Economic Devastation

[TPTB_need_war]

I mean how obtuse is it really? If you try to swat a fly 10 times before you succeed does that require finance? 

I don't expect people to see insights the first time, but I do expect them to not be in woefully unable to think once it has been explained to them.

[TPTB_need_war]

Finance is primarily a tool to push forward consumption and disperse risk.

Actually it turns out that it metastasizes and aggregates risk until it becomes Too Big To Fail.

[CoinCube]

Sorry but this bolded assumption is myopic and exemplifies you still haven't grasped my conceptual insight entirely.

The more that final production moves closer to the individual with lower startup costs, the more uncertainty and risk decline. When a human can fully leverage his knowledge creation, he earns such an enormous ROI that several iterations of failure between each success are a non-risk and a no-brainer decision versus slaving away as an employee. Trust me, everyone who has made this leap has never gone back. I certainly never will work for financier nor employer ever again.

I mean how obtuse is it really? If you try to swat a fly 10 times before you succeed does that require finance?  

To the degree this is increasingly true how is it incompatible with what I wrote above. I imagine that even in a future knowledge age there will be some projects with such a low chance of success with correspondingly high reward that it would not be feasible for an individual to pursue alone and that some form of finance would be used. Change 10 times to 10 thousand times and you have a situation that may call for finance providing the payoff justifies the investment.

My own experience has been that name substitution does not further constructive dialog. BldSwtTrs has been polite in his posts. Far better to drill down to the core of the differences in opinion and leave it at that.

My best guess is your bias is you want so much to believe that your world won't radically change. My bias is I want the world to change, and I want the areas where I am strong to be strong.

Perhaps I would certainly benefit from continuation for the status quo for as long as possible. However, I do expect change to be gradual. My suspicion is that time will prove you correct but not in the time frame you hope to see as the majority of the economy transitions from one fiat global currency to another perhaps SDR's. Time will tell, however, and this is not a point I have much interest in debating.  

[TPTB_need_war]

My own experience has been that name substitution does not further constructive dialog.

There was no constructive dialog because he was determined to not do his effort on the vast information that is already in the thread. Instead he wanted to be the 30 minute in-and-done superstar. As if his laziness is my responsibility!  

CoinCube did you earn 2 university degrees by making your homework and study the responsibility of the authors of the books in your curriculum.

And yet you apologize for his behavior and try to passively aggressively slander me. Sorry you need to pick sides between productive and failure. Choose.

BldSwtTrs has been polite in his posts.  

Absolutely not! Notice he is on ignore (except for the brief moment to quote the following) so I don't know if he has wised up yet and apologized to me.

Here he is blaming his lack of reading comprehension on me, which is not polite. If he was polite, he'd expend more than 30 minutes before assuming that my writings didn't already explain it. Even you warned in the opening post that even for someone of your intellect (with a Math degree and a medical doctor) that you needed 2 weeks to fully absorb, yet he comes in here guns blazing like a typical Dunning-Kruger dufus:

in front of a lack of a solid argument to explain why finance doesn't give an edge in knowledge creation and why wage earning will stop being a thing in the future, I have no other choice than to think that you have at least one blind spot

He had another choice which was to expend more time studying, reading, researching, and thinking before slandering and wasting the time of the author. I suspect he had some education in finance and is offended.

OK so because East Asia is emerging that means finance will no longer be important. You are a formal logic genious!

...

So because manufacturing is disrupted by 3D that means finance will no longer be important. Because we all that the only reason finance exist is for building factory!

...

You are less smart that you think you are, and I am smarter than you think. You seem pretty bad at assessing that kind of things.

[TPTB_need_war]

...These conditions will never be met and thus finance will never cease to exist...

Sorry but this bolded assumption is myopic and exemplifies you still haven't grasped my conceptual insight entirely.

