Now, just before you go all crazy rant on me, hear me out. First we need to consider several things: 1) The modern banking system sees both debt and (savings) deposits as capital against which they can lend, yes? 2) The modern economy is based on the concept of perpetual and exponential growth, yes? (think compound interest) After all, throughout the crisis we have been hearing about declining growth rates, sure there have been some cases of negative growth (and they have been widely publicized), but the thing that has really freaked investors and bankers is the slowdown in growth. And why shouldn't it freak them out, they live fast paced lives, things can't be slow around them or they wouldn't be important people. After all, isn't it they who have been responsible for the growth that we have seen over recent decades, growth that has resulted in thousands of jobs, allowing you to increase your standard of living, buy that car, send your kids to university, and all while paying off your house. Don't they deserve the car, the second car, the massive house with a walk in wardrobe and seldom used kitchen. Haven't they earned it? 3) Debt grows faster than savings. Look at the rates offered by banks, you know it to be true. Well with these things in mind it doesn't take a giant leap to realize that the way to save the banking system and ensure that they can keep supplying the required liquidity to grease the wheels of the ever growing economy is to guarantee that there is a constantly increasing base of capital for them to lend against. But how do you make sure that the level of capital against which they can lend will always increase at a rate great enough to service the ever growing economy? You make debt more attractive. And how do you do that? Punish the savers! After all, this whole crisis is all their fault anyway. Had cared about their fellow man, had they wanted their children would have jobs, they wouldn't have tried to slow down the wheels of progress by "living within their means" (this what they call stealing valuable capital from hard working companies who are only trying to make their lives better). Had they cared about anyone else but themselves they would never have tried to slow down the economy by slowly stealing it's life blood, money! Or debt... they are interchangeable really. But debt grows faster, and they knew that! Now, why do it in such a blatant and public way? Well we've been trying it with inflation but they just don't seem to be able to take hint. Either that, or they are really slow and haven't noticed. tldr: We will save the banking system by increasing debt levels as it is a form of capital that grows faster than savings. To do this we make debt more attractive by punishing savers. It's all their fault anyway for hoarding the valuable money they should have been giving back to the economy that so graciously provided for them with a means of employment. Edit: Spelling. Have probably missed some other things as well but I just got home from work and can't be bothered proof reading
It should also be noted that if everyone is in debt, you don't get runs on the bank. Yet another benefit of a completely debit based economy...
And for all who have questions about the above rant. I tried thinking like a banker, this is the result.
I thought with the title that we were thinking the same thing. Unfortunately I disagree with most of what you're saying. I explained my view here: http://forums.silverstackers.com/message-495737.html#p495737
GP - we need a "tongue-in-cheek" smiley!!! Thanks KMGeneral - you have explained the current system and the thinking behind the proponents of the system admirably. Thanks dogmatix for outlining a potential future system. Of course, any system will always end up going to the dogs because over time, some people see a potential to make themselves wealthy at the expense of the other bloke
