Gino said:Prior to banks being anything but an multi-user safe, things worked reasonably well without central banks printing fiat currencies and defining their rate of depreciation. There were housing co-ops, that provided very conservative housing finance to ensure participants had shelter. Capitalists invested and entrepreneurs created. Some succeeded through luck or good management, others failed and creative detruction played out daily, without this "too big to fail" concept.
For really massive state based undertakings that need new sources of capital to finance, then the treasury used to expand the monetary base by the funding amount required, without debt or inflationary effects because the investment returned that value to the economy and more over time, e.g. the Snowy Mountains Hydro-Electric project.
I do think there are solutions to these financing problems that do not demand Bankers having the role of Investment Partner, Money Printer, Savings Depreciation Rate Fixer, Government Financier, etc. To my way of thinking, they have simply risen beyond their level of competence and ability to add value to society and they have become, collectively, destroyers of freedoms (societal values) through the debt slavery that is their paradigm.
One thing for sure, they are privileged in our "economic system" and will not give that up without a fierce fight and neither will those who have a stake in maintaining the financial status quo. Like police being well paid by those guardians of the economic system we call politicians, fighting ruthlessly against demonstrators and other members of the public that might question the privilege they all enjoy. But as we saw in Victoria earlier this year, if the police are not well paid and feel disaffected, then they will turn against their political masters and actually take the side of the public (pointing out speeding traps rather than fining people, in this instance).
Ultimately, fiat currencies collapse under this weight of privilege and corruption. This is the classic Buddhist principle of impermance, that everything has within it the seed of its own destruction from its very conception. So it is with this form of globalised central banking and its associated fiat currencies. Lets hope that what follow is at least a little better than what preceded it, although it too will not last and will probably end up with protesters and fierce defenders.
So you want banks to go back to being just a warehouse for money basically where people who put there money in are charged a fee, rather than getting interest, for the bank to hold their money for them and the money sits idle unusable by society? Do you think most people will be happy with that? Do you think it's a good way of allocating society's scarce capital?
You say say that increasing the monetary base doesn't create inflationary effects? It creates permanent inflationary effects because the money stays in circulation where as if it is paid by debt, the debt drops out of circulation once it has been paid. You are advocating govt robbing citizens surreptitiously to pay for things. How is that different to govt printing money to "stimulate" the economy today?
The financial status quo can't be maintained no matter who wants it to, no matter how powerful they are. All they can do is drag it out. But it's not just them, no-one wants the correction. It will be harsh and severe and there will be widespread calls for the govt to "do something" to relieve the pain. There is no answer but they will do what they think has the best chance of working and prolong the pain. Not because banks want them to, but because everyone else wants them to.
If you really take a harsh look at the system you will see that nothing really works particularly well and it is just a question of trade-offs. Human nature and the world are what they are.
