Bitcoin Forum

Lots of the time on here I see people complaining about the existence of FRB while at the same time preaching the free market and real money. I think its important to understand what the so called "real money" is, and why FRB is not only unavoidable but the only way for an economy to succeed assuming a free market. In short, in the current system, money is backed by debt issued by a central authority and there's a theoretically unlimited supply of it. In what many people here seem to think is a "real" system, money is backed by something in limited supply, and not debt, and is decentralized. In reality, in order for an economy to truly be stable, there must both be a decentralized limited supply of money AND it must be backed (at least somewhat) by debt.

Scenario: Money in a limited supply without debt.

First, money is in a limited supply, so people hoard it, as its going up. Then, something happens, and some big holders stop holding it. This is usually triggered by a period of huge expenditures, such as war, a bubble in another commodity, or when a great new invention is created that everyone wants. People decide that owning that new product, or spending on war, is preferable and will produce a greater return over the economy in general than hoarding actual currency. This means that contractors/producers of the new product either start hoarding the new product, or they run out of supply. This drives the price of the product up, reducing the economy-wide deflationary effect. What follows is an economic boom where everybody is spending their currency, and since nobody has any real reason to hoard it now that its decreasing in price anyway, it money velocity increases and eventually the currency goes to 0 and is forgotten, unless some people hoard it again, beginning the cycle anew. Result: Hugely unstable boom-bust economy. Eventually, one of these people that buys up the currency decides to lend it out, leading to the ideal "debt/limited supply" hybrid economy.

Now for the debt-only backed system.

In the debt backed system, all money is backed by debt meaning that the entire money supply is ultimately owed to a central issuer (there could never be multiple issuers under this system, because each issuer would be afraid that the other would print more money - to clarify, each currency can only have one central issuer, although there can be multiple different currencies, each of which has their own issuer). The central issuer, since its lending out the entire money supply, collects what is effectively rent on the entire money supply. This system can have one of two possible outcomes: Either hyperinflation to zero, or the accumulation of almost all goods and services by the issuers of the currency. The reason is this: The money must be paid to the issuer with interest. So, either the issuer spends that interest, putting it back into the economy, which gives him some hard good or service, moving that good/service into his own hands from the hands of the masses; or, the issuer hoards that interest, forcing defaults, moving the collateral to the hands of the issuer, again taking it from the masses; or, the issuer issues more debt to those already in debt so they can pay back the interest, constantly increasing the money supply, leading to hyperinflation.

Finally, for the hybrid system:

There is a currency of limited supply which people are spending on products. Some holder(s) of a larger amount of this currency lend currency out to individuals, to collect interest. This creates a fractional reserve banking phenomenon, as those holder(s) realize that they can profit from a spread between the interest they pay smaller holders or holders requiring more liquidity, and the interest they collect themselves. Unless the currency is already too centralized (in which the interest causes almost all the currency to be collected by one individual who then deflates it to magnify its worth, and then engages in what is effectively a debt-only backed system) there will be multiple of such lenders. These lenders will be motivated to lend for collateral worth less and less more than the underlying currency. This will cause a period of slight inflation, but it can never inflate too much, because each lender has a limited supply to lend. If the effective reserve ratio ever becomes too low (i.e, there's too many "layers" on the fractional reserve pyramid), then money will be easy to come by, and some individual will hoard it, which will cause others to default, which will move the property used as collateral into the hands of the original lenders, causing, once again, one person to have property and another to have the money, causing the system to repeat once again. Since, of course, the collateral on the loans last issued would be valued the most vs. the currency, and the currency would deflate during the period of defaults, the lenders would lose money each time this occurs, rewarding reasonable reserve requirements. As such, through normal free market "selection of the fittest", the best lenders survive while the rest fail/give up, meaning that the currency stabilizes over time. Of course there will always be some fluctuation in the value of the currency. But hopefully you can see that the currency can never deflate more than the excess collateral %, and can never inflate to the point where a new group of banker(s) can afford to buy up a significant portion of the money supply. This probably has some correlation to the Gini Coefficient, but I'm not going to calculate it because that is too hard :)

Tl;Dr: Debt-backed system doesn't work. Limited supply system doesn't work unless there's also a lot of lending going on. Currency (and whole economy for that matter) will be most stable when there's a wide distribution of wealth among both non-bankers and bankers. The bigger the difference between the wealth of bankers, and the wealth of non-bankers (taking into account both currency and assets used as collateral), the more potential the currency has to inflate.

Wrong.
Fractional reserve lending is fraud.
Prices transmit information in a free market.
"Some holder(s) of a larger amount of this currency lend currency out to individuals, to collect interest. This creates a fractional reserve banking phenomenon"
lending money at interest is not fractional reserve banking.
You have your definitions mixed up.  ???

vote with your bitcoins
if a company holds your bitcoins is engaging in fractoinal reserve
you can choose not to deposit your coins with them
if they cant cover their bitcoin withdrawls (in a bank run) there is a chance they will go under.

Fractional reserve banking is akin to counterfeiting money, creating what shouldn't be there
It's a Ponzi scheme ultimately

How is it fraud? Care to elaborate?

FRB is FRAUD.

FRB explained: http://ozziecoin.com/index.php/fractional-reserve-banking-explained

It's fraud because you're lending out money that you're also making available for withdrawl simultaineously. If too many people exercise their rights to deposits the whole system falls apart, That's exactly like a Ponzi.

Amen bro. Not to mention ordinary workers' savings are diluted to sweet nothing.

Is insurance fraud too?

No, because insurance payouts involve meeting the criteria of the policy, and there is nothing to stop insurance companies from borrowing money to meet unexpected obligations, much like for example any other company responding to a sharp unexpected increase in costs. In the case of regular banking, all deposits are liabilities that the depositors are entitled to collect at any time.

It's not necessarily fraud for a business to find itself in a situation where it can't meet all its liabilities. But banking is actually designed from the ground up such that they intentionally can't meet the liabilities they've explicitly accepted.

Say what?  If a bank takes in your deposit and loans out 900% of that as FRB.  The loan is an asset-no?  BTW this is not how it works.  But I'm trying to use YOUR logic.

How is it you think banks are designed not to meet liabilities if their assets exceed liabilities due to being able to create new money

Sorry, I skipped over a bit here. When large holders are lending, they will release that they can accept deposits from others, and lend that money as well, for the same reasons basically any investment fund exists. Eventually, most people will become aligned with one or more of these funds and stick their savings in there to get interest. Then some smart merchant will realize that he may as well accept money in these accounts as payment in place of cash, because there's no reason not to (he would have stuck it in there anyway) and because accepting the money in these accounts as payment increases the money supply bidding for his products, increasing his sales/profits.

Where there's low-risk lending there will eventually be a fractional reserve system.

not really. What you're doing is, you're lending out money, while simultaneously allowing the transfer of the deposited balance(s) between depositors. In order for fractional reserve to be fractional reserve, the only requirement is that deposits are used as currency in their own right - the bank need not guarantee liquidity.

EDIT: Even if they are offering liquidity though, that doesn't make them a scam. By that logic every form of maturity transformation should be illegal.

it's fraud and it's bad.

Consider this:

You store $100 at the bank

the bank uses that $100 as a security to grand a $1000 loan to someone else. So the bank magically makes $900 and gambles with your money.

The bank now also expects the $1000 'back' (while it was never their possession in the first place) and on top of that they also charge interest on it.

So they actually make money on money that never existed in the first place. That's pretty much counterfeiting.

Umm.  Thats not how modern banks work though.

Besides if they don't do this then how do people get loans?

Loans are possible without fractional reserve banking.  It just isn't done with depositor funds.  It involves a lender and a lendee.   If your friend needs $5K to buy a car so he can commute to work and you have $5K cash, you could lend it to him, and he repays you over time.  That is an example of lending without fractional reserve banking.  

Borrowing, lending and interest far predates fractional reserve banking.  AFAIK the earliest recorded example of FRB by design was in the late 1600s.  Prior to that banking was a bailor-bailee arrangement, it was a place for merchants to store coinage that was more secure than what they had available themselves and they usually paid fee for the security.  If the bank couldn't pay out everything it took in, then it probably was going to end with someone being hanged.

Replace the word "liability" with "obligation" or whatever general English word you want to use, and the argument still holds up. Your rhetorical spasms here sound good dramatically but the entire point you're trying to make is a sloppy equivocation on the definition of money, then you're acting like it's outrageous that somebody else produces an argument that doesn't accept your at best controversial baked-in assumptions.

Actually that is how it works (although he got the numbers wrong, since the bank would now have $1100 liabilities and $100 liquid assets, that wouldn't have a high enough reserve ratio, you would only be able to lend out $900 when you got a $100 deposit).

FRB without regulation -- recipe for disaster.  Works just fine with regulation, though.  100% of the world's economy runs on fiat and FRB.
Well, 100% minus Bitcoin banks like NeoBee :-\

who said i agree for the bank to take my money and invest it.
not only did the bank invest my money i don't get anything in return for the risk.
if ill want to invest my money ill invest it myself, the bank has no right investing my money while still claiming its in my account.

You did, when you deposited your money.
Sure you did, do you think the bank and its employees should work for free?  Not only do you get the services, you usually get a bit of interest to sweeten the deal :)
See above.  And read up on money.

no one tells you how banking works when you open a bank account, 99% of the public is unaware of what is really happening when they deposit their money in the bank.
the bank should obviously be paid for its services, and it should tell me exactly the price so that i can decide if i want to use their service or go to another bank, needless to say this does not happen.
finance is a hobby of mine and i've been studying monetary systems for years, FRB is a fraud.
if taking your depositors money and investing it without telling them for your own personal profit is not fraud then i don't know what is.

The butcher doesn't explain to you where meat comes from, the baker doesn't tell you how bread is made.  Why should a bank explain to you what it does with your money?  Take some responsibility for yourself.  I'm sure a teller will explain the basics to you if you ask her nicely.
That is the most unjustifiably entitled thing I've read today.  See above.
A finance hobbyist is as useful and worthy as an amateur brain surgeon, which is to say "be careful, bro."
There's still time to learn.  Adult education is a thing.

FRB also increases the wealth divide. It promotes aristocracy and not meritocracy.

Looks like someone works for a bank.

Nah.  Money increases the wealth divide.  FRB is the way money works today.  No exceptions.  ...well, occasional fuqups like Pirate S&L, BitFunder and NeoBee. <==meritocracies immune to failure :)
Build an economy that works without FRB, then preach to me about economics.

P.S:  No, I do not work for a bank.

The blockchain buddy. That's the solution right there.

FRB increases the wealth divide because it creates money out of thin air.

It's fraud because you're lending out money that you're also making available for withdrawl simultaineously. If too many people exercise their rights to deposits the whole system falls apart, That's exactly like a Ponzi.

theonewhowaskazu

The three links below are my rebuttal to your argument. I believe they convincingly demonstrate that you are completely and utterly mistaken.

Finance Part I: Understanding the Parasite (https://bitcointalk.org/index.php?topic=529603.0)
Finance Part II: The Parasitic Cycle (https://bitcointalk.org/index.php?topic=564088.0)
Finance Part III: Divide, Conquer, Enslave (https://bitcointalk.org/index.php?topic=586125.0)

And bitcoin is created out of???
And no, FRB does not create money out of thin air.
And no, FRB does not increase the wealth divide.  Money increases the wealth divide.  Non-inflationary money like Bitcoin [will eventually become] maintains the wealth divide.  Hoarders increase the wealth divide.  Greed increases the wealth divide.  Money revolutionaries like Danny Brewster, who  praise your pseudo-liber notions to rob you, as well as people who get robbed by the likes of him, increase the wealth divide.

FRB doesn't even rank, let's stop repeating nonsense.

Bitcoin is created out of Work

Bitcoin's non-inflationary property is not a problem because the very fact that it is non-inflationary will result in bitcoin eventually losing market share to some future superior cryptocurrency that has some built in inflation. Bitcoin thus won't increase or maintain the wealth divide because it is only the beginning of something better.

FRB does effectively create money out of thin air. The posters up-thread describing it as fraud are correct. See the links to my posts on Finance linked above for a detailed analysis of this point.

Relax mate or you're going to get an aneurysm.  Bitcoin has the blockchain mate.  If on the Blockchain = money.  Not on the Blockchain = not money.

FRB creates money out of thin air.  Totally.  Even the central bankers admit that: https://bitcointalk.org/index.php?topic=602739.msg6653996#msg6653996 (https://bitcointalk.org/index.php?topic=602739.msg6653996#msg6653996)

The FRB makes everyone without assets poorer, increasing the wealth divide: http://ozziecoin.com/index.php/fractional-reserve-banking-explained/ (http://ozziecoin.com/index.php/fractional-reserve-banking-explained/)  It's sad but totally true.

