only thing that makes or stops commercial banks creating more money is their confidence and will.Not only do private banks have the privilege of determining how much new money gets created, they also decide where it goes. Werner [4] notes that the economy can be split into two parts – the productive and the unproductive economy. Investment in the productive economy leads to the creation of new jobs and infrastructure, adding value to the real economy. Investment in the unproductive economy, through financial speculation or the purchase of existing assets, simply leads to price inflation and adds no new value whatsoever.Of all the credit created by commercial banks, only 8% of this newly-created money is invested in the productive economy, the other 92% is spent on financial speculation and asset purchases. This simple fact explains housing bubbles for example, and the constant boom-bust cycles that we have experienced at regular intervals for the last few centuries. The difference between a boom and a bust period simply lies the expansion or contraction of the money supply. In boom times, banks hand out new credit far quicker than people pay off old debts, leading to an increase in the money supply. In bust times, banks are reluctant to lend and so people pay off old debt quicker than they can take on new debt, leading to a reduction in the money supply. This highlights the paradox at the heart of a credit-based money supply. The only way we can get more money is to take on more debt, and so the seeds of its downfall are sown at inception.The implications of this process are profound. Money is born into this world in two halves: a ‘positive’ interest-earning half and a ‘negative’ interest-paying half. If you have £x in your bank account, this implies that £x of debt exists somewhere else. If you are the owner of the ‘positive’ side of this picture, your money multiplies through interest, making money desirable for its own sake. The question is one of ‘how can I make money?’. The current UK monetary system gives us a form of money that behaves very differently to the real, natural objects over which it is supposedly acting as a veil. Most natural resources degrade rather than multiply over time if they are horded, whereas money will grow and grow through the interest it gains. Of course, at the same time the ‘negative’ side of the debt-credit divide is multiplying even quicker, and in the opposite direction.Returning to those people who are living in poverty, it is inevitably the poorest who end up with the biggest debt burden. Any money that they do earn has to first go to paying off debt. This removes their money from the real economy, money that they could otherwise have spent with businesses in their community and further afield, and thus we have a vicious circle. There is a systemic funnelling of money from the poor to the rich, leading to an everwidening gap between the richest and poorest in our society. Indeed, you need to reach well into the 99th percentile of people as ranked by income earned before you find someone who earns more interest than they pay [3].This is not the result of a conspiracy, it is an inevitable outcome given that money is created in this way as credit issued by the private banking sector – a systemic failure rather than a conspiracy.In a society where money has become as essential to life as water, it is surely of fundamental importance that money is created in the first instance for the benefit of the people, and not for the profit of private banks.But all is not lost. Money certainly doesn’t grow on trees. Neither do we mine it, farm it or hunt it. Money is a social construct. In the words of John Maynard Keynes money is “a social relation of abstract value” [4]. It is something we create and, thus, it is something we could create differently, should the will exist.This sort of reform is not without precedent. In 1844, the Bank Charter Act was passed to stop private banks printing their own bank notes. This Act was in response to a succession of banking failures and financial crises that sound very similar to the crisis we find ourselves in today [5]. The modern advent of digital money, internet banking and deregulation have allowed the banking sector to exploit a loophole in this law by creating digital money instead of printing paper money. This loophole could be easily closed by updating an important law through simple legislative means.In addition, there are already fully-formed proposals of alternative monetary and banking systems on the table (see here for an explanation of full-reserve banking, or here for a proposal of seigniorage reform). Not only would these alternative monetary systems bring money creation back under democratic control, they would also change our very relationship with money and with each other. Instead of asking ‘how can I make money?’, the question would become ‘what can I make with my money?’.To close the circle and return to where we started, it is no coincidence that Brazil has experienced a massive economic boom over the last few years as it has not only entered into the free-market economies established by the west, but has adopted our monetary policies too. What is clear is that, if they follow in our footsteps, the gap between the world inhabited by the street children of No Olho da Rua and the world inhabited by the rest of Brazil will grow ever wider. It is our responsibility to look at the people excluded from our modern society, to look at the widening gaps between rich and poor, and to ask ourselves if this is acceptable. We have the power to change things for the better. The question is, do we have the courage?If we want to make the world a safer, more secure, peaceful and permanent place, first of all we need to have more control of how our money gets created and where it gets spent.Change money, change the world.

