Solutions - Nationalize the Banking System and Print Greenbacks

[HKVP9]

1) Nationalize the banking system - distribute 99% of profits generated from banking to citizens. Check in the mail, every quarter, to every citizen of the country. The retained 1% is used to reward performance targets met by the bank, in terms of bad loans (ie, if bad loans are kept under 2%<, executives make 350K instead of losing their jobs etc.)

I like where you head is at, but nationalizing a broken system won't solve the problem. The problem is the system itself. It needs to be replaced. The concept of Fractional Reserve is the problem.

2) Print Greenbacks to finance the debt - create debt-free money. The idea that money and debt are the same is bullshit invented by the parasitic banking cartel. Money is NOT debt. That's what gold and silver are......debt-free money! That's why they are reviled and hated by bankers and their media shills all around the world - precious metals represent a much cheaper, and more prosperous money solution then debt-backed money!!

While I agree that Gold Standard was probably best, it was never going to last for an economy now tipping the scales at $17 trillion. The real issue is the Federal Reserve and the charter Congress gave it back in 1913. Central Banks around the world are now the problem - Public Enemy Number #1, with the IMF and World Banks running a close Number #2. Pumping more "money" into the system won't solve long range problems and will only lead to more stagnation in economic growth. Money "is" debt because of the 9:1 leverage that Banks get to use each time they put a buck on the street. They are making money through the back door of the Fractional Reserve system while the rest of society picks up the tab. All the while, the USD because even more devalued over time, both here at home and abroad.

1913, was probably "one" of the worst years in all of American history, if the real truth be told. The solution? Eradicate the Fed, break private banking monopolies, "re-set" the intrinsic "value" of the dollar to some reasonable level and establish a network of community based banks with local roots and a charter to support their respective communities. In the meantime, force Congress to balance the budget through a national referendum called The People's Constitutional Amendment, which can never be violated by an act of the Executive or Congressional branches of government, nor repealed. Finally, force Congress to halt all Omnibus spending until a full and clear accounting can be made on what precisely is worth spending taxpayer dollars on each fiscal year.

Do that and you will have a good economic foundation for returning manufacturing back to America, along with Middle Incomes which by the way, built this country during the post industrial period. Fail to do that, and we will see new forms of unparalleled economic bubbles with horrific negative impact on our future economic stability as a nation.

I am saying that our Economic, Fiscal and Monetary models have become a matter of National Security at this point. We either solve these problems now, or we will lose our Republic - as we now know it.

 

[drcha]

And I am amazed how single tracked minded you are.
And this without drugs and alcohol.

So the government isn't workin for ya eh.

Well how about you change your government, and I mean completely, not Obama shit or Bush shit.
But whole new government, its called revolution, and it takes balls, something you Americans prove again and again you don't have.

I think processed food has turned you all into major slimeballs.

Your grandfathers ate meat, beans and wholegrains and drank room temperature whiskey.

Today's sugar filled Americans disgust me.

Geez, Bonds, why the venom? Take it easy.

For the record, I don't eat processed food. And I never said I was doing this without drugs or alcohol.

 

[achilles28]

Firstly, the people aren't loaning anything, it's your private capital we're talking about. And yes, for sure, you need to be compensated for the risk inherent in making the loan. Given all this, how do you know that in today's system, the 3% or whatever rate that the banking system "charges" the economy isn't "compensation for loan risk", which would work the same exact way with commodity money, as you have stated yourself? Moreover, as always, you seem to be forgetting the other side of the loan. Specifically, if I have obtained a loan and my widget-making project has generated more value-added than the total interest I have had to pay on the loan (net of depreciation, etc), I have actually added to the system's purchasing power.
.

The point is banks aren't lending out "their" money, or private capital. Banks create money via fractional reserve banking. The value from that money comes from diluting the existing stock of dollar holders (ie the people who work and hold dollars). The money loaned out and risked belongs to the People, not the banks. Banks are just an intermediary. They risk virtually none of their own "private" capital. Therefore, the people should receive the overwhelming share of banking profits, since it's THEIR money that's being loaned out (via reduced purchasing power). Real simple.

Finally, it appears to me that what you want to create is a 100% government-managed and regulated full reserve banking system. I am, frankly, amazed by this, since I thought you're a proponent of capitalism and free markets. A system where the government decides how and where to allocate credit isn't my cup of tea, so I can't agree with your ideas.

