Why do we need private banks

[Arraya]

Besides fractional reserve lending the way money works has a shelf life. Collapse is built into the system. It’s pretty obvious why it was essentially state mandated to give out as many loans as possible over the past few years. Because it has a definitive PONZI scheme structure that requires more and more suckers to keep in from collapsing. Madoff is small potatoes compared to the central banking system and the Fed.

http://www.chrismartenson.com/EssentialArticles
A debt-based monetary system has a lifespan-limiting Achilles heel: as debt is created through loan origination, an obligation above and beyond this sum is also created in the form of interest. As a result, there can never be enough money to repay principal and pay interest unless debt is continually expanded. Debt-based monetary systems do not work in reverse, nor can they stand still without a liquidity buffer in the form of savings or a current account surplus.

When interest charges exceed debt growth, debtors at the margin are unable to service their debt. They must begin liquidating.

Mr. Lachance reveals the mathematical limit as being the moment that new debt creation falls short of existing interest charges. When that day comes, a wave of defaults will sweep through the system. Which is why our fiscal and monetary authorities are doing everything they can to keep money/debt creation robust.

But it’s a losing game, and they are only buying time. How do I know? Because nothing can expand infinitely forever. The evidence clearly points to exponentially rising levels of money and credit creation. As the bacterium example shows, once an exponential function gets rolling along, its self-reinforcing nature quickly takes over, requiring larger and larger aggregate amounts, even as the percentage remains seemingly tame.

Similarly, our supremely wealthy suffer only from an inability to spend what they ‘earn’ on their capital (interest & dividend income), which means their principal is compounding. But, because each dollar is loaned into existence, it means that when Bill Gates ‘earns’ $2 billion on his holdings, a whole lot of people somewhere else had to borrow that $2 billion. Taken to its logical extreme, and without enforced redistribution, this system would ultimately conclude with one person owning all of the world’s wealth. Game over, time for a Jubilee, hit the reset button, and start again.

When we started our monetary system, nobody ever thought that we would fill up our empty bacterium bottle. Nobody really thought through what it would mean to society once wealthy people earned more in interest & dividends than they could possibly spend. Nobody considered whether it was wise to place 100% of our economic chips into a monolithic banking system that requires perpetual, endless growth in order to merely function.

So, we must ask ourselves: Does it seem possible that our money supply can continue to double every 6 years forever? How about another 100 years? How about another six? What will it feel like when we are adding another $1 trillion every month, week, day, and then, finally, every hour?

Just remember, money is supposed to be a store of value; or, said another way, a store of human effort. Currently it seems to be failing at meeting that characteristic and therefore is failing at being money.

Who ever thought that oil production would hit a limit? Who knew that every acre of arable land, and then some, would someday be put into production? How could we possibly fish the seas empty?

We have parabolic money on a spherical planet. The former demands perpetual growth while the latter has definitive boundaries. Which will win?

[davelj]

The issue isn’t that the money supply can’t grow forever or that there’s a fundamental problem with fractional reserve lending. BUT… the commentator (above) is correct that you can’t you can’t have the money supply (and debt) growing at a greater rate than real GDP forever without blowing yourself up. But so long as it grows in line with GDP you’re not creating a problem. The problem, of course, is that our political system (democracy) doesn’t do a good job of reigning in growth of money and debt. It’s the nature of the business.

We, the U.S., are like an upper middle class family that’s too deep in debt. We’ve got good jobs, a decent education and pretty good fundamental long-term prospects (relative to the rest of the world), BUT… our mortgage and other financial obligations are too big. So, what are we gonna do? Some of the debt’s going to get eliminated (we’ll default on a little bit and inflation will eat some of it). But the vast majority will have to be paid back and that’s going to require two things: spending less and getting a second job. So we’re going to be spending less and working more to pay off that mountain of debt.

So it’s going to be a rough 5-10 years (VERY rough for the next two years) as we get our financial house back in order. But it doesn’t mean that we have to file BK (go into a depression). We just have to buckle down and gut it out. As I’ve pointed out mathematically in a prior thread, we have the economic means to stabilize our household situation and slowly start paying that debt down. The question is whether we have the political will to do so. It remains to be seen.

