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By slybaldguy
#14209593
Positive Money is a UK based charity which advocates democratising the monetary supply by preventing private banks from creating new money as loans.

Here are the key proposed reforms:

1. Remove the power of banks to create money
2. Return that power to a transparent and accountable process
3. Create money free of debt
4. Create money only when inflation is low and stable
5. Make sure that new money goes into the real economy instead of financial markets
6. Give us control and transparency over how our money is invested


Source: http://www.positivemoney.org/our-proposals/

Is this just discredited hogwash or are they on to something? Discuss!
By Baff
#14260337
You shouldn't expect too many replies because most of us are sick to death of explaining this one. It's tired and old and it comes up so often there should be a sticky thread.

slybaldguy wrote:Positive Money is a UK based charity which advocates democratising the monetary supply by preventing private banks from creating new money as loans.

Here are the key proposed reforms:

1. Remove the power of banks to create money
2. Return that power to a transparent and accountable process
3. Create money free of debt
4. Create money only when inflation is low and stable
5. Make sure that new money goes into the real economy instead of financial markets
6. Give us control and transparency over how our money is invested


Source: http://www.positivemoney.org/our-proposals/

Is this just discredited hogwash or are they on to something? Discuss!


Fruit cakes.
Ignore them.
Same old conspiracy theory retold.


I think Zeitgeist does it best.
[youtube]_dmPchuXIXQ[/youtube]
Great viewing, enormously persuasive, 98% true, but ultimately 100% incorrect.


Banks do not have the power to create money.
The central banks have that power and typically a central bank is democratically accountable and highly transparent about it's money printing. You can read in your daily newspapers exactly how much money they are creating and when. They even give advance notice.
The decisions to print money in America for example are not made by the central bank but are made by the democratically elected President and taken to congress to get voted on. All of this is probably televised these days so it doesn't get any more transparent than that. You can watch it live on TV.

The key to understanding this is that the central bank is not a high street bank like you are used to dealing with. It's a government office.
It's called "independant", but it's independance has very tight limits.


You have full control of how your money is invested already. What you don't have full control of is how the money you gave to someone else is invested.



That's the facts, now here is some conjecture
In my spurious opinion....
The govt will create money when inflation is low, they will create money when inflation is high.
The money they create goes to them... so they will find plenty of good excuses to do so, whatever the economic circumstances, you can expect that one to be part of every govt response.
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By slybaldguy
#14260451
Baff wrote:

Banks do not have the power to create money.
The central banks have that power and typically a central bank is democratically accountable and highly transparent about it's money printing. You can read in your daily newspapers exactly how much money they are creating and when. They even give advance notice.
The decisions to print money in America for example are not made by the central bank but are made by the democratically elected President and taken to congress to get voted on. All of this is probably televised these days so it doesn't get any more transparent than that. You can watch it live on TV.

The key to understanding this is that the central bank is not a high street bank like you are used to dealing with. It's a government office.
It's called "independant", but it's independance has very tight limits.


You have full control of how your money is invested already. What you don't have full control of is how the money you gave to someone else is invested.



That's the facts, now here is some conjecture
In my spurious opinion....
The govt will create money when inflation is low, they will create money when inflation is high.
The money they create goes to them... so they will find plenty of good excuses to do so, whatever the economic circumstances, you can expect that one to be part of every govt response.


I see. Thank you for your response. What then happens when someone is overdrawn at the bank? Does the Central Bank suddenly jump into action to authorise the creation of new credit? I find this hard to believe.

Are the commentators in this video lying and if so can you pinpoint the falsehoods?

[youtube]l7L3ZtCSKKs[/youtube]

PS. I know the video is fucking annoying but are the claims false?
By Baff
#14260457
When someone is overdrawn at the bank, the bank has to find a lender to match that debt.
In the meantime the bank will cover it out of it's reserves.

The job of a bank is to match lenders with borrowers. It's a middle man operation. None of the money they use is their own.

At the end of each day the bank must show it's books. It must prove that it has not only a lender for every £ it lends out, but also has borrowed a small amount more than it has lent out to cover any unforseen withdrawls. (A fractional reserve).


The central bank does not authorise new credit on behalf of banks. Only the government.

When the central banks print money, they use this money to buy govt debt. To cancel it.
The govt gets all the money they create. Not Morgan Stanley or HSBC or whoever.

I'll check out that vid.

Yeah it's wrong.
Same old shit.
Same old conspiracy theory again.


Money is not created in private banks.
This is fundamentally incorrect.

He's probably going to go on and get fractional reserves wrong.
I'm not watching this video to the end but typically it goes like this...

In his mind for every £1 it borrows, a bank can lend out £100. He calls this £1 the fractional reserve. (A 1% reserve).
This is the de rigeur conspiracy theory.

What actually happens is for every £100 it borrows it can lend out £99. The remaining £1 in it's vault is the fractional reserve. (A 1% reserve).
By Baff
#14260484
No idea mate sorry.

I'm not so interested in academia. Just money. Give it to me!

You could probably look up fractional reserves on Wikipedia, even Google should get you some pretty authoratative definitions.

The FEDS mission statement on the FEDS webpage. I think the FAQ section covers a lot of the usual OWS style stupidity.
Some Googling should get you to some news stories on Mr Bush, Mr Obama and Congress authorising QE after the banking crash.

Or there is countless threads to this end on countless forums. It's an old favourite being revisited.
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By Cromwell
#14285717
Baff wrote:What actually happens is for every £100 it borrows it can lend out £99. The remaining £1 in it's vault is the fractional reserve. (A 1% reserve).


This is misleading. We're not talking about loans to the bank, we are talking about deposits. Whilst they are, when you look into it, very similar; a customer is not told that his deposit is more like a loan to a bank than a traditional safety-deposit.

Fractional reserve banking allows a bank to lend more than the worth of the deposit. It does not print new money, but the effect is the same; an inflation of the money supply followed by a contraction when the debt is called (plus interest).

And, on that note, you are ignoring the biggest problem of all; even full-reserve banking is unsustainable as interest-drain continues to put greater and greater strain on the economy (more debt for government and more asset-seizure for the public).

Whilst I do not trust Positive Money because they make no reference to the early work of Kitson, Douglas and Feder (they appear, rather, to be pushing this as a modern revelation to economists), you cannot write them off so brazenly. They are not conspiracy theorists, they are economists that operate outside of the harmful Keynesian-Austrian dichotomy.
By layman
#14285721
The system does work as long as the economy keeps growing.

The money supply also expanded under commodity based money. It was just dependant on silver, gold mining etc which is pretty weird when you think about it.

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