Seems to me you enjoy debating straw men. What I proposed is a nationalized banking system, run by managers whose pay is dependant on performance targets (2%< loan default = 350k a year.....>2% loan default = shit canned or 60k a year). Be creative. You act like this is the only possible money system in the world when it's the most destructive!!!

 

[achilles28]

Yes I did, you just refuse to acknowledge my point. So I'll repeat it for you and maybe you will receive instead of just shouting.


The idea of nationalizing the banking system would never garner the votes required to make it law.

US Politicians, regardless of party affiliation but most notably the "progressive" social program types, would not stand for nationalizing the banking system unless it allowed them to spend dollars on a deficit basis immediately for their own political purposes (buying votes and pandering to their core constituents).

Which means you would be printing deficit dollars and auctioning deficit bonds regardless of what name you wanted to call it - the US National Bank, or the Federal Reserve, or whatever. Different name same essential function.

In other words, simply not feasible because you have two political parties with genuinely and wildly different views on the purpose of servicing national debt.

Oh, and the US Import-Export Bank is a money losing bureaucracy that doesn't come close to fulfilling its original charter and "that" National Bank is currently under scrutiny and criticism from both politicians and US Government Inspectors General.

Can't happen and won't happen are totally different things. Your original statement, along with Martin, implied nationalized banking can't happen. IOW, it's unworkable. When in fact, it is VERY workable.

You and Martin now appear to be back peddling on the workability of it, and now just settle for a "won't happen" argument. Sure, I would agree with that. Politically, like you mentioned, it's suicide for the ruling class.

I would also agree that the United States and Europe are close to a financial implosion as they quickly approach the end of this fiat fractional reserve system. You realize that US debt-to-gdp > 103%, ya?

Will you and Martin be smugly pleased when the Treasury market goes off a cliff in a few years? Will that be a glorious day for you cheerleaders of fractional reserve banking? Have you realized that you and I are on the same boat? Or did you think you'll be safe from the teaming masses in your armored redoubts and island compounds?

 

[Ucan'tEatBonds]

While I agree that Gold Standard was probably best, it was never going to last for an economy now tipping the scales at $17 trillion. The real issue is the Federal Reserve and the charter Congress gave it back in 1913. Central Banks around the world are now the problem -

This is a very very common misconception, and when someone makes a statement like this, it proves the poor thing is reading Mainstream Business Articles.

Now I am going to blow your mind, AND SET YOU FREE

There is not enough gold in the world to be the standard for the US or any large economy.

UNLESS

YOU PRICE THE DAMN THING TO 10 000 an ounce, or 40 000 an ounce

And suddenly, the gold can back up whatever you need it to back up.

Interesting isn't it. In fact, if gold was not being manipulated down by the FED, it would already be 4000

 

[Martinghoul]

The point is banks aren't lending out "their" money, or private capital. Banks create money via fractional reserve banking. The value from that money comes from diluting the existing stock of dollar holders (ie the people who work and hold dollars). The money loaned out and risked belongs to the People, not the banks. Banks are just an intermediary. They risk virtually none of their own "private" capital. Therefore, the people should receive the overwhelming share of banking profits, since it's THEIR money that's being loaned out (via reduced purchasing power). Real simple.

Firstly, like I said, there is no dilution and no reduction of purchasing power. Secondly, are the bank shareholders not "people"? I mean it's the beauty of capitalism that you can become one of the recipients of banking profits, simply by buying a share of, I dunno, JPM or Citi or whatevers... Thirdly, banks risk virtually none of their own "private" capital? As a UK taxpayer I am a proud owner of RBS and lemme tell you, they sure did risk a lot of their capital on all sorts of random sh1t. They weren't alone, either.

Seems to me you enjoy debating straw men. What I proposed is a nationalized banking system, run by managers whose pay is dependant on performance targets (2%< loan default = 350k a year.....>2% loan default = shit canned or 60k a year). Be creative. You act like this is the only possible money system in the world when it's the most destructive!!!

I don't see how I am debating straw men. You specifically talk about the evils of fractional reserve and the nationalization of the banking system. I am trying to suggest to you that, while certainly far from perfect, our current system is, most crucially, capitalist. You want to replace it with a basically socialist setup to fix what you perceive as an "unfair" distribution of wealth and income. As I have a bit of personal experience with socialist experiments, I disagree and am arguing against your suggestions.

Can't happen and won't happen are totally different things. Your original statement, along with Martin, implied nationalized banking can't happen. IOW, it's unworkable. When in fact, it is VERY workable.