Charlatans will always exist, but the biggest thieves by far wear suits:  http://www.ritholtz.com/blog/2014/05/6-years-after-financial-crisis-big-banks-are-still-committing-big-crimes/ (http://www.ritholtz.com/blog/2014/05/6-years-after-financial-crisis-big-banks-are-still-committing-big-crimes/)

I'm about as relaxed as I get without the aid of heavy recreational chemistry.
Now explain to me how the blockchain bit helped NeoBee "investors"?  Or how it helped Ukyo's depositors/investors?  Or how it helped Pirateat40's depositors/investors?  Or Patrick Harnett's depositors/investors? 
And bitcoin is created out of???  And why are you linking me to a bitcointalk topic like it's a primary source?  Say it in your own words, bro.
I assume it's your blog and you're quoting yourself?  No shortage of humility here :D  Anyhow, no.  You're wrong.  Repeating yourself and linking to your blog (I assume it's your blog) only adds extra lulz.

Sure bro, there are plenty of scams in fiat world.  When 95% of banks simply walk away with *all of your money*, fiat banking would descend to where Bitcoin finance is now.
And you would have the beginnings of a point.

Reading the links would really help you mate.  But that's ok.  I'll do it in my own words:

The people that invested in the fraudulent stuff in bitcoin made one of two errors.  1. They trusted people they shouldn't have trusted, and gave money to those fraudsters.  2. And this is the biggest mistake.  They leave bitcoin on exchanges and other services that use off Blockchain transactions. 

They swapped real bitcoins for fake bitcoins.  Bad move.

Banks are worse than all the above because they just make more money out of nothing.  It steals money from you without even realising it. It's the biggest heist ever. 

Inflation steals from everyone.  But it's worse than that - rising property prices steal from the young and disadvantaged people.

Created out of work?   WTF does that mean?  Then FRB loans are created out of work.  Or unicorn farts.  Or any statement that is so structurally crippled it's not even wrong.
Non sequitur.
It won't if it fails, it will if it succeeds.  Are you saying that the seeds of Bitcoin's destruction are an intrinsic part of Bitcoin?  That it is a planned failure, to be superseded by a better currency?
Does everyone here quote themselves?  No, you're wrong.  See my previous post :D

Its no secret that banks create money from loans (out of thin air).  But they don't need FRB to do this, its just a balance sheet operation.  And the fact that they do this is NOT bad.  In most cases its done cause people need to borrow money.  The WORSE thing that can happen is if NOBODY is willing to borrow money and the economy comes screeching to a halt.

Read this article to understand how banks create money.  From the horses mouth.  http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q1prereleasemoneycreation.pdf

Now the idea that FRB creates inequality that's hogwash.  Inequality is a side effect of free market Capitalism.  The more money you have the harder it is for others to compete w you, every child who has played Monopoly understands this.  That's why in places like USA there are anti-trust regulations.  

I laugh at all the bitcoiner BS here.  They are all as greedy as any other Captitalist except they pretend to rail against the "1%" so they can lure the lemmings into driving up price of BTC.  If you are really concerned about inequality then you should spend your time figuring how to redirect money flow from rich to poor.  Not spew BS about how some banker is stealing your money.

Bitcoin is not the answer to any economic problems in the world.  It might become a useful tool to transmit money -- and that's all it'll ever be

Only people who value their time and don't like repeating themselves.
Read the posts I linked or don't I really don't care.

If you read them and still think I am wrong say so and why and I will respond.
Otherwise quite frankly you are not worth wasting my time on.

Lol, if everyone kept their money in their wallets and did absolutely nothing with it (didn't spend it, didn't invest it, literally did nothing with it), then any money would be just fine.  Unfortunately, money gets used -- it gets invested, it gets spent in transactions with virtual strangers, it gets used.  And that's where the blockchain has nothing to offer, and Visa, with its chargeback and government enforcement agencies hunting down and pwning crooks, has plenty.  See?

No.  The biggest heist ever is when you give your money to your buddy Danny or Jon and he says okthxbi.

Ridiculous.  The young are more than compensated for inflation with rising wages.  Did you ever work?  Did you get raises?  Were you raises keeping up with inflation?  Or...

In that case don't shit up this thread with your posts.  You cite yourself as a primary source -- only on bitcointalk, folks :D

No if you were not too lazy to even open the links I mentioned you would see that they are simply summaries of mostly existing works with citations. I am certainly not the primary source for most of the information.

Since you seem to value non summarized original links here you go. The source material for the posts in question. But you and I both know you won't ever read any of it you are just talking up a load of BS to cover your laziness.

References:
McLeay M, Radia A, Thomas R. Money creation in the modern economy. Bank of England Monetary Analysis Directorate Quarterly Bulletin 2014 Q1
http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q1prereleasemoneycreation.pdf
Rothbard MN. The Foundations of Modern Austrian Economics, Edwin Dolan, ed. (Kansas City: Sheed Andrews and McMeel, 1976), pp. 160-184
http://mises.org/rothbard/money.pdf
Murray N. Rothbard, Economic Depressions: Their Cause and Cure
https://mises.org/daily/3127
Ludwig von Mises Institute, Austrian Business Cycle Theory
http://wiki.mises.org/wiki/Austrian_Business_Cycle_Theory#cite_note-6
Christina D. Romer, Business Cycles
http://www.econlib.org/library/Enc/BusinessCycles.html
Shelby Moore III, Understand Everything Fundamentally
http://www.coolpage.com/commentary/economic/shelby/Understand%20Everything%20Fundamentally.html
Matt Taibbi The Great American Bubble Machine, Rolling Stones July 9, 2009
http://www.rollingstone.com/politics/news/the-great-american-bubble-machine-20100405
Ludwig von Mises. Human Action: A Treatise on Economics 1949
http://mises.org/Books/humanaction.pdf

Funny...  somehow young people's wages haven't kept up:

http://www.smh.com.au/business/the-economy/actu-to-seek-rise-in-minimum-wages-as-home-ownership-becomes-a-pipedream-20140324-35eb1.html (http://www.smh.com.au/business/the-economy/actu-to-seek-rise-in-minimum-wages-as-home-ownership-becomes-a-pipedream-20140324-35eb1.html)

Why is that? Can you explain to us all how that happened?  Thanks buddy.  ;)


Let me quote:

Seeing as you laugh at all bitcoiners here, and one presumes you don't laugh at yourself, which therefore means that you are not a bitcoiner.  So mate, what are you???  lol

And what are you doing here?  lol

^See?  There's your problem :)

I'm an options trader w background in economics & finance.  I'm here to warn people to stay away cause some bucket shop operation phoned up my very old and retired father to try to sell BTC investments.  I get the feeling that the Bitcoin world is full of scammers as bad if not worse than Wall Street.  

I've seen the same crap in penny stock land all the time.  Wolves pumping & dumping on newbies.  Like you pumping your ozziecoin

Options trader.  Haha.  You're in the biggest ponzi system on the planet mate.  Let me prove it to you:

Libor = rigged
Metal markets = rigged
Short term interest rates = rigged
Long term interest rates = rigged
FX markets = rigged

You worried bitcoin?  Seriously???  FRB is stealing from your father by paying him ZERO interest my friend.

When we get the ozziecoin blockchain to the Australian public, we're going to have every ozziecoin accountable on the Blockchain.

Lol, you're gauging the standard of living by house prices?  That's your basket?
Bro, do you realize that population has at least doubled since you were a kid?  For house prices to stay the same, we'd have to make houses smaller (we don't) or colonize another planet for moar, u know, 4 Lebensraum :D

Explain me one thing: how can I pump up ozziecoin when it has zero value, it's not listed on any cryptoexchange that I know of, we have not requested for such a listing and we're giving our half of all ozziecoins to the Aussie public free?

How do I pump that?  Can you please be my pump manager?

And the price of rice in China is...  lol  Seriously, explain to me why house prices have to be smaller?  Are we running out of land?  Are your kids getting smaller?

Awww don't cry. I know the links are hard to understand. Look there's a rainbow

http://www.iwatchstuff.com/2007/04/12/care-bears.jpg

By not being an idiot who thinks every con must be a short con.  You create enough interest in the coin, you distribute some coin, you wait for people to start using and trading the coin, and, when it finally has sufficient value, you start selling your reserves.  
Simple.  Surprised I need to explain such basics.

@CoinCube:  Austrian School :D :D  Crazy old people with your souped-up Babbage Engines! :D

Give up dude.  Your too stupid to understand finance and economics.  Everything you post sounds like its coming out the mouth of a High Schooler who just watched a Zeitgeist video on YouTube.

My father doesn't keep his money in a savings account you fool.  He has a income generating portfolio catered towards retirees.  

You want a really long con.  Here you go mate, introducing you to the Federal Reserve:

Calling me a fool, mate?  Haha. Must've touched a nerve.

When I read options trader with a background in finance and economics - I thought unemployed ex-investment banker.  Next thought was: schmuck.

Here is a real options trader worth following: http://www.fooledbyrandomness.com/

You asked "Explain me one thing: how can I pump up ozziecoin when it has zero value..."
I explained.
You forget to thank me and start sperging about fiat.  Again.

Rudeness >:(

Yeah I'm a big fan of Taleb.  What does this have to do with the topic? 

Disgusting 80s failbears only bring poverty, tears and despair.  You know why you don't see them around anymore?  Yeah, that's right.  They're doing time for buttraping defenseless shota.  Here's a mugshot of one of those disgusting deviants:

http://th03.deviantart.net/fs71/PRE/f/2012/321/0/c/t_shirt_design_pedobear_by_92kronus-d5l9g6q.png

Thanks for nothing.  Pervert >:(

I am surprised your father is getting cold calls regarding Bitcoin. I would have thought it was far too new for such things.

I agree that Bitcoin has a lot of pyramid/ponzi features built into it and very well may end in tears for a lot of investors (but I think the price is likely to go much higher before that happens). I own all of 1 Bitcoin which I bought to familiarize myself with the technology so I guess that technically makes me a Bitcoin investor.

The difference between Bitcoin and your typical pump and dump, however, is that the underlying innovation cryptocurrency is fundamentally groundbreaking and revolutionary which makes bitcoin an interesting case.

Wow just wow. The utility of this conversation is rapidly approaching 0.
I think I will bow out and leave you to your illusion that all is well in fiat land.

Good Day

Well if you understood Taleb then you would realise that options trading is not an option.

And this is exactly why we're doing everything we can to introduce the concept of the Blockchain to the community over here in Australia.  

You still haven't explained this:


[four fingers tapping on table repeatedly...]

Please share with us your wisdom.  lol.

Did you think real estate prices are going up because there's a greater supply and a lower demand?  If twice as many people need to share this planet, each one of us would, naturally, get a smaller slice.  Since selfish pricks like myself aren't willing to let squatters onto our land, that means the rest needs to be divvied up into smaller parcels still.  So TL;DR yeah, real estate prices are going up.  It has nothing to do with FRB or inflation, and everything to do with increased demand without an equally greater supply.  To somewhat make up for it, a ...computer, let's say, costs a bit less than its equivalent did in the 90s.  Basic stuff again, bro, I shouldn't have to explain this :)

I lived in NYC for a big chunk of my life.  Rent is pretty brutal there -- I'm sure I was paying a bigger portion of my income for my apartment than some guy in Iowa.  Though I wouldn't say that my standard of living was lower.
See how things work?  

Umm, I don't change my life just cause I like someones writing.  Taleb made his money trading options so I don't know what you are referring to.  He just had an extreme way to trade options

Nah mate, he bets against people like you. lol.

Hey beef chops, care to cite any real data to support what you say?  Or we're supposed to just believe you? 

^Real data?  Real data showing that real estate prices go up when demand doubles?  Or that NYC rent is high?  Those things should be evident on their face to most post-pubescent earthlings without serious learning disabilities.  

You seem to establish a direct causal relationships between FRB and rising hose prices without citing any data (or even hinting at the underlying reasoning ...or the household solvent which caused said reasoning to take place), but you want me to produce evidence that the price of a house will be higher when more people want to buy it?  RU 4realz?

Put up the data mate or we're going to conclude you're full of it.  I've cited data on my site: https://ozziecoin.com/index.php/fractional-reserve-banking-explained/

You can see M3 and dilution happening.  It's flowing into asset prices. So far you offer... nothing.

This is pure nonsense. Wealth isn't measured by money supply, it's measured by net assets.
FRB doesn't add net assets to economy, because with an asset it also creates a liability.
The only monetary thing that can add net assets to economy is government deficit spending.

