[pp.int.general] [Pp-leaders.discussion] EU: ESM-treaty

[Alexander Bock]

Umm, I'm sorry but fractional reserve banking doesn't quite work like
that. If the reserve requirement were 10%, a bank that receives a
deposit of €1000 could lend out €900. The borrower could then take
these 900 bucks and put them into another account at some bank which
would then be able to lend out €810. That way, in theory, you could
have a 10x money increase, simply by calculating the corresponding
geometrical series. In reality, people don't borrow money and put it
all in another account.

In the Eurozone, the reserve requirement is 2%, not 10% like in the
US. That allows a theoretical money multiplier of 50. In reality it's
around 13. At least it was in 2009, I couldn't find any newer data.

I really don't know what all the half-truths and conspiracy theories
from America are doing in Europe. That's really not something we need
to copy.

Alex

2011/11/6 Antonio Garcia <ningunotro at hotmail.com>:
> The problem about banks going bust is the fact that banks have access to the
> miracle procedure of fractional reserve lending whereby for any 1.000$ or ¤
> they receive in deposits they can automagically mobilize 10.000$ or ¤ to
> lend to their friends (like the shameless top of the icelandic banking
> system did securing loans among themselves) at preferential rates or to
> ordinary citizens at rates caracterized as usury... so what we are actually
> living is a strategy that aims to get little banks busted and bought by a
> few big banks in order to limit the quantity of those that can continue to
> benefit from the miracle of fractional reserve lending. Of course, national
> elites and national governments are well aware of the fact that they can not
> allow this movement of concentration to go as far as to have NO LOCAL BANK
> serving their LOCAL INTERESTS in their own country with access to the
> miracle of fractional reserve lending. That is why they have to establish
> criteria that enable them to save at least one bank in their area of
> influence, and in Europe this means there is a struggle between those that
> think that their preferred sphere of influence is the nation state, and
> those that think their interests are best served by the establishment of an
> Europe-wide structure (if possible with less interference from the wishes of
> the national populations, and thus the dominance of administrative powers
> beyond the reach of the influence of "democratically" elected national
> parliaments that have to respect the wishes of their populations and devote
> resources to social matters because otherwise they would fail to be
> reelected).
>
> Banks thrived because they cheated everyone with the fractional reserve
> lending procedure, which was nothing less than a "gentlemans agreement"
> between felon brethen so as to not kill by overexploitation the chicken with
> the golden eggs. The 10% or 10x limit was an autoimposed limitation based on
> statistical evidence about the real circulation of deposited amounts of gold
> in the vaults... if only 10% of the amounts deposited where withdrawn to
> circulate as cash... the 100% of the amounts deposited could be used under
> normal circumstances as 100% of the 10% that was to circulate as cash... for
> an amount of 10x the real deposits (the 9/10ths of all money thus
> circulating being under the discrete control of the bankers without them
> having to do any more than the intellectual effort to create it and have it
> at their disposal). Thus we get a skewed economy where the real productive
> forces create 1.000 units of wealth and get paid 1.000 credits (a little
> less, but for simplicities sake...). As soon as they bring their salary to
> the bank then the bank can move 10.000 credits, 1.000 on the account of the
> worker, 9.000 they can dispose of discretely. One effect is that as only
> 1.000 units of wealth exist but 10.000 credits... ultimately all wealkth
> will be traded for all credits, and the worker can only buy 1/10 of his own
> production while the banks get 9/10 without more effort than "printing the
> money". One other effect is that eventually, with inflation ocurring... we
> will get to a point where the 1.000 credits the worker gets paid for his
> production... no longer suffice to pay for the cost of living for the period
> he is being paid for... and he no longer reaches the end of the month with
> his devalued salary.
>
> The real question is for how long we still plant to tolerate that banks
> thrive on such unfair an advantage. Of course, all banks, not only those of
> countries not smart enough to realize the competitive edge of having access
> to the unfair advantage of fractional reserve lending.
>
> The 2008 financial crisis was caused because some smart banking asses