The more that final production moves closer to the individual with lower startup costs, the more uncertainty and risk decline. When a human can fully leverage his knowledge creation, he earns such an enormous ROI that several iterations of failure between each success are a non-risk and a no-brainer decision versus slaving away as an employee. Trust me, everyone who has made this leap has never gone back. I certainly never will work for financier nor employer ever again.

I mean how obtuse is it really? If you try to swat a fly 10 times before you succeed does that require finance?  

To the degree this is increasingly true how is it incompatible with what I wrote above. I imagine that even in a future knowledge age there will be some projects with such a low chance of success with correspondingly high reward that it would not be feasible for an individual to pursue alone and that some form of finance would be used. Change 10 times to 10 thousand times and you have a situation that may call for finance providing the payoff justifies the investment.

I don't know why I have to repeat myself.

What you keep forgetting CoinCube is that relative size can force an withering paradigm into waterfall collapse into extinction. Refer the math I provided in the post about relative rate of growth.

Maybe you thought you were providing a counter-example by stating that some high ROI project might have too large of an economy-of-scale (risk of failure isn't a finance problem if the scale is small, remember my fly swatting analogy), but the entire point is the Knowledge Age will destroy the need for economies-of-scale because the production is becoming more fine grained and modular (e.g. designs for 3D printers, 3D CNC mills, 3D house printers, my work on complete solution to the Expression Problem for software fine grained modularity, etc).

My best guess is your bias is you want so much to believe that your world won't radically change. My bias is I want the world to change, and I want the areas where I am strong to be strong.

Perhaps I would certainly benefit from continuation for the status quo for as long as possible. However, I do expect change to be gradual. My suspicion is that time will prove you correct but not in the time frame you hope to see as the majority of the economy transitions from one fiat global currency to another perhaps SDR's. Time will tell, however, and this is not a point I have much interest in debating.  

Oh I agree that the majority will transition to SDRs. I don't see that dying until at least 2032 and probably withering some decades on from there. The main reason being that morass can wage war on and steal from those in the Knowledge Age.

In short, I see the Age of Totalitarianism first before the Golden Age of Knowledge wins outright.

P.S. How much are you earning CC? I hear programmers of my caliber are earning roughly $0.5 - 1 million a year counting the stock options. I was earning $0.3 - 0.5 million a year including those factors in the 1990s and that is not even inflation adjusted. Unfortunately I let my career slip away. Do you understand why he doesn't have a right to demand my time (especially I am battling Multiple Sclerosis, am 4 days into fasting, in a deep financial hole, and risking it all to make sure we all have the cryptocoin we desperately will need).

[CoinCube]

...These conditions will never be met and thus finance will never cease to exist...

Sorry but this bolded assumption is myopic and exemplifies you still haven't grasped my conceptual insight entirely.

The more that final production moves closer to the individual with lower startup costs, the more uncertainty and risk decline. When a human can fully leverage his knowledge creation, he earns such an enormous ROI that several iterations of failure between each success are a non-risk and a no-brainer decision versus slaving away as an employee. Trust me, everyone who has made this leap has never gone back. I certainly never will work for financier nor employer ever again.

I mean how obtuse is it really? If you try to swat a fly 10 times before you succeed does that require finance?  

To the degree this is increasingly true how is it incompatible with what I wrote above. I imagine that even in a future knowledge age there will be some projects with such a low chance of success with correspondingly high reward that it would not be feasible for an individual to pursue alone and that some form of finance would be used. Change 10 times to 10 thousand times and you have a situation that may call for finance providing the payoff justifies the investment.

I don't know why I have to repeat myself.

What you keep forgetting CoinCube is that relative size can force an withering paradigm into waterfall collapse into extinction. Refer the math I provided in the post about relative rate of growth.

