What would be wrong with a 100% reserve banking system? Why doesn't America change to this? It would prevent a ton of issues.
What would be wrong with a 100% reserve banking system? Why doesn't America change to this...
Daniel Nelson
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Samuel Harris
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Jeremiah Moore
>What would be wrong with a 100% reserve banking system?
It would unnecessarily retard the flow of credit, and therefore the growth of the economy.
>Why doesn't America change to this?
Because we have intelligent people running our reserve bank.
>It would prevent a ton of issues.
And issues would those be? Read about a lot of bank failures in the U.S. in the last 40 years?
Levi Martin
Why are some people in favor of this type of system then? I was reading a lot of stuff that economists wrote and it seems legit considering our current banking system isn't entirely stable (bank runs can still occur) as well as it creates money and causes more inflation. right?
Luis Sanders
destruction of capital, contrary to what the autists believe, a bank is not a giant safe.
Parker Bell
Bank runs aren't caused by insufficient reserves; they're caused by people losing faith in the banks themselves. In the U.S., there's (a) government insurance for bank deposits, and people trust that insurance, and (b) a long history of very, very few people ever losing money to a bank insolvency. We've also never had the government seizing banks or bank deposits for political or economic reasons in the last 100 years. People trust the system, and don't need their deposits backed by a 1:1 reserve to sleep at night.
>it creates money
This is a good thing. Increased monetary velocity means a healthy, growing economy. A bigger pie means more for everyone (well, for most).
>causes more inflation
First, inflation isn't a bad thing. A healthy economy has inflation in the 2-3% range. Any less can indicate weak demand and low productivity. The Fed activity works to create inflation when necessary, just as it works to keep it from getting too high.
Second, inflation isn't just a factor of money supply or money velocity. When you have a strong global currency like the dollar, its easier to keep inflation within desired limits.
Samuel Garcia
>Bank runs aren't caused by insufficient reserves
ehhh, thats just plain wrong. you are missing the large part where legislators require banks to hold large reserves they cannot use, just in case of bank runs
The whole idea of 100% reserves is promoted because it would reduce volatility in money supply- creating credit would no longer create more money in the economy and in the3 potential downturn the credit collapse would have much less effect on money supply, therefore creating more stable system
Historically under the gold standard it made alot of sense to have fractional reserve banking because you didn't need to be reliant on the gold miners to create a larger supply of money, but in the current system, where money is practically free to make, whole system makes a lot less sense.
Jack Evans
>you are missing the large part where legislators require banks to hold large reserves they cannot use, just in case of bank runs
You're a fucking moron. There hasn't been a bank run in the U.S. in generations.
Reserve requirements are about confidence, oversight, and control of M2 (look it up, retard). If there was a legitimate bank run in this day and age, no amount of reserves would actually result in people getting timely access to their money.
>creating credit would no longer create more money in the economy
Jesus, you really are stupid. Try doing some reading before you waste people's time with your middle school economics.
Daniel Long
>And issues would those be?
The 2008. crash that is railroading the world into another world war.
Jose Rivera
>The 2008. crash
Oh you mean the crash that had ABSOLUTELY FUCKING NOTHING to do with inadequate bank reserves? Tell me more, kid.
Hunter King
>ABSOLUTELY FUCKING NOTHING
>to do with inadequate bank reserves
It had everything to do with the fed and the 10% reserve debt fiat money system.
You know when your bank has 1 (one) million dollars and works like it has 10 (ten).
Those nine million must come from somewhere and the usury that comes with lending and debt they are used for.
Henry Wood
Jesus kid, read a book or just go watch the movie if you're too stupid to grasp the details. The 2008 crash had everything to do with poor lending practices, speculative underwriting, and toxic assets ... and NOTHING WHAT-SO-FUCKING-EVER to do with the Fed or with reserve requirements.
Connor Bell
retard you, more interest rates nothing to do with anything else, that incentives putting savings to serve your comunity progress instead of corp stocks, it provides healthy growth without any cycle symphtome
Leo Allen
In English please.
Nicholas Jackson
jew banker spotted
bad credits are given on an environment of saturated of credits that should not exist in the first place, economy is polluted by credit expansion
capital misallocation destroys wealth, buffed sectors of the economy due to all around credit expansion is a way to waste human energy and resources
op read 'bank, credit and economic cycles'
Jackson Gonzalez
>You're a fucking moron. There hasn't been a bank run in the U.S. in generations.
>You're a fucking moron
> moron
what is Bear Stearns, what is IndyMac
>Velocity_of_money
LOL you are way too cocky for your econ 101 understanding, are you saying credit does not create money in fractional reserve system?
Josiah Wright
You have to convince yourself first with that bullshit, then try to shill it here.
Bitcoin or gold will be the future currency, I wish it to Bitcoin, but with faggo ts like you it will probably be gold.