You and Martin now appear to be back peddling on the workability of it, and now just settle for a "won't happen" argument. Sure, I would agree with that. Politically, like you mentioned, it's suicide for the ruling class.

I never said anything of the sort.

 

[HKVP9]

This is a very very common misconception, and when someone makes a statement like this, it proves the poor thing is reading Mainstream Business Articles.

As a full-time Trader and student of history (among other things) I'd take a closer look at the largest economic downturns in U.S. history and what do I find? The Federal Reserve having engaged in the manipulation of the USD through supply and interest rates, to a point where a bubble forms in some critical area of the economy which ends up being the embedded "host" (much like researching and finding a viral host in biological infectious diseases) that lies at the causation of the economic turmoil that ensues.

Now I am going to blow your mind, AND SET YOU FREE

Standing by...

There is not enough gold in the world to be the standard for the US or any large economy. UNLESS... YOU PRICE THE DAMN THING TO 10 000 an ounce, or 40 000 an ounce

Let me get this straight:

You would hyper-inflate Gold to artificially off-set its demand by making it less available on a par dollar basis? That's not just scary - that's downright dangerous. This "solution" would have so many deleterious consequences that I hardly know where to start. Right off the bat, this would compress the trading range of Gold and Gold Futures to near zero. You are fully aware of what happens to a traded market when its Delta reaches zero, don't you? News Flash: The Market Stops Being The Market. Who will be left to trade at those levels? Second, with a single swipe of the pen you have just shifted the risk model for any Gold Risk Evaluation Calculation into the real of absurdity and near impossible to rationalize. By artificially hyping Gold to such levels absent natural causation for such price increases, you mathematically draw potential to near zero while at the very same time pushing risk all the way to plant Pluto. No. Outside our own Milkyway Galaxy. Why? Because the delta between psychological risk and physical risk has just been widened to encompass the Grand Canyon itself.

Sure, doing something like this would turn the central banks now holding all the gold into the most wealthiest earthbound entities the universe has ever known, but that would only be on paper, because you would have at the same time created a non-transactional market with not so much as a rip chord to save itself if/when prices begin to fall and the Shorting Fest begins in earnest.

On second thought. Hmmmm. Let me short the sucker. Nope. My personal financial gain is not worth destroying the United States of America as we know it (economically speaking, of course).

Having said that, I do appreciate the outside the box thinking. Creative solutions come from creative minds and just because one idea is the whackiest thing since Boy George, it should not stop you from going for the gusto! Drop another quarter and try again!

Interesting isn't it. In fact, if gold was not being manipulated down by the FED, it would already be 4000

Ok, now that is something we agree on - but, I don't see Gold 4000. What do you think people use as the Cost Basis for taking a position in Gold? That's right, Fiat Money, that is STILL predicated on the underlying fundamentals of a 9:1 Fractional Reserve system that has no chance whatsoever, of doing anything but retarding the valuation of that same Fiat Currency over time.

Sorry, the mathematics just won't work. It sounds interesting on the surface, but the numbers don't have a snowballs chance outside on the ramp of Phoenix Sky Harbor International Airport in mid July at 12pm.

But, I like the creative thought process!

 

[piezoe]

... and Japan did .... and the FED did .... and China is beginning ( under a different name) .... and Argentina did .... and so on ..... and so on .....

I think the point is that by using the bond markets to push bad debt on external countries printing money ( especially base currencies) is a form of economic warfare IMO. At least with the currency being printed by the government, the costs and the benefits of printing money are borne by the same country.

There was something called the Chicago plan in the 1930s which made much the same point.

Now the choices are to default ( Argentina) bail-in (Greece), start war somewhere else to distract the citizens (Ukraine), or get 10% GDP growth for years (US). I will not include martial law and socialism. In a few years both medical and pensions for a growing percentage of seniors kick in and since the money to pay for both was essentially spent years ago ( Detroit) some bad things are going to happen. So the big question is who will ultimately pay the bill. The average worker and net worth and housing have paid in to date but the train continues to the cliff.

Or maybe I am completely wrong and the governing economic powers have a great solutions that work and they have simply been holding them back for effect? - you know the calvary rides in just when all looks lost and saves the day.