Not to say that you confuse money supply inflation with price inflation (the latter is one that makes people poorer, not the former).

I think I'm not the one confused here.

Please read: http://www.businessinsider.com/why-debt-fuels-bubbles-2014-5?IR=T  (http://www.businessinsider.com/why-debt-fuels-bubbles-2014-5?IR=T)

You are inflating the original supply of store of value in everyone's system essentially stealing value out of everyone's pocket over time to benefit those that are able to lend early and lend at fractional reserves.

Thats fraud

^
Now that you found out that fiat money is inflationary, you can avoid being a chump by investing it or spending it on goods and services -- not stuffing it in your mattress and expecting it to retain its value.

The cool kids know this, and have been doing this "investing and spending" thing all along.  Give it a shot :)

And? This doesn't have anything to do with what I wrote.
If you want to prove me wrong, please give counterarguments, not some random links.

So who is the fraudster here, according to your understanding? A bank or a borrower? Because without a borrower the supply of 'store of value' (it's actually quite funny to call fiat money 'store of value') wouldn't increase.

How does that help people attempting to store funds for retirement, the risk averse, or entrepreneurs? Should they be invested in something risky to attempt to keep up with the rate of inflation? This debt based "monetary" system encourages risky(stupid) investments by punishing inactivity, just like ppaca does. Even those that thought they were prepared are getting looted, that's why grandma is working at mc donalds now. She may well have saved up what she thought was a significant sum, but then inflation worked it's magic on her savings.

Productivity increases are inherently deflationary, but when productivity increases are introduced in modern society the only beneficiaries are those that issue the currency or are first to spend it. That's theft through monetary inflation. There's no capitalism without capital. FRB & artificially low interest rates ensures that there's very little capital formation. If you want to start a business...BORROW. It's a scam.

That's not quite right. It's not the monetary system that's responsible, it's monetary authorities. Monetary authorities which set absurdly low interest rates which in turn fuel bubbles and stuff.
Retirement savings wouldn't be a problem if interest rates were in line with inflation.

Oh please.  If you're a "sound money" fan, let grandma invest in gold, the ...err... gold standard of stability :D  Of course, there's all kinds of low-risk retirement funds -- investing != high risk.
No.  Bitcoin securities encourage risky (stupid) investment.  Please visit the securities section to learn what 95% failure rate looks like.  Inflation encourages you to put your money to work, instead of using it for mattress stuffing.  If you don't like to keep your wealth in fiat, and you shouldn't, spend that fiat on whatever you feel is a better store of value.  FRB does not prevent you from doing that.  In fact, that's what most normal folks do.
Huh?
I have no idea what your grandma did, but my parents are quite comfortable, thanks.  I haven't had to help them out financially, or give mom lrides to McD's so's she could work the fryer.  Nothing short of a full-on Socialist state would protect every grandma from financial misplanning.
What does that mean?
Err... wat?  You bake cupcakes.  You figure out how to bake them faster and more efficiently.  If you're in the baking business, you profit from this productivity increase.  No?
Capital isn't affected by FRB, that's not even wrong :D.  Inflation is not theft.  You sound like one of those wacky "Money As Debt" YouT00b vids.

Since you understand this, *DON'T BORROW*.  Problem solved.

Not going to engage in a lengthy drawn out "duh session" with you. You seem to know exactly what theft is going on, you're just fine with it because it doesn't hurt you. It's hurting others...badly, many of whom don't even realize what's happening to them. In large part because intimate knowledge of the modern(scammy) banking system is not a mandatory part of the curriculum in public brainwashing institutions schools.

The problem with low risk investing is it doesn't keep up with the real rate of inflation, but then I think you know that. Low risk investments still result in losses over time...just slower and only then if things go well.

Yes, WEALTH should be stored in something other than fiat, and many make the wise decision to do that very thing. That's why banksters(and their puppet politicians) keep attacking things that represent stable stores of value over time that cannot be used to steal through inflation.

You initiated this, and now that you've spouted your entire arsenal of hackneyed cliches, from ObamaCare to brainwashing schools, you ragequit.  K :-\

Cliches? Ragequit? Okay bud, frame the non-debate however you like. I'm delighted that FRB, monetary expansion WAY beyond legitimacy, and blatant interest rate manipulation by non-government crooks(FRBNY) have not injured you. Others have plainly been less fortunate.

*NotLambchop adds "non-government crooks(FRBNY)" to the cliche list*

Is there anyone not conspiring to part you and your monyz, solarion?
Surrender and welcome your Reptilian Overlords, Human!
Forget Grandma, she'll be well taken care of.  She's been repurposed into an incubator for teh eggs of our young.

What do bankers steal through inflation? Can you describe the process?

Goodness no. Please look up the millions of books or articles on the subject. I can recommend you look up Thomas Jefferson, Andrew Jackson, and Alexander Hamilton's history. If you're disinterested in reading then look up the thousands of youtube videos dealing with FRB, jeckel island, FRBNY, etc. Not doing your homework for you. This stuff should be required reading material for anyone unfortunate enough to have to deal with fiat currency, not a semi off topic paragraph.

Not in government or banking...no.

I know...I know there's no way Americans will be treated to a Cypriot like looting. It can't happen here. FDR has been dead and gone a long time! US banks are safe, honorable institutions! ::)

The last looting I heard of in Cyprus was a little Bitcoin bank called NeoBee :$
:D

Relevance? I know very little about neobee and bitcoin securities in general. They're not for me. If people choose to entrust their bitcoins with someone else then they were at risk. That should be obvious with a non-redeemable currency like Bitcoin. I haven't heard of anyone being forced to engage in bitcoin commerce or investing.

You should probably familiarize yourself with Bitcoin securities.
It is a shining example of laissez-faire economy based on non-inflationary currency in action.  ~95% failure rate.
NeoBee was a lulzy proposal by a charismatic young man named Danny Brewster to start a Bitcoin/fiat bank.  He has raised millions by pitching his brainchild to a receptive audience of Libertarian-leaning amateur financiers.
Then he ran away :)

Not quite sure how happy that would'a made Grandma.  Oh wait...

http://s29.postimg.org/txz6x14pj/neo1.jpg

Photo cutesy of http://www.neo-bee.com/en/ , which is still up to mock the hobby finance aficionados.

Please cite the bitcoin legal tender law that requires me to engage in bitcoin commerce or crypto related investing. Your posts are akin to soccer moms that blame guns for "killing" people. Make sense man.

^
*NotLambchop add "MuhGunz" to the cliche list*

No law requires you to engage in bitcoin commerce, but this begs the question:  What's bitcoin good for, if not for commerce?  Isn't that sort-a a given that money is, you know... used? :D

Money? Did you mean to say currency? ...or did you intend to imply that Bitcoin fits the definition of the word money? I'm fine with that provided you also agree that fiat clearly does NOT fit the definition of money.

Sure, please permit me to quote myself, as I've already answered this question in this thread.


https://bitcointalk.org/index.php?topic=604083.msg6691978#msg6691978

I meant to say exactly what I have said -- mon·eyˈmənē/ :)

Err...  Why dredge that up again?  Who told you that fiat was a great store of wealth?  How does that statement, regardless of it's validity, relate to bitcoin's use as money (or "currency," if you want to fool people into thinkin' you've been to finishin' school)?  Are you suggesting that it isn't?

Holy crap, I retract my previous comment about what you seem to know. I apologize, I overestimated your understanding of the topic.

Only at the parents of the embryo smoking the cancer stick. :(

...and now it's smoking :(
Tell me what you *do* like, solarion, because it's starting to seem like you just have a case of the blahs.
How about we turn that frown upside down?

In no particular order: Women(except when they smoke as it makes them taste like I envision an ashtray tastes), motorcycles, cars, cryptos, learning, sincerity, hockey, empathy, liberty.

We? I don't think you're my type bud, but thanks.

I missed this post previously.

While I agree that absurdly low(artificially low is how I usually refer to it) interest rates are a huge problem, as it doesn't allow for a price discovery mechanism to operate, brutally punishes savers, and rewards gamblers, this isn't the whole problem. After all the very same NON governmental "authority" setting interest rates also "prints" the nation's currency, which it then lends to congress with interest. Plainly there's no legitimate reason to do this as congress is granted the authority to print our currency directly without interest, which is why there's a US treasury(they still stamp our coins). However if you're a politician in DC and you want to spend more than you're taking in it's fantastic, as you can inflate the budget to your heart's content and saddle future generations with that debt. This wouldn't be possible with a sound currency. You cannot simply whip up an extra trillion gold certificates as someone may well try to exchange those certificates for gold you do not have.

-- http://en.wikipedia.org/wiki/Fractional_reserve_banking

...and yet :-\

Again, not getting the relevance of your post. I'm familiar with the long history of fraud in the fractional reserve system, with or without sound money.

Are you saying that because there were crooks long ago that there aren't any now? Are you saying that because there were crooks long ago that crooks now are excused?

...are you trying to say that they're only crooks if their name does NOT contain the word "federal" to allow you to help yourself to the erroneous conclusion that they're a part of legitimate US government authority?

What's your point?

You said fractional reserve is impossible with "sound money."  I showed you wrong.  Your inability to such basics is, frankly, worrying >:(
I gave you some bright red font, see if that helps.  If not, there are plenty of promising careers in ditch-digging and fryer management.
.

So you're saying because people steal gold is bad? ...or you're saying because people fell for the concept of gold deposit slips that therefore gold is bad?

JUST SPELL IT OUT MAN. ;)

Quoting me out of context and adding a link isn't doing anything for me. I know you can type, you did it previously. Now you've colored stuff red...perhaps you could just spit it out?

Ah thanks. That's not even close to what I said. If you're going to just skim the thread while paying little attention, please feel free to ignore my posts. The concept I was failing to convey clearly required more attention than you were willing to give it.


This sentence does NOT refer to FRB. Either you're not paying attention or you're way over your head.

n/m You're plainly lost.

No.  You're saying that fractional reserve is impossible with "sound money."  I explained that fractional reserve was used, and originated with, "sound money," i.e. gold.

I'm beginning to suspect that you suffer from serious, dangerous organic brain disorder, requiring messy invasive surgery, followed massive doses of powerful psychotropics.
Please tell me that you feel safe and will call 911 as soon as things become unmanageable?

All kidding aside, I worry for you, solarion.

Please quote me saying that, with or without the "B" for banking.

I'm beginning to get a little worried for you too bro. Are you on any prescription meds?

Shhh.  I'm a friend, solarion.  You're surrounded by friends.  
Now, if you feel up to it, tell me why you disabled your activity light?

http://s4.postimg.org/i097v7d15/Capture.jpg

Do you sometimes feel that government men are watching you, stalking you, following your every move?
It's OK to talk, it's just us friends.  Did government men ...touch you?

I'd change the subject if I were as far out of my depth as you are too bud. Don't sweat it.

I'll repost this for you, but promise not to hurt yourself tonight.  Promise?


*Now tell me, Do you sometimes feel that government men are watching you, stalking you, following your every move?
Did government men ...touch you?

You may repost that comment as many times as you like...in any color you wish, but it's not magically going to say what you seem to think it does...even out of context. The repulsive relationship between the federal reserve and congress critters is not fractional reserve banking. The fact that you think it has anything at all to do with FRB indicates that you do not understand the principles of expansionary monetary(currency) policy or how banks function.

We are all living in an increasingly oppressive police state in which millions of arcane laws, codes, and regulations are intentionally written with ambiguous meanings so that as many as possible can be charged at any given time with any number of "crimes". It's been estimated that in the US, an average American unknowingly commits 3 felonies/day.  

If you're asking if I personally feel singled out by government parasites, then the answer is no.

So tell me what you were trying to say here, and put it in context.  Keeping in mind the topic of this thread, "Fractional Reserve Banking."

What is it that can not be done with "sound money"?

I realize it can be fun to quote people out of context, but if you simply read the paragraph you're so fond of, in it's entirety I believe it's actually pretty clearly written. As to your reminder of the topic, you'd do well to recognize that the comment you seem to want to pick through and erroneously cite as some great grotcha, was a response to a comment someone else made. It had nothing whatsoever to do with you, though you've used it to illustrate, very effectively, that you do not understand the subject material of this thread.


https://bitcointalk.org/index.php?topic=604083.msg6695555#msg6695555

In case you still SOMEHOW do not get it...it's a conversation about the federal reserve...which is not federal and does not have any reserves. It has nothing whatsoever to do with secondary currency generation...otherwise known as fractional reserve banking.