    http://positivemoney.org/2012/11/cha...nge-the-world/
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    (Original post by Polymath0)
    This article was written by Michael Taylor, commissioned by Fabrica Art Gallery, Brighton. This article takes inspiration from Beautiful Horizon by No Olho da Rua (In the Eye of the Street), a photography exhibition resulting from a collaborative project between a small group of artists and a number of young people who live on the streets of Brazil. The project allows these young people who are socially and economically excluded from mainstream society to express themselves and make connections with the wider world. This article considers how different economic and monetary policies can either widen or narrow the divide between the richest and poorest people. In particular, it considers the systemic failings of a debt-based money supply.No Olho da Rua is a long-term collaboration between artists Julian Germain, Patricia Azevedo and Murilo Godoy and young Brazilians living on the streets of Belo Horizonte. Since 1995, the artists have worked with young, marginalised children to offer them the chance to express themselves, through photography, writing and interviews. Beautiful Horizon showcases a selection of this work. It was the intention of the artists to fully include the young Brazilians in the whole production process and, in so doing, give them the sense that someone cares about something they do, making them visible. In effect, by including them fully in the project, the artists give a wider sense of inclusion to people who have been excluded socially and economically from mainstream society. In a recent interview, the artists describe the project as “… a response to people’s exclusion founded on principles of inclusion, collaboration, sharing and respect”. These core principles that underpin the work all relate to how people are connected to each other – the real-world networks which form the infrastructure through which we exchange emotions, ideas, information, money and much more.The images captured by the young Brazilians are intimately familiar yet shockingly alien. The themes are universal – recognisable to any human living at any time during the history of our race. Themes of beauty, friendship, love, birth and death. But the setting of these universal themes is a world away from the safe and well-connected environment with which many people reading this article will be familiar.The photos show a world of extreme poverty, but one that exists within one of Brazil’s richest cities, literally a stone’s throw from a world of cars, computers and fresh linen that many take for granted. These young people are in absolute poverty, an inability to meet their basic needs that is so severe as to be life threatening. As Richard Murphy points out, absolute poverty may not simply be the inability of a person to meet their material needs, but also their emotional, intellectual and social needs [1]. There is stark evidence highlighting the outcome of this kind of poverty from the artists themselves. When they started the project 17 years ago, they were collaborating with a group of 55 young people. Today 40 of the original group have died, disappeared or been jailed.The stark contrast of universal scenes of human triumph and tragedy framed by a backdrop of extreme poverty is clear to all who visit the exhibition, and these contrasting images resonate far beyond the borders of Brazil. In the words of the artists, the project shows “the human condition within a context of extreme poverty in modern society. This is not in anyway exclusive to Brazil, but points to the lives of millions of people, an underclass, living on the margins of big cities around the world” .We have to look no further than our own backyard to see the truth of this statement. Research carried out by the Department for Work and Pensions finds that 3.6 million children are living in poverty in the UK. In other words, 27% of all UK children are classed as living in poverty, with 1.6 million of these classed as living in severe or absolute poverty. Work by the Institute for Fiscal Studies projects that, under current economic and social policies, this figure is set to increase significantly to 4.2 million by 2020 [2].These shocking figures become even more outrageous when we take into account that the total amount of money in circulation in the the UK has quadrupled in just 15 years, rising from around £500,000 million in 1992 to around £2,000,000 million in 2007 [3]. It is alarming that this dramatic increase in money has coincided with a dramatic increase in poverty. Just as Beautiful Horizon bears testament to the lives of a group of young people who live on the streets of Brazil, it also stands as a challenge to capitalism, consumerism and monetary policy that resonates throughout the whole world.The current financial crisis in Europe and the US has given rise to a lot of finger pointing. Some blame unwise government spending, some the culture of greedy banking and some the foolish borrowings of the public. This culture of blame is unproductive and misleading, for this dramatic divergence of rich and poor is not the direct fault of any individual group of people, rather it is an inevitable outcome of the current way money itself is created in the first instance. It is a systemic failure of the monetary system.The process by which money is created is still poorly understood, even by politicians, bankers and economists, but recently things have started to improve. The 2011 book ‘Where does money come from?’ is a comprehensive guide to the UK monetary and banking system and clearly explains how money is created and enters circulation. The importance of this piece of research cannot be overestimated, as the process of money creation is rarely included in economic models and theory. The dominant school of economic thought today is neoliberalism, and its ideas and theories are widely accepted as fact by many economists and politicians. It views money as neutral, a veil over the real economy. But money is far from neutral. It is born with its own nature, its own properties that dictate how it flows around the economy.It is only by understanding the nature of money itself that we will begin to be able to deal with the pressing economic, social and environmental problems we face today.Thanks to the hard work of awareness group Positive Money and others, it is now an established, if little-known, fact that over 97% of all money in circulation today was created by private banks as debt. It is beyond the scope of this article to describe the mechanics behind this process, but I point the reader in the direction of the Positive Money website initially and to the work of Ryan-Collins et al. [3] for an in-depth analysis.In broad strokes, whenever