Comments on: What’s the Problem with Banks? http://blog.lawsonforcongress.com/2008/06/04/whats-the-problem-with-banks/ Peace, Prosperity, and Liberty Tue, 06 Jan 2009 12:03:07 +0000 http://wordpress.org/?v=2.5.1 By: Lawson for Congress Blog » Archive » This makes me sad, and angry http://blog.lawsonforcongress.com/2008/06/04/whats-the-problem-with-banks/#comment-8705 Lawson for Congress Blog » Archive » This makes me sad, and angry Tue, 28 Oct 2008 06:34:01 +0000 http://blog.lawsonforcongress.com/2008/06/04/whats-the-problem-with-banks/#comment-8705 [...] How did we get to the point where we accept “money” that is a token of debt instead of wealth? How did we get to the point where we accept a monopoly on money that is lent into circulation based upon the borrower’s promise to pay it back with interest? [...] [...] How did we get to the point where we accept “money” that is a token of debt instead of wealth? How did we get to the point where we accept a monopoly on money that is lent into circulation based upon the borrower’s promise to pay it back with interest? [...]

]]> By: Lawson for Congress Blog » Archive » The Fed and Moral Hazard http://blog.lawsonforcongress.com/2008/06/04/whats-the-problem-with-banks/#comment-5173 Lawson for Congress Blog » Archive » The Fed and Moral Hazard Sat, 30 Aug 2008 20:45:35 +0000 http://blog.lawsonforcongress.com/2008/06/04/whats-the-problem-with-banks/#comment-5173 [...] usurious interest rates for credit cards, load up customers with penalties and fees, profit by creating money out of nothing to lend to the public with interest, and seize underlying assets when folks can’t pay. Why [...] [...] usurious interest rates for credit cards, load up customers with penalties and fees, profit by creating money out of nothing to lend to the public with interest, and seize underlying assets when folks can’t pay. Why [...]

]]> By: Steve Coerper http://blog.lawsonforcongress.com/2008/06/04/whats-the-problem-with-banks/#comment-2744 Steve Coerper Tue, 17 Jun 2008 02:36:33 +0000 http://blog.lawsonforcongress.com/2008/06/04/whats-the-problem-with-banks/#comment-2744 In a wealth-based economy, the 'money supply' will expand as people create anything of value, because those valuable things are 'monetized' as they enter into the economy. In a debt-based (Keynesian) system, debt becomes money. The bank does not loan money per se. Instead, it creates a debt claim on real property (the collateral) and monetizes that debt. The bank lends CREDIT at interest. Because the amount of 'money' created cannot exceed the principal plus the interest on the 'loan', default and foreclosure is a necessary consequence. For example, I want to buy your house for 100K. I don't have 100 K so I go to the bank and they create 100K out of nothing. But my loan is at interest. All they create is the principal, so the only way I can pay off my debt is by getting someone else's princpal. Someone, somewhere will go into default as soon as the bank stops creating this 'money.' So this rash of foreclosures is not an unintended consequence. It is part of the design and is fully intended by the bankers. They did it in the 30's to harvest farms, and they are doing it again with residences. The intent is a complete feudal system, as Jefferson warned against, where we "wake up homeless on the continent our forefathers conquered." Read "God, the Devil, and Legal Tender" at http://www.rogershermansociety.com/rushdoony.htm In a wealth-based economy, the ‘money supply’ will expand as people create anything of value, because those valuable things are ‘monetized’ as they enter into the economy. In a debt-based (Keynesian) system, debt becomes money. The bank does not loan money per se. Instead, it creates a debt claim on real property (the collateral) and monetizes that debt. The bank lends CREDIT at interest. Because the amount of ‘money’ created cannot exceed the principal plus the interest on the ‘loan’, default and foreclosure is a necessary consequence. For example, I want to buy your house for 100K. I don’t have 100 K so I go to the bank and they create 100K out of nothing. But my loan is at interest. All they create is the principal, so the only way I can pay off my debt is by getting someone else’s princpal. Someone, somewhere will go into default as soon as the bank stops creating this ‘money.’ So this rash of foreclosures is not an unintended consequence. It is part of the design and is fully intended by the bankers. They did it in the 30’s to harvest farms, and they are doing it again with residences. The intent is a complete feudal system, as Jefferson warned against, where we “wake up homeless on the continent our forefathers conquered.”

Read “God, the Devil, and Legal Tender” at http://www.rogershermansociety.com/rushdoony.htm

]]> By: Lawson for Congress Blog » Blog Archive » Fisher v. Greenspan: The Fed, Our Government, and Our Dollar http://blog.lawsonforcongress.com/2008/06/04/whats-the-problem-with-banks/#comment-2689 Lawson for Congress Blog » Blog Archive » Fisher v. Greenspan: The Fed, Our Government, and Our Dollar Fri, 13 Jun 2008 06:15:36 +0000 http://blog.lawsonforcongress.com/2008/06/04/whats-the-problem-with-banks/#comment-2689 [...] What’s the Problem with Banks? [...] [...] What’s the Problem with Banks? [...]

