Swiss referendum on fractional reserve banking

[psionl0]

No, banks wouldn't offer any accounts if they couldn't profit from them.

Well DUH! Do you think that might be the reason banks charge merchants fees for accepting electronic payments?

 

[catsmate]

Who's "Soddy" and why do I care?

So you admit you know nothing about the Chicago Plan then?

That's a pathetic argument. I prefer to see the detail before I form an opinion about it.

Except there is no detail, as I pointed out.

 

[psionl0]

So you admit you know nothing about the Chicago Plan then?

I know about the Chicago plan but I don't know about this "Soddy" character that you invented.

Except there is no detail, as I pointed out.

You don't know the details but that is an entirely different thing (unless you can prove that the details don't exist).

 

[WildCat]

questioning the wisdom of the existing banking system is not just something that "kooks" do

Yes, it is.

 

[psionl0]

Yes, it is.

No it isn't.

 

[Sceptic-PK]

Well DUH! Do you think that might be the reason banks charge merchants fees for accepting electronic payments?

Banks charge fees for anything and everything they think they can get away with. So, hooray for supporting a system to massively increase those fees

 

[psionl0]

Banks charge fees for anything and everything they think they can get away with.

More DUH!

So, hooray for supporting a system to massively increase those fees

How do you know that the retail giants would accept "massively" increased fees? Are you clairvoyant?

 

[McHrozni]

Full reserve banking could only make the Swiss Franc more stable. It is possible that the SNB might have to print more Francs to keep up with the currency wars but that doesn't seem like a negative to me.

I can only say I agree with WildCat.

Proponents of full reserve banking have shown precisely zero evidence for any of their claims. Criticism of full reserve banking is everywhere, with good thought-out arguments, whereas full reserve banking cooks don't even know whether they want full reserve banking on all accounts, or just on savings accounts.

We could do one thing, and one thing only in this direction - force the bank to give the customer the option of selecting how much of his balance goes in the reserve, and have that go up to 100%. The floor is set by the state, the top is open to the customer. Fees and interest on the account are, of course, set by the bank.

It would have approximately zero effect on banking, but it should silence the kooks somewhat. I'm sure this referendum will cost the Swiss more than a change like this one would, so there is added value in the proposal.

McHrozni

 

[Sceptic-PK]

How do you know that the retail giants would accept "massively" increased fees? Are you clairvoyant?

Who's talking specifically about "retail giants"? I'm talking about all the general banking infrastructure/services involved with me just keeping and managing my account(s). Why is a bank going to provide me with anything they can't profit from? How are they profiting from these services without raising fees?

Though I do find your accusation of clairvoyance funny

Full reserve banking could only make the Swiss Franc more stable.

psi- Providing solutions while in search of problems since at least 2009.

 

[lupus_in_fabula]

There's a whole bunch of economists who have proposed banking reform in some form or another. Some of those reform proposals include full reserve banking, or reforms approximately to the same effect. They include nobel laureates like James Tobin, Milton Friedman and Friedrich Hayek. Then there are other prominent figures like Martin Wolf, Irving Fisher and Kotlihoff etc. who also have proposed similar kinds of reforms. The list of names is rather long if you'd care to actually take a look. So no, it's not solely "kooks" who propose such reforms.

Here's a paper which just appeared on the Minneapolis Fed's homepage: Should We Worry About Excess Reserves? From the conclusion:

Another potential solution is for Congress to make the policy and legal changes necessary to convert excess reserves into required reserves by dramatically increasing required reserve ratios, perhaps to 100 percent (and possibly compensating banks by paying adequate interest on these reserves). In a separate paper (Chari and Phelan 2014), V. V. Chari and I consider the costs and benefits of implementing a 100 percent reserve requirement and argue that the costs of such a requirement shrink as communications technologies improve, with the usual and oft-cited benefit that bank runs are eliminated. The arguments in this essay and in Bassetto and Phelan (2015) can be interpreted as highlighting an additional benefit to a 100 percent reserve requirement beyond the elimination of bank runs.

Whether you agree with such proposals or not is another matter (I'm somewhat skeptical myself). But "kook-territory" it is certainly not.

 

[McHrozni]

Whether you agree with such proposals or not is another matter (I'm somewhat skeptical myself). But "kook-territory" it is certainly not.

Do they say where the money for interest on the reserve comes from? If not it's definitely well into kook territory, if it explains that it probably still is kook territory, though a good answer my get them out of there.

