Full reserve banking

[William Hummel]

John,

 

After a Google search on "full reserve banking", I found no proposals that involve endogenous money growth. My article on monetary reform, which is listed in fourth position, is apparently the only proposal that deals with that option. All the others leave the decision and control of the money supply in the hands of the government or the central bank. Also I found no discussion of the capital accumulation issue in the Chicago Plan by Fisher or any of several other proposals on a full reserve system. So that issue remains a potential problem that needs resolving.

 

William 

 

 

[helge nome]

As stated before, my reservations over full reserve banking are related to the degree of centralized control that implies.
The present system, of course, has gone sideways for lack of control, with numbers representing trillions of dollars
bubbling up and down in computers belonging to casino players in the financial system.
Helge

---

From: wfhu...@ca.rr.com
To: understan...@googlegroups.com
Subject: Full reserve banking
Date: Fri, 26 Apr 2013 11:17:09 -0700

[William Hummel]

----- Original Message -----

From: helge nome

To: understan...@googlegroups.com

Sent: Friday, April 26, 2013 12:39 PM

Subject: RE: Full reserve banking

As stated before, my reservations over full reserve banking are related to the degree of centralized control that implies.  The present system, of course, has gone sideways for lack of control, with numbers representing trillions of dollars bubbling up and down in computers belonging to casino players in the financial system.
Helge

---------------------
The full reserve banking system I proposed at http://wfhummel.net/monetaryreform.html involves no more centralized control than does the current fractional reserve banking system. In both, the money supply varies as a function of demand from the private sector. The central bank sets a target for the short-term interest rate and can only respond by adding or draining reserves as required to keep that rate on target. That is what is meant by endogenous growth. The basic difference is that in a full reserve system, banks cannot create money by lending. They can only lend money they have acquired from the sale of shares, from earnings, or what they can borrow. They operate much like an ordinary intermediary such as a finance company which sells its debt to enable it to lend at a mark up. 

 

William

[helge nome]

William stated:

"The basic difference is that in a full reserve system, banks cannot create money by lending. They can only lend money they have acquired from the sale of shares, from earnings, or what they can borrow. They operate much like an ordinary intermediary such as a finance company which sells its debt to enable it to lend at a mark up. "

So how would you transition from the present system to the proposed one?
Helge

---

From: wfhu...@ca.rr.com
To: understan...@googlegroups.com

Subject: Re: Full reserve banking
Date: Fri, 26 Apr 2013 14:35:17 -0700

[John Hermann]

I agree that this problem needs resolving, as a prerequisite to any serious advocacy of a full reserve system.  However some important questions have been begged.  The supposed necessity for continuing economic growth, which underpins all market-driven economic models, is indeed very shaky.  The rapid depletion of almost every important resource on the surface of the planet, climate change, soil degradation, chemical and nuclear pollution of every kind, etc etc testify to the necessity to curtail growth in the production of material goods (but not necessarily services), and to recycle materials wherever practicable.  Also the assumption that an economic system should be driven by accumulating debt, at any level, is very debatable.  In short, the present capitalist system can be accurately described as a disaster, and in urgent need of replacing by something which operates along more intelligent and sustainable lines -- if humanity is to have a future.  Placed into this context, and the need for radical change, the supposed problem of capital accumulation (along with most of the other problems that economists are busily grappling with) fades away.      John

[Mira Tekelova]

Hello,

Do you know this proposal?:

http://www.positivemoney.org/our-proposals/#technical

This document presents a plan for monetary reform, based on a proposal initially put forward by Frederick Soddy in the 1920s, and then subsequently by Irving Fisher and Henry Simons in the aftermath of the Great Depression. Variations of these ideas have since been proposed by Milton Friedman (1960), James Tobin (1987), John Kay (2009) and Laurence Kotlikoff (2010). While inspired by Irving Fisher’s original work and variants on it, the proposals in this paper have some significant differences. 

Best regards,

Mira