]]> By: Dan Unser http://blog.lawsonforcongress.com/2008/06/04/whats-the-problem-with-banks/#comment-2672 Dan Unser Wed, 11 Jun 2008 04:04:45 +0000 http://blog.lawsonforcongress.com/2008/06/04/whats-the-problem-with-banks/#comment-2672 BJ, it is great to see your knowledge and understanding of the current monetary system and the practice of fractional reserve banking (FRB) the current banks utilize and speak about it. You've explained and articulated it very well. Certainly this is usury and most Americans do not realize the destruction this fraud perpetuates. Of course FRB is only part of the problem. BJ hit it on the nail when he said, “Given that most folks think monopolies are “bad”, why should we allow a private central bank to exercise monopolistic control over the most important commodity in our economy: the money supply itself?” Regarding the Gold Standard, I’m not completely convinced this is the best option. History would show gold has never been a stable commodity itself. Though I have not studied or read much about Ludwig von Mises ideas regarding monetary policy, I have read the book Louis Even wrote entitled, In This Age of Plenty, published by the Michael Journal in Canada (http://www.michaeljournal.org/plenty.htm) which is based on the principles of the Scottish Engineer, C.H. Douglas’s book, Social Credit. (http://douglassocialcredit.com/resources/resources/social_credit_by_ch_douglas.pdf). I would highly recommend a review of those two books, which essentially illustrate the points BJ made and more but also offer an alternative monetary system putting money back at the service of man and not its master. I believe a great step in the right direction is the legislation proposed by the American Monetary Institute (http://www.monetary.org), The American Monetary Act (http://www.monetary.org/amacolorpamphlet.pdf). Such legislation would change the monetary system bringing prosperity and real freedom back to Americans. The institute provides a wealth of information and Stephen Zarlenga has written a quite extensive and lengthy book (736 pages) titled, The Lost Science of Money, an interesting read (I"m not finished though). We should all keep in mind, this crude economic system persists throughout the world, not just America and in other parts of the world this has created a situation in which people suffer and starve to death. An economic system that mass-produces poor, homeless, starving people; every Christian must make it his duty to fight and replace it. I’ll end this post with one final comment from F.R. Burch’s book, Money and Its True Function: “As long as Christ confined His teachings to the realm of morality and righteousness, He was undisturbed; it was not till He assailed the established economic system and cast out the profiteers and overthrew the tables of the money changers, that He was doomed. The following day, He was questioned, betrayed on the second, tried on the third, and on the fourth, crucified.” BJ, it is great to see your knowledge and understanding of the current monetary system and the practice of fractional reserve banking (FRB) the current banks utilize and speak about it. You’ve explained and articulated it very well.

Certainly this is usury and most Americans do not realize the destruction this fraud perpetuates. Of course FRB is only part of the problem. BJ hit it on the nail when he said, “Given that most folks think monopolies are “bad”, why should we allow a private central bank to exercise monopolistic control over the most important commodity in our economy: the money supply itself?”

Regarding the Gold Standard, I’m not completely convinced this is the best option. History would show gold has never been a stable commodity itself. Though I have not studied or read much about Ludwig von Mises ideas regarding monetary policy, I have read the book Louis Even wrote entitled, In This Age of Plenty, published by the Michael Journal in Canada (http://www.michaeljournal.org/plenty.htm) which is based on the principles of the Scottish Engineer, C.H. Douglas’s book, Social Credit. (http://douglassocialcredit.com/resources/resources/social_credit_by_ch_douglas.pdf).

I would highly recommend a review of those two books, which essentially illustrate the points BJ made and more but also offer an alternative monetary system putting money back at the service of man and not its master. I believe a great step in the right direction is the legislation proposed by the American Monetary Institute (http://www.monetary.org), The American Monetary Act (http://www.monetary.org/amacolorpamphlet.pdf). Such legislation would change the monetary system bringing prosperity and real freedom back to Americans. The institute provides a wealth of information and Stephen Zarlenga has written a quite extensive and lengthy book (736 pages) titled, The Lost Science of Money, an interesting read (I”m not finished though).

We should all keep in mind, this crude economic system persists throughout the world, not just America and in other parts of the world this has created a situation in which people suffer and starve to death.

An economic system that mass-produces poor, homeless, starving people; every Christian must make it his duty to fight and replace it.

I’ll end this post with one final comment from F.R. Burch’s book, Money and Its True Function:

“As long as Christ confined His teachings to the realm of morality and righteousness, He was undisturbed; it was not till He assailed the established economic system and cast out the profiteers and overthrew the tables of the money changers, that He was doomed. The following day, He was questioned, betrayed on the second, tried on the third, and on the fourth, crucified.”

