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Author Topic: Good thing BTC isn't a debt based currency.  (Read 3957 times)
MoonShadow
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June 16, 2011, 03:13:53 AM
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Can you point one example in history when money printing was not abused?

Tally sticks.


LOL!  Even that was abused!  The king declared tally sticks ursury and had them outlawed after forcing all of the goldsmiths in London to accept them in trade for gold so that he could pay for his war with France.  And since they were now illegal, no one could come to the treasury and claim their gold deposits.  They were then burned so that there wouldn't ever be any chance that the goldsmiths might come back in the future and be able to make a credible claim.  This is actually were we get the phrase, "he got the short end of the stick" because the tally sticks were created by taking a common stick, etching on both ends, breaking it in half, and then the treasury kept the long end while the (mostly unwilling) goldsmith was left with the short end as a receipt.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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hugolp
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June 16, 2011, 03:16:16 AM
 #22

Ok, you follow the nutjob. That movie is pure nonsense and the peole who follow him become ilogical. I have dealt with the few of you enough to know there will be no logical discussion. For example, you are admiting that your early point about inflation distributing the wealth was not true, but then keep defending inflation because supposedly it keeps money in the economy and that magically creates new resources. And you dont care that it hursts the people who earn a wage! Anyway, good luck.
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June 16, 2011, 03:17:55 AM
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Can you point one example in history when money printing was not abused?

Tally sticks.


LOL!  Even that was abused!  The king declared tally sticks ursury and had them outlawed after forcing all of the goldsmiths in London to accept them in trade for gold so that he could pay for his war with France.  And since they were now illegal, no one could come to the treasury and claim their gold deposits.  They were then burned so that there wouldn't ever be any chance that the goldsmiths might come back in the future and be able to make a credible claim.  This is actually were we get the phrase, "he got the short end of the stick" because the tally sticks were created by taking a common stick, etching on both ends, breaking it in half, and then the treasury kept the long end while the (mostly unwilling) goldsmith was left with the short end as a receipt.

Its funny how governments always use inflation to pay for wars and yet some keep defending it. It will be use for good, it will be used for good. They are sold a dream and loose the habitility of thinking critically.
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June 16, 2011, 03:20:54 AM
 #24

Fiat means "by decree", debt based means backed by a debt instrument. It is a bit of a stretch to refer to a receipt for gold as "debt based" when the money is not secured against "debt as in a loan"

Nonsense.  Debt based means that the paper is an abstraction of some third party's obligation to perform, otherwise known as a "debt".

Well the implications of the difference are enormous.

http://www.csper.org/renaissance-20.html

Cheesy mine mine mine mine mine mine mine Cheesy
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AnonymousBat
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June 16, 2011, 03:26:45 AM
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Ok, you follow the nutjob. That movie is pure nonsense and the peole who follow him become ilogical. I have dealt with the few of you enough to know there will be no logical discussion. For example, you are admiting that your early point about inflation distributing the wealth was not true, but then keep defending inflation because supposedly it keeps money in the economy and that magically creates new resources. And you dont care that it hursts the people who earn a wage! Anyway, good luck.

Ah, so someone you disagree with = nutjob.

That's pretty sad.

Please tell me, how do you solve the manipulation problem then, where the wealth is eventually concentrated among the few, they make credit cheap so that everyone is put into debt with them, they then make credit expensive (while everyone still has outstanding debt), and then forclose on everything that was created?

How do you pay for a $11,000 debt if only $10,000 exists in the monetary system? You'll be forced into default with the bankers.

Also, why do you think the bankers had to confiscate all of the gold in the 30's? Too much gold was in the hands of the average joe and they had to consolidate it. They didn't need to confiscate the gold for all of the new deal programs, they could have just abolished the gold standard then and printed the money to pay for those programs (which were a sham).

Once the foreigners figured out the scam in the 70's they finally ended the convertability. 'Temporarily' of course.  Roll Eyes

Quote
Can you point one example in history when money printing was not abused?