Now that you know our dark secret, that [my] Federal Reserve is not a branch of US [Reptilian] government, you leave us [me] no choice.
But just try bringing this [mine!] arcane knowledge to others of your kind.  All creatures that hear and crawl I've made deaf to your truth, solarion!
Bwahahahaha!
You're doomed, filthy Human! >:(

*Now that you've derailed the topic from Fractional Reserve not being bad to Federal Reserve not being US government, I'd still like to get an answer:


@odolvlobo:  Don't be mean.

http://www.federalreserve.gov/faqs/about_14986.htm

Federal Reserve is independent but subject to oversight by Congress.  It was created through The Federal Reserve Act sign into law by Woodrow Wilson in 1913.  Its nothing like a private bank like JPM Chase or Citibank.  Its the bank for these banks.

Get your facts straight before putting on that tinfoil hat

Pretty sure ignore works.

I do hope you're kidding with this post. If congress creatures had any interest at all in doing the job they were elected to do they wouldn't have single digit approval ratings.

^
You seem bitter.
And undercooked.

Earthling >:(

Nah. You don't seem to understand our current monetary system. That's become clear when you wrote this old "saddle future generations with debt" manthra.
Government debt is not a burden, it's a monetary instrument for the monetary system. That's why congress doesn't simply print the currency but issues debt. If it started printing, the Fed would have to start selling its own debt (net effect would be zero) or just let rates plunge to zero forever without the ability to raise them.

Also government debt is an asset for private sector. When government is running fiscal deficit, it isn't saddling future generations with debt, it provides current generation with an asset. Perfect credit risk free asset. Moreover only the government sector and the foreign sector are able to add net monetary assets to the domestic private sector. Government does it through deficit spending, the foreign sector does it through current account deficit (for the foreign sector).

You ignore the fact that it's impossible (well, only possible if you're dumb) to default on your own debt in your own currency.

If you imply that Fed is ruled by banksters then you imply that all government is too. But it's not a monetary problem, but a political one.

Of course the US can default on their own debt.  When the Chinese, Japanese and Germans stop accepting paper in return for real goods and services.

And why would they do that? Because the US isn't the world's policeman anymore.

Or maybe the Saudis decide to accept a digital coin they can trust.  Man, they could issue their own coin for oil.  OilCoin!  You heard it here first.

Get your head in and stick to the Blockchain!

Yeah, and what are they supposed to accept instead?

Its not possible unless dumb dumb Congress refuse to raise debt ceiling.  Which is political issue not monetary one.

Debt owed to foreigners are in form of bonds not goods & services

True. Some guys here don't have an idea about national accounting, balance of payments, international investment position and stuff.

Not your toilet paper mate.

Here you go:


The Chinese are getting smarter. 

That's really sad, I did save some of my used toilet paper under the mattress. It's worthless now, what a shame. :'(

OH NOES THE US IS GOING TO DEFAULT NOW :'(
What's the point?

Start a separate thread if you wish to discuss this...misguided post at length.

Fractional Reserve Banking IS bad.  Here is why: http://ozziecoin.com/?page_id=1068

Ozziecoin, gotcha. You're a spammer, how could I be so blind ;D

Got it. I don't currently want to educate anyone, so I won't. Just a relaxing conversation happening here ;)

Saves me having to repeat myself.  Also, able to avoid your rambling logic.   ;D

Having to repeat nonsense you wanted to say? :D
At least you seem to be familiar with Goebbels methods ;D

Nonsense appears to be coming from your side of the fence mate.  8)

Here is how to avoid Fractional Reserve Lending = USE THE BLOCKCHAIN

Do not allow off blockchain transactions.  Problem solved.  Case closed.  This thread is dead.

Understood.

It is better to remain silent and be thought a fool than to open your mouth and remove all doubt.

Hey, just want to be clear why you guys are saying frb is 'fraud'. I don't get it. Fraud means that there was some dishonesty. However, the frb system, at least in the us, is very well understood and how it works is public knowledge. So, no real deception/dishonesty. Who is deceiving who, and how?

On the issue of Fractional reserve banking being a fraud or not, I just want to point out that we individuals would go to jail if we started lending several times money people entrusted to us. But never mind.

I'm just going to say that FRB allows banks to increase M3 and to profit for that liquid creation of money. Taking in account that M3 is several times bigger than M1 (mainly, notes and coins), even taking in account that a big part of M3 is created directly by the central bank (by crediting banks with money on the accounts they have in the central bank) we are still allowing private corporations to create a huge part of our money.

Therefore, we are depriving the State/Central bank of the power to create all the money that is created by banks. If FRB was tighter or inexistent, a huge (or all) part of the M3 created by banks would be created by the central bank and given out to public entities without the risk of creating inflation. So less taxes for all of us.

Basically, part of the taxes we pay go to support Fractional reserve banking and the profits given by it to banks.

Not well understood by the public.  And especially retirees, savers and other hardworking people out there.

Individuals are not banks. There is a special set of regulations that allows banks to do what they do. These do not extend to individuals (unless those individuals decide to open a bank :) )

And please explain to us all why banks should have this special privilege?  And tell me what is the Blockchain for?

Not sure I get your point. Its not like the rules governing banks and fractional reserve are secret and/or deceptive. They can be retrieved via internet, library, etc. Wikipedia has good summaries of it too. The rules are published and the banks operate by those rules. I don't see any fraud. Or am I missing something?

In what world is fractional reserve banking fraud? When you take your money to the bank and they agree to hold it for you and pay interest, you know that they are doing so in order to lend it out. If they didn't lend it out, you would have to pay THEM interest.

Also, the benefit of fractional reserve banking is that it allows multiple people to use the same money at the same time. You can have your money in a rainy-day fund, and I can use it to buy stuff until you need it back. Locking money in a vault and doing nothing with it for years is not productive.

Because that's what the politicians we voted into office legislated. That's the rules that were made. For the same reason a policeman gets to arrest people and I don't. Right?

Block chain is for keeping a history of transactions. Why?

The only reason it is a special privilege is because the government labels anyone who does so a bank. You can't bank without being a bank and therefore only banks are allowed to bank. If regulations did not restrict the ability of individuals to privately borrow and lend money, anyone could do it. As long as they were responsible about it there would be nothing wrong.

By the way, fractional reserve banking is nothing more than borrowing money to invest it. For example, I would be engaging in activities very similar to FRB:

1: If I borrow money on a site like BTC Jam and then loan it out at a higher interest rate, or if I buy Bitcoins using money from my credit card and then loan out those Bitcoins.

2: If I borrow money on a credit card to buy stocks at an IPO, since a stock is essentially a loan to a company secured with partial ownership (to be more accurate I could buy bonds).

FR isn't only the right to lend out money someone lent to us, in the end it's the right to create money by lending the same amount of money several times.
Technically, isn't fraud, but it's risky and concedes a public function (a sovereign one) to a corporation, the right to create money, crowding out as unnecessary the same amount of public money. If the bank can lend the same money, it doesn't have to ask for credit from the central bank. We all lose.

I disagree, we would lose if that money was sitting in a vault doing nothing. People need to save for their futures, and FRB allows that savings to be used productively to create economic value that benefits us all. If FRB was banned, money would have to be stored in vaults and under mattresses or (more likely) FRB would just take other forms.

Ending it completely might be too demanding, but limiting it? 10% seems to be the rule around the world. That is playing with a serious risk.
And allows a drastic banking multiplier on the creation of money.

Then have one to one lending.  NO problems with that.

This is an intelligent comment.  :)

Banks are not only lending out the money that they have, they are lending out the money they DON'T have.

The risk is credit worthiness of the borrower.

In England there is no cap so banks can create unlimited credit as long as there are credit worthy borrowers.  The make the loans THEN they look for the reserves not the other way around. The problem occurs when deregulation allows things like subprime lending

The issue isn't whether we should have FRB or not.  It's absolutely necessary for modern economies.  The issue is how to regulate it in order to avoid systemic risk

The real issue is not that we "allow" fractional reserve lending. The government should not be involved in banking at all.

Banks would not take such stupid risks if they were not back by the federal reserve's ability to print money. If you make stupid decisions you fail. The government bailout addiction makes it easy for banks to make stupid decisions and the hyper regulation after such a bailout leads to the demise of small banks which compounds the original issue by further centralizing the banking system and increasing the risk of systemic shocks. These newly merged frankenbanks are then even more likely to be bailed out for bad decision making. The bailouts come from you and me in the form of tax dollars and devalued currency. Rinse and repeat ad nauseam.

Agree with this.  But let's not forget the human propensity to be greedy, especially when they are not personally taking on risk themselves.

Banks are run by managers who are paid bonuses. When losses occur, it is the shareholders that get hit.  I don't recall any banker going to prison since the GFC. Maybe in Iceland. 

You are wrong.  Bailout was an emergency loan that's already paid off w interest

In the case of AIG the Treasury took equity in terms of AIG stock and made a handsome profit selling in 2012.

I don't know about you but I didnt pay any more taxes because of bailouts.  I got suckered into an ARM mortgage by Countrywide and when my interest ballooned no bank allowed me refinance because my mortgage was underwater.  But I could roll it into an FHA jumbo.  So the govt helped me out a lot

And if those risks make profits and stockholders make money? 

Yes, the modern differentiation between property and management can have serious risks. An exaggerated attention to the short-term (profits this year) and a disregard for the long-term interests of the corporation. So, risks with good short-term profits are welcome.
A system of laissez-faire on the banking system was precisely what left us where we are.

I agree that there should be more regulation but the debate is how much?  Is Dodd Frank enough to prevent another 2008?  We won't know til it happens again

Bankers make money in the short term (possible 5 to 10 year period), get paid bonuses.  The debt bubble eventually collapses leaving shareholders and taxpayers with the bill.

Believe the answer is the Blockchain.  Post Great Depression various rules were implemented to prevent the exact scenario we are now in.  Things like separation of investment from savings banks.  Reserve requirements. 

Every single rule was broken down over time.  The most egregious was Alan Greenspan's mob in allowing investment banks to have virtually unlimited leverage.  As a consequence Lehman was able to leverage up 40 to 1.  The free market failed to perceive the risks until it was too late.

Even a little FRB is a slippery slope.  If all money was on the Blockchain, this will never be a problem ever again.

Christ dude, just stop w your "Occupy" cliches.  Clearly you don't know how banking or finance or taxes or stocks work.  Some banker screw your girlfriend or something?

You've been given a massive load of debt and you're thankful for that?  Mate, wise up.  If no one had massive debts, houses would be cheaper for everyone.

Mate, does this mean you're not part of the 99%?  Why are you so in love with the 1%?  Go the occupy movement!

I speak for the young, disenfranchised and asset poor people.  I make no apologies for that.

You speak of the Occupy movement as if they were to be despised.  I speak of them as brothers.

This is supposed to be about arguments, not ad hominem attacks

I don't despise Occupy Movement.  I just think they are disorganized and ignorant.  I get that they are hurting but they are directing their energies in the wrong direction.  They are loud but they have no clear message.

I know you are trying to do something w ozziecoin. Good luck to you but you are just so misguided. Instead of learning shit from the wackos here why don't you use Cousera.org and take some free classes from legit schools.  You can even find classes from Ivy League or elite schools like Stanford.  Seriously, check it out cause your knowledge of economics and finance is like high school level.

But I really don't care what you do.  Just stop repeating the same thing ad nauseum.  Its really boring.  Its not like a fresh perspective that nobody has heard before

And what perspective do you offer? The same keynesian/neo-classical/monetarist clap trap that got us into this mess?  I studied all that. And I reject it all because it is false.  

I offer zero FRB money.  All on the Blockchain.  We are going to get ozziecoin to the community so parasites, which appear to include you, do not get to benefit from the rest of us.  

You say the Occupy Movement is disorganised and ignorant - well I'm not.  

I don't believe I'm the misguided one here.  I believe you offer zero solutions.  You have massive debt.  You accept massive debt.  You speak for the 1%.  And you think it is okay for FRB to inflate money.  

It is those academics running the Fed that are teaching at those ivy league schools you so glorify.  And at what cost? Hundred of thousands in fees? Please, they know nothing so they can teach you nothing.

Soros rejected neo-classical economics, citing there is no perfect market and proceeded to make billions with his theory of reflexivity.  Fama works for a company that exploits market inefficiencies.  Schiller says housing bubbles appear all the time.  Richard Fisher says they are juicing the markets.

You go study the Efficient Market Hypothesis.  I point out to you, if the markets were efficient then how come we had a market crash?  

If markets were efficient and self correcting then how come the Fed needs to intervene and print trillions?

There is a MASSIVE HOLE in economic theory right now.  You would be blind not to realise that.