[davelj]

The issue isn’t that the money supply can’t grow forever or that there’s a fundamental problem with fractional reserve lending. BUT… the commentator (above) is correct that you can’t you can’t have the money supply (and debt) growing at a greater rate than real GDP forever without blowing yourself up. But so long as it grows in line with GDP you’re not creating a problem. The problem, of course, is that our political system (democracy) doesn’t do a good job of reigning in growth of money and debt. It’s the nature of the business.

We, the U.S., are like an upper middle class family that’s too deep in debt. We’ve got good jobs, a decent education and pretty good fundamental long-term prospects (relative to the rest of the world), BUT… our mortgage and other financial obligations are too big. So, what are we gonna do? Some of the debt’s going to get eliminated (we’ll default on a little bit and inflation will eat some of it). But the vast majority will have to be paid back and that’s going to require two things: spending less and getting a second job. So we’re going to be spending less and working more to pay off that mountain of debt.

So it’s going to be a rough 5-10 years (VERY rough for the next two years) as we get our financial house back in order. But it doesn’t mean that we have to file BK (go into a depression). We just have to buckle down and gut it out. As I’ve pointed out mathematically in a prior thread, we have the economic means to stabilize our household situation and slowly start paying that debt down. The question is whether we have the political will to do so. It remains to be seen.

[davelj]

The issue isn’t that the money supply can’t grow forever or that there’s a fundamental problem with fractional reserve lending. BUT… the commentator (above) is correct that you can’t you can’t have the money supply (and debt) growing at a greater rate than real GDP forever without blowing yourself up. But so long as it grows in line with GDP you’re not creating a problem. The problem, of course, is that our political system (democracy) doesn’t do a good job of reigning in growth of money and debt. It’s the nature of the business.

We, the U.S., are like an upper middle class family that’s too deep in debt. We’ve got good jobs, a decent education and pretty good fundamental long-term prospects (relative to the rest of the world), BUT… our mortgage and other financial obligations are too big. So, what are we gonna do? Some of the debt’s going to get eliminated (we’ll default on a little bit and inflation will eat some of it). But the vast majority will have to be paid back and that’s going to require two things: spending less and getting a second job. So we’re going to be spending less and working more to pay off that mountain of debt.

So it’s going to be a rough 5-10 years (VERY rough for the next two years) as we get our financial house back in order. But it doesn’t mean that we have to file BK (go into a depression). We just have to buckle down and gut it out. As I’ve pointed out mathematically in a prior thread, we have the economic means to stabilize our household situation and slowly start paying that debt down. The question is whether we have the political will to do so. It remains to be seen.

[davelj]

The issue isn’t that the money supply can’t grow forever or that there’s a fundamental problem with fractional reserve lending. BUT… the commentator (above) is correct that you can’t you can’t have the money supply (and debt) growing at a greater rate than real GDP forever without blowing yourself up. But so long as it grows in line with GDP you’re not creating a problem. The problem, of course, is that our political system (democracy) doesn’t do a good job of reigning in growth of money and debt. It’s the nature of the business.

We, the U.S., are like an upper middle class family that’s too deep in debt. We’ve got good jobs, a decent education and pretty good fundamental long-term prospects (relative to the rest of the world), BUT… our mortgage and other financial obligations are too big. So, what are we gonna do? Some of the debt’s going to get eliminated (we’ll default on a little bit and inflation will eat some of it). But the vast majority will have to be paid back and that’s going to require two things: spending less and getting a second job. So we’re going to be spending less and working more to pay off that mountain of debt.

So it’s going to be a rough 5-10 years (VERY rough for the next two years) as we get our financial house back in order. But it doesn’t mean that we have to file BK (go into a depression). We just have to buckle down and gut it out. As I’ve pointed out mathematically in a prior thread, we have the economic means to stabilize our household situation and slowly start paying that debt down. The question is whether we have the political will to do so. It remains to be seen.

[davelj]

The issue isn’t that the money supply can’t grow forever or that there’s a fundamental problem with fractional reserve lending. BUT… the commentator (above) is correct that you can’t you can’t have the money supply (and debt) growing at a greater rate than real GDP forever without blowing yourself up. But so long as it grows in line with GDP you’re not creating a problem. The problem, of course, is that our political system (democracy) doesn’t do a good job of reigning in growth of money and debt. It’s the nature of the business.