Tally sticks.


LOL!  Even that was abused!  The king declared tally sticks ursury and had them outlawed after forcing all of the goldsmiths in London to accept them in trade for gold so that he could pay for his war with France.  And since they were now illegal, no one could come to the treasury and claim their gold deposits.  They were then burned so that there wouldn't ever be any chance that the goldsmiths might come back in the future and be able to make a credible claim.  This is actually were we get the phrase, "he got the short end of the stick" because the tally sticks were created by taking a common stick, etching on both ends, breaking it in half, and then the treasury kept the long end while the (mostly unwilling) goldsmith was left with the short end as a receipt.

I'll stand corrected then and fall back to the colonial script example that the British had to outlaw.

But it seems pretty much every monetary system in history has been abused, either by the issuer or by governments wanting to destabalize other governments.

Don't think bitcoin will be an exception to this rule, this has been going on for thousands of years.

Its funny how governments always use inflation to pay for wars and yet some keep defending it. It will be use for good, it will be used for good. They are sold a dream and loose the habitility of thinking critically.

You can't fund a war on 3% inflation.
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June 16, 2011, 03:39:57 AM
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Also, why do you think the bankers had to confiscate all of the gold in the 30's? Too much gold was in the hands of the average joe and they had to consolidate it. They didn't need to confiscate the gold for all of the new deal programs, they could have just abolished the gold standard then and printed the money to pay for those programs (which were a sham).

Once the foreigners figured out the scam in the 70's they finally ended the convertability. 'Temporarily' of course.  Roll Eyes


Where do you come up with this stuff!?  It's comic gold!

Quote

I'll stand corrected then and fall back to the colonial script example that the British had to outlaw.


The US Constitution outlaws it as well.  The British outlawed it in the colonies because the colonial bankers were cutting into their game.  Now it's outlawed in the states so that state banks cannot cut into the federal game.  It's still a game, as in the "don't bet against the house or you will lose, but don't refuse to bet either or you'll die" sense.

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Don't think bitcoin will be an exception to this rule, this has been going on for thousands of years.

Perhaps not.  There is that risk.  But the potential upside far outweighs the risks, IMHO.  One thing that is certain, do nothing and we will continue to get what we have been getting.
Quote
Its funny how governments always use inflation to pay for wars and yet some keep defending it. It will be use for good, it will be used for good. They are sold a dream and loose the habitility of thinking critically.

You can't fund a war on 3% inflation.


First, you can actually.  And second, you really believe that 3% is what you have actually been getting?

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
hugolp
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June 16, 2011, 03:54:17 AM
 #27

Ok, you follow the nutjob. That movie is pure nonsense and the peole who follow him become ilogical. I have dealt with the few of you enough to know there will be no logical discussion. For example, you are admiting that your early point about inflation distributing the wealth was not true, but then keep defending inflation because supposedly it keeps money in the economy and that magically creates new resources. And you dont care that it hursts the people who earn a wage! Anyway, good luck.

Ah, so someone you disagree with = nutjob.

That's pretty sad.

No, a nutjob is a nutjob. There is people I disagree with who are not nutjobs. Bill Still is a nutjob. I am still ashamed that I believed tThe Money Masters when I saw it. Im glad I decided to learn more about central banking and started reading history books about it so I could learn what really happened and the lies that are on his videos. Believe it or not I understand the feelign of enlightment you get after watching those videos. I went through the same. The problem is that its false, and if you read some history books you would realize.

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Please tell me, how do you solve the manipulation problem then, where the wealth is eventually concentrated among the few, they make credit cheap so that everyone is put into debt with them, they then make credit expensive (while everyone still has outstanding debt), and then forclose on everything that was created?

I already asnwered to this. Its amazing the capacity of this videos of making people incapable of logical thinking. Let me quote myself:

Quote
Yes there is a debt problem, but that is not how it happens. The excessive debt happens because the government regulates the banking system allowing the banks to overextend credit. The debt in the present system is not based on savings, its based on the government money monpolly and the banking cartel it creates.

