I bet you think fractional reserve banking is a scam too 
Am I talking to a bunch of rubes that just fell off the turnip truck? Of course fractional reserve banking is a scam.
It is the natural state of affairs. You can't regulate what is natural. So nature is a scam?
Did you forget what the free market chose to do in the 1800s by preferring to use fractional receipts instead of trade physical gold.
What is natural can still be evil.
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It is possible to eliminate what is both natural and evil it is just very hard. We will get rid of fractional reserve too someday. It is a much more subtle evil, however, so it might not happen for a long time.
I wrote a few posts on the basics of the fractional reserve system a while ago here:
Finance Part I: Understanding the Parasite
Finance Part II: The Parasitic Cycle
Finance Part III: Divide, Conquer, Enslave
I added some replies to CoinCube's 3 threads he linked to above.
Fractional reserve banking was natural when gold was what the public CONFIDENCE wanted as money in the early 1800s, because society demands liquidity and so to get liquidity, the banks were forced to issue paper receipts for the gold.
But I want to note a key distinction in that these receipts afaik were not fungible dollars. The USA Notes (which were not created from debt) and the US gold and silver coinage were distinct from the bank notes. Prior to that:
For Americas first 70 years, private entities, and not the federal government, issued paper money. Notes printed by state-chartered banks, which could be exchanged for gold and silver, were the most common form of paper currency in circulation. From the founding of the United States to the passage of the National Banking Act, some 8,000 different entities issued currency, which created an unwieldy money supply and facilitated rampant counterfeiting. By establishing a single national currency, the National Banking Act eliminated the overwhelming variety of paper money circulating throughout the country and created a system of banks chartered by the federal government rather than by the states. The law also assisted the federal government in financing the Civil War.
Laterus' competition idea is impossible because the notes could not be fungible without causing the Tragedy of the Commons which is the current federalized system.
Nevertheless society demands liquidity because humans are focused in the near-term and rapid economic expansion is always politically favored. And then the collapse is blamed on the rich and society turns to Marxism.
This is natural because humans have a limited life span and are insatiable.
With every rotation of the "business cycle" the middle class finds it harder to maintain a quality standard of living. As the populace suffers from cyclical but progressive economic strangulation many find they simply cannot get ahead. Intuitively they feel the system is rigged against them but they do not understand how or why. Growing progressively desperate they turn to the only actor willing to help. They petition the governmentto Marxism.
ftfy
We can't prevent humans from preferring a system which misinforms the economy to create great liquidity and economic expansion at the cost of a bust later. This is natural. It is also natural when viewed from Theory of the Universe perspective, because friction necessitates waves and without friction the speed-of-light would not be quantized (i.e. would be unbounded) and thus the past and future would collapse (as in Godel's universe). A straight line or uniformity is a static universe where life does not exist. Armstrong wrote about this again recently:
Quote
Richard E. Nesbett wrote a good book entitled The Geography of Thought, How Asians and Westerners Think Differently
and why. He attributed his work to a Chinese student who said, You know, the difference between you and me is that I think the world is a Circle, and you think its a line. He goes on to quote him:
This is the best description I have encountered of the difference between east and west. It is right on point. We think everything is a straight line (linear) and in Asia they see it as a cycle
The Chinese believe in constant change, but with things always moving back to some prior state. They pay attention to wide range of events; they search for relationships between things; and they think you cant understand the part without understanding the whole. Westerners live in a simpler, more deterministic world; they focus on salient objects or people instead of the larger picture; and they think they can control events because they know the rules that govern the behavior of objects.
This is the best description I have encountered of the difference between east and west. It is right on point. We think everything is a straight line (linear) and in Asia they see it as a cycle
Thus we can expect the dying Industrial Age (and the socialism of the masses that is accompanying it) to cling to some Bretton Woods #2 monetary reset with some cooperative reserve currency (SDRs) which the national currencies will float against. This will enable the globalist bankers to entirely enslave the nations as they did to Greece, loaning denominated in SDRs, so that the nations can't devalue the loans by devaluing their currencies. Fractional reserves will eventually run amok again after the monetary reset.
The key point for us is as follows:
Once the parasitic cycle has run its course banks need a way to forcibly harvest the wealth of those who opt out of the system. To succeed they need a more efficient suction mechanism. Specifically they need powerful centralized government and taxation powers
And we have recently noted how gold can no longer serve that opt-out release valve, but crypto-currency does.
TPTB and the fucktard, leftist, Marxist masses don't want any of us to be able to compete with them by transferring our wealth into assets which can retain value during the forced collapse:
Banks create money by making loans, but this process is not in any way constrained by reserves, deposits or a money multiplier. Banks do not need deposits to make loans. The idea that banks somehow lend out grandmas savings is propaganda. Instead banks simply create money via accounting wizardry. When a bank approves a loan they simultaneously create a deposit in the borrowers bank account and voilà new money is created. Banks do not function by lending out deposits. Instead the act of lending creates more deposits. This is the reverse of the sequence taught in almost all economic textbooks. Banks create deposits at will.
Economic texts often state that banks are constrained by reserve requirements. This is another lie. There does exist a number called reserve requirements.
Economic texts often state that banks are constrained by reserve requirements. This is another lie. There does exist a number called reserve requirements.
The vast majority of money is NOT created by central banks, but by regular banks who loan out money that doesn't exist.
The simply move numbers around in their records, creating debt out of thin air.
The simply move numbers around in their records, creating debt out of thin air.
And my limited understanding of the Basel rounds is that Tier 1 reserve capital requirements will gradually become more strict, thus enabling TPTB to collapse the global banking system so they can usher in their NWO and SDRs.
After I get some sleep when I am back home, I will explain what I think we need in terms of crypto-currency and blockchains in order for them to play this role that gold used to have but no longer can fulfill.