a bank extends credit through agreeing overdrafts, mortgages, credit cards or any other form of credit, this money is not lent, but rather it is created out of thin air. It is recorded as both an asset and a liability on the bank’s balance sheet and, hence, the banks say that they have not created any money as their balance sheets still sum to zero, with the asset offsetting the liability. But try telling that to the person who has just spent the newly-issued credit, or better yet try telling the person who has just been paid with this newly-created credit that it is not real money. Crucially, this process is not how people intuitively understand lending and credit from their everyday experience. If I lend some money to my friend, I give up access to that money for a period. There has to be money in the first place for a loan to take place but this is not the case with banks. Money doesn’t lead to a loan, but rather a loan leads to money. The only thing that makes or stops commercial banks creating more money is their confidence and will.Not only do private banks have the privilege of determining how much new money gets created, they also decide where it goes. Werner [4] notes that the economy can be split into two parts – the productive and the unproductive economy. Investment in the productive economy leads to the creation of new jobs and infrastructure, adding value to the real economy. Investment in the unproductive economy, through financial speculation or the purchase of existing assets, simply leads to price inflation and adds no new value whatsoever.Of all the credit created by commercial banks, only 8% of this newly-created money is invested in the productive economy, the other 92% is spent on financial speculation and asset purchases. This simple fact explains housing bubbles for example, and the constant boom-bust cycles that we have experienced at regular intervals for the last few centuries. The difference between a boom and a bust period simply lies the expansion or contraction of the money supply. In boom times, banks hand out new credit far quicker than people pay off old debts, leading to an increase in the money supply. In bust times, banks are reluctant to lend and so people pay off old debt quicker than they can take on new debt, leading to a reduction in the money supply. This highlights the paradox at the heart of a credit-based money supply. The only way we can get more money is to take on more debt, and so the seeds of its downfall are sown at inception.The implications of this process are profound. Money is born into this world in two halves: a ‘positive’ interest-earning half and a ‘negative’ interest-paying half. If you have £x in your bank account, this implies that £x of debt exists somewhere else. If you are the owner of the ‘positive’ side of this picture, your money multiplies through interest, making money desirable for its own sake. The question is one of ‘how can I make money?’. The current UK monetary system gives us a form of money that behaves very differently to the real, natural objects over which it is supposedly acting as a veil. Most natural resources degrade rather than multiply over time if they are horded, whereas money will grow and grow through the interest it gains. Of course, at the same time the ‘negative’ side of the debt-credit divide is multiplying even quicker, and in the opposite direction.Returning to those people who are living in poverty, it is inevitably the poorest who end up with the biggest debt burden. Any money that they do earn has to first go to paying off debt. This removes their money from the real economy, money that they could otherwise have spent with businesses in their community and further afield, and thus we have a vicious circle. There is a systemic funnelling of money from the poor to the rich, leading to an everwidening gap between the richest and poorest in our society. Indeed, you need to reach well into the 99th percentile of people as ranked by income earned before you find someone who earns more interest than they pay [3].This is not the result of a conspiracy, it is an inevitable outcome given that money is created in this way as credit issued by the private banking sector – a systemic failure rather than a conspiracy.In a society where money has become as essential to life as water, it is surely of fundamental importance that money is created in the first instance for the benefit of the people, and not for the profit of private banks.But all is not lost. Money certainly doesn’t grow on trees. Neither do we mine it, farm it or hunt it. Money is a social construct. In the words of John Maynard Keynes money is “a social relation of abstract value” [4]. It is something we create and, thus, it is something we could create differently, should the will exist.This sort of reform is not without precedent. In 1844, the Bank Charter Act was passed to stop private banks printing their own bank notes. This Act was in response to a succession of banking failures and financial crises that sound very similar to the crisis we find ourselves in today [5]. The modern advent of digital money, internet banking and deregulation have allowed the banking sector to exploit a loophole in this law by creating digital money instead of printing paper money. This loophole could be easily closed by updating an important law through simple legislative means.In addition, there are already fully-formed proposals of alternative monetary and banking systems on the table (see here for an explanation of full-reserve banking, or here for a proposal of seigniorage reform). Not only would these alternative monetary systems bring money creation back under democratic control, they would also change our very relationship with money and with each other. Instead of asking ‘how can I make money?’, the question would become ‘what can I make with my money?’.To close the circle and return to where we started, it is no coincidence that Brazil has experienced a massive economic boom over the last few years as it has not only entered into the free-market economies established by the west, but has adopted our monetary policies too. What is clear is that, if they follow in our footsteps, the gap between the world inhabited by the street children of No Olho da Rua and the world inhabited by the rest of Brazil will grow ever wider. It is our responsibility to look at the people excluded from our modern society, to look at the widening gaps between rich and poor, and to ask ourselves if this is acceptable. We have the power to change things for the better. The question is, do we have the courage?If we want to make the world a safer, more secure, peaceful and permanent place, first of all we need to have more control of how our money gets created and where it gets spent.Change money, change the world.