The debt in the present system does NOT come from savings. Please take a moment to understand this. It comes from the banks enjoying the monopoly on credit that the government has granted them. Please read and try to use the logical part of your brain. Forget about the stupid dream the charlatan has sold you and use your rationallity.

Quote
How do you pay for a $11,000 debt if only $10,000 exists in the monetary system? You'll be forced into default with the bankers.

Another fallacy promoted by the nutjob. You could pay a debt of $11.000 with only $10.000 in the money supply because money circulates. Lack of money is not why credit crunches happen. You are learning stupid ideas from the nutjob.

Quote
Also, why do you think the bankers had to confiscate all of the gold in the 30's? Too much gold was in the hands of the average joe and they had to consolidate it. They didn't need to confiscate the gold for all of the new deal programs, they could have just abolished the gold standard then and printed the money to pay for those programs (which were a sham).

Once the foreigners figured out the scam in the 70's they finally ended the convertability. 'Temporarily' of course.  Roll Eyes

Well, you are making some sense here, but its not that simple. First, the gold was not confiscated by the bankers, Roosevelt did it. Second, he could not remove the gold standard because it would have created big distrust towards the dollar and heavy price inflation. Back then the gold standard was not a free market system, but a government regulated gold standard, usually called the gold-exchange, and the politicans and the finantial elites were beneifting from it so they wanted to keep it. But in reality as you say it was all a sham because they end up devaluating the dollar so they could keep printing.
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June 16, 2011, 03:57:43 AM
 #28

Where do you come up with this stuff!?  It's comic gold!

I'm waiting for you to prove me wrong instead of just shouting "comic gold".

The US Constitution outlaws it as well.  The British outlawed it in the colonies because the colonial bankers were cutting into their game.  Now it's outlawed in the states so that state banks cannot cut into the federal game.  It's still a game, as in the "don't bet against the house or you will lose, but don't refuse to bet either or you'll die" sense.

Because of the experience of hyperinflation of their paper currencies, which was caused by the British counterfeiting.

Perhaps not.  There is that risk.

It's an absolute certainty, it will just take generations for it to happen. Don't think that the bankers will sit idle why they lose their power. Monetary policy is the single biggest cause of wars.

One thing that is certain, do nothing and we will continue to get what we have been getting.

I agree. I dont think bitcoin will be the only game in town. The free market tends to foster lots of competition, and the people will choose their currency instead of it being forced upon them by government.

I think we can both agree that this is a good thing.

First, you can actually.  And second, you really believe that 3% is what you have actually been getting?

First, not efficiently, and especially if your enemy is using a larger amount of inflation (fabricating a boom) in order to beat you.
Second, of course not. They are lying about inflation by removing things from the consumer price index.

Programming code on the other hand, doesn't lie.

Finally, you don't have to get hostile with me, we're pretty much on the same side we just have minor differences in things that could be considered technicalities. I worry about a centralized entity getting control of enough bitcoins down the road to be able to manipulate the economy. I don't plan to make a bitcoin alternative, but I'm certain someone else will with different attributes.

The free market will decide it's fate, and we can both agree that this is a good thing.

By the way, what would have the outcome been during the civil war, if Lincoln didn't inflate the currency with the Greenbacks?
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June 16, 2011, 04:07:45 AM
 #29

Well, you are making some sense here, but its not that simple. First, the gold was not confiscated by the bankers, Roosevelt did it.

I guess you forgot that the politicians pretty much own Washington? Roosevelt confiscated the gold because the bankers told him too. Just like Woodrow Wilson created the Federal Reserve in the first place, because the bankers told him too.

It wasn't to benefit the people, that's for sure.

Quote
Yes there is a debt problem, but that is not how it happens. The excessive debt happens because the government regulates the banking system allowing the banks to overextend credit. The debt in the present system is not based on savings, its based on the government money monpolly and the banking cartel it creates.