Maybe you thought you were providing a counter-example by stating that some high ROI project might have too large of an economy-of-scale (risk of failure isn't a finance problem if the scale is small, remember my fly swatting analogy), but the entire point is the Knowledge Age will destroy the need for economies-of-scale because the production is becoming more fine grained and modular (e.g. designs for 3D printers, 3D CNC mills, 3D house printers, my work on complete solution to the Expression Problem for software fine grained modularity, etc).

This back and forth is uninteresting and can be simplified mathematically to the following.

F(x)=

CoinCube: For any finite value of x the function is not 0
TPTB_need_war: The answer is 0
CoinCube: For a finite value of x the function is greater than zero
TPTB_need_war: Why do I have to repeat myself the answer is zero

***

Do you understand why he doesn't have a right to demand my time (especially I am battling Multiple Sclerosis, am 4 days into fasting, in a deep financial hole, and risking it all to make sure we all have the cryptocoin we desperately will need).

I think I do, but it is your decision to interpret a challenge in this thread as a demand on your time. Challenges can also be ignored or addressed at a later date. The primary purpose of this thread after all is to challenge and explore your thesis.  

[TPTB_need_war]

I think I do, but it is your decision to interpret a challenge in this thread as a demand on your time. Challenges can also be ignored or addressed at a later date. The primary purpose of this thread after all is to challenge and explore your thesis.  

Let's differentiate an intelligent, well researched challenge from a lazy "sound bites" (non-holistic) conceptualization slander.

Generally you get on my ignore list in one of the following 8 ways:

• You have exceeded my patience in your refusal to pay attention to something that was being explained to you

[TPTB_need_war]

This back an forth is uninteresting and can be simplified mathematically to the following.

F(x)=

CoinCube: For any finite value of x the function is not 0
TPTB_need_war: The answer is 0
CoinCube: For a finite value of x the function is greater than zero
TPTB_need_war: Why do I have to repeat myself the answer is zero

You have a blind spot when it comes to economics.

If the opportunity cost of not joining the Knowledge Age is say 10 - 100X greater than remaining in the financed NWO morass, the profit margins of the financed world go negative (in fact this has already happened in China in the export manufacturing sector!) because you have too many competing for the same small bounded value (relative to the Knowledge Age value and the unbounded opportunities for growth).

Thus collapse to 0. That collapsed financed NWO system will try to survive by TOTALITARIANISM and eugenics.

Q.E.D.

[OROBTC]

...

I am staying out of this little sub-argument here, but have an observation of TPTB's assertion that Chinese manufacturers' profits are down.

I do not know for a fact that they are (in general let's say), but I do wonder how they can be making any money selling many of their automotive bearings for so cheap.  I cannot see how, even if they have robots in their plants.

Also it is in the media that companies are leaving China for Vietnam, Bangladesh and even Mexico (though I have no numbers).

China and the BRICS seem to be Poster Boyz for "Economic Devastation" for now.  

I wonder if China's manufacturing base is at risk of being hollowed-out as companies leave for cheaper pastures...  They DO have a huge manufacturing base, so likely they can hang on to it enough to benefit from TPTB's expected decline of America & Europe.  Well, we'll see.  

If the West declines enough, TARIFFS & QUOTAS will come back from the past.  Not good for China.  

^^ And you saw THAT here first! ^^

[BldSwtTrs]

CoinCube, I have read your three posts about fractional reserves.

*I think you are making a mistake when you say that there is not enough money to repay the existing debt plus the interests. The way you wrote it, it seems as if it was one of Ludwig von Mises idea. I would be really surpise if he wrote something like that. Did he really write that?

Debt is a stock and money is a flow. One bank note can be used to pay a lot of debt, it just needs to circulate.

We can even imagine an economy where debt and interests are repaid without money. Let's assume we are both alone one an island. I borrow from you the equivalent of 100$ of fish, you tell me that I now owe you the equivalent of 110$ because of the interests.
Then we both agree to asses the value of my work at 10$ an hour. So some time after, I work for you during 11 hours and... boom, I have redeem my debt. How beautiful is that?