Andrew Morgan
You can't be serious...
Dominic Miller
>Bear Stearns
Not a bank.
>IndyMac
Not a bank run.
>are you saying credit does not create money in fractional reserve system?
If you're too stupid to understand monetary velocity, I'm not wasting my time explaining it to you. I already gave you the link. Go read it.
>joos
>buttcoins
>NEET
And you people wonder why Veeky Forums sucks so badly. Look at what happens when people try to discuss a serious topic: joos, buttcoins, and NEETs. Pathetic.
Christian Gonzalez
>be you
>watches the movie big short once
>thinks he understands everything about the 08 financial crisis
>shit post on here
Caleb Evans
Do you get paid by the post? Because despite whatever drivel you typed, you haven't given a single reason why you think I'm wrong. That makes you the shitposter, kid.
It's a shame there's no one to have an intelligent discussion with at this time of night. You Aussies, nightowls, and NEETs really can't even have an elementary level discussion of financial topics. Oh well, its not like your opinions matter anyway....
Jayden King
What do bank runs have to do with anything? You're conflating two entirely different things.
Define what you think 100% reserves mean? Because if you think it is a surefire way to prevent bank runs, you must have a fundamental flaw in your thinking.
Say someone (A) puts $100 into a savings account. Now the bank takes those $100 and grants them as credit to someone else (B). Now B has $100, the bank has nothing and A has the right to withdraw $100 from the bank. If A starts a bank run, the bank can't pay him off even though it never created any additional money.
If you think the bank should be required to hold those $100 in reserve indefinitely so they can always pay out every last one of their customers, then the bank can *never* grant any credit (and by extension pay any interest or make a profit).
Brandon Rogers
are you seriously that dense? did you not even attempt to look at anything beyonf basic econ 101 theory?
positivemoney.org
Kayden Scott
>too stupid to understand monetary velocity
>monetary velocity
>too stupid
its called velocity of money sweetie
Hunter Jones
>if you'd lie an alternative expenation
>This is because of the role of banks and other lending institutions that receive new money. Nearly all of that extra $100 billion enters banking reserves. Banks don't just sit on all of that money, even though the Fed now pays them 0.25% interest to just park the money with the Fed Bank. Most of it is loaned out to governments, businesses and private individuals.
The credit markets have become a funnel for money distribution. However, in a fractional reserve banking system, new loans actually create even more new money. With a legally required reserve ratio of 10%, the new $100 billion in bank reserves could potentially result in a nominal monetary increase of $1 trillion.
Read more: Understanding How the Federal Reserve Creates Money | Investopedia investopedia.com
Jayden Lopez
>bank loan out money for tards to buy overpriced houses
>bank lose money because tards can't pay it back
>bank get bailed out with tax dollars
but but it had nothing to do with bank, bank too big to fail,
your money insured by government that's 20 trillion dollars in debt,
don't you understand stupid goy fed creates cycles by changing interest rates,
it's good for the economy if you lose 3% purchasing power each year.
We need more growth and loans to maximize shekels,
we'll decide when to boost it or slow it down,
don't worry goy it's all above board,
we have fancy paper that says it's safe and for the better,
don't worry goy we woln't profit off having prior knowledge of these decisions.
Daniel Stewart
>It would prevent a ton of issues.
And issues would those be? Read about a lot of bank failures in the U.S. in the last 40 years?
Yes, there have been bank failures in the last decade. I'm not seeing your point here?
Adrian Baker
I'm sorry that you're too stupid to understand the difference between money supply and monetary velocity. However, you can't really have an intelligent discussion about the reserve system without knowing those topics.
I gave you a link, but you're obviously not capable of getting it on your own. And, unfortunately, I don't really have either the time or inclination to teach you. I'd recommend that if you do ever make it to college, take an Econ 101 course.
>Yes, there have been bank failures in the last decade
Not bank failures cause by bank runs or fractional reserves. I.E., the topic of this thread.
>I'm not seeing your point here?
I'm not surprised in the slightest.
Evan Nelson
Cause fuck nixon. He ruined us.
We ised to be until uncle sam got a taste of the fractional monies.
Maybe when this fiat currency folds and the new money is out we will unfuck ourselves.
Not holding my fucking breath tho
Xavier White
>banks go broke, no longer able to make money through loans
>housing market dead
>auto industry dead
>economy dead
i wonder
Hudson Barnes
>inflation isn't a bad thing
true if the productive capacity of the economy keeps up. inflation on unproductive assets / investment however is nonsensical, especially if it's segregated to specific sectors of the economy (eg housing)
Joshua Rodriguez
When talking about inflation, don't confuse the condition with the symptom. When inflation is the condition, it means the federal reserve isn't in control, and that tends to be a bad thing. But most of the time inflation is a symptom, a byproduct of the economy itself. And a moderate rate of inflation is a symptom of a healthy economy.