And do you know how they paid off those debts with interest? They took the money that was supposed to be for making loans and getting the economy moving and create jobs and they used it to speculate on food commodities. That's right. They used that money to drive the price of food up so they could make a profit. People were hungry in this country and they made it worse so they could make a buck off of it.

Yes you are taxed on all of that. Have you taken the time to look at the value of the money in your pocket? Have you noticed that it doesn't go as far as it used to? Do you know why? In order to support this house of debt we have been living in the fed has been printing money at record rates in order to lower the value of the dollar to reduce the size of the debt. That is also a tax.

@ozziecoin

Again you know not of what you speak.  

Keynesians are not neoclassicists.  Keynes wasn't a monetarist either although a monetarist like Bernanke could also be Keynesian.  However, Friedman, the father of monetarism, was definitely not Keynesian

LOL. I don't have solutions to the worlds economics problems and never claimed to have. However, at the least I understand economics so I don't go around talking about "evils of FRB".  That would be plain ignorant.  The only thing I try to post on these boards are factual knowledge and I debate those who post misinformation.

Wait so now you are quoting Soros and Shiller?  LOL cause I happen to follow Soros Institute for New Economic Thinking and I'm taking Shillers Coursera class.  How can you follow these people and be so misguided?  You do realize that Soros is part of the 1% that you seem to hold so much contempt for.

Weren't you the guy who told me to follow Taleb cause you think options trading is for schmucks not realizing Taleb got famous as a renegade options trader?

Are you just pulling these names put of your ass to sound intelligent or do you actually read what they write?  

I don't subscribe to EMH.  But the GFC had nothing to do w FRB and something like BTC won't prevent bubbles and crashes either.  If youre so keen on Shiller you would already understand that bubbles are the result of psychology and behavioral economics not monetary policies.  The QE came after as a response to bubble crash

Also you keep interchanging private debt and govt debt.  They are not the same thing

Hah! An economics student.  I should've known.  I rest my case - you are a complete dumbass.  Enjoy school fees buddy.

FYI: keynesians, monetarists and neo-classical economics all prescribe to the same belief of efficient markets, supply and demand and FRB.

Hyman Minsky on the other hand told them they're all idiots.  The GFC taught us that Minsky was right.  So were the Austrians.

Taleb bets against idiots like you and Soros is the 1% because he used leverage to prove that the system is not efficient.  I don't support him but he exploited the system. And you have to respect that.

Shiller knows it's behavioural but Soros understood you need leverage to create a bubble. (Please read his theory of reflexivity. It is similar to Minsky's disequilibrium theory but much easier to read.)

Private debt and gov't debt are not the same thing but who cares about the price of rice in China.

The problem is FRB.  Take your head out of your ass.  

http://www.businessspectator.com.au/article/2013/12/16/economy/oh-my-paul-krugman-edition


It would appear the ignorant people are the ones talking about the Loanable Funds model.  It's a myth!!!  

Krugman is WRONG.  One person's liability is NOT another person's asset.  Due to FRB.  Minsky was RIGHT.

@ twiifm

I don't know what you're following.  But you understand nothing of what you are following.  I'm sorry but it's a fact.

Outstanding trolling, well played

I take it the two of you have successfully avoided brainwashing?  While other children were being corrupted by teh banksters, you finance revolutionaries were busy huffing household solvents?

I'm also critic of the FR, but from a formal point of view it doesn't destroy the link between credit and debit. One man debit is another man/entity credit.

The bank lends the money someone deposited to another person by crediting the account of this second person, that might use the money to pay a debt to a third person that decides to keep the money on the bank, allowing it to lend again a big part of it. But the link between debit and credit isn't affected.

The problem is on their guaranty, the "real" money. If one of the debtors of the bank defaults that is going to have a bigger impact because of the FR.

I cannot speak for Ozziecoin, but I was indoctrinated at a .gov DOE facility. I was taught all about the three equal and opposing pillars that allegedly maintain balance in US government, which was then still billed as a Republic(I'm old). Interestingly the FRBNY and the fourth branch of government were not discussed.

So at which point is the "money" to repay the interest on a debt created?

lolwut?  Are you still saving monyz on recreational chemistry by stealing stuff from under my sink?  Come on, bro, put down teh bag >:(

Since all fiat money is created out of debt (the central bank creates money by lending to banks or, in certain countries, directly to the State), interest creates new debt that can only be paid by borrowing more, supposedly supported in future income grow (think about corporations).

It's because of this that no modern economy is prepared for a long economic stagnation. Interest debt can only be paid by someone getting more loans and that can only be supported by economic grow or inflation (nominal grow). Any long stagnation creates a financial crisis, solved by inflation or defaults.

It is Fraud, plain and simple.

So long story short...it's not.

Sounds remarkably like a pyramid scheme. There's never enough "money" available to extinguish all debt(principle + interest) as the interest on that debt hasn't been created. This results in perpetual debt slavery as well as major deflationary events if/when the masses lose faith in their currency or there's a sustained economic slowdown and large numbers of peasants stop living beyond their means. If people stop borrowing(or ironically use only physical cotton dollars) the entire system collapses in a deflationary spiral as debt(currency) is extinguished faster than new debt(currency) is created. This is why government policy encourages debt greater than previous debt...IT MUST. HUD, Fannie mae, freddie mac, cash for clunkers, tax credits, zero(and near zero) % interest rates, .gov student loan takeovers, fed mbs purchases(liquidity injections), operation twist(again), etc.

Fiat debt based currencies are designed to fail, and they always do as they're inherently flawed. The USD is no exception and it too will fail(again), but not until those that do not understand the scam are milked dry. At the appropriate time a new scam currency(SDR, Amero, etc) will be wheeled out on cue to replace the failing USD and continue the complicated theft...perhaps this time on a global scale under a single scam currency(SDR). Perhaps like the Euro has unified much of the Euro zone under a scam currency the Amero will unify the Americas under a single scam currency.

And where does that 'growth' come from? And doesn't the compounding interest on ever growing debt require exponential growth, instead of just linear growth? Is that even sustainable in a finite world with finite resources? Could it be that all our financial and even climate change problems are related to this? I think the answer is yes, but I'm sure someone here will argue it's not and everything is fine...

Stop and think for a second, and that is obviously rubbish, because practically every economy that currently exists uses fiat currency, and hasn't collapsed.
So your argument becomes that every economy that has adopted fiat currency has collapsed ...  except all the ones that haven't.
You can say the same thing about anything.
Every economy that has adopted democracy has collapsed ... except all the ones that haven't.
Every economy where people each vegetables has collapsed ... except all the ones that haven't.
Every economy in a country beginning with R has collapsed ... except all the ones that haven't.
And you think it was fiat currency that caused the collapse of the Roman empire? If not, then what is the connection?
Much more simply: Every economy has collapsed ... except all the ones that haven't.

Human population growth is exponential.  Economic growth needs to be exponential just to keep up :-\

http://worldhistoryforusall.sdsu.edu/images/Popn_Graph2.jpg

@ozziecoin

LOL not even close.  Just because I like to learn doesn't mean I'm in school.  Try it sometimes

If you understood options trading you would not make a dumb statement like that about Taleb betting against me. It doesn't even make sense.  You don't even know how I trade or what my positions are.  Furthermore traders sont bet against each other as individuals just the options have 2 sides.  Its not a chess game its a market.  Besides, Taleb retired from trading its impossible for us to ever cross paths

Wait so you respect Soros for gaming the system, but not every other banker for gaming the system?  All Wall Street guys game the system.  Thats how they make money since they don't produce anything

You trying to impress me by name dropping Minsky?  You know he's considered a Post Keynsian right?  

None of these names you dropped says anything about FRB being responsible for economic crashes.  

Human population growth is not exponential and currency expansion is not economic growth. The US economy doesn't magically improve simply because helicopter benny conjures up $85b/month and dumps it on his bankster buddies.

^Miz4r suggested that exponential growth is unsustainable.  I replied that human population growth is exponential.
Not everything in this thread is about you. :-\

Consider taking part in the gubmint brainwashing program -- huffing gas may have seemed like a great alternative to education, but look how shit worked out...

<ignorant troll ignored>

This is a discussion forum. If you're unprepared, unable, or unwilling to defend your posts, then don't post them. You're contributing precisely nothing to this conversation.

I agree but if you want free markets its gotta be this way.  How are you gonna stop people from wanting to enrich themselves through profit?  Communism didn't work.  

http://s12.postimg.org/u9k0byg19/Capture.jpg

Re. your edit:
Your posts could be accurately described as "not even wrong." (http://en.wikipedia.org/wiki/Not_even_wrong)
While mostly grammatically well-formed, your posts fail to meet the same criteria at a logical level, thus responding with anything other than "lol" is a fool's errand.

I'll tell you more, that's not only in England. It's virtually everywhere. Bank makes a loan and then corrects its reserve account (usually closer to the end of the day).
This makes reserve requirements obsolete because there will always be enough reserves to expand credit (unless central bank stops maintaining interest rate target).

So you're just another gamer in the system?  Don't keep tripping over yourself, will ya?

Except Minsky does.  So does Soros.  Seriously, for fucks sake - do some effing homework.

Between FRB and communism is this thing called the Blockchain and one on one lending.  Gee, do I have to spell everything out for you?

I rebut you with David Suzuki

http://mmoffatt1.typepad.com/blog/2012/10/david-suzuki-how-economics-became-a-science-of-destruction.html

There's a nuance. You treat government as if it was another average Joe borrowing from banks. That's not quite true. In fact, the government is who sets rules here. It's the government that creates money.
For this very reason, MMT breaks down monetary transactions to two different types: horizontal and vertical. Horizontal transactions are those which happen between banks and average Joe. And it's true that interest repayment here can only happen through borrowing more. But it becomes more complicated when you add government to the system.

Vertical transactions involve central bank, banking system and the government. And the government is able to add money (monetary assets) to the economy. It does it every time it runs a budget deficit.
So, basically there are two ways new money is created: through bank lending and through deficit spending.

So the answer to this question:
is "when government runs fiscal deficit".

WTF am I reading?

Weirdass extrapolation from statements made by the guy who wrote The Population Bomb in the '60s (mostly shown wrong since), and an ex-chairwoman of some Canadian agency disbanded in the early '90s (had to look both of them up).

What are you trying to say?  Say it in your own words.

When you say "government" you're referring specifically and exclusively to federal government are you not?

Is this real in your opinion?

https://i.imgur.com/WJNzV69.png

http://www.usdebtclock.org/

One on One lending is not possible to meet the capital demands of the market.  You can still have FRB under BTC.  A bank makes loans and then finds the BTC reserves.  But the big difference is when they can't find reserves there is no Central Bank to act as lender of last resort and the system would collapse pretty fast.

LOL this ozziecoin guy has been constantly dropping names of economists and famous traders who don't support his position about FRB.  I don't know WTF he is saying either.  I think he's just trolling but I have some sick compulsion to keep replying him

Human population growth is no longer growing exponentially, in some countries like Japan they're actively trying to stimulate the population to make more babies because they know otherwise it will be much harder to keep growing the earth's cancer economy to keep up with their debt burdens and accompanied interest. Do you believe this is actually a healthy and natural thing? Honest question.

That's just nonsense. One on one lending may be unable to meet the needs of warped and distorted capital markets. In a free market system, the cost of money(interest rates), would be set by the market...not a bunch of un-elected banksters in a privately owned cartel pretending to be government officials. It'd take capital formation to start and sustain business expansion. The masses would be appropriately compensated for producing more than they consume and the costs associated with poor investment decisions would be borne by the investor, not an ignorant public. IOW capitalism, which we most certainly do not have currently.

"lender of last resort" ROFL

Don't forget the rest of the fed's charter. Full employment of the sheep is necessary if you intend to continue sheering them indefinitely.

Just think logically about what you are saying.  If a bank has $1B in reserves and they can only lend out one to one.  What happens when that $1B runs out and there are about $10B of demand still unmet.  The only thing they could do is wait for some repayment.  If they knew the repayment is gonna take a while then the interest is gonna shoot thru the roof.  If interest shoots through the roof then who can buy a house or go to college or start a business?  You gotta stop only thinking about the supply side gotta consider the demand side as well

Not sure what you are asking.  What is "healthy and natural"?  Healthy and natural for whom or what?  It's perfectly healthy and natural for yeast to snack on sugar and shit out alcohol, multiplying exponentially until alcohol kills off the entire yeast culture.  We thank the critters for delicious booze.