Fractional reserve banking can still exist with Bitcoins, the only difference is bailouts of 10:1 overextensions of credit would be impossible.

Fractional reserve banking IMO, should absolutely be outlawed and one of the primary things Bitcoins has going for it is that it puts it in check, you can still engage in it, but if you go too far and you fail, you'll be hung.

Again, we're all pretty much on the same side, we all hate the monopoly on the money supply, we all hate the federal reserve, we all seem to hate fractional reserve banking. We all love seem to love free markets.

I'm not calling you name, idiot, dumbass, clueless, etc, and I'd appreciate it if you (and the other guy) would not call me names. Attack the statements, not the person.

Thanks.
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June 16, 2011, 04:09:36 AM
 #30

Because of the experience of hyperinflation of their paper currencies, which was caused by the British counterfeiting.

Please read a real history book.

Quote
By the way, what would have the outcome been during the civil war, if Lincoln didn't inflate the currency with the Greenbacks?

Who knows? maybe the southern states would have get independent as its their right under the constitution of the USA. Maybe the slaves would have been freed like in Europe by paying the slave owners, which would have been cheaper than the war and would have avoided a lot of deaths.

Btw, why The Money Masters does not explain how Lincoln passed the National Banks Act at the end of the civil war which centrallized the credit around teh big banks of New York? Because it does not bode well with the nutjob wanting to promote Lincoln as an anti-banker and insinuating his death was because he opposed the bankers, when in reality Lincoln gave them control of the credit.
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June 16, 2011, 04:13:44 AM
 #31


Fractional reserve banking IMO, should absolutely be outlawed and one of the primary things Bitcoins has going for it is that it puts it in check, you can still engage in it, but if you go too far and you fail, you'll be hung.


If you love the freemarket you can't hate fractional reserve banking.

It's same as hating motorcycles, because cars are safer.  Cheesy

I like both fractional, and conservative banking, so long as the bank is open about it. Fractional reserve is nothing worse than an investment fund that leverages their captial by xx:1 which enables to give you higher interest on your deposit at increased risk of a bank collapse.

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June 16, 2011, 04:20:26 AM
 #32

Please read a real history book.

Sources would be welcome you know.

Who knows? maybe the southern states would have get independent as its their right under the constitution of the USA. Maybe the slaves would have been freed like in Europe by paying the slave owners, which would have been cheaper than the war and would have avoided a lot of deaths.

Btw, why The Money Masters does not explain how Lincoln passed the National Banks Act at the end of the civil war which centrallized the credit around teh big banks of New York? Because it does not bode well with the nutjob wanting to promote Lincoln as an anti-banker and insinuating his death was because he opposed the bankers, when in reality Lincoln gave them control of the credit.

Sources please.

Also, do not confuse me with a Lincoln fan, I believe that the states absolutely have a right to secede from the union if the federal government violates the contract that they are bound to.

If you love the freemarket you can't hate fractional reserve banking.

It's same as hating motorcycles, because cars are safer.  Cheesy

I like both fractional, and conservative banking, so long as the bank is open about it. Fractional reserve is nothing worse than an investment fund that leverages their captial by xx:1 gives you higher interest at the risk of a bank collapse.

Fractional reserve banking is fraud. If you were to engage in it in any other commodity you could be sent to jail. It's one thing if a bank is open about it and people know the risks of depositing their money there, but as of right now it's done in secret. Everyone that has money in a demand deposit account thinks that the bank actually has that money with their name on it sitting in a vault somewhere, when they don't.

Fraud isn't part of the free market.
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June 16, 2011, 04:21:35 AM
 #33

I'm not calling you name, idiot, dumbass, clueless, etc, and I'd appreciate it if you (and the other guy) would not call me names. Attack the statements, not the person.

Thanks.