**I know pretty well the Austrian Business Cylcle Theory and I don't think it's the main cause of the booms and busts like you seem to think. I think boom and bust might indeed be partially caused by the distortion of the money price, itself caused by fractional reserve and central banking, but it's only one part of the problem (and the main culprit is not fractional reserve but central banking - see the next point). Without fractional banks and central banks there would still be booms and busts because there are basically caused by human psychology and the way knowledge acquisition works.

***You are describing a system where a Central Bank exists. That system is fucked up, we agree. But you don't explain why fractional reserve without central bank would sucks.

Without a central bank, banking become basically like any business. A bank provides what the market wants: liquidity. Central banking fucked up the market because it basically subsidy the offer of liquidity.
But without central bank, the offer of liquidity depend on the demand of liquidity, like any other market (and there would still have boom and bust of weaker intensity, because a free market operates by trial and error, as knowledge acquisition does - see the point before).

****You are saying that fractional reserves kill the midde class. Why in such country as China -where fractional banking exists- the middle class is expanding fast?


In conclusion, you have read Rothbard, he is against fractional banking so you probably have been influence by him. It's all well and good BUT Rothbard demonstratation is completly false on that point. He wrongly thinks fractional reserves are a steal. All his hostility comes from the fact that he mixes up of a free market operation and a steal. Hayek, which is way clever, is not against fractional banking. He understood the root of the problem is central banking (to be precise, the monopoly of central banks).

And on a more broader note, I think you are overestimating A LOT the role of finance in the world's woes, and are underestimating the role of governments (you almost describe them as victim of the evil finance) and human psychology.

I will come back to the topic of knowledge and finance later when I have more time, for now I just wanted to react on your posts on that subject. It will probably help us to move forward with the initial discussion.

[TPTB_need_war]

Fractional reserves don't exist without debt. Debt doesn't exist without the ability to predict the future. Innovation can't be predicted.

Thus fractional reserves require failure. This failure can either be dealt with frequent bank runs (and short-lived economic depressions) of the 1800s which eventually metastasized to JP Morgan bailing out the USA banking system and the formation of a regionally autonomous Federal Reserve system to buy corporate paper. Which metastasized to a centralized Fed which can do what ever the fuck it wants to do.

The Knowledge Age will destroy debt formation because finely grained innovation and the maximum division-of-labor can't be financed (predicted). The debt-based NWO world will spiral off into eugenics once it can't expropriate from the Knowledge Age.

Burn your finance degree. It will become useless.

[BldSwtTrs]

Fractional reserves don't exist without debt. Debt doesn't exist without the ability to predict the future. Innovation can't be predicted.

Thus fractional reserves require failure. This failure can either be dealt with frequent bank runs of the 1800s which eventually metastasized to JP Morgan bailing out the USA banking system and the formation of a regionally autonomous Federal Reserve system to buy corporate paper. Which metastasized to a centralized Fed which can do what ever the fuck it wants to do.

The Knowledge Age will destroy debt formation because finely grained innovation and the maximum division-of-labor can't be financed (predicted). The debt-based NWO world will spiral off into eugenics once it can't expropriate from the Knowledge Age.

Take your finance degree and burn it. It will become useless.

You think finance exists because of predictability whereas finance exists because of unpredictability.

More unpredictability = more finance.

Thus fractional reserves require failure

Innovation requires failure.

You cannot innovate if you don't take the risk to fail. Knowledge formation is done by trial and error.

You cannot not innovate if you are not ready to fail. That's why finance will be needed in the future, because it's protect individuals against risks tie to the innovation process.

[TPTB_need_war]

There is no risk in fine grained innovation. The unpredictability is subsumed by the upside (opportunity cost!) and the lack of impact on an individual's surplus in survival goods:

http://www.catb.org/esr/writings/magic-cauldron/magic-cauldron-2.html

You are extrapolating beyond the utility of finance and trying to apply it to where it no longer is relevant. It is because you have not looked at the composition, you just blindly apply some top-level concept where it is inapplicable.