Examples of this in nature are common as dirt.  The human population could follow an s-curve (reaching an equilibrium), be limited by some catastrophic event and resume exponential growth (major war, natural disaster -- stay in dynamic equilibrium), or be extinguished by a catastrophic event (okthxbi).  Examples of similar scenarios abound in nature and thus are (by definition) perfectly natural.

Economy is also not static, it's not even an entity.  It exists in constant flux, changing everything about itself.  Like a living culture, it can follow any one of the scenarios described, and then some.   Bitcoin is one of the things affecting economy.  

Federal government of course.

And what's your point? Be more concrete please.

These bankers are a part of, and a creation of, the free market.  Financial institutions and regulations were all created by the free market adapting to changing environment.
...unless you think that aliens brought us bankers and regulations.

I have thought about it logically. Have you?

What you're suggesting is a system in which people only take on debt they can repay. People that choose to not take on debt and save are compensated as interest rates rise appropriately. As a result lenders are compensated appropriately for lending. How much of that theoretical $10b in loan demand disappears instantly when interest rates rise to appropriate levels? Buying a home is SUPPOSED to be difficult, not a simple matter of filling out a few HUD forms to pop "money" into existence so anyone with a minimum wage job can experience the satisfaction of home ownership...and later the crushing disappointment of home foreclosure because they lacked the means to buy the home in the first place. Naturally in between the signing for the home they could not afford and the day the bank takes the home back they're encouraged to borrow against their equity with a HELOC. This is "good" debt after all right? How much lower do you suppose home prices would be if not for government meddling in the housing and interest rate markets? Secondary education? Health care?

The moral hazard of endless mountains of debt and a government hell bent on sustaining an unsustainable system of debt greater than previous debt, simply does not have a positive end game scenario. You look at one tiny aspect of a thoroughly rigged system and say "look this needs to be thus", but ignore the broader implications.

I feel it's an important distinction as only federal government can conjure currency from thin air.

Dude!  Did you hear 'bout Federal Reserve, the sneaky non-gobmint bastards?

Real grow comes from investment that usually depends on cheap credit, new technologies, comparative advantages, new primary ressources, etc..

Of course, there are limits to grow and, in end, economies have to pass under periods of recession or/and inflation to return to a sustainable level of debt.

Fiat systems as systems based on authority/trust are not necessarily based on debt. I agree the debt system has its merits as a way to let the economy decide the expansion of the M3, but has also his risks and soon or later ends with a monetization of a public deficit with liquid (non based on debt) creation of money. Japan probably won't escape the need to create money to pay out its public debt (about 240% of GDP, even if its liquid debt is much lower). And Japan won't be the only one. So a mix system of debt and liquid creation seems to be necessary.

But I don't believe either on a system based on a golden standard or a finite currency like bitcoin, even if a mix system might be viable. A fiat system is necessary to allow for public economic policies and these policies are very important. Without the expansion of the monetary policy by Bernanke the USA would be as Europe is now, with about 11% of unemployment.

Actually, the serious problems certain States are having, like Japan and Europe, are derived from a slow decrease of their active populations and expected negative grow of their general populations. That is going to bankrupt social systems and to provoke liquid creation of money/inflation or sovereign defaults.

Even China and India have the grow of their populations under control. India is having about two babies per women, China is having much less than that. China is going to have serious problems because of a decrease of their active population and huge numbers of old people.

Population is going to keep growing because of increase of life expectancy and because of Africa, that is still growing fast, but the population is going to decrease in Europe and other developed countries. Projections are pointing for about 9 or 9.5 thousand millions around 2050 and then a decrease that might be fast.

Just reread the OP. OP is right. If reserve ratio is high. No problems here.

If I could rid UK of the Bank of England or Fractional Reserve Lending, I pick to burn the central bank every fucking time.

Fraction reserve banking with no central bank? If the lenders cock up, they die. This is OK by me :D

G.

Besides having effects on the banking multiplier that can increase the M3 (these issues, as we all know, are controversial and divide schools of economic thought), running a public deficit only resolves the problem if the deficit is monetized (supported on the liquid creation of money by the central bank that is transferred without debt to the State) and that was one of the solutions that I quoted, as one solution that usually creates inflation. If the States goes to the financial market to borrow money to pay for the new deficit, the debt just keeps growing.

Sure the us has had lincoln greenbacks and kennedy treasury notes. I don't have a huge problem with these instruments. Either would be an improvement over the FRN IMO. Plainly they're not good for job security at the fed.


Disagree. Our current monetary system encourages excesses in nearly every form and at nearly every level of government. Public economic policy should meet genuine(and dire) public needs only...not the desires of life long political creatures to bribe the masses into complacency if not outright laziness with their own wealth. Government lacks the means to produce wealth and is a parasitic drag on an economy. More government spending means more looting of working people to fund these misguided ventures, which are then naturally administered ineffectively as the administrators have no reason to be efficient with other people's "money".

The problem with saying "this would have happened if this didn't happen..." is you do not know what would have happened, you're merely speculating. Anyway, almost nobody believes the made up unemployment numbers coming from the .gov, just like few believe the hocus pocus inflation numbers calculated with ever changing components, but generally less food and energy(due to volatility). Ironically there are only a few things a human being absolutely cannot survive without.

Yes we certainly wouldn't want to see a national unemployment rate of 11%.

How about 13%?:

http://www.cnbc.com/id/101398855

Pick your poison here:

http://www.shadowstats.com/alternate_data/unemployment-charts

What debt are you talking about? I thought we were talking about debt created by FRB, not government debt.
Government debt is de facto monetary instrument. It's a way to avoid 'monetization' which you mention (which is believed to be inflationary) and allow for monetary policy to control interest rates.
Deficit spending is one of the ways to add net monetary assets to the private sector. Bank lending, as a horizontal transaction, doesn't add net assets (as every loan is backed by a liability).

You're right, the rate of increase of the rate of increase is easing off, but current birth rate is still more than double current death rate.


http://www.worldometers.info/world-population/

I agree with your sentiments about credit worthiness.  Just don't see what that has to do w fractional vs full reserve lending.  I'm arguing that FRB is necessary when demand exceeds supply.

When I need irrefutable facts, I rely on the guy wearing that hallmark of credibility -- teh tinfoil hat.

I admit that a system where the Banks would live with a non-FR system would be viable. The banks wouldn't be allowed to lend more than what they have and if demand for money was higher than savings on their accounts, they would have to borrow from the central bank giving as collateral the money on their accounts. So the creation of money would rest on a public entity as well as the profits of that creation (so, we would pay less taxes). If the interest rates of the Central Bank were low, the banks rates could be acceptable.

But this system seems to be too tight, therefore a system of a high Fractional Reserve might be better, since still limits the ability of the banks to create money and limits the risks of a low FR.

I think his point is FRB does not solve every problem of finance, and I agree.  Lending money indiscriminately, to everyone who asks, is a bad thing.  Just look at bitcoin securities and this forum's lending section :)

Plainly if banks actually had to have the assets to loan them then they'd be a whole lot less prone to gambling. I'm not comfortable with loan officers at banks having the authority to add to the nation's currency supply with a signature. These are just private citizens with no public accountability or transparency. If I did the same I'd be tossed in the can for counterfeiting and fraud.

We've also seen on numerous occasions that when banksters do go too far and gamble themselves into the poor house, their mistakes are forgiven and their losses are socialized by .gov authority. I'd have less of a problem with this if their nominal gains weren't privatized, but it cannot be both.

We were talking about the creation of money, including "through deficit spending". I just pointed that deficit only determines creation of money if there is monetization.

No doubt, even democratic systems allow for abuses. The so-called political economic cycles, where in years of election there are expansions of the economy to grab votes, are proof of that. But in other systems things are worst.

And I think macro-economic policies are essential. If you think we should just wait for hard times to pass, with no intervention from Government, well we disagree on that. I'm not american, but I would gladly had exchanged the Trichet guy, that almost killed the euro, for Barnanke.

Numbers are abstractions. It's not important the exact number for my point, we know things were harder on the USA than they are now.

If you had Trichet, you would be worst. The capacity to make predictions about what would happen if some policy wasn't adopted or what will happen if it's adopted is a precondition of every science. Economics is a weak science, with lots of incertitude, but if we reject completely that capacity, we would be recognizing that it isn't a science at all, but a collection of cook receipts.

I favor free market solutions which is the opposite of government interventionism. Keynesian economic theory is a serial proven failure at this point. The fact that governments continue to doggedly follow these failed principles indicates that there's no scientific methodology being employed. The bernanke is the jackhole that admitted that the fed caused the great depression. That's his excuse for massive monetary expansionism...because he seems to be convinced that monetary inflation and monetary deflation will cancel...again with no scientific methodology to support such a conclusion. Surely the man has heard of monetary velocity measurements by now? You cannot just fix decades of ridiculously stupidly easy credit policy with more stupidly loose monetary policy.

Governments do not create wealth, they only re-distribute wealth. The notion that racking up massive piles of debt to "prime the pumps" during economic downturns is remarkably irresponsible, but that's the behavior you get when you're throwing around other people's "money".

Deficit always creates money (more precisely net financial assets). Because government debt is quasi-money and can be turned into base money. Moreover, for private sector it's not debt, it's an asset.
That's what my post content (that you removed from quote) was about.

Here you go:

Economists live in a land of make-believe. They aim at steady growth in consumption, material goods, wealth and profit as if it can be sustained indefinitely. And they have faith that human ingenuity will open up new frontiers for steady expansion while providing endless solutions to problems we create.

Of course you don't know what I'm saying. Otherwise you'd be smart.

Not true.  Private sector is creating money out of thin air.  I can go ten rounds. Loving this.

http://www.ft.com/intl/cms/s/0/7f000b18-ca44-11e3-bb92-00144feabdc0.html

The highlighted bit is a lie: http://mpra.ub.uni-muenchen.de/53385/

Loanable Funds vs. Endogenous Money: Krugman is Wrong, Keen is Right

http://www.ft.com/intl/cms/s/0/76b6f332-2133-11e3-8aff-00144feab7de.html?siteedition=intl#axzz31kP0HLZH

One to one lending is higher risk unless your are very careful, and it takes a lot more risk. It also doesn't prevent FRB since I can borrow money from you and loan it out (pretty much the same thing). FRB is a fairly safe and efficient system.

The problem with that argument is that money creation is not the purpose of FRB, but a side effect. Also, I'd rather have banks create money in a limited fashion than have governments printing unlimited amounts.

FRB works with dollars and with Bitcoins. Contrary to being incompatible with a free market, the only way to prevent FRB is by regulating the free market and making it less free.

I'm not able to read your link as it appears to be a subscriber service. Do you have another source?

The conversation you're referencing was in regards to US federal government spending vs state and local government spending. Obviously private banks can and do contribute to the currency supply which is the topic of this thread.

The way to avoid it is to treat all coins on the blockchain as money.  If on blockchain = money.  Not on blockchain = NOT money.

Sure mate: http://www.washingtonsblog.com/2014/04/conservative-economist-wants-basically-ban-banking.html

The article refers to the ability of private instos aka BANKS to create money out of thin air.

^Was your pop a banker, Ozziecoin?

I don't think that the creation of money is just a side effect: is an intended effect that directly support the profit of banks.
Anyway, being the main effect or a side effect is not the point: the point is that it's a soverign function that should be entrusted to a public independent entity, not the Government, but the central bank (well, in the USA the FED isn't exactly a public entity, but its status in one of those absurd things of the USA). And not conceded to private corporations. We all have to pay more taxes to support that aspect of the "free market".

From the paper you provided (page 7):
It's quite opposite to being a lie :D To be precise, the paper discusses household sector balances, while I mean private sector, which includes both household and business sectors.
The fact that you highlighted is empirical and doesn't need thorough analysis. It's basics of accounting, double-entry accounting principle.

Even if you believe that, which I feel has little to do with rational thinking and more to do with principle (I don't mean that personally), no one has proposed a reasonable solution. Destroying the economy based on principle is pretty foolish. FRB is how things work, you actually have to intervene in the economy to prohibit it. Why do you feel that a government continually fails at almost everything it does is better suited to money creation and than a free economy? You might not like FRB but the reality is it works, and massive piles of red tape will only make things worse for everyone.

You guys are missing the only point. As Abe Lincoln put it, "the hand that gives is higher than the hand that takes". When governments are in a ton of debt to banks and all they have to do is raise a little the interest rate and the country goes bankrupt... the governement (we) is at mercy.

Even if the actual economic system was the best possible (its not), it would be worth totally destroying it and starting with something new only for the fact that it gives way too much power to a very small group of people.

Now of course... I wouldn't expect an economist to understand that. It's nowhere in the books.