We, the U.S., are like an upper middle class family that’s too deep in debt. We’ve got good jobs, a decent education and pretty good fundamental long-term prospects (relative to the rest of the world), BUT… our mortgage and other financial obligations are too big. So, what are we gonna do? Some of the debt’s going to get eliminated (we’ll default on a little bit and inflation will eat some of it). But the vast majority will have to be paid back and that’s going to require two things: spending less and getting a second job. So we’re going to be spending less and working more to pay off that mountain of debt.

So it’s going to be a rough 5-10 years (VERY rough for the next two years) as we get our financial house back in order. But it doesn’t mean that we have to file BK (go into a depression). We just have to buckle down and gut it out. As I’ve pointed out mathematically in a prior thread, we have the economic means to stabilize our household situation and slowly start paying that debt down. The question is whether we have the political will to do so. It remains to be seen.

[CA renter]

arraya,

That was a perfect quote from the link you posted. Absolutely, perfectly describes the nature of our current problems.

Interestingly enough, a famous author wrote this exact same thing back in the mid-1800s. Unfortunately, the bankers and financial overlords have so thoroughly brainwashed people that the plebs react with blind disdain whenever this author’s name is mentioned. This enabled the wealthiest and most powerful to extract all the wealth derived from workers’ productivity. So, here we are…

[CA renter]

arraya,

That was a perfect quote from the link you posted. Absolutely, perfectly describes the nature of our current problems.

Interestingly enough, a famous author wrote this exact same thing back in the mid-1800s. Unfortunately, the bankers and financial overlords have so thoroughly brainwashed people that the plebs react with blind disdain whenever this author’s name is mentioned. This enabled the wealthiest and most powerful to extract all the wealth derived from workers’ productivity. So, here we are…

[CA renter]

arraya,

That was a perfect quote from the link you posted. Absolutely, perfectly describes the nature of our current problems.

Interestingly enough, a famous author wrote this exact same thing back in the mid-1800s. Unfortunately, the bankers and financial overlords have so thoroughly brainwashed people that the plebs react with blind disdain whenever this author’s name is mentioned. This enabled the wealthiest and most powerful to extract all the wealth derived from workers’ productivity. So, here we are…

[CA renter]

arraya,

That was a perfect quote from the link you posted. Absolutely, perfectly describes the nature of our current problems.

Interestingly enough, a famous author wrote this exact same thing back in the mid-1800s. Unfortunately, the bankers and financial overlords have so thoroughly brainwashed people that the plebs react with blind disdain whenever this author’s name is mentioned. This enabled the wealthiest and most powerful to extract all the wealth derived from workers’ productivity. So, here we are…

[CA renter]

arraya,

That was a perfect quote from the link you posted. Absolutely, perfectly describes the nature of our current problems.

Interestingly enough, a famous author wrote this exact same thing back in the mid-1800s. Unfortunately, the bankers and financial overlords have so thoroughly brainwashed people that the plebs react with blind disdain whenever this author’s name is mentioned. This enabled the wealthiest and most powerful to extract all the wealth derived from workers’ productivity. So, here we are…

[rnen]

[quote=TheBreeze][quote=rnen]

Do we need to rethink the banking system as a whole? Absolutely. Do we need to put regulations and controls on the banking system? With out a doubt. Do we want the government to decide who qaulifies for a loan? Gee, maybe not such a good idea.

Just imagine the shape we would be in if the likes of Frank, Shumer and Waters dictated lending policies.

[/quote]

Ring…ring…ring. “Hi, this is the cluephone. Who do you think is going to put ‘regulations and controls’ on the banking system? Ding! Ding! Ding! That’s right, it’ll have to be the government. Frank, Schumer, and Waters. Get a clue.”

So under your ‘private banks’ plan we have two corrupt systems – the government and the private banks. The private banksters then pay the government politicians to keep easing back on regs so that they can continue to rape America. If all the banks were controlled only by the government, there wouldn’t be any lobbying/payments to politicians from banks and maybe then the government would put in some reasonable regs. With private banks, there’s no chance of that happening.