> succeeded in implementing a mechanism that circumvented the voluntary
> regulations of the banking cartel regarding the 10x limit on fractional
> reserve lending without breaking the accepted rules... titrization. This
> takes loans that formpart of the 10x contingent and sells them away for a
> little less than the total expected benefit, thus creating room for the
> issuance of more loans to refill the created gap, while at the same time the
> monies received are clean funds that can be injected into the total resource
> base that serves as reference to be multiplied by 10 in the fractional
> reserve process. Of course, this enormous breach of the "do not kill the
> chicken with the golden eggs" procedures that could not be stopped because
> it breached no formally agreed rules... could but fail to cause the total
> collapse of the finantial system sooner or later... so the smartes people
> rushed to cash in on the benefits as ruthless as possible... and this is
> where they decided to speed up titrization beyond any rational behaviour and
> pack whatever crap someone would put a signature under any amount. Because
> once the crap sold the benefits were cashed and the risks were for the
> careless buyer who would hold the titles when the bubble bust. Those that
> were well aware of the risks hold the titles in transit the shortest time
> possible to be able to cash in some clean benefit in the transaction, those
> that weren't stacked titrization certificates as part of their own funds...
> and got in serious trouble when the bubble busted.
>
> Considering what really happened, as peoples we neither deserve to have to
> default not to have to continue in poverty... the whole financial construct
> is an intellectual framework we should reject, nullifiing the accumulated
> effects stacked by those that have been profiting from the trick since the
> beginning.
>
> Withdrawing money from felon banks and putting it into ethical banks (any
> one not using fractional reserve banking anywhere? Do not be stupid fools.)
> or under the mattress is POINTLESS other than shaking the fundations of
> small banks and thus favouring the concentration process the big banks are
> pushing for anyway. As long as we assign value to existing bank notes, even
> the little 1.000$ or ¤ we monthly get as salary... all of us are lending
> value to the millions of banknotes they can print (or already stack
> somewhere having printed them before), and they will continue to steal the
> biggest part of our production. The only alternative is to forget all
> existing money and to establish new mechanisms for the fair exchange of our
> productions they no longer get a foothold on nor can control to their
> advantage.
>
> They have transformed a big chunk of the produced money into the ownership
> of strategical physical goods... they will only loose control of when they
> no longer have the means to pay people to guard and clean their buildings...
>
> As soon as we ban existing money reserves by simply refusing to use them, we
> the 99% will be in complete control of our destiny as they won't be able to
> pay for any service with the fake wealth they accumulate and there will not
> be enough of them to get all the efforts done to maintain their status and
> posessions in operable conditions.
>
> Perpetual poverty is not a bad solution to start with... who will care about
> the fact that it is technically called poverty... when it is the situation
> almost all of us share, it will be normality, and from then on we can reuse
> our intellectual capacities to find new and equitable ways of improving our
> general condition without anybody having the unfair advantage of being able
> to print all the money and be the one who is to decide what it should be
> used for in the first place.
>
>
>> Date: Sun, 6 Nov 2011 07:10:50 -0500
>> From: rms at gnu.org
>> To: pp.international.general at lists.pirateweb.net
>> CC: pp.international.general at lists.pirateweb.net
>> Subject: Re: [pp.int.general] [Pp-leaders.discussion] EU: ESM-treaty
>>
>> i have difficulties seeing the greek, or any other nationality, becoming
>> much happier from banks going bust. basically, what they are protesting
>> for is the right and entitlement to a decent life including health care
>> and schooling, education, housing, etc. at least this is what the greek
>> "don't pay"-protest leaders told el país week before last.
>>
>> The question is whether default would be less bad than perpetual poverty.
>>
>>
>> --
>> Dr Richard Stallman
>> President, Free Software Foundation
>> 51 Franklin St
>> Boston MA 02110
>> USA
>> www.fsf.org www.gnu.org
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>> Use free telephony http://directory.fsf.org/category/tel/
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