Ok, you are right. But I did not insult you. The thing is that I believed the nutjob because his movies are very well done and seem very real to someone not educated enough in economic and economic history. He sells you a dream and then become uncritical to him becose you get addicted to that dream. I felt so ashamed when I started reading economic history books that I just cant understand if the guy is very dishonest and has an agenda or he is really a complete nutjob. Its confusing people with stupid ideas and stopping real change.
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June 16, 2011, 04:29:46 AM
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I'm not calling you name, idiot, dumbass, clueless, etc, and I'd appreciate it if you (and the other guy) would not call me names. Attack the statements, not the person.

Thanks.

Ok, you are right. But I did not insult you. The thing is that I believed the nutjob because his movies are very well done and seem very real to someone not educated enough in economic and economic history. He sells you a dream and then become uncritical to him becose you get addicted to that dream. I felt so ashamed when I started reading economic history books that I just cant understand if the guy is very dishonest and has an agenda or he is really a complete nutjob. Its confusing people with stupid ideas and stopping real change.

I've been in the same position with the gold standard. I failed to see that the bankers have most of the gold locked up and could manipulate the new government forced gold standard at will, I'm not married to an ideology like most people are.

Knowledge is a process, it doesn't do anybody any good to just call other people stupid and then not really explain why, which is why I hate generic comments such as "Wow Comic genius! HHHAAAHA U ARE EH STOOPID"

When something becomes bloody obvious to me I'll correct my facts.

I'm interested in those history books you were mentioning.
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June 16, 2011, 04:31:39 AM
 #35


By the way, what would have the outcome been during the civil war, if Lincoln didn't inflate the currency with the Greenbacks?

Probably much the same.  Like most major wars, the Civil War was a conflict decided by economics, not tactics.  Inflation is, economicly speaking, just another tax as far as funding wars go.  It's just that it's a particularly regressive form of taxation.  The North won because they had the industrial base to support a war of attrition and enough unemployed young men to throw at it, not because they had a morally superior mission.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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June 16, 2011, 04:38:03 AM
 #36

Fractional reserve banking is fraud. If you were to engage in it in any other commodity you could be sent to jail. It's one thing if a bank is open about it and people know the risks of depositing their money there, but as of right now it's done in secret. Everyone that has money in a demand deposit account thinks that the bank actually has that money with their name on it sitting in a vault somewhere, when they don't.

Fraud isn't part of the free market.

It isn't a fraud....

The bank finds an idiot to lend them 70 times their capital (in our crazy world thats the government because who else would be that stupid), the bank then invests that money and gains much better return on equity. Or as it happens every 10 years or so, the bank loses on that investment and goes down under.

The bank doesn't steal anything. The fractional reserve ratio is on their balance sheet which they post to public every quarter, something every depositor and shareholder can see.

The problem is, when a big enough bank fails the government intervenes, and decides to save a mismanged bank, you get the bill. < this is fraud.

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June 16, 2011, 04:40:26 AM
 #37

Fractional reserve banking is fraud. If you were to engage in it in any other commodity you could be sent to jail. It's one thing if a bank is open about it and people know the risks of depositing their money there, but as of right now it's done in secret. Everyone that has money in a demand deposit account thinks that the bank actually has that money with their name on it sitting in a vault somewhere, when they don't.

Fraud isn't part of the free market.

It isn't a fraud....

The bank finds an idiot to lend them 70 times their capital (in our crazy world thats the government because who else would be that stupid), the bank then invests that money and gains much better return on equity. Or as it happens every 10 years or so, the bank loses on that investment and goes down under.


Except that they don't go under.  Therein lies the fraud.  It's called, "moral hazard" because they know in advance that the government will save their asses if they get into trouble at the taxpayers' expense, and thus it is an immoral business to engage in.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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June 16, 2011, 04:42:47 AM
 #38

I failed to see that the bankers have most of the gold locked up and could manipulate the new government forced gold standard at will,

The problem is that this is not true. The bankers adquired control of the money supply through government intervention. Some times the government intervention meant imposing some kind of gold standard (never a free market gold standard, and btw I dont support the gold standard). In the free market the bankers never managed to control the physical gold. They used all kind of regulations to control the money supply, sometimes under the name of godl standard.