How do you reconcile your view that banks need governmental ‘regulations and controls’ (presumably from the same government that Frank, Schumers, and Waters are a part of) with your view that we need private banks and that Frank, Schumers, and Waters shouldn’t dictate ‘lending policies’? So Frank, Schumers, and Waters are capable of crafting reasonable ‘regulations and controls’, but they aren’t capable of creating reasonable ‘lending policies’? There is a massive logical disconnect in your argument.

We’ve already tried ‘private banks’. They failed. Big time. Why do you want to go back there? What’s going to stop them from raping the system and failing again? A government led by Frank, Schumers, and Waters is going to stop the private banks from raping the system again? Please. Other than abolishing the Fed and the fractional reserve banking system, the only hope of having a banking system that won’t rape and pillage is to make it 100% owned by the government.

[/quote]

I agree the current system failed badly. It needs an overhaul, and it can be done with responsible people at the helm who are not beholden to every freaking special intrest group that feeds them money.
Do you really believe that a single bank run by the government is a better alternative? So we eliminate all the banks and credit unions, who compete for our business, and create a monopoly run by the government. Do you think that maybe they would have just found a new way to squeeze more out of all of us to fund even more pork projects? Given how efficient the government operates do you really believe we will all be better off?
Do you really want the government to have complete access to all your finiance activity?

This is not going to be an easy problem to solve but I for one will never support putting all my faith in the government.

[rnen]

[quote=TheBreeze][quote=rnen]

Do we need to rethink the banking system as a whole? Absolutely. Do we need to put regulations and controls on the banking system? With out a doubt. Do we want the government to decide who qaulifies for a loan? Gee, maybe not such a good idea.

Just imagine the shape we would be in if the likes of Frank, Shumer and Waters dictated lending policies.

[/quote]

Ring…ring…ring. “Hi, this is the cluephone. Who do you think is going to put ‘regulations and controls’ on the banking system? Ding! Ding! Ding! That’s right, it’ll have to be the government. Frank, Schumer, and Waters. Get a clue.”

So under your ‘private banks’ plan we have two corrupt systems – the government and the private banks. The private banksters then pay the government politicians to keep easing back on regs so that they can continue to rape America. If all the banks were controlled only by the government, there wouldn’t be any lobbying/payments to politicians from banks and maybe then the government would put in some reasonable regs. With private banks, there’s no chance of that happening.

How do you reconcile your view that banks need governmental ‘regulations and controls’ (presumably from the same government that Frank, Schumers, and Waters are a part of) with your view that we need private banks and that Frank, Schumers, and Waters shouldn’t dictate ‘lending policies’? So Frank, Schumers, and Waters are capable of crafting reasonable ‘regulations and controls’, but they aren’t capable of creating reasonable ‘lending policies’? There is a massive logical disconnect in your argument.

We’ve already tried ‘private banks’. They failed. Big time. Why do you want to go back there? What’s going to stop them from raping the system and failing again? A government led by Frank, Schumers, and Waters is going to stop the private banks from raping the system again? Please. Other than abolishing the Fed and the fractional reserve banking system, the only hope of having a banking system that won’t rape and pillage is to make it 100% owned by the government.

[/quote]

I agree the current system failed badly. It needs an overhaul, and it can be done with responsible people at the helm who are not beholden to every freaking special intrest group that feeds them money.
Do you really believe that a single bank run by the government is a better alternative? So we eliminate all the banks and credit unions, who compete for our business, and create a monopoly run by the government. Do you think that maybe they would have just found a new way to squeeze more out of all of us to fund even more pork projects? Given how efficient the government operates do you really believe we will all be better off?
Do you really want the government to have complete access to all your finiance activity?

This is not going to be an easy problem to solve but I for one will never support putting all my faith in the government.

[rnen]

[quote=TheBreeze][quote=rnen]

Do we need to rethink the banking system as a whole? Absolutely. Do we need to put regulations and controls on the banking system? With out a doubt. Do we want the government to decide who qaulifies for a loan? Gee, maybe not such a good idea.

Just imagine the shape we would be in if the likes of Frank, Shumer and Waters dictated lending policies.

[/quote]

Ring…ring…ring. “Hi, this is the cluephone. Who do you think is going to put ‘regulations and controls’ on the banking system? Ding! Ding! Ding! That’s right, it’ll have to be the government. Frank, Schumer, and Waters. Get a clue.”