Stop your nonsense posting.

(you entirely missed the entire point of my seminal essay in the opening post! and you go on and on ignoring the key point I have clarified to you now several times!)

[BldSwtTrs]

There is no risk in fine grained innovation. The unpredictability is subsumed by the upside (opportunity cost!) and the lack of impact on an individual's surplus in survival goods:

http://www.catb.org/esr/writings/magic-cauldron/magic-cauldron-2.html

You are extrapolating beyond the utility of finance and trying to apply it to where it no longer is relevant. It is because you have not looked at the composition, you just blindly apply some top-level concept where it is inapplicable.

Stop your nonsense posting.

(you entirely missed the entire point of my seminal essay in the opening post! and you go on and on ignoring the key point I have clarified to you now several times!)

It's not because the risk/reward ratio is favorable that there is no risk.

And if someone doesn't care about failure in an entrepreneurial endeavour, it's because he has already some comfort (ie. has a survival surplus), or has other income streams or know he can quickly obtain new ones.
But someone who is poor and/or unemployed with no income stream will care a lot about failure since he has not surplus to begin with. So if you are talking about wealthy individuals (or the best in their domain with highly marketable skills), sure they will not care about failure, but basically everyone else will care about failure.

[TPTB_need_war]

The poor are those who don't join the Knowledge Age. The upside is so high and the cost-of-entry is so low and declining always, that they launch into the Knowledge Age within 5 days of having laptops dropped into an area where the kids are illiterate.

http://www.technologyreview.com/news/506466/given-tablets-but-no-teachers-ethiopian-children-teach-themselves/

Who will cast their pearls at swine.

Now please, please, please stop wasting our time.

[CoinCube]

BldSwtTrs I have addressed your queries below. In the interest of clarity and brevity I have reordered and condensed some of them.  I suspect we are going to agree on very little but I will point out where I believe your reasoning to be flawed.  

Rothbard demonstratation is completly false on that point. He wrongly thinks fractional reserves are a steal. All his hostility comes from the fact that he mixes up of a free market operation and a steal…

***You are describing a system where a Central Bank exists. That system is fucked up, we agree. But you don't explain why fractional reserve without central bank would sucks.
Without a central bank, banking become basically like any business. A bank provides what the market wants: liquidity. Central banking fucked up the market because it basically subsidy the offer of liquidity.
But without central bank, the offer of liquidity depend on the demand of liquidity

Fractional reserve banking is theft and not understanding this appears to be a fundamental misconception on your part. There is a strong market demand for liquidity and fractional reserve banking has profitably exploited this demand worldwide. However, the relevant question is what competitive advantage allows fractional reserve institutions to so thoroughly dominate the market for liquidity.

Fractional reserve wins the competition for one simple reason. It has lower costs. A lender participating in fractional reserve is able to lend money they do not have. They do this by promising their depositors that funds can be withdrawn anytime on demand while simultaneously lending those very same funds to the broader market. By creating multiple and therefore fraudulent claims on each unit of currency a bank is able to meet the market demand for liquidity at a lower cost than competing methods of finance.
  
In any other industry making promises you cannot keep would be considered fraud. In this particular instance fraud is very profitable so multiple quaint but false justifications have been developed to defend it.

Central banks arise naturally due to the instability created by fractional reserve banking. Fractional reserve banks are prone to failure. Everything is fine until enough people start to call in outstanding claims. Bank runs naturally arise from fractional reserve and a devastated public demands action making central banks an easy sell to an angry public.
 
This is not rocket science and economist used to understand this. Shortly after the last wave of massive bank failures in the great depression a number of influential economists recommended the Chicago Plan. It was ignored in favor of massive government subsidy of banks via FDIC.

