That's true, but it can get uncomfortable. Unfortunately stuffing your cash in a mattress does not help the economy.
This is how you do it: you apparently stuff your first cousin into the mattress :/ William I, Elector of Hesse William of Hanau married, on 1 September 1764 at Christiansborg Palace, his first cousin Wilhelmina Caroline of Denmark and Norway (17471820), the second surviving daughter of Frederick V of Denmark and Norway. Upon the death of his father on 31 October 1785 he became William IX, Landgrave of Hesse-Kassel and as such, is said to have inherited one of the largest fortunes in Europe at the time. Due in part to the wealth of his estate, William is especially notable for his role in affording Mayer Amschel Rothschild both the relationship, and situational means, by assigning some of the care of his properties and tax-gathering, for founding the Rothschild family dynasty. Also, though acquainted since 1775, William IX didn't formally designate Rothschild as overseer until 1801. Mayer Amschel Rothschild and William: Already at Hanau, William utilized the knowhow of Rothschild, who resided in the nearby Frankfurt. The early fortunes of the Rothschild family were made through a conjunction of financial intelligence and the wealth of Prince William. In 1785 the Landgrave of Hesse-Kassel died, leaving his immense wealth (largely gained through the loan of Hessian mercenaries, not least to Great Britain during the American Revolution) to his eldest son, the Prince William of Hanau. During the Napoleonic wars William saw necessary to have his fortune hidden from Napoleon by using his long standing association with the Frankfurt Rothschilds. This money then saw its way through to Nathan Mayer, (N.M.) in London, where it helped fund the British movements through Portugal and Spain. The interest made from this venture was reaped by the budding banker barons, who used it to swiftly develop their fortune and prestige in Europe and Britain. It was not long before their riches outweighed that of their benefactor, William of Hesse-Kassel. more at: http://en.wikipedia.org/wiki/William_I,_Elector_of_Hesse
Uh, yeah. Banks help the economy by matching long term borrowers with short term lenders. The problem is that when lots of short term lenders all want to withdraw their money at the same time, the bank can't necessarily call in the debts owed by the long term borrowers fast enough to meet the demand for withdrawals. If that happens, the bank fails. This is the basis for the Diamond Dybvig model of bank runs, which goes on to explain how its actually in the depositors interest to participate in a run on their bank by withdrawing their money because the loss of confidence becomes a self-fulfilling prophecy.
Why do we desire "economic growth" - no kind of growth can go on indefinitely in a finite world. would we not be better served by 100% reserves.... use banks as a safe place to store our money (since its kind of easy to break in and pillage your mattress)? Should we not chase productivity gains? efficiency gains? in place of the current economic growth model? In a finite environment doing more with the same resources is a much more stable plan than burrowing more from tomorrow to make cushier today.
There appears to one sound banking system currently afoot in the world, feel free to investigate it. "Principles Of Islamic Banking" http://en.wikipedia.org/wiki/Islamic_banking Of course concomitant with this system is the surrender of most of what you hold dear in your lives, and I am not talking about giving up pork or giving up your new suits and ties either. The western addiction to sitting on your bum and earning money off other peoples labor does not work under the system so if you want a comfortable retirement be prepared to work hard until you die. A lot of the people that are crying for honest banking have no idea of it's limitations. Where do you think the money came from to build your favorite shopping mall or to fill it with all those new toys you buy on your credit card? We are so relatively wealthy because our corrupt fractional reserve banks have exploited the earth's poor nations and brought the profits back home. Were not helping the Chinese when we buy their cheap crap, we are simply exploiting them and perpetuating the slave labor system they work under. In principle it's like the wars in the mid east, everyone wants the western meddling there to stop but no one is prepared to suffer the consequences of the higher oil prices that would surely come if the Arabs had true freedom. The Americans and the British have used threats and invasions to fix the oil price low, so you can drive your kids to footy twice a week and visit your friends across town and not be concerned with the cost. The same applies to the benefits of western banking and economics. No one here is a Mother Teressa, so shut up, enjoy the free ride while it lasts and have a solid plan B for when it collapses.
You don't need a link, just look down your street, look in your carport and lounge room. Then Google some picks of Sudanese towns, Indian towns, Chinese towns (that actually have people living in them) or Iraqi towns. But don't look at that big OPEC Island above us, far too depressing that one.
Ron Pauls book "The case for Gold" explains in depth the gold standard era you describe in the OP and how fractional reserve banking was still being practised during that time and what led to the panics during that era
Also during some of the recessions/depressions, real economic production and real wages actually increased, however prices decreased thus they are termed recessions and depressions
My point is that the current system abrogates responsibility. The bankers don't have responsibility for their losses. Whatever type of system you have, the people who make the decisions, who take the risks and get the rewards must also be the ones who suffer the losses when things go wrong. If you don't have that, then massive risks are taken and then losses thrown on the taxpayers, because the system needs to be cleaned up regardless. Crisis after crisis should be expected and in fact that's what occurs. I don't see anyway to get rid of recessions but I don't see any reason why they should be so severe systemically. You will always have local things like Detroit for example. My argument (I don't know whether the Austrians specifically say this or not) is that the current system can not be modified to achieve this, because the abrogation of responsibility is specifically in a government's interests. If you say that people who make the decisions must bear responsibility then you remove the possibility of govt bonds and fiat currency. After all, how is it responsible for someone to borrow money and spend it and throw the task of paying that money back on to others?