So under your ‘private banks’ plan we have two corrupt systems – the government and the private banks. The private banksters then pay the government politicians to keep easing back on regs so that they can continue to rape America. If all the banks were controlled only by the government, there wouldn’t be any lobbying/payments to politicians from banks and maybe then the government would put in some reasonable regs. With private banks, there’s no chance of that happening.

How do you reconcile your view that banks need governmental ‘regulations and controls’ (presumably from the same government that Frank, Schumers, and Waters are a part of) with your view that we need private banks and that Frank, Schumers, and Waters shouldn’t dictate ‘lending policies’? So Frank, Schumers, and Waters are capable of crafting reasonable ‘regulations and controls’, but they aren’t capable of creating reasonable ‘lending policies’? There is a massive logical disconnect in your argument.

We’ve already tried ‘private banks’. They failed. Big time. Why do you want to go back there? What’s going to stop them from raping the system and failing again? A government led by Frank, Schumers, and Waters is going to stop the private banks from raping the system again? Please. Other than abolishing the Fed and the fractional reserve banking system, the only hope of having a banking system that won’t rape and pillage is to make it 100% owned by the government.

[/quote]

I agree the current system failed badly. It needs an overhaul, and it can be done with responsible people at the helm who are not beholden to every freaking special intrest group that feeds them money.
Do you really believe that a single bank run by the government is a better alternative? So we eliminate all the banks and credit unions, who compete for our business, and create a monopoly run by the government. Do you think that maybe they would have just found a new way to squeeze more out of all of us to fund even more pork projects? Given how efficient the government operates do you really believe we will all be better off?
Do you really want the government to have complete access to all your finiance activity?

This is not going to be an easy problem to solve but I for one will never support putting all my faith in the government.

[rnen]

[quote=TheBreeze][quote=rnen]

Do we need to rethink the banking system as a whole? Absolutely. Do we need to put regulations and controls on the banking system? With out a doubt. Do we want the government to decide who qaulifies for a loan? Gee, maybe not such a good idea.

Just imagine the shape we would be in if the likes of Frank, Shumer and Waters dictated lending policies.

[/quote]

Ring…ring…ring. “Hi, this is the cluephone. Who do you think is going to put ‘regulations and controls’ on the banking system? Ding! Ding! Ding! That’s right, it’ll have to be the government. Frank, Schumer, and Waters. Get a clue.”

So under your ‘private banks’ plan we have two corrupt systems – the government and the private banks. The private banksters then pay the government politicians to keep easing back on regs so that they can continue to rape America. If all the banks were controlled only by the government, there wouldn’t be any lobbying/payments to politicians from banks and maybe then the government would put in some reasonable regs. With private banks, there’s no chance of that happening.

How do you reconcile your view that banks need governmental ‘regulations and controls’ (presumably from the same government that Frank, Schumers, and Waters are a part of) with your view that we need private banks and that Frank, Schumers, and Waters shouldn’t dictate ‘lending policies’? So Frank, Schumers, and Waters are capable of crafting reasonable ‘regulations and controls’, but they aren’t capable of creating reasonable ‘lending policies’? There is a massive logical disconnect in your argument.

We’ve already tried ‘private banks’. They failed. Big time. Why do you want to go back there? What’s going to stop them from raping the system and failing again? A government led by Frank, Schumers, and Waters is going to stop the private banks from raping the system again? Please. Other than abolishing the Fed and the fractional reserve banking system, the only hope of having a banking system that won’t rape and pillage is to make it 100% owned by the government.

[/quote]

I agree the current system failed badly. It needs an overhaul, and it can be done with responsible people at the helm who are not beholden to every freaking special intrest group that feeds them money.
Do you really believe that a single bank run by the government is a better alternative? So we eliminate all the banks and credit unions, who compete for our business, and create a monopoly run by the government. Do you think that maybe they would have just found a new way to squeeze more out of all of us to fund even more pork projects? Given how efficient the government operates do you really believe we will all be better off?
Do you really want the government to have complete access to all your finiance activity?

This is not going to be an easy problem to solve but I for one will never support putting all my faith in the government.

[Author]

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