    http://positivemoney.org/2012/11/cha...nge-the-world/
    The answer is no.
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    (Original post by cole-slaw)
    How many times can I explain this. LENDING money and CREATING money ARE THE SAME THING.

    Every time a bank makes a loan of £100, they add £100 of new money into the money supply. This is the only way in which money is created.

    talking about "where did that money come from" is moronic. It didn't come from anywhere. It was created from scratch at the moment it was credited to the loanee's account.
    This is not entirely true, banks have to have a maintain a particular level of reserves to back the loans they issue, this is called fractional-reserve banking.Typically the fractional reserve rate will be around 10% so for a bank that has a loan book of say £500Billion, it has to have £50Billion of deposit reserves to back those loans, the other £450Billion is new currency being injected into the economy.
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    (Original post by cole-slaw)
    Look: "Creating money" and "extending a loan" are two phrases that mean the same thing. You have already argued that every time a bank extends a loan of £100 to a customer, it adds £100 to the money supply. It is impossible for this not to happen.
    It is not technically impossible, if the fractional-reserve rate was upped to 100% (So every back had to have £1 of deposits to back every £1 of loans) then loaning out money would not lead to any excess money supply.So if in this fictional case I was the only depositor and I put £100 in my bank account and the bank decided to loan out the £100, then no money has been created in that scenario.I wouldn't be able to withdraw my £100 until the person who owes the bank £100 pays the bank back the £100 so there would be no excess money supply in the economy.

    The problem with high fractional-reserve rates is that they require banks to keep very high amounts of capital reserves when the amount of withdrawals from the bank will most likely remain quite low.
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    (Original post by Polymath0)
    That's the point. The banks actively create that which they loan.
    I'm arguing that money should not be created by banks in the process of loan making. The banks should lend already existing money that has been invested in an investment or savings account.
    I have not read all your previous posts but I think the question you are asking is why we need banks to create money.It is because we need a system where we can increase money supply as the economy grows and banks are thought to be the best way we can do this.

