"Positive Money" a Debt Crisis Solution?

[Wezznco]

Hello,

My dear friend sent this link to me yesterday, exclaiming a cure for debt;
http://www.positivemoney.org.uk/

I'd love to hear a summary of how simple a solution it is and also if this is really new news?

Best wishes to you all.

 

[psionl0]

You would have to understand fractional reserve banking and all its consequences before you could decide if full reserve banking was a better system or not.

ETA I don't have any links for it right now but I believe something like this was proposed as far back as the 1930's.

 

[Wezznco]

I am familiar with fractional reserve banking. Read many threads on here about the pros/cons.

If full reserve banking was enforced, we would surely suffer a huge economical depression? I imagine it too late to change?

 

[psionl0]

Actually it could be implemented immediately and seamlessly. All you need is for the central bank to create enough money to cover the balances of all the bank trading accounts and forbid the banks from lending out any of that money (unless a customer transfers some of that money to an investment account).

 

[kevsta]

I am familiar with fractional reserve banking. Read many threads on here about the pros/cons.

If full reserve banking was enforced, we would surely suffer a huge economical depression? I imagine it too late to change?

Im pretty sure that Ben (Dyson, its his site) wouldn't be campaigning as hard as he is to bring on a "huge economic depression" - he is no fool.

and BTW Mervyn King is broadly in favour of the positivemoney approach in meetings they've had with him, again I don't think he would be taking that position if he thought it would be disastrous.

 

[geni]

I am familiar with fractional reserve banking. Read many threads on here about the pros/cons.

If full reserve banking was enforced, we would surely suffer a huge economical depression? I imagine it too late to change?

Well the first problem is that we would have to start paying to hold current accounts which no one really wants to do. Other than that there is nothing to stop someone setting up a non lending day to day financial services company.

In terms of wider market effects you hit the problem that the average person in the the UK is in debt and thus a significant dent in the amount of cash banks had on hand would be a problem. You also hit the problem that it discourages small and medium scale saving which makes people more vulnerable to economic shock resulting in the goverment having to spend more on social safety nets.

It also doesn't really solve the problems of banks failing since if they do they take the money transfer mechanisms with them. Cash machines don't work to well if no one is paying the phone bill any more.

 

[psionl0]

Well the first problem is that we would have to start paying to hold current accounts which no one really wants to do.

We are talking about a couple of bucks a month here. If that is a potential problem then providing full reserve fee free accounts could be made a requirement for a banking licence.

Other than that there is nothing to stop someone setting up a non lending day to day financial services company.

In terms of wider market effects you hit the problem that the average person in the the UK is in debt and thus a significant dent in the amount of cash banks had on hand would be a problem.

You didn't read my post above.

You also hit the problem that it discourages small and medium scale saving which makes people more vulnerable to economic shock resulting in the goverment having to spend more on social safety nets.

Total nonsense! People can put their money into interest bearing accounts if they wish - and most do if they have any to spare. Current accounts don't pay much.

It also doesn't really solve the problems of banks failing since if they do they take the money transfer mechanisms with them.

Oh! You're joking!

Cash machines don't work to well if no one is paying the phone bill any more.

Getting cash from a cash machine via telephone. Cool!

 

[The Central Scrutinizer]

Hello,

My dear friend sent this link to me yesterday, exclaiming a cure for debt;
http://www.positivemoney.org.uk/

I'd love to hear a summary of how simple a solution it is and also if this is really new news?

Best wishes to you all.

"My friend sent this to me" pretty much always means it's nonsense.

 

[kevsta]

"My friend sent this to me" pretty much always means it's nonsense.

except in this instance it isn't.

and actually " pretty much always means" is nonsense.

 

[JJM 777]

"Watch this 3 minutes video, and..."

AAAAaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaa.............................

Any short summary in written format?

 

[kevsta]

"Watch this 3 minutes video, and..."

AAAAaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaa.............................

Any short summary in written format?

its true, they really ought to do a transcript for you video / time challenged types, I will pass that message on.