The problem with the idea of "gold standard" is that it can refer to may systems who are completely different from each other, just because they have some kind of relation to gold. But, f.e. Bretton Woods, a "gold standard", is more similar to the present system, than to a gold based free banking system, that could be called a gold standard too. In reality, "gold standard" means nothing and everything because each person refers to a different thing by it.
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June 16, 2011, 04:50:43 AM
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The problem is that this is not true. The bankers adquired control of the money supply through government intervention. Some times the government intervention meant imposing some kind of gold standard (never a free market gold standard, and btw I dont support the gold standard). In the free market the bankers never managed to control the physical gold. They used all kind of regulations to control the money supply, sometimes under the name of godl standard.

The problem with the idea of "gold standard" is that it can refer to may systems who are completely different from each other, just because they have some kind of relation to gold. But, f.e. Bretton Woods, a "gold standard", is more similar to the present system, than to a gold based free banking system, that could be called a gold standard too. In reality, "gold standard" means nothing and everything because each person refers to a different thing by it.

I can agree with that pretty much 100%.

The bank doesn't steal anything.

It embezzles it. Demand deposits are used as collateral for nearly ten times the amount in loans. $1,000 in deposits becomes collateral for $10,000.

The fractional reserve ratio is on their balance sheet which they post to public every quarter, something every depositor and shareholder can see.

Perhaps this would be a good video to make.

Go to every local bank, and ask to speak to the bank manager.

You just have one very simple question. Lie and saying you're doing it as some sort of college research thing.

Ask them on camera, to tell you what "Fractional Reserve Banking" is.

Nine times out of ten, the manager does not know what it is, and in some cases has never even heard the term before.

Therefore, to expect that the average joe will understand that banks do this when bank managers don't even know, is pretty laughable.

With bitcoins, fractional reserve banking probably doesn't even need to be outlawed though, since a bailout is pretty much absolutely impossible.

The money supply is too tight.
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June 16, 2011, 04:55:57 AM
 #40

Fractional reserve banking is fraud. If you were to engage in it in any other commodity you could be sent to jail. It's one thing if a bank is open about it and people know the risks of depositing their money there, but as of right now it's done in secret. Everyone that has money in a demand deposit account thinks that the bank actually has that money with their name on it sitting in a vault somewhere, when they don't.

Fraud isn't part of the free market.

It isn't a fraud....

The bank finds an idiot to lend them 70 times their capital (in our crazy world thats the government because who else would be that stupid), the bank then invests that money and gains much better return on equity. Or as it happens every 10 years or so, the bank loses on that investment and goes down under.


Except that they don't go under.  Therein lies the fraud.  It's called, "moral hazard" because they know in advance that the government will save their asses if they get into trouble at the taxpayers' expense, and thus it is an immoral business to engage in.

It seems i didn't get my point across.... The fraud is as i said in the government saving the bank, the bank simply utilizes the level of political corruption our system of government enables and we are stupid enough to support it (not all of us, not me, but the majority of the people think its a brilliant idea).

Let me explain how a fractional reserve bank would work in a freemarket then.

The bank finds an idiot to lend them 70 times their capital (likely that would be hard to get unless they'd pay extremely high interest), the bank then invests that money and gains much better return on equity. Or as it happens every 10 years or so, the bank loses on that investment and goes down under.
If the bank goes down under, depositors, bondholders and shareholders can take over the bank (voluntarily bail it out) or they can declare it bancrupt.

To emphasize my point here, so  i don't get misunderstood again. The fraud enabler is the government, the banks just like any other for profit business utilizes all regulations, law and lobbying (corruption) methods to maximize their profit and minimize their risk, the system we have today unfortunately encourages this.

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