Their problem is that very lack of accountability, as the impulse to go overboard overwhelms the knowledge of the consequences. The feedback turns from positive to negative at the crest of the wave, where we are most intoxicated.
Eventually we will come to see that money and banking, like government, is fundamentally a public utility. One day private banks will seem as obtuse as monarchy does today.
A much earlier example of the same economic dynamic, was in the Ancient Middle East, where clay receipts for how much grain one put in the communal granary were traded around.
Which then lead to the practice of loans and compounding interest, which then required those debt jubilees to sustain a functional state.
"Eventually we will come to see that money and banking, like government, is fundamentally a public utility. One day private banks will seem as obtuse as monarchy does today."
John, I agree with you wholeheartedly on this point. Look no further for a model than the successful Bank of North Dakota. Moneyed interests have made several attempts to shut down the country's only only state-owned bank. But it's popularity remains such that North Dakotans won't hear of it. The bank is still alive today, and it performed admirably compared to its commercial counterparts during both the 2008 Financial Crisis and COVID.
Sometimes I think the socialists are just the controlled opposition.
I rarely go out to social functions these days, but about a month ago, I went to a bookstore, called Red Emma's, in Baltimore, to a book signing by a Palestinian I met on Medium. The guy managing it just seemed to shout undercover cop. I could be wrong, but he was the type.
In the Zen tradition, the Heart Sutra (Prajña Paramita Hridaya Sutra) posits "Form is Emptiness" and "Emptiness is Form" which seems to reconcile conundrums about reality.
I did not appreciate the role of fractional reserve banking in the modern financial system, so good to know. I have thought that the Central Bank could better control inflation by reducing the ratio of reserves rather than raise interest rates. Nor am I convinced that 'interest' itself is a good idea. How can there be an increase in money without an increase in production? Why has the charging and paying of interest captured such a central role in modern Western finance? I am heartened to know that Iranian banks do not charge interest, one of much that they do right.
You are quite correct as always, Tedder. The Federal Reserve does indeed control the cost of lending by dictating reserve requirements for its members banks. If they are required to hold fewer deposits, they will invest the extra funds. If they are required to hold, there will significantly less demand for investment. Member banks must adhere to reserve requirements dictated by the Fed, because the Fed acts as their backstop against the bank runs that used to strike fear into the hearts of English goldsmiths. The Fed can act as a backstop because, of course, they can conjure money out of thin air. In extreme cases, the Fed will also create money to purchase Treasury Bonds (quantitative easing). During the aftermath of the 2008 financial crisis, they were even permitted to purchase other, distressed assets (like mortgage-backed securities).
Their problem is that very lack of accountability, as the impulse to go overboard overwhelms the knowledge of the consequences. The feedback turns from positive to negative at the crest of the wave, where we are most intoxicated.
Eventually we will come to see that money and banking, like government, is fundamentally a public utility. One day private banks will seem as obtuse as monarchy does today.
A much earlier example of the same economic dynamic, was in the Ancient Middle East, where clay receipts for how much grain one put in the communal granary were traded around.
Which then lead to the practice of loans and compounding interest, which then required those debt jubilees to sustain a functional state.
"Eventually we will come to see that money and banking, like government, is fundamentally a public utility. One day private banks will seem as obtuse as monarchy does today."
John, I agree with you wholeheartedly on this point. Look no further for a model than the successful Bank of North Dakota. Moneyed interests have made several attempts to shut down the country's only only state-owned bank. But it's popularity remains such that North Dakotans won't hear of it. The bank is still alive today, and it performed admirably compared to its commercial counterparts during both the 2008 Financial Crisis and COVID.
Nathan,
It is a movement;
https://publicbankinginstitute.org
Though obviously one that gets zero attention.
Sometimes I think the socialists are just the controlled opposition.
I rarely go out to social functions these days, but about a month ago, I went to a bookstore, called Red Emma's, in Baltimore, to a book signing by a Palestinian I met on Medium. The guy managing it just seemed to shout undercover cop. I could be wrong, but he was the type.
In the Zen tradition, the Heart Sutra (Prajña Paramita Hridaya Sutra) posits "Form is Emptiness" and "Emptiness is Form" which seems to reconcile conundrums about reality.
I did not appreciate the role of fractional reserve banking in the modern financial system, so good to know. I have thought that the Central Bank could better control inflation by reducing the ratio of reserves rather than raise interest rates. Nor am I convinced that 'interest' itself is a good idea. How can there be an increase in money without an increase in production? Why has the charging and paying of interest captured such a central role in modern Western finance? I am heartened to know that Iranian banks do not charge interest, one of much that they do right.
You are quite correct as always, Tedder. The Federal Reserve does indeed control the cost of lending by dictating reserve requirements for its members banks. If they are required to hold fewer deposits, they will invest the extra funds. If they are required to hold, there will significantly less demand for investment. Member banks must adhere to reserve requirements dictated by the Fed, because the Fed acts as their backstop against the bank runs that used to strike fear into the hearts of English goldsmiths. The Fed can act as a backstop because, of course, they can conjure money out of thin air. In extreme cases, the Fed will also create money to purchase Treasury Bonds (quantitative easing). During the aftermath of the 2008 financial crisis, they were even permitted to purchase other, distressed assets (like mortgage-backed securities).