Chicago Plan
The Chicago plan was a collection of banking reforms suggested by University of Chicago economists in the wake of the Great Depression. A six-page memorandum on banking reform was given limited and confidential distribution to about 40 individuals on March 16, 1933. The plan was supported by such notable economists as Irving Fisher, Frank H. Knight, Lloyd W. Mints, Henry Schultz, Henry C. Simons, Garfield V. Cox, Aaron Director, Paul H. Douglas, and Albert G. Hart. Suggested reforms included the abolition of the fractional reserve system and imposition of 100% reserves on demand deposits.

**I know pretty well the Austrian Business Cylcle Theory and I don't think it's the main cause of the booms and busts like you seem to think. I think boom and bust might indeed be partially caused by the distortion of the money price, itself caused by fractional reserve and central banking, but it's only one part of the problem (and the main culprit is not fractional reserve but central banking.

Central banking arises naturally from the economic booms, busts and bank runs inherent in fractional reserve economics. It should not be looked at as fundamentally separate from fractional reserve but as logical growth of a fraudulent business. Much like the mob benefits from taking over the police fractional reserve banks benefit from central banking.

****You are saying that fractional reserves kill the midde class. Why in such country as China -where fractional banking exists- the middle class is expanding fast?

If you are arguing that oligarchy with fractional reserve banking is better than communism you will find no argument here.

*I think you are making a mistake when you say that there is not enough money to repay the existing debt plus the interests.
Debt is a stock and money is a flow. One bank note can be used to pay a lot of debt, it just needs to circulate.

You are focusing on mutual obligations and creating an overly simplistic model. You appear to be envisioning a simplistic flow scenario such as Sally owes John $100 who owes Tom $100 who in turn owes Sally $100. Yes there is likely some overall debt that could be satisfied in this manner. However, this is a very small portion of total debt. I suggest you read this article on why it is mathematically impossible to pay off the national debt.

http://www.zerohedge.com/news/2015-05-22/it-mathematically-impossible-pay-all-our-debt

Our current system of coining money creates principle without creating the interest this results first in the financial impoverishment of
the masses and later the impoverishment of governments.  

I think you are overestimating A LOT the role of finance in the world's woes, and are underestimating the role of governments (you almost describe them as victim of the evil finance) and human psychology.

On the contrary I think I have accurately described the role of finance in today’s economy. I am less certain that it will be harmful in the long run. Modern finance seems to be progressively undermining the nation state and driving political consolidation across national borders. Perhaps this will allow us to more quickly transition to something better. I certainly would not defend the track record of the nation state and strong government. A close look at WWI and WWII would disabuse any rational observer of that notion.      

[username18333]

[...]

If the opportunity cost of not joining the Knowledge Age is say 10 - 100X greater than remaining in the financed NWO morass, the profit margins of the financed world go negative (in fact this has already happened in China in the export manufacturing sector!) because you have too many competing for the same small bounded value (relative to the Knowledge Age value and the unbounded opportunities for growth).

Thus collapse to 0. That collapsed financed NWO system will try to survive by TOTALITARIANISM and eugenics.

Q.E.D.

(Colorization mine.)

If an "economic object" should prove detrimental to plutocracy, it should also, therefore, prove moneyness-less. (I.e., "the capital or money is . . . money because it is beloved of the [one basis point]" [qtd. in username18333] [emphasis added].)

[minor-transgression]

Sequel to post on Economic Totalitarianism ... re Bank-space.
I'm posting this in Economic Devastation - it seems more relevant here

You keep using that word (fractional reserve banking) I do not think it means what you think it means
(similarly for "money")

As I posted earlier :
http://www.firstrebuttal.com/the-feds-fatal-flaw-a-predictable-end/
"The monetary system enacted in 1913 (and all fiat monetary systems), issuing currency backed by interest bearing indenture, was fatally flawed due to a requirement for its very survival to create an ever-increasing stock of money ..."

