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FreeMarkets (99.20)

It's the System That's Broke

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October 05, 2011 – Comments (6)

While this is 45 minutes long, the first 30 minutes are all that really matter as the last 15 minutes are dedicated to a solution, rather than simply allowing people to develop their own ideas.  

And this is the crux of our economic problems - MONEY = DEBT!

All the economic theory and mathematical formulas won't help one bit when the SYSTEM is the problem.

Here the fairest solution I can think of to fix our current system.

Constitutional Amendment:

         1) Fractional Reserve banking is outlawed.  No bank can loan money it does not have.  
         2) The Treasury will be allowed to create "X" dollars for EVERY citizen based on the U.S. Census.  As population grows and new money is created, it will be EQUALLY divided amongst all citizens.

You essentially fix multiple problems in one change.  No more banking regulations (except that one about not forging money), no more bubble/bursting economy, stable dollar, less wasteful gov't spending, create a society based on sustainable practices and not consumption.

6 Comments – Post Your Own

#1) On October 05, 2011 at 12:22 PM, Frankydontfailme (27.34) wrote:

but... we won't be able to deficit spend to fund our wars and welfare!

Seriously though, the only problem I can see with these common  sense solutions is how uncompetitive it would make us with developing China. If we can't print to support our economy and they can...

Seems to me the best solution would be to follow these ideas and pressure China to follow. I'm not a fan of force but see no other way to unravel the system that was built on force. We use our absurdly powerful military to force  China to similarly follow such a system. We might not even need force because we would be all but gauranteeing they would be the dominant economic force in the world if we all went along with such a system.

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#2) On October 05, 2011 at 1:07 PM, chk999 (99.98) wrote:

2) The Treasury will be allowed to create "X" dollars for EVERY citizen based on the U.S. Census.  As population grows and new money is created, it will be EQUALLY divided amongst all citizens.

I've heard sillier ideas.

But not many.

If your goal is price stability, you want the money supply to grow in accordance with the growth in goods and services. This results in long term deflation because goods and services grow faster than population. And handing out dollars to people randomly as population grows is even sillier. 

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#3) On October 05, 2011 at 1:36 PM, Frankydontfailme (27.34) wrote:

Is it more or less silly than printing money to pay soldiers to shoot camels?

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#4) On October 05, 2011 at 1:53 PM, FreeMarkets (99.20) wrote:

chk999 - Today we hand out money to anyone who has a credit score above the amount required for an interest rate.  That extra money devalues all the dollars in existence AND creates an immediate debt of the citizen assuming the loan to a bank that created the money out of thin air.  And my idea that new money created by the gov't be equally distributed to all citizens OF THAT GOV'T is silly?

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#5) On October 05, 2011 at 3:59 PM, Dow3000 (< 20) wrote:

It isn't really necessary to outlaw fractional reserve banking...the market will sort that out.  The crap banks of today would fail and people could decide where they want to put their money in the future.  One thing is for sure, for the risk of fractional lending the interest rate paid on savings would be A LOT higher

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#6) On October 05, 2011 at 6:38 PM, rfaramir (30.46) wrote:

Outlawing fractional reserve banking as an idea is good. As a Law, it is unnecessary and impossible. What needs to be done is repeal the laws that allowed it, along with perhaps, specific laws overturning judges' decisions that reinforced said bad laws. Then our normal laws protecting private property will be allowed to effect the ending of fractional reserve fraud.

The laws that protect fractional reserve banking are the ones that violate private property. Perhaps you didn't know, but banks BY LAW own your bank account. It is NOT your money, after all. That has to be repealed. Then, if they were to loan it out without your permission, it would be theft, pure and simple, which we already have laws against.

That's just one. Others like it enable them to prevent access to your money when it's not convenient for them (like during a bank run). The biggest ones are mere executive orders: Nixon's 1971 order which "closed the gold window," so dollars were no longer redeemable in gold by foreigners, and similarly, FDR's Banking Act which made dollars unredeemable in gold by US citizens. (Executive Order 6102, The Gold Confiscation Act of April 5, 1933)

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