FRB doesn't have to involve tokens or certificates. In simplest form with a single bank, it works like this (with a 10% reserve ratio):

Customer A deposits 100 BTC. Total deposits: 100 BTC, with 90 available for loans
Bank loans 90 BTC to customer B. Customer B deposits 90 BTC. Total deposits: 190 BTC, with 81 available for loans
Bank loans 81 BTC to customer C. Customer C deposits 81 BTC. Total deposits: 271 BTC, with 73 available for loans
Bank loans 73 BTC to customer D. Customer D deposits 73 BTC. Total deposits: 344 BTC, with 66 available for loans
...
Bank loans 1 satoshi to customer X. Customer X deposits 1 satoshi. Total deposits: 1000 BTC, with 0 available for loans

Customers think they have 1000 BTC in the bank, but there is really only 100 BTC. There is no problem until customers want to withdraw more than 100 BTC. Then, the bank will fail unless it can borrow from another bank (or a central bank).

How about this answer: discussing this is stupid, and the idea is wrong on so many levels.
The whole financial system is fucked up, end of story.

Yes, but your definition does not match your previous scenario. You can give FRB money without printing a single cent: you just say you have all people's money and have everybody believe you. This can be done with Bitcoin in theory, but I hope we don't fall there.

That's not how FRB works.

Fractional-reserve banking is the practice whereby a bank holds reserves (to satisfy demands for withdrawals) that are less than the amount of its customers' deposits. Reserves are held at the bank as currency, or as deposits in the bank's accounts at the central bank. Because bank deposits are usually considered money in their own right, fractional-reserve banking permits the money supply to grow beyond the amount of the underlying reserves of base money originally created by the central bank.[1][2]

That's not how FRB works.

Regardless of your feelings on the evil of fractional reserve banking and central banks, FRB will be implemented with Bitcoin, as long as it is legal. When Bitcoin FRB is put into place, a central bank will be necessary. The central bank will not be able to print money, but it will control Bitcoin bank reserves, and so it will have some limited power to manipulate inflation/deflation.

You can whine about how it goes against the spirit of Bitcoin or how it violates the wishes of our Lord Satoshi, but I feel that it is a certainty unless laws are enacted to prevent it.

International Man: "A Former SWIFT Insider on Financial Warfare, the Fate of the Dollar, and Bitcoin"

To be honest he doesn't say much about bitcoin aside from its potential to be disruptive to the banking industry, but the brief history of SWIFT is well worth reading.

http://www.internationalman.com/articles/a-former-swift-insider-on-financial-warfare-the-fate-of-the-dollar-and-bitc

"Tjerk Veenstra: I like to refer to SWIFT as the dot-com of the 1970s, when it was conceived in Europe. Building SWIFT in the 1970s was like building an Internet for the global banking system decades before the actual Internet was available. Back then, communications systems were telephone and telex systems and nothing else."

Nick: What are your thoughts on Bitcoin and cryptocurrencies?

Tjerk: I think they are interesting. Bitcoin or any other cryptocurrency still has to prove itself, but it definitely can be a disruptive technology. Cryptocurrencies may impact systems like SWIFT. I think what we’ll see in the next 10 years is going to be groundbreaking.

Yes. Right now USA economy is in rising, so their debt should decrease. How many it decreased from 2010 to 2014?

Federal debt held by the public as a percentage of gross domestic product, from 1790 to 2013, projected to 2038.

Yes, it does seem illogical. On it's surface, it is, because you're proceeding from the axiom that a greater degree of liberty is a good thing. They are NOT proceeding from that axiom. Govenments are parasites. They produce nothing, steal everything they have, and distribute it by whim (seemingly). A good parasite does not too quickly kill the host.

I've said for years that governents are organisms. Free men are their food. Thus, when the food gets smart or lucky, they have to work harder or change direction.

