In reality, every economic boom and bust is a ponzi scheme, IT bubble, housing bubble etc... We are currently in a situation that no ponzi scheme is available, so that the economy is in so terrible shape, people strongly need a ponzi scheme to revive the economy. Of course it will inevitably cause another crash, but then another ponzi scheme will save the world again...

The return on lending the money for a home depend on the FUTURE income of the borrower. In a society that computer and machine continuously replace people and all the low tech work outsourced to other country, how could you make sure the future income is secured for the home buyer? That FUTURE is not one or two months, it is 20 years or more, who can see that far?

True, no last lender means they have a bankrun risk, so that they should treat each loan much more carefully. This is by design

You WILL if one BTC exchange value is $1000, by that price, a team will brake into your house with a gun pointing to you to get that string  If they succeed, no trace to chase them, it is almost a risk free robbery. Actually this could be a problem preventing BTC from going main stream

And to the computer part, either a web based online account or a managed pension fund, normal people can not go higher than this degree of complexity

Don't know how to play this game, what kind of political system ancap cities are using?

IMO, Fractional Reserve Banking just works like insurance: 99.99% of the time the saving account will not get a withdraw before the contracted deposit time ends. Since these money are dead money before the deposit period ends, banks try to get some use of it by loaning them out, there is nothing wrong

The problem is that they loan these money out to buy a house, instead of investing in some future projects that could possibly generate some return

The return of buying a house is purely dependant on the house value, it is more like a speculation, it is not sustainable. The investment on future projects are more carefully considered by some experienced entrepreneur and are more likely to generate some return

Another problem is that currently there are really less and less investment opportunities, buying a house becomes an outstanding investment opportunity

Loaning out money to people to buy a house is a big deal, it quickly depleted the savings in the bank, and when house price falls, these loans will generate loss, banks have high risk of going bankrupt, currently they could only depend on FED buying their mortgage backed serurities to keep their life, but this situation will not improve until the savings in bank return to normal. During the next 10 years, there will be more and more savings deposit mature, and there will be less saving go into bank, banks have to borrow money from central bank to buy more time

All these has nothing to do with fiat or BTC, in a BTC bank, FRB could also happen, exactly the same

I read again the OP's post, there are some really good points, especially the cruel competition part

Imagine in a RBE, everyone will be allocated 50BTC per month, and after a year, someone will have more than 200BTC saved, someone will use up every coin they get and try to borrow from those who have saving

This is how today's world shaped, even we could remove money and allocate resource to each person equally, sooner or later some of them will become rich, some of them will get debt, this is related to each person's behavior

And money works as an incentive, without money, how could people have incentive to come out with new ideas to improve the life of other people?

Maybe, a game based society could be close to RBE, where each people will share the way of improving the gaming experience to others, without consider their income

Is there any such kind of social system existing in second-life? Someone can just create such a community virtually and see if it works

In a society that everything is free? All the resource have zero cost so the product also cost nothing, then everyone would like to have their super house in the best location near water with a big yacht...

The physical places on earth are so limited, so there should be a mechanism to allocate  limited physical resources to each person, queue based?

I think current model of making money through work and market based price setting basically solved this allocation problem, the more scarce the resouce, the higher price it will get. The biggest problem with this model is that there are lots of middle man in this process and in the end those who working hardest get poorly rewarded

In fact money did become many people's religion, and worshipping USD have been frequently displayed on many different medium

Compared to them, worshipping BTC has much more meaningful and serious feeling 

This is a valid concern, I think at the end it is still people that is backing anything, but when BTC get enough acceptance, there will be many more computer scientists/security experts/network experts continuously analyze it and give recommendations to improve it

BTC has a very important political neutral position, it is purely backed by science

There is no big difference between credit from today's saving or credit from tomorrow's saving. The later gives people a feeling that those money are created out of thin air, since currently there are nothing connected to those credit, but if the future is close and sure enough, the difference can be ignored

A short term loan is almost as good as saving, but a long term loan should be very difficult to get, since the risk of future must be factored in, this is not the case in today's credit market, banks try to get everyone a long term loan and collect interest forever, and when the situation changes, they all screwed

Hardware

In reality, I do not want those $1000 principle and $100 back quickly, I want borrower to pay very little principle and interest $100 to me every year, so that I can spend those $100 as I wish, and the borrower will work to earn back that $100 I spend, and pay back interest to me next year, etc...

In this way, the actual interest income will be more than $1000 for a long term loan, but there will never be $2000 existed at any given moment in the system

One easy to ignor aspect: Although there are only 100$ in existence, they can change hands many times, each time it changes hands, some goods change hand and get consumed (MV=PY)

Same when talking about fractional reserve banking: "With 10% reserve requirement, 100$ could create 1000$ loan after many times of deposit and loan process"

This 1000$ is very misleading, it is just a count of the same money multiple times in different time, the total available money at any given moment is always 100$

Capital corresponding to ready-to-spend goods/services, and it normally depreciate slowly(Any kind of captial lose value over time, factory, machine, stocked goods etc...)

