Rep. Dennis Kucinich (D-OH) Abolish Fractional Reserve Banking Jan 26th, 2009

[c-rock]

[bob]

despite its bad press in the tin foil hat community, fractional reserve banking is no better or no worse than a banking system that requires 100% reserves.

 

the problem with a fractional reserve system is the temptation to fiddle with what fraction is required to be held in reserve.

 

but its greatest attribute is that you can adjust the fraction required to be held in reserve when you have to.

 

i do not know that there is any banking system that is perfect. previous systems built around precious metals failed miserably.

 

i am pretty much convinced the real answer is to keep banks as small and conservative as possible so when they inevitably fail (as all businesses tend to do) they won't bring down the rest of the economy.

[c-rock]

I agree,

 

there is no prefect system. But what we done since 1971 is not working like it use to.

 

Printing money is inflation. What is the difference between the Federal Reserve and someone counterfiting a dollar in their basement?

 

Not much.

 

 

A metals based system has one purpose. It can control the spending of government. Its easier to print, than to tax folks during times of war.

[Hossua]

Of course a system of 100% reserve isn't going to work. The banks can't seem to keep enough real money on hand to meet their liabilities. There is your real problem. It has nothing to do with a failure of precious metals as currency, its all human greed. Banks make a bunch of loans and crap, and have less capital than they need on hand.

 

When you can't pay your liabilities you have a big problem.

 

With our current system having adequate capital on hand is no big deal, the Federal Reserve will just print some more useless paper off and you are back in business.

 

As long as our currency is not bound to any commodities by weight, it can simply be printed off and inflated at will.

 

When you look at it from a standpoint of someone housing your property and then spending it and not being able to pay you back, it cannot be viewed as anything less than theft.

 

It's outrageous.