I think the point is that you could beat 100 years of inflation by investing for only 40 years even after having 60 years of inflation eating away at the value of your money. Historically speaking investments in the stock market have outperformed the rate of inflation by ~7% per year.

To suggest that investing in the stock market is investing in a ponzi is just crazy. Companies create actual value by producing goods and offering services which results in earnings (and potential cash flow) that are available to their shareholders.

Much of the derivative risk that large banks "have" is not actually risk because many of the derivatives cancel each other out and is hedged. To say that banks could potentially lose $40 trillion is really not accurate.

I am American, though I do not consider myself a citizen. Subject is a more accurate word, and I'm not good with that either.

However, while I can't disagree with your assessment, I tend to look to where they might go if pushed. Bitcoin and associated blockchain based coins are not likely to go away. The very existence of a disruptive technology, especially one as potentially devastating to them as this, requires a response. Since it is in the best interests of the powers to APPEAR benevolent, and since the cracks in the foundation of the Federal Reserve Act and it's egregious succesors are becoming obvious even to the sheeple, it behooves them to try to co-opt it. Destroying it is impossible, and I think they learned that lesson with the Internet.

Think, then, what advantage such a thing would give them. The disadvantages are somewhat obvious and are discussed on this forum on an hourly basis, but few have bothered to look what the powers might GAIN from this technology.

First, let's dispense with the idea that they care a great deal about money. They don't. The currency they deal in is power. Money is merely an aspect or symbol of that power. Losing control of it it is catastrophic to the way they currently do business, but if you look at the history of rulership, they're incredibly adaptable. In America, they have turned a nation of renegades and individualists into a sociofascist empire that maintains and appearance of liberty. So, looking to that, how might blockchains be incorporated?

One that I find obvious is that they can hide their legerdemain in plain sight. Instead of fractional reserves, they have an adjustable rate of proof of stake, based on some metric they control. It appears that all money creation is above board and clean... but they control the metric.

I could go on for a while on the ways they might subvert the technology while APPEARING to "fix" the economic system. If they can come off as heroes, then they elevate themselves and again appear to be the benevolent overlords.

EDIT. Just saw your flavor text. Lose and loose I hate that shit. Bravo!

Receive motion and second. It has been moved and seconded the meeting be adjourned. All in favor say 'Aye..

Does the Rothschild family count as a privately owned country yet?

If Bitcoin grows large, exactly how will governments tax the 'windfall'?

I'm not sure if it's mentioned before.


FRB is not necessary for lending.

A borrower can just issue bonds or the similar like time deposits for raising the fund.
And the bonds are not used as the accounting units or medium of exchange like a currency.

Am I correct?

...
Price of DJIA today ~17,100 (call it 17,000)

Return: ~24.7x in ~40 years.

Your chart has the CPI being at somewhere between one and three in 1910 (call it 1.1) and is at roughly 27 now (call it 28). That means the CPI has gone up by 25.45x in 102 years.

If someone had taken one dollar in 1910 when the fed was created, kept it in a mattress, then invested it in the stock market in 1975, they would have come close to beating 102 years of inflation in just 40 years and this does not count dividends which would be substantial (several percentage points per year).

There are five "too big to fail" banks in the United States that each have more than 40 trillion dollars in exposure to derivatives.  Today, the U.S. national debt is sitting at a grand total of about 17.7 trillion dollars, so when we are talking about 40 trillion dollars we are talking about an amount of money that is almost unimaginable.  And unlike stocks and bonds, these derivatives do not represent "investments" in anything.  They can be incredibly complex, but essentially they are just paper wagers about what will happen in the future.  The truth is that derivatives trading is not too different from betting on baseball or football games.  Trading in derivatives is basically just a form of legalized gambling, and the "too big to fail" banks have transformed Wall Street into the largest casino in the history of the planet.  When this derivatives bubble bursts (and as surely as I am writing this it will), the pain that it will cause the global economy will be greater than words can describe.

Ah ... the ever expanding Keynesian economy!