It doesn't work though. US economic history is one of bankruptcies, defaults, fascist bailouts, and outright theft. If the banking system works then what happened in 2008?

The US last openly looted the world in 1971 when Nixon unilaterally(and temporarily LOL) closed the gold window and ended Bretton Woods. The result has been a global race to the bottom for competing worthless debt based fiat currencies. Just because the vast majority of the peasants in the world don't understand the complex method that's being used to rob them, doesn't mean it's not happening or that they'll remain ignorant forever. We're stuck at insanely low interest rates long term for a reason. It helps to paper over the underlying dysfunction.  

Willing to destroy the economy?  Haha easy to say if you have nothing to lose.

Ridiculous.  *World* history is one of bankruptcies, defaults etc., etc.  US banking system sux?  Compared to what?  This Libber paradise?  Where *every bank to date,* from Pirateat40 to TradeFortress to Ukyo to NeoBee Danny -- turns out to be a straight-up scam?

"Fascist bailouts"?  WTF does that even mean?  But hey, as bailouts go, this forum was all over Danny Brewster's D when he claimed to be bailing out Jon.  Now that he ran away, the sentiment has somewhat soured.


The vast majority could be wrong and you right, but more likely it's the other way around.  Climb off that soap box, bro, your particular brand of crazy stopped being amusing in the early naughts, don't milk it.

Are you a bwanker mate?

I've got to say this is one of the most tortured pieces of logic I've come across. Almost hurt my eyes reading it. 

1. Money creation is not rocket science.  Create it, people use it.

2. Govt's NEED NOT BE INVOLVED in money creation at all. There is this thing called the Blockchain.  I don't care which we use but hopefully we stick to a few key ones and hopefully it's got privacy built in.

3. The problem is that the banking sector is creating more money out of thin air, to the detriment of everybody except the 1%.  JUST END THIS BIT!!!

Man, this should not be this hard.

Rocket science is not rocket science.  Light fuse, climb in, go to da moon.

Give it a shot.

http://media.jrn.com/images/660*500/29000659-mjs_playground14e.jpg

*On second thought, don't.  You'll hurt yourself and I'll have to start paying for entertainment. 

Is that a pic of you? Looks like you ate quite a few lamb chops.  ;D

Why bother. Meme's, petty insults, and generalities is all lambchop has. He won't engage on specific issues because he doesn't know anything about the topic.

We can all do our part to keep the thread clear of trolls by not engaging them.

How specific would you like me to get?

Well, you could start by addressing the portion of that post that you keep *NOT* quoting.

Also, by all means drop the silly comparisons to a few frauds committed by scammers in bitcoin securities. There's no force of government behind those fraudulent enterprises. People voluntarily and unwisely trusted someone not trustworthy with their coins...end of story. It sucks, but it doesn't come close to comparing to the frauds committed by banksters and their government stooges.

If you seriously don't know what the word "Fascist" means then brush up on it and come back so we can discuss it intelligently.

Since your posts are random assemblages of unsubstantiated generalities, slurs, and invective, I try to force you into some semblance of coherence by narrowing the topic down.  If there is a specific slur or invective you'd like me to address, I'd be happy to do so.


No.  Not "a few frauds."  I'm referring to the sum total of Bitcoin money services.  Each one ended in lolz, tears, and fail.  If that's what you are offering to replace the current financial institutions, no thanks.


Well yeah -- they trusted, they got pawnt, they cried, end of story.  All the money trusted vanished is somewhere on the blockchain (ther'ya go, Ozziecoin).  Not sure how to respond with specifics to "frauds committed by banksters and their government stooges."  My bankster never ran away with all of my monyz, my broker never texted me with "sry got hax0rd bro ur monyz gone."


I would seriously like you to explain WTF what specifically you meant by "fascist bailout."  Sounds interesting, but doesn't quite parse.

^
Is this specific and detailed enough for you?

You are making the argument on principle without providing *one good reason* to end a practice that many, including myself, would argue is beneficial. Other than "it's not fair," I've yet to see one reason that FRB should be banned, nor has anyone provided any evidence that doing so would not be immensely harmful.

You might not like the "big bad banks" but the reality is that all they are doing (in this case) is investing borrowed money. This works better for everyone since borrowing is cheaper, and savers earn interest instead of having to pay a fee. Yes, banks do make a profit, as they should, but the kind of money creation done by banks is different than just printing as much money as you want and spending it.

I agree that government need not be involved in money creation, but do you think that merely because Bitcoin is a non-fiat currency it is not affected? It is. Bitcoin is subject to FRB just as other currencies, and that is a good thing.

How do you propose we "just end this bit?" More importantly, why?

I just want to ask... those of you who are against FRB seem to see it as Bitcoin vs Fractional Reserve Banking, but you do realize that the two are not mutually exclusive, right?

Sure...off blockchain counterfeiting(FRB) is certainly possible.


Because there's no capitalism without capital and there's no capital without savings(capital formation). The current system will end whether you love it or hate it. It's doomed to failure because debt greater than previous debt is unsustainable. It will eventually collapse on itself. Savers are being brutally punished under the current system, and while FRB is only part of the problem, not the whole problem, it's the subject of this particular thread.

No...it is not.

Goldman sachs is a privately owned company...yes or no? Why are US taxpayers on the hook for their failed gambling ventures? Banksters needn't "run away" with your funds to rob you, they'll have their army of politicians relieve you of your savings in due course. Who do you think is putting these guys in office?

Do you prefer the term "crony capitalist"? How about "national socialist"?

Yeah, making a loan is now counterfeiting  ::).

I'd say those problems are mostly the result of government programs. Savers are being brutally punished by low interest rates, which are also causing the debt growth you are talking about. FRB has existed for thousands of years and been very prolific for the past few hundred and we've yet to see a massive collapse that can traced to FRB.

Dear solarion,
I have taken the time too eek out the meaning from your incoherent (and frankly insulting) post, and addressed every point you have raised.
In return, you failed to coherently answer any of the concerns I have raised, choosing to lob at me a new salvo of asinine idiocy questions.
Way to manners >:(
Re. your abortive attempt to define "fascist bailout":  I ask you again, what did you mean, and how does the word "fascism" (national socialism) modify "bailout"?  

Loaning "money" you do not have is counterfeiting. If I do the same it is not called "loaning" it's called "fraud".


The problem with this argument is that the fed is not part of government, it's privately owned and it is the fed that sets interest rates. If it were free market economics determining that 0% interest rates were appropriate and that saving should be a losing proposition that'd be one thing, but that's not the case.

Where are you from, solarion?  If this is a language difficulty, here is the definition of the word:
:  made in imitation of something else with intent to deceive
:  forged <counterfeit money>


Because when you do it it *is* fraud (though not counterfeiting).  When I get such a loan from you, I get nothing.  When I get it through a bank, I can ...you know, spend it.

Yeah, we get it.

http://bogleech.com/pokemon/slowpoke.png

Re. Goldman Sachs:  Money is already paid back.  Relax :)

http://s18.postimg.org/tw89j1755/subg.jpg

LOL I'm relaxed ty.

Shame bear sterns didn't pay their "dues" or they'd still be around today too eh? It's clearly not capitalism...so it must be something else right?

Congress is charged with creating the nation's currency...yes? Who has the authority to charge them with that incredible power? Is it...We the People perhaps? If so, how can *I* grant Congress the power to divest the authority to coin the nation's currency into the hands of unknown opaque private banking institutions? Further, how can *I* grant Congress the power to grant bankers the power to whip up currency from thin air, if *I* don't have that power to grant?

Have you EVER seen a definition of the word "dollar"? Can you define the word? Can you tell me why it keeps changing over time?


Does that mean that you concur? ...or you simply don't care? If you don't care that's fine, but your unfunny memes are not a position and don't encourage me to take you seriously. It's a rather significant point, so if you'd prefer to be taken seriously then don't just ignore important topics, like this one and my comments about Bretton Woods.

I can appreciate that you're a thoroughly indoctrinated true believer...willing to fight for the dysfunctional status quo, but that doesn't make these salient points just disappear.

I assume what you were trying to say is "I was pwnt.  Now ahmagonna bring up moar random shit and hope you take the bait."
Sorry, fail.


Waaaa?


http://en.wikipedia.org/wiki/Dollar


It's a temporal reality.  Time implies flux.  TL;DR:  Shit changes.


I can try to explain to you that the world isn't binary, that Federal Reserve is a complex entity
"... composed of the presidentially appointed Board of Governors (or Federal Reserve Board), the Federal Open Market Committee (FOMC), twelve regional Federal Reserve Banks located in major cities throughout the nation, numerous privately owned U.S. member banks and various advisory councils..." ~wikip
...but i understand your craving for simple answers to complex questions.  Unfortunately, reality doesn't work that way.
Complicated things are complicated :-\


Your points aren't salient, they're the same tired idiocy I have replied to time and time again.  I'm not trying to convince you of this for the same reason I don't try to convince a rock that it is a rock, for the same reason I don't try to persuade a mad man that he's not "a little tea pot, short and stout" -- it's a fool's errand.  But you are fun :)

http://www.subgenius.com/pams/doireally.gif

...and this is why I had have you on ignore. You're in a discussion thread, but you don't wish to discuss.

I don't want to change you buddy, you're the perfect lambchop...just the way you are! The last thing I want is for you to have to focus on one topic for more than 5 seconds, when I know that deep down, you'd rather be out tracking down more senseless Internet memes.

"Complicated things are complicated" is no basis for a monetary system.

I release you from having to try to focus on complicated issues.  

Quite the contrary.  I can not convince you of your errors, for above-mentioned reasons.  But your ignorance, combined with your humorless faith in the absurdities you believe, are excellent fodder for this edifying thread.  I can open this page in a browser and instruct the precious tot under my tutelage:  "Study your civics, pumpkin, or you'll grow up to be just as silly as solarion."  There may be tears, but the initial shock and dismay will guide my charge to a full, productive life.

And yes, solarion, complicated things are complicated, and so is our monetary system.  Though the egalitarian in me wishes that everything was accessible to everyone, the cruel reality does not agree.  There are things that the likes of you will not understand, such is this brutish life.
But don't let this get you down -- God don't make no junk!  If it wasn't for your ilk, who would dig our ditches and wash our dishes?  

http://3.bp.blogspot.com/_93Hxgw6KL0o/TUNmRUewyoI/AAAAAAAAAT4/RWvxwZEIvqI/s1600/do_people_think_01.jpg

It's not money they don't have, it's money they do have! You can't physically have money that you loaned out, that's the definition of it being loaned out. Any bank that doesn't have fractional reserves, yet loans out money, would be counterfeiting, not the other way around. When you deposit money in a bank, you are letting them hold your money and loan it out, they even pay you (barely anything thanks to the Fed). If they loaned it out and kept it too, you'd be right, but they don't, which is the whole point of FRB. The only alternative is for deposits to sit around in a vault, doing nothing and for banks to loan out only their own money (does 35% APR on a mortgage sound nice?). It would be a waste, and for no reason other than principle.

EDIT: Also, I should point out that it is not fraud for you to do the same thing. Try it at home: Ask a friend if you can borrow $100 as long as you pay back $110 at the end of the year. Now invest $90 (simulating a 10% reserve requirement) on BTC Jam or in a bond. At the end of the year, pay them back. You've just engaged in FRB.


Now, as for the Fed: It's created by fiat and authorized to be the sole issuer of the nation's sole legal tender. It's chairman is appointed by the President and confirmed by the Senate. Membership is mandatory for all national banks. It creates regulations that are binding for all member institutions (all national banks). Maybe it's technically not a government agency, but the reality is quite different.

Now other than whether or not it's part of the government, you seem to be agreeing with me that interest rates are manipulated by the Fed and that that is part of the problems we're seeing which was my point, so I'm not sure what you mean here.

I don't share all those suspicions about government and I don't agree with the conclusion on their failures.
The "free market" without central regulation usually ends with a monopoly, like standard oil or Carnegie steel: with no free market or accountability, only to serve the interests of the owner of the monopoly.

Natural monopolies only occur in rare cases and in some cases can be a good thing. Most monopolies are created by government. Very few people would argue for no regulation, but the reality is that right now we have so much that it is smothering economic growth. According to the government's own estimates, (in 2008 I think) the average small business spent over $10,000 per employee, per year on federal regulations alone (according to the U.S. SBA). In addition to taxes.

Do you really think regulations provide enough protection to justify that? If a regulation protects "the economy" from $10,000,000 in loss but costs $20,000,000 to comply with, then it does more harm than good. The problem is politicians seem to ignore the costs of regulations and only look at the benefits.