Capital in gold/silver's form do not depreciate, so they are generally regarded as a better medium for capital, then there is less risk that ready-to-spend goods/services will depreciate, since they will be produced when gold/silver is paid to producer. But there is a risk of inflation when lot's of gold and silver enter the market at the same time

Loan corresponding to future goods/services, it does not depreciate, so generally loan is a higher quality asset, cost of ownership is almost 0, if the default risk can be contained

I think this video gave me an impression that all the investments are financed by loans. In reality only part of the projects are financed by loans

Loan and saving do not differ that much, saving corresponds to something that is already produced, and loan corresponds to something that is going to be produced. Since loan is a projection of future production, there is certain risk involved, in a depression, loan is difficult to get since the projection of the profitability in future is low. But there is still investments happening using savings

Suppose the price does not change and productivity decreased, A will capture 1 fish and B will pick up 1 basket of fruits every day

In such a case, they will have less income, only 1$ to spend on the fish and fruits, so each of them can only consume half a fish and half a basket of fruits, the amount of money supply needed for transaction will drop from 4$ to 2$

And market will have excessive amount of money at hand (2$) without corresponding goods, this will cause inflation in a real world scenario. To keep price stability, central bank will reduce the amount of money loaned out to market, this is by raise the interest rate and in turn reduce the available loan to market

It means, when central bank start to tighten, the amount of money already exceeded the amount of goods, this could be caused by either too fast expanding of credit or decreased GDP, but typically the first reason, because in a loan financed model, A and B seldom have the freedom to reduce their production, since they have to payback the loan, they have to produce more than they consume



I think central bank is a non-profit driven organization and their mandat is to keep price stability and low unemployment

If the productivity increase is 5% per year and bank charge 5% interest per loan, the profit will all go into bank's pocket, this is a good reason to say no to loan financed projects. But there are many projects have more than 50% of return, for them the loan is the fastest way to expand the business

I never know this, just checked this groupcoin, seems it is not working at the moment. It's biggest problem is that a mechanism to pay the core developer with half mined coin endlessly, and use a strange whitelist to achieve this

Actually from pure economy point of view, 50BTC/Block forever provide better chance for late commers at the early years of coin genertion, but after 10 years it still becomes insignificant for the total coin supply. While BTC is more aggresive in reducing the coin supply, makes it highly speculative

You need to be very confident about your computer knowledge before you do all this alone by yourself

When the sum of money becomes larger than salary, it need to be managed against potential loss, people start to rely on institutional services. Even if you stashed 10000 BTC in your offline wallet, you will feel unsecure

Let's discuss this with a simple example

On an island with only 2 people and one market:
Each day, A capture 2 fish and sell to market for 2$, he use that 2$ to buy 1 basket of fruits and 1 fish
B pickup 2 basket of fruits and sell to market for 2$, he use that 2$ to buy 1 basket of fruits and 1 fish

As long as they are doing this everyday, the total amount of money supply is constant, 4$ at maximum, and they are existing money

They can also take 0-intrest-loan to achieve this: A take 2$ loan, buy one fish and 1 basket of fruits for today's consumption, after one day's work, he capture 2 fish, sell them and return the loan, the second day, same thing happens...


If their productivity increased, A will capture 3 fish and B will pick up 3 basket of fruits every day, but they still consume 1 fish and 1 basket of fruits, then there will be stock of goods (1 extra fish and 1 extra basket of fruits), and there will be extra money supply, 6$ total for each day, and each day there are 2$ go into A and B's saving

Since the island does not have any way to store the fish and fruits more than one day, those goods have to be consumed. If A and B took loan to make the work possible, after A and B paied back the loan, they need to pay 1$ interest to the bank, thus bank get the interest, bought those extra fish and fruits from market and consumed them

So, the interest appears only when the productivity increased and there are extra products in the society. If the productivity stayed the same, there will not be enough goods to sell to market and get the money to pay back the interest, so bank's interest rate should be 0 correspondingly

Positive interest means continuously improved productivity in society as a whole, this has been the case for hundreds of years, and I think there is still room for more and more productivity increase, since people need to improve the quality of life all the time

This is a simplified model, market get loans from bank to facilitate the trade (adding money into circulation), they also need to pay back the interest, so the sell price from market will include these interest and the consumption of market itself, but do not change the way it works

From this point of view, banks, market etc all benefit from an increase in productivity, they just like some kind of middle man, take a small bite in the whole trading process, but since people are dependant on the service they provide, their charge basically get accepted