How do we make it real?

King_Martha
King_Martha

How do we make it real?

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youtu.be/F_7HIxCg4is

w8t4u
w8t4u

Three Words:. FULL RESERVE BANKING.

askme
askme

We don't. Society is too far gone into the notion of borrowing money. And the people who have enough power to advocate for a creditless economy are the people making billions off of debt interest.

Also, that's just on paper.

Anyway, I'm asking this to my friend who's a respectable economist. Be back in a few minutes.

Poker_Star
Poker_Star

You don't. Credit has existed since mankind started trading with one another and it probably always will exist as long as we do.
Credit exists even in full reserve banking, they just don't use on-demand deposit accounts.

Deadlyinx
Deadlyinx

Will literally never happen.

Methnerd
Methnerd

Today in Veeky Forums NEETS discuss things they don't understand.

Snarelure
Snarelure

Walk me through a loan. Where does the money come from?

Firespawn
Firespawn

One valuable way of learning is through discussion, as it prompts research by revealing what you don't know.

Flameblow
Flameblow

Not him, but time deposits (e.g. CDs).

eGremlin
eGremlin

So far what he's told me is that without credit, there would be no interest in savings, savings would make sense because inflation would eat it up.

With that being said, since there would be no benefit to saving, people would just spend it, which would cause inflation to skyrocket, anyone who would want to save would be fucked by the 100%+ inflation rate.

Along with that, companies wouldn't be able to grow because most large-scale companies NEED to borrow money in order to expand notably.

And on top of all that, new people joining the workforce would generate even more inflation because of new money joining the economy.

And now to combine everything, with an inflation that high, no one would be able to keep up, businesses would close down because of insane wages & lack of demand, and new business wouldn't rise because of the lack of capital. Ultimately generating an economy where there is no growth, increasing inflation, and an increasing unemployment.

--

Well, that's what my Economist friend said. He has probably debated this many times already with people who don't have too much knowledge on the topic (Like OP, Me, and most other people here), so yeah. There we go.

BinaryMan
BinaryMan

Okay. When the dude having the time deposit cancels it - do they take my loan away?

FastChef
FastChef

Ask /pol/.

StrangeWizard
StrangeWizard

Just asked him how economies worked before credit. He's taking a while to answer. If you guys have any requests on what I should ask him, let me know.

Need_TLC
Need_TLC

It would depend on the policy of the bank / banking regulations. Maybe you couldn't cancel your time deposit at all? Maybe your loan stays but they can't give as many loans during their next accounting period (if reserves are settled periodically like now). Full reserve banking isn't an existing system that we can examine.

Sir_Gallonhead
Sir_Gallonhead

Ah, I see. Sounds pretty inconvenient for everyone, to be honest. I can't cancel my deposits and when I want a loan they might tell me "sorry, we're out of money" or "all 10 year loans are gone, we can only give you money if you repay us in 3 years".

I assume all the interest rates would go through the roof since there was actual demand for money as a scarce resource?

SomethingNew
SomethingNew

Yeah, there are reasons why we use fractional reserve banking instead.

Inmate
Inmate

As for interest rates going through the roof, it would depend on how exactly it played out. One concern over full reserve banking is that it would just push money out of the traditional, regulated banking system and further into the "shadow" banking system.

LuckyDusty
LuckyDusty

Sounds plausible. But I was thinking more along the lines of deposit interest rates getting sky-high. Right now the bank doesn't give a shit about my 20k. In full reserve banking it would care, especially if I offer long-term time deposits. So I'd have more negotiating power and could demand higher interests, maybe? Still zero risk for me (as opposed to putting my money into some shady shadow bank) but higher yields. Under these conditions - who would put their money into a shadow bank, unless we're talking about illegal funds? And if the shadow banks don't have money, they can't offer loans, so you'd have to pay the premium at regulated banks, right?

King_Martha
King_Martha

Google positive money

askme
askme

Credit has existed forever but Usury has been banned in every islamic country.

iluvmen
iluvmen

You buy etherum

PackManBrainlure
PackManBrainlure

According to the Torah jews also aren't allowed to lent at interest to other jews but it's okay to charge interest to gentiles (Deuteronomy 23:20).

You may charge a foreigner interest, but not a fellow Israelite, so that the Lord your God may bless you in everything you put your hand to in the land you are entering to possess.

Evilember
Evilember

Money is itself debt.
No debt, no money. No money, no economy.
No debt, no economy.
youtu.be/F_7HIxCg4is

takes2long
takes2long

That's only for gubmint fiat.

My gold, silver, bitcoin, dash, etc, etc is not from a loan someone else took out.

FastChef
FastChef

no you silly cuck debt is not money!

massdebater
massdebater

With no legal debt, watch organized crime and loan sharking flourish. You'd make an enormous, unregulated , highly profitable, highly violent black market.

lostmypassword
lostmypassword

why would want a creditless economy?

StonedTime
StonedTime

ethereum smart contracts.

decentralised p2p lending circles

decentralised finance.

ETHEREUM thats how it's done f a m

eGremlin
eGremlin

I think that certain things shouldn't be allowed to be bought on credit, Imagine the price of vehicles if you had to pay cash and there was no such thing as financing. We'd actually be paying the real value of the vehicle.

Nude_Bikergirl
Nude_Bikergirl

Wouldn't lending circles defeat the purpose of a creditless economy?
Isn't the point of a creditless economy to do away with the notion of lending and borrowing money?

StonedTime
StonedTime

no the point of credit-less society is to do away with consumer debt as primary means of getting by.

RavySnake
RavySnake

But wouldn't p2p lending circles still bring about the potential for debt?
Maybe I'm just getting stuck on the term "lending" and I'm misunderstanding it's use.

LuckyDusty
LuckyDusty

no the difference between good debt and bad debt is what you spend it on. if you consume what you buy on debt it's real bad if you invest in production it's good. if you invest into non productive assets that's speculation and it makes the system more unstable.

Methnerd
Methnerd

I understand, thanks.