The flaw is not so much with the monetary system itself, but in particular, it is the way it is used.
Interest on capital is either a time preference, made good with profit, or interest is a
reward for risk. For example, in banking:

As the Bank of England kindly pointed out, banks lend first and worry about
balancing the books later. In other words, they create endogenous credit.

I'm going to throw out some numbers here, feel free to correct me where I'm wrong.
I'm also going to ignore derivative products, and keep things simple.

Bank A is levered 30:1 has 15% ROI, Equity = 3%
Bank B is levered 25:1 has 12.5% ROI, Equity = 4%
Bank C is levered 20:1 has 10% ROI, Equity = 5%
Bank D is levered 10:1 has 5% ROI, Equity = 10%

If bank liabilities are 400, total equity is 22. 

Each banks assets are 30% bank loans, 30% mortgage loans, 30% commercial lending, the remainder are
deposits or other government backed paper. What can go wrong?

Mortgage fraud is endemic, causing 10% losses, and this pushes up commercial losses to 10%,
unlikely (even 3% is enough), but I'm keeping things simple.

Initially, as things progress, only Bank A is insolvent.

If Bank A goes into bankruptcy, Banks B and C become insolvent. Bank D has problems
with liquidity. The financial system locks up because nobody trusts anybody anymore.
If these banks are in Unicornland, Banks A, B, and C throw up their hands and declare
themselvs bankrupt, the government seizes them and puts them through receivership, and
in the process the "Money" supply shrinks by ten precent, balancing risk and reward.
Bank D now has a monopoly, but is levered 30:1, is split into four banks, and the game continues.

Where capital gains interest at risk, losses limit the increases in credit.

Anyone want to set out what would happen in the real world? Anyone?

[TPTB_need_war]

CoinCube the only flaw I find in your last post is what minor-transgression points out, that if everyone is loaning money at interest, then the money supply and/or velocity of money must grow compounded.

Thus I say debt demands fractional reserves (booms, busts and dominance by an oligarchy whether it be 100% reserves or not is irrelevant, except that if you can enforce 100% reserves the booms and bust are much more contained).

Debt is pulling demand forward thus creating a vacuum of demand in the future because it proposes to assume that guaranteed production can predict the future. It doesn't anneal.

[CoinCube]

CoinCube the only flaw I find in your last post is what minor-transgression points out, that if everyone is loaning money at interest, then the money supply and/or velocity of money must grow compounded.

Thus I say debt demands fractional reserves (booms, busts and dominance by an oligarchy whether it be 100% reserves or not is irrelevant, except that if you can enforce 100% reserves the booms and bust are much more contained).

Debt is pulling demand forward thus creating a vacuum of demand in the future because it proposes to assume that guaranteed production can predict the future. It doesn't anneal.

If the act of lending was seperated from the process of money creation pulling demand forward would be constrained by natural market forces. No systemic risk would develop as the cost of borrowing would rise quickly as more people borrowed. Interest rates would be set by the time preference of the market plus a risk premium.

For demand deposits (funds that are available for withdraw at any time) 100% reserve would essentially require banks to hold onto these funds and not lend them out. For these deposits banks would simply to act as a secure storage area and would of course charge a fee for this service.

Financial transactions could be accomidated by non demand deposits where a depositor seeking interest could be paired up with a borrower screened by the bank. Lent funds of this nature would not be available for immediate withdraw but but would be returned to the depositor as the debt was repaid or potentially not returned to the depositor if the borrower defaulted. In this model the depositor is taking the role of an investor in the borrower and assuming risk.

There are legitimate and rational reasons to pull demand forward in certain circumstances . The problem arises when the process of lending is allow to pull demand forward systemically and in the process fraudulently debase the money supply. It is the inherent instability of fractional reserve that leads to the boom and bust cycles. The publics general failure to understand the problem leads naturally to the abandonment of sound money which is incompatable with the underlying fraud.