McHrozni

 

[lupus_in_fabula]

Do they say where the money for interest on the reserve comes from? If not it's definitely well into kook territory, if it explains that it probably still is kook territory, though a good answer my get them out of there.

McHrozni

Please explain why you think your question is relevant (perhaps specify it further)?

 

[catsmate]

I know about the Chicago plan but I don't know about this "Soddy" character that you invented.

Oh good grief this is simply pathetic and demonstrative of your utter ignorance.

The Chicago Plan was the brainchild of Frederick Soddy (wiki link so you can learn), something you seem to be unaware of. He was the originator of the 100% Reserves plan (in 1926) which led to the infamous letter of 1933 which proposed the Chicago Plan. Soddy, a British chemist and Nobel Laureate (1921), was an amateur economist who was utterly opposed to the "treasonable practice of uttering false money" (though many of his other ideas were quite sane).

Really, if you don't know this you are in no position to discuss the matter.

 

[psionl0]

Criticism of full reserve banking is everywhere, with good thought-out strawman arguments,

ftfy.

whereas full reserve banking cooks don't even know whether they want full reserve banking on all accounts, or just on savings accounts.

Case in point. This is just pure fantasy that came straight from your imagination. Do you really think that the prominent economists who supported the Chicago plan didn't know what they were supporting?

BTW your "idea" is based on the false notion that banks only lend money that has been deposited.

 

[psionl0]

Who's talking specifically about "retail giants"? I'm talking about all the general banking infrastructure/services involved with me just keeping and managing my account(s). Why is a bank going to provide me with anything they can't profit from? How are they profiting from these services without raising fees?

It doesn't matter where the banks get the bulk of their transaction fees from, if they could extract more money from their customers then they wouldn't be waiting for any full reserve legislation.

 

[psionl0]

The Chicago Plan was the brainchild of Frederick Soddy (wiki link so you can learn), something you seem to be unaware of.

It's interesting that you should back up your claim with a wiki link. The same source (https://en.wikipedia.org/wiki/Chicago_plan) does not say that Soddy was the originator of the Chicago plan.

In 2012 the IMF produced a report that favoured a revised version of the Chicago plan (https://en.wikipedia.org/wiki/The_Chicago_Plan_Revisited). I suppose you think they are kooks too.

 

[lupus_in_fabula]

Oh good grief this is simply pathetic and demonstrative of your utter ignorance ...

The Chicago Plan was the brainchild of Frederick Soddy ...

Really, if you don't know this you are in no position to discuss the matter.

Depends on who you ask, (or the level of hubris)

Here's Allen's take on that particular issue:

In March 1933, a group of economists at the University of Chicago, evidently with little if any influence from Soddy, gave very limited circulation to a six-page statement providing "both for emergency relief and for permanent banking reform," and one of the "detailed proposals" pertained to 100 percent reserves. Those who signed the statement included G. V. Cox, Aaron Director, Paul Douglas, A. G. Hart, F. H. Knight, L. W. Mints, Henry Schultz, and Henry C. Simons.

And to further emphasize…

The drafting was done by Simons, who "got started toward this scheme" some ten years earlier, in "trying to figure out the possibilities of applying the principle of the English Act of 1844 to the deposits as well as to the notes of private banks." "This Act would have been an almost perfect solution of the banking problem," Simons added, "if bank issue could have been confined to notes." Later, Fisher was to allude many times to the English precedent, partly to emphasize that "the 100 per cent proposal is the opposite of radical."

Allen W. R. (1993):"Irving Fisher and the 100 Percent Reserve Proposal". Journal of Law and Economics, Vol. 36, No 2, pp. 703-717.

 

[catsmate]

Depends on who you ask, (or the level of hubris)
<snip>

Quite a number of Chicago Plan supporters attempted to downplay Soddy's influence and the supporters of their theory continue in that vein. Certainly Knight's review of "Wealth, virtual wealth, and debt" and the passages in Fisher's theory of debt-deflation would indicate otherwise.
Certainly Soddy presented the same ideas.

 

[McHrozni]

Please explain why you think your question is relevant (perhaps specify it further)?

Well, if banks are getting hefty interest fees for their mandatory deposits, it stands to reason someone will pay for them, right? As it stands the money is generating revenue by providing financing for loans, but if it's just sitting there doing nothing, someone has to finance it, right?

Who is that person or institution? Where does the money for the interest fees come from?

McHrozni

 

[ponderingturtle]

No it isn't.

look this isn't an argument it's just contradiction, An argument is a connected series of statements intended to establish a proposition.