I think you are talking about regulations on social security, health insurance, consumer safety, worker rights and safety. Would you end all of them? A return to the glorious laissez faire times?
Free market rule: 14 hours working time, kids working in mines, corporations selling non-tested drugs, etc.
Do you really believe a monopoly can be good (governmental or "natural")?

I am talking about regulations in general. No, I would not get rid of all of those, but I do believe that in general, the more economic freedom we have, the more efficient the economy operates. Regulations can reduce risk, but they also introduce inefficiency. The "laissez faire" times may have been worse, but things were getting better at a faster rate. Quality of life in the US is falling, whereas it used to be rising quickly. We are clearly doing something wrong, and I think that a government that supports almost any rule that has a benefit, regardless of the cost, is a part of that.

I know several business owners (small business owners), and all of them are good people who try to do what is right for their employees and customers. However, they all spend an enormous amount of time and money making the government happy. One of them has about 5 employees, but one of the employees works full time just on regulatory compliance. That adds up to less profit, higher prices for customers, and lower salaries for employees.

EDIT: As for a monopoly being good. I don't think it's common and it's complicated to explain, but basically, when a firm sells a product or service, there is a point at which the average cost per product is as low as possible (efficient scale), and if the firm makes more or less than that many products, it costs more. One firm (a monopoly) might be able to dominate a small market and manufacture "items" for $100, but two firms might each have to spend $150 per "item" because they are not producing at efficient scale. So although the monopoly might overcharge, there is more waste, and maybe not even lower prices with two firms.

I'm okay with anti-monopoly regulation though because I think they are usually bad.

@Razick:  It's hard to figure out what's "too much" and what's "not enough" without some context.  Having never run an economy the size of US, I can't really say anything intelligent about the numbers (I'm guessing you're talking about this:  "Impact of Regulatory Costs on Small Firms," http://static.mgnetwork.com/rtd/pdfs/20110325_SBAregulation.pdf )

Re. "quality of life":  If you were born in the late '60s, there are twice as many people on this planet as when you were born.  Twice.  Getting a bit tight. Also, when you complain about declining standard of living in US, I'm assuming you're a US native.  I'm not.  Trust me, US has a ways to go :) 

It sure is, but like I said, we're doing something wrong. Having seen some examples of unreasonable regulation, I do believe that it's a major part of the problem.

I believe you. We have it good. However, I believe that it could be better for everyone if the world had more economic freedom. As an American, I feel our struggling economy is a result of growing dead weight loss due to an over-burdensome government.

EDIT: I'm not nearly that old.  ;)

EDIT: One thing I consider is that if individuals and businesses are not qualified to run their own affairs, then why is some bureaucrat with little understanding of how things actually work?

Could you allow, as a hypothetical, that the regulations were not put in place by people intent on causing harm?  That the regulations were arrived at after an entire human history of trial and error, by people who are no less intelligent or aware than us?  Is this at least theoretically possible?

Re. 2nd edit:  A good baker is not necessarily a good bakery owner, a good bakery owner is not always capable of running a chain, the guy who knows how to run a chain of bakeries doesn't always know how to bake.  See?

Alright, we have some common ground.

But don't believe on owners (big or small) doing the right thing. History shows people usually don't do the right thing. Slavery ended not because of owners wanting to do the right thing: it's all about regulations. Hell, in the USA it was necessary to kill more than half a million people to end it.

I agree with efficiency and scale production, but on a monopoly the price has little to do with the cost of production. The monopolist extracts as much as possible from buyers.

I'm no believer on Rousseau good savage or the good human nature of anarchism. I hate power and authority, but I have no illusions, without public authority controlled by the people, mostly it would be hell on earth.

If fractional reserve banking isn't bad they should allow me to do it. Yet they don't. I wonder why.

If capital punishment is not bad they should allow me to do it.  Yet they don't.  I wonder why.

If running red lights like ambulances do is not bad they should allow me to do it.  Yet they don't.  I wonder why.

In areas where those apply they are state run "businesses". Banking is supposed to be publically run. Plus banking done right should not be a danger to anyone (as opposed to your two examples).

But banking done wrong is certainly a danger to everyone involved, at least those who deposit money.  See Ukyo's victims.  See Pirateat40's victims.
That's why hobby banking enthusiasts are discouraged from starting banks.  See?

I can't understand why people start insulting others because of divergences of opinion.
Insulting is an aggressive action and aggression usually (lets forget now about cases of greed or power that are irrelevant here) is a manifestation of insecurity.

If someone is ignorant and like to stay that way and hates anyone that tries to help him, that is a case for ignoring him or, at most, to laugh, not to insult.

I'm not taking sides or thinking about anyone in particular. Just read some messages on this thread.

No. They committed fraud and should be convicted of that after the fact.

I get the precrime bit.  I feel that I should be allowed to drive as drunk and as fast as I wish, through your neighborhood where your kids play.  No one should stop me from doing that no matter how likely it is that I'll end up killing someone.  Precrime is fundamentally wrong.  Let me kill someone, and *then* punish me.
AFTER the fact.  Am I getting it?

FRB is just like insurance, when something disastrous happens, the insurance company will go down. So they need a FED to back them with endless money, so inflation will force every USD user to pay for that insurance by themselves

Drunk driving is obviously putting people in physical harm.

In the case of pirateat40 everyone could who chose to do business with them did so on their own choosing. further, it wasn't completely clear people would get harmed.

The state just tries to make you think you need protecting with these laws and regulations to make themselves a nice moat and low (or even no) risk income. I don't blame them. I do blame all the retarded people just bending over and taking it.

Most people speed and drive drunk without causing accidents.  I have, causing exactly none.  I'm a conscientious and capable drunk driver/speeder.  I don't want some gubermint busybody regulating me just because statistics show there's a higher chance that I might kill someone.  I have caused exactly zero harm, and punishing me for what might happen if I'm not stopped is the very definition of precrime.

With banks, it's a bit different.
Every Bitcoin bank and financial service, from Pirateat40 to TradeFortress to Ukyo to NeoBee Danny, ended in surprise buttsecs for the intrepid marks.  So yeah, unregulated banks obviously put people in harm's way.  And before one "Bitcoin entrepreneur" is through raping his "investors," these victims are already lined up for the next raping.

Allow me to quote you: "I do blame all the retarded people just bending over and taking it."

Capable drunk driving is impossible. If you consciously and repeatedly drunk drive (while believing you're capable lol) you disregard the safety of others so blatantly and to such an extent that I do not wish to converse with you any further.

QFT

It is not only possible, there are documented cases of it.  I have done it, for one.  Just because some gubermint-sponsored studies suggest that it is dangerous shouldn't make it illegal.  Dumb people drive -- they're dangerous.  Old people drive -- they're dangerous too.  Regulate stupidity and age FTW.

Bitcoin financial institutions, on the other hand, are a fine example of unregulated finance at work -- straight-across rape.  And unregulated securities?  Just fail and aids, lol.

http://s9.postimg.org/m7vqchjy7/neo1.jpg

I  do allow that. Regulations are created with good intentions, the problem is we often fail to properly assess the costs.

+1

Very true, but do you think that the people who run the government are any better? The problem is that right now, we have rules that are similar to putting a $2,000 Sargent & Greenleaf padlock on a $500 bicycle. The people in favor of the rules say "We haven't had our bicycle stolen in the 2 years since we bought the lock," but they neglect to notice that they could have bought four bikes for the price of the lock. That's a simplistic and extreme example, but you get the point.

Then we pretty much agree, I just can't say with any certainty how much bureaucratic overhead and regulation is "too much" without understanding the macrosphere.   My first business was run on 3-part forms for accounting.  Worked out great, but I doubt it would have scaled well.  I'm pretty sure no one wants costly regulation when it comes to regulating them.  And I'm also sure that bureaucrats try to increase the amount of regulation to justify their own existence, so that their branch of bureaucracy is fruitful and multiplies.  But there are mechanisms in place to keep the system in a dynamic equilibrium.  That study about excessive regulation, for instance, was funded by Small Business Administration, a .gov agency.

edit:

Just as an example of having to weigh all the variables, consider that it might take a day of productivity to replace a stolen bike *and* make bicycle theft economically viable, thus attracting thieves to the community, increasing the crime rate, and tanking property values by much more than $2,000.  Yeah, this is reductio ad absurdum, so meant to sound ridiculous, but just an illustration of how what seems absurd on its face is actually a fairly complicated problem.

Of course, I don't trust people in power. They are the last that deserve trust, since power corrupts. Therefore, they have to be controlled by the people.

On regulations and taxes, here I have no doubt that we disagree. Since the Reaguen/Tatcher/Neo-liberal take over, many regulations were repealed, so I don't think we have an excess of it.

Moreover, we never had so much inequality and so many people receiving aid from charities (instead of public social services) and that is humiliating. Wages have been losing their share on the global income. We have people working full time and even having second jobs that are poor. I can't help feeling pity for them and thinking they live on unfair situations.

Inequality must exist, since it has efficiency consequences, but people earning 50 and 100 times what other earn is like making them from different species.

Can a democracy work well on those circumstances, where a few can with their money almost control public authorities and buy all the attention, work and subservience of millions of workers?

My view is that unless a regulation can be proven beneficial it should be assumed harmful. If we are going to interfere in people's live and livelihoods, we should be able to justify that.

I'm pretty sure regulations have to be justified before they are implemented.  The question is only "to whom" and "to what extent."  In theory, the bureaucrats you elect somehow represent your opinion.  In principle.  Practice is a bit different, but now we're into the gray of implementation rather than principle.  Not quite as fun.

P.S:  This is an alt account of NotLambchop.

I don't really think that's true, once again according to the SBA regulations increased by a lot in the past few decades. FICA taxes are 500% higher than in 1954, poverty is just as common (in the US, although extreme global poverty has actually fallen) as it was when the "War on Poverty" was started. Americans spend more on taxes than on food, shelter and clothing combined. In other words the cost of government is higher than the cost of living without even considering regulations. Add another $10,000 to $15,000 for them.

In the US the number of people receiving government support is huge. I don't know where you get that fewer people are receiving social services.

I agree that inequality is a problem, but have you considered that government may be partly to blame? With the regulatory burden actually being higher on small business (it is), big businesses have an advantage with has created many oligopolies and mega-corporations. The business failure rate is now higher than the start-up rate, is this because we don't have enough regulations? The reality is we have a lot, arguably more than ever before. The problem isn't not enough, it's too many. Inequality is very likely partly caused by a stagnating economy and higher regulatory barriers to entry.

America was a small government nation for a lot of its history, and it experienced the highest increase in standard of living in history along with a huge amount of technological innovation, and a growth of human rights. The evidence does not support high regulations and taxes, and if someone wants to tell me they are doing to take away nearly a third of what I earn, and require me to register with multiple government agencies and follow thousands of pages of rules, they damn sure better have a lot of evidence that it will benefit me, or at least society. They don't.

Compare Texas and California if you want some evidence that more freedom and less bureaucracy is a good thing (I'm not saying Texas is perfect by any means):

Exactly. I don't think they are being justified to the right people and the right extent.

---

Thank you everyone for having a civil debate. We've gotten way off topic though and I think it's time for me to bow out before I spend my entire life on this thread. Good luck everyone.

I think people forget that there were rates of taxes of 80% between 1940 and 1963 for the richest and the seventies (where we find more regulations) were the time with less inequality.
Just to justify my assertions, I end my participation with these links to charts on inequality on the USA.


http://www.newrepublic.com/article/116361/17-charts-about-inequality-obama-should-read
http://www.newyorker.com/online/blogs/johncassidy/2013/11/inequality-and-growth-what-do-we-know.html

FRB dilutes the savings of retirees and workers for the benefit of the 1%.  That is reason enough.

FRB leads to ever increasing debt and an eventual collapse of the financial system due to debt overload.

This is rubbish.  Banks are loaning out not only the funds that they have but the funds that they do NOT have:



I'm quite happy to keep repeating this point until everyone gets it.

I find the fractional reserve system to be appropriate for a system with regulated monetary supply, but debt being offered within some level of acceptable tolerance for default. I personally have been working on a system that uses a 100% reserve initially, but offers the ability to have various tiers.

I think the power of these cryptocurrency networks is that they establish the rules that guide the direction of utilization and aggregrate those who share those common values. Therefore, I do believe Fractional Reserve Lending is not necessarily bad, but it is often abused. However, within a cryptocurrency system, it is possible to design where the inflation rate is capped and lending represents a strict percentage of the monetary supply in accordance with the volatility and some margin of error.

The downside is increased competition for eligible funds.

These are the basic concepts supporting my work with the Digital Reserve. (http://www.thedigitalreserve.org)