 

[The Central Scrutinizer]

"Watch this 3 minutes video, and..."

AAAAaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaa.............................

Any short summary in written format?

It's a favorite tactic among nutwads. "Here, watch this video".

 

[kevsta]

It's a favorite tactic among nutwads. "Here, watch this video".

also, believe it it not, videos are a vastly superior way to disseminate information to the general public, after all skeptics who refuse to watch videos are a pretty small and insignificant minority in the general scheme of things.

 

[The Central Scrutinizer]

also, believe it it not, videos are a vastly superior way to disseminate information to the general public, after all skeptics who refuse to watch videos are a pretty small and insignificant minority in the general scheme of things.

Sadly, yes we are a minority. Which is why we stand out as critical thinkers, while most of the dumbell public believes whatever nonsense is told to them in a YouTube video.

 

[kevsta]

Sadly, yes we are a minority. Which is why we stand out as critical thinkers, while most of the dumbell public believes whatever nonsense is told to them in a YouTube video.

to be fair, there is also a whole site full of articles

click--> Google search site: positivemoney.org.uk

About 1,350 results (0.21 seconds)

but not specifically a transcript of the intro video.

so refusing to dig deeper because there is a video on the front page is a bit on the "lazy critical thinker" side.

 

[geni]

We are talking about a couple of bucks a month here. If that is a potential problem then providing full reserve fee free accounts could be made a requirement for a banking licence.

Which is an effective way to remove banks from operating in the UK but not much else.

You could start a new company effectively offering paid for current accounts where the full deposit is held.

You didn't read my post above.

I did I just don't view that level of printing money as viable.

Total nonsense! People can put their money into interest bearing accounts if they wish - and most do if they have any to spare. Current accounts don't pay much.

However if you increase the risks on interest baring accounts fewer people would use them.

Oh! You're joking!

Getting cash from a cash machine via telephone. Cool!

So you don't know how ATMs work. Fine no reason you should but you might want to think before advertising your ignorance:

http://en.wikipedia.org/wiki/Cash_machine#Financial_networks

One point I missed was the issue of business accounts. The amount of company deposits banks hold still puts them into too big to fail territory and it isn't practical to do all business banking through centeral banks (although some companies seem to be trying).

 

[psionl0]

I did I just don't view that level of printing money as viable.

Care to explain that?

 

[Wezznco]

My novice understanding was that printing that much money over a small period of time would considerably affect the strength of that currency?

Well, perhaps it wouldn't immediately do so, as the money will remain in the banks, but all the previously loaned money would still be 'in play'.

Would it also be safe to assume that we would look less appealing to industry?

 

[psionl0]

My novice understanding was that printing that much money over a small period of time would considerably affect the strength of that currency?

Ordinarily when the government prints money it causes inflation because it gives the banks more money to lend out resulting in deposit expansion.

In this case, the banks wouldn't be allowed to lend out this money so no deposit expansion can take place.

Well, perhaps it wouldn't immediately do so, as the money will remain in the banks, but all the previously loaned money would still be 'in play'.

That's the beauty of it. Many argue that to implement a full reserve banking standard would require banks to recall loans. This is not so. The money to implement a full reserve standard comes from the government - not borrowers. Any loan repayments that were made to a bank go into an equity account at the bank which can be lent out again. The mathematical totals remain unchanged.

Would it also be safe to assume that we would look less appealing to industry?

A money supply that is immune to bank failures would only make us more appealing to industry.

Initially, implementing a full reserve standard would have no immediate impact on bank profitability. So why do they oppose it? Two reasons: In the long term, as new money gets added to the economy, the banks' percentage of the money supply that they collect interest on would shrink from over 90% to probably around 50%. Their bigger concern is that under full reserve banking, governments don't have to borrow money - they can print it instead. That's a serious attack on the hold that the banks have over governments.

 

[timhau]

"My friend sent this to me" pretty much always means it's nonsense.

Yeah, that's strike one. It's in video format, which is strike two. The name "Positive money" is strike three. And just in case someone calls that a ball, it's advertised as a "Simple solution", which is strike four.