    If we have, for example, an increase of 10 million people in a particular country (from 50 million to say 60 million), those additional people will be creating additional goods and services but if the money supply doesn't increase the total money in the economy will stay the same leading to deflation (there are more goods and services but there is no additional money).

    Deflation can prove to be bad for two main reasons i) it discourages investment/spending - why should I invest now or spend now if my money can substantially increase in value if I just leave it parked in the bank? ii) it makes it hard for governments and individuals to pay off debt - how is a government going to get out of debt in an environment where there is no increased money supply? How are tax receipts going to rise enough to cover say a 80% debt to GDP ratio if there is no additional money flowing into the economy?
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    (Original post by History98)
    If we have, for example, an increase of 10 million people in a particular country (from 50 million to say 60 million), those additional people will be creating additional goods and services but if the money supply doesn't increase the total money in the economy will stay the same leading to deflation (there are more goods and services but there is no additional money).
    A cursory look into the history of fractional reserve banking reveals a series of deflationary spirals occasioned by deleveraging and repayment of loans exceeding the willingness of banks to create loans. In order to overcome this particular inefficiency, it would be rational to transfer the power to create money to a transparent and accountable public body that has the economic health and development of society in its purview. This would enable the banks to serve simply as financial intermediaries, while the public body would pump a sufficient quantity of money to circulate the economy so as to strike a near perfect balance. There is no sound reason for the quantity of money to be determined by the whims and fancies of private interests.

    I am interested to know how you think it is possible for additional goods and services to be introduced in the absence of additional money. I'd appreciate it if you could clarify this assumption.
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    http://positivemoney.org/wp-content/...2015-12-11.pdf
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    http://positivemoney.org/2016/01/qe-...people-part-4/

    [PART 4]
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    http://positivemoney.org/2016/01/an-...people-part-5/

    http://positivemoney.org/2016/01/qe-...people-part-6/

    http://positivemoney.org/2016/02/not...le-in-the-usa/

    http://positivemoney.org/2016/04/can...people-part-8/
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    Quantitative Easing and Fractional Reserve Banking lead to large amounts of money being created, and it goes straight to the financial sector, which perhaps is why they are so rich.
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    (Original post by LordMallard)
    Quantitative Easing and Fractional Reserve Banking lead to large amounts of money being created, and it goes straight to the financial sector, which perhaps is why they are so rich.
    Indeed. In relation to this, I think we ought to emphasise the artificiality of the system under which we operate. Rather than provide for the welfare and development of the banking / financial industry and a low tax rate, these favours can instead be shifted to the nation as a whole. But only the public issuance of money without debt can ensure this reality.
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    (Original post by Polymath0)
    A cursory look into the history of fractional reserve banking reveals a series of deflationary spirals occasioned by deleveraging and repayment of loans exceeding the willingness of banks to create loans. In order to overcome this particular inefficiency, it would be rational to transfer the power to create money to a transparent and accountable public body that has the economic health and development of society in its purview. This would enable the banks to serve simply as financial intermediaries, while the public body would pump a sufficient quantity of money to circulate the economy so as to strike a near perfect balance. There is no sound reason for the quantity of money to be determined by the whims and fancies of private interests.
    There are such bodies, in the UK the body responsible for monetary policy is called the Bank Of England and in the US its called the Federal Reserve. Central banks set monetary policy by setting reserve ratios, interest rates e.t.c These measures help ensure there is enough money circulating in a economy to help the economy grow.

    (Original post by Polymath0)
    I am interested to know how you think it is possible for additional goods and services to be introduced in the absence of additional money. I'd appreciate it if you could clarify this assumption.
    If I tutor you I am providing a service. Now, if the population grows and there are 5 million more students in the country and there are also 5 million more tutors in the country giving those students tuition, then those 5 million tutors are providing extra services in the economy. If the money supply does not increase to reflect that then there will be downward pressure on tuition costs.
 
 
 
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