Quote from: solex on May 16, 2013, 06:56:45 AM

Quote from: Le Happy Merchant on May 16, 2013, 06:36:33 AM

Quote from: Hawker on May 15, 2013, 03:23:57 PM

Fractional reserve banking means that you get more interest on your savings.

Imagine, 20 million BTC are held in a bank offering 1% interest. They stay sitting for 6 years with compound interest, see the issue?

The reason interest had to exist in the first place, was to incentivize actually putting money into the banks, now the only reason to do it would be security. Additionally, if inflation didn't exist, I think people could learn to be happy with a 0% ROI in banks. With Bitcoin, it may even be reasonable for banks to charge anti-interest to accommodate the deflation that will arise. So long as the interest matches inflation, the system is fair, and you never lose purchasing power parity from your savings.

Got to disagree there.

Interest is the key driver or mechanism which gets money from the hands of savers who have spare money into the hands of producers who need it for expansion or more efficient production. Producers benefit society and living standards. This is the essence of capitalism.

Today the whole system has gone horribly wrong because borrowed money is being used for consumption (cars, holidays, houses), and reckless lenders (banks) are constantly bailed out by central banks. It is bankruptcy which is the cleansing process in capitalism releasing money from the banks back into society. Interest can work in an economy with an inflexible monetary base (Bitcoin). In the example of a bank with 20 mil BTC offering 6%, it would soon go bankrupt, releasing BTC to the system and restoring normal conditions.

Central banks create moral hazard by manipulating interest rates, encouraging reckless lending (for consumption), excessive credit money, enabling excessive government funded by excessive debt, diverting funds from producers, stealth taxing savers, and thereby creating a system where eternal inflation is an essential feature.

Higher usury-interest coupled with reserve (once gold-receipt) counterfeiting are actually the number one causes of inflation (devaluation or demeaning) of the Medium of Work-Resource Exchange "currency" (money). By this I mean undue profiteering (excess inflation) in excess of the goodly need of an economy and it's "currency" to "grow properly" (inflate properly and naturally in a well-regulated manner) based upon the ever-increasing (enlarging) exportable value growths of the increasing values of all of the fruits of all it's also-growing workers (EP Export-Product) labours.

The reason the crime of interest usury originated was so that fraudulent gold-smiths could lend out counterfeited gold-reserve receipts, (first coin-tokens then paper receipt-notes) to people who had no gold deposited with them. They knew people didn't want the bother of the damned stuff and would never come back to claim any unless they were moving away, so figured why not rent out phoney ones as well as good ones? Their unfairly criminal (and costless) competition in the lending business inflated rates of usury, since real lenders could not accept risks reserve-counterfeithers could, and consolidating counterfeiters ended up repossessing everything..

The security of the Bitchain system makes this fraud impossible with a Bitcoin Funded Credit Swap OTC derivative-coin. Smiths cannot duplicate Bitcoin OTC derivatives to lend them out in a "reserve loan-counterfeiting" fashion. (unless idiot morons are allowed to mint or ever stupidly agree to accept physical Bitcoins that cannot be "confirmed") The Tory "Federal Reserve Printing Company" or "WB-IMF" Trotskyite reserve-counterfeithers could, however, "intervene" (price-fix or crash) the Bitcoin "penny stock" market, but if we always out-maneuver them to price the BTC at a mid-point between USD and Euro they would always lose and we all should always profit.

The fact that BTC are traded on hundreds of discreet markets also foils them, although dangerous preeminence of the vulnerable Mt Gox monopoly is a serious global-threat to our currencies safety.

In 48 BC the Pontifex Maximus, Julius Caesar outlawed private coin-smithing/usury and minted the first publicly owned for public profit public coin-currency, which could only be rented from the Republic. With it's profits domestic taxation became obsolete, and he was able to complete vast expensive public projects. As with Lincoln and JFK, this was why he was assassinated.