]]> By: David Williams http://blog.lawsonforcongress.com/2008/06/04/whats-the-problem-with-banks/#comment-2669 David Williams Tue, 10 Jun 2008 21:54:02 +0000 http://blog.lawsonforcongress.com/2008/06/04/whats-the-problem-with-banks/#comment-2669 Check out this chart from the St. Louis Fed: http://research.stlouisfed.org/fred2/data/BOGNONBR_Max_630_378.png Our banking system in aggregate has NEGATIVE non-borrowed reserves. Banks essentially don't have the organic reserves themselves required by law, and are relying on the Federal Reserve to fund their reserve requirements. The financial system as a whole is insolvent. Check out this chart from the St. Louis Fed:

http://research.stlouisfed.org/fred2/data/BOGNONBR_Max_630_378.png

Our banking system in aggregate has NEGATIVE non-borrowed reserves. Banks essentially don’t have the organic reserves themselves required by law, and are relying on the Federal Reserve to fund their reserve requirements.

The financial system as a whole is insolvent.

]]> By: David Williams http://blog.lawsonforcongress.com/2008/06/04/whats-the-problem-with-banks/#comment-2668 David Williams Tue, 10 Jun 2008 21:53:28 +0000 http://blog.lawsonforcongress.com/2008/06/04/whats-the-problem-with-banks/#comment-2668 Check out this chart from the St. Louis Fed: http://research.stlouisfed.org/fred2/data/BOGNONBR_Max_630_378.png Our banking system in aggregate has NEGATIVE non-borrowed reserves. Banks essentially don't have the organic reserves themselves required by law, and are relying on the Federal Reserve to fund their reserve requirements. The financial as a whole is insolvent. Check out this chart from the St. Louis Fed:

http://research.stlouisfed.org/fred2/data/BOGNONBR_Max_630_378.png

Our banking system in aggregate has NEGATIVE non-borrowed reserves. Banks essentially don’t have the organic reserves themselves required by law, and are relying on the Federal Reserve to fund their reserve requirements.

The financial as a whole is insolvent.

]]> By: Joseph Guzman http://blog.lawsonforcongress.com/2008/06/04/whats-the-problem-with-banks/#comment-2649 Joseph Guzman Mon, 09 Jun 2008 02:28:55 +0000 http://blog.lawsonforcongress.com/2008/06/04/whats-the-problem-with-banks/#comment-2649 JCR, the market would indeed reward the prudent bankers, you have a point there. With FRB there will be inflation though (but at least it wouldn't be for the extravagance of Big Govt.). The point remains though, without 100% reserves, and with FRB the banks will eventually fail, and as BJ said people will lose all or most of their money. So either competing banks will have to foot the bill and redeem the failed banks notes, or the people who entrusted their funds with the bankrupt bank will share the same fate. I don't know what the solution is: a law requiring 100% reserves as was tried by Andrew Jackson, or the free market solution of having stronger banks redeem the failing(inflationary) banks' notes. Joe JCR, the market would indeed reward the prudent bankers, you have a point there. With FRB there will be inflation though (but at least it wouldn’t be for the extravagance of Big Govt.). The point remains though, without 100% reserves, and with FRB the banks will eventually fail, and as BJ said people will lose all or most of their money.

So either competing banks will have to foot the bill and redeem the failed banks notes, or the people who entrusted their funds with the bankrupt bank will share the same fate.

I don’t know what the solution is: a law requiring 100% reserves as was tried by Andrew Jackson, or the free market solution of having stronger banks redeem the failing(inflationary) banks’ notes.

Joe

]]> By: gp manish http://blog.lawsonforcongress.com/2008/06/04/whats-the-problem-with-banks/#comment-2643 gp manish Sun, 08 Jun 2008 03:25:08 +0000 http://blog.lawsonforcongress.com/2008/06/04/whats-the-problem-with-banks/#comment-2643 hi BJ...Rothbard has written an excellent book on exactly this topic...its called "the mystery of banking" and is available free on mises.org...the book is written in typical Rothbard style...where the most complex ideas are explained in amazingly simple terms... hope this helps! hi BJ…Rothbard has written an excellent book on exactly this topic…its called “the mystery of banking” and is available free on mises.org…the book is written in typical Rothbard style…where the most complex ideas are explained in amazingly simple terms…

hope this helps!

]]> By: John C. Randolph http://blog.lawsonforcongress.com/2008/06/04/whats-the-problem-with-banks/#comment-2641 John C. Randolph Sat, 07 Jun 2008 17:33:13 +0000 http://blog.lawsonforcongress.com/2008/06/04/whats-the-problem-with-banks/#comment-2641 This just in.. Ron Paul's book, "Pillars of Prosperity. Free Markets, Honest Money, Private Property" is available in PDF form online at the Von Mises Institute. http://www.mises.org/books/prosperity.pdf -jcr This just in.. Ron Paul’s book, “Pillars of Prosperity. Free Markets, Honest Money, Private Property” is available in PDF form online at the Von Mises Institute.

http://www.mises.org/books/prosperity.pdf

-jcr

]]>