Well actually there is a critical difference between what Zimbabwe did and what the other countries you mentioned do. Though the lay person refers to either what Zimbabwe did or what the Fed does as "money printing," and even economists may sometimes refer to what the Fed does as "printing," economists know the difference between what Zimbabwe did and what the others countries do. They correctly refer to what Zimbabwe did as "money printing". What the U.S. and other countries generally do, however, is to issue bonds that the central banks buy. When those bonds are purchased by the central bank with newly created money, the new money becomes linked to debt. (This is probably the origin of the idea of money as debt.) In Zimbabwe's case they simply printed money without linking it to debt, and used that newly printed money to pay on debt!

I believe this critical difference between money printing the Zimbabwe way and creating money the Fed way, by linking the new money to debt, is the Reason Bernanke, when questioned about "money printing" in a Senate committee hearing, responded, "We're not printing". And technically he was correct. Technically, printing is what Zimbabwe did.

When new money tied to debt is created, the new money will have value so long as the credit of the issuer is good and the issuer may continue to borrow, from other than their own central bank, at reasonable rates. If a countries credit is so bad that no one other than their own central bank will buy newly issued sovereign bonds, or only at usurous rates, money in circulation will rapidly decline in value and hyperinflation occurs. (At one point Argentina printed new money so rapidly that she actually ran out of paper on which to print currency. It became a moot point whether the newly issued currency was linked to new debt because no one, other than the central bank, wanted their bonds. Hyperinflation set in.) Zimbabwe, of course, also suffered hyperinflation. In their case, no one wanted their currency. Since their newly created money was not linked to debt with a reasonable credit risk, there was no limitation on how much could be printed.

It seems a key word in your statement I quoted above is the word "bad" to characterize U.S. debt . Is the debt really "bad"? The way that is typically decided is through the market, is it not? I would have to say that so far, according to the market, the U.S. and Japan have not been pushing "bad debt". I am one of the few, however, that believes that the market is often wrong.

 

[HKVP9]

...the purpose of borrowing the money instead of just printing it is to avoid the devaluation of the currency. So how did we suffer all that inflation the last 100 years. Even 50 years ago coffee was a nickel. And the demand for the dollar has been massive. Countires and black markets all over the world demanded dollars. The currency should have appreciated. Coffee should be less than a nickel.

This is precisely right and common sense should dictate this reality to all of us - including those in Congress who keep spending us down the toilet decade after painful decade. Just look at what happened in 2006. The Current Account was cut by more than half before 2010.

Oh, sure. They will say that it was because our economy was slowing down. But, will they actually take a look at the data:

The contraction in the economy did stall growth in the Current Account, no doubt. However, we could have had the same result with a growing Middle Class, the return of Middle Income Jobs, less borrowing from China/Germany/Japan and more inherent (homegrown) buying here in the U.S. instead of the overflow of buying we do from foreign sources.

We've got the script entirely backwards and at some point we need to start asking whether or not someone is doing this on purpose and to what end.

 

[HKVP9]

Well how about you change your government, and I mean completely, not Obama shit or Bush shit. But whole new government, its called revolution, and it takes balls, something you Americans prove again and again you don't have.

I have been calling for the replacement of the Legislative Branch of government since September 11th, 2001, when two F-15s received scramble orders out of Otis, to fly a heading to an altitude where no commercial Boeing 767 had existed for more than nine (9) minutes - taking both F-15s up to an altitude that would guarantee absolutely no contact with a commercial aircraft, whatsoever.

Government is not the problem. We The People, are the biggest problem our nation faces. We don't have our act together and therefore, government is having its way with us. We are uneducated in the things that matter most. We are so blinded by the here and now that we fail to study the mistakes of yesterday and by definition plan to fail in the future. We think we live in a Democracy when the founders gave us a Republic.

Jefferson, told us explicitly what to do when things get this bad - and they have been bad since 1913 - not with the election of Obama, Clinton or Bush 41\43. But, who the heck knows what Jefferson, said anyway or why it matters.

I worry for my country. I worry a great deal. I don't know that we have another 200 years left as a free standing Republic. I just don't know.

$17 trillion in debt. Nearly 3 times that much in outstanding netted credit. Sigh. We've got ourselves into some serious trouble. China, is getting stronger - not weaker. The tide is changing directly under our feet and our generation is just sitting by and letting it happen. We could have had Thorium Reactors up and running, providing the energy needs for ALL American Households from coast to coast and lowering our energy dependence on foreign entities, but no. We ran for the profits in oil instead of fueling the future with cleaner and virtually unlimited (for all practical purposes) supplies of energy. Meanwhile, China, develops it own clean reactors with the nice little added benefit of never undergoing a meltdown by design.

We've got it all sdrawkcab.