Swiss Referendum To End Fractional Reserve Banking.

Most people believe in the UBIQUITOUS MYTH that Banks make out LOANS out of DEPOSITS made with them by Savers. In fact, this myth is IDOLISED even by mainstream Economists like NOBEL LAUREATE Paul Krugman @NYTimeskrugman. This myth has a name: “LOANABLE FUNDS MODEL” [LFM]. In this, BANKS Supposedly PLAY NO ROLE in the Economy save except acting as a MARKET PLACE for those who have excess funds to PARK for a RETURN and for those who are in need of BORROWING those funds to finance economic activities and are willing to pay CHARGE for the LOAN made. And banks merely take a CUT by way of difference between INTEREST CHARGED and PAID.

At it’s barebones essentials the LFM [see graph below] suggests the intuitive relationship that Supply of Credit [Savers propensity to park funds] is Directly correlated to Interest Rates [on deposits] and demand for credit inversely correlated to Interest  rates [for loans].
The Factors that Contribute to and Influence both DEMAND and SUPPLY of CREDIT are captured in the following table in the context of US economy, but could be applied to other economies Mutatis Mutandis.
This myth has been DEBUNKED by other Economists, a much smaller tribe, such as Steve Keen @ProfSteveKeen by proving that Any Commercial Bank by Making a LOAN literally CREATES MONEY out of nowhere like a CONJURER [MONEY IS LOANED INTO EXISTENCE]. This TRICK is possible because of an ARTIFICE called FRACTIONAL RESERVE BANKING [FRB]. FRB permits commercial Banks to Make Out LOANS at a CLICK of a MOUSE by putting Loans made out on the ASSET side of their Balance-Sheet, while simultaneously increasing LIABILITY side by EQUAL AMOUNT by SHOWING NEW DEPOSITS. If this appears PHANTASMAGORIC, then here it is from the HORSE’S MOUTH. In the First Quarter of last year, the ROLE PLAYED BY FRB in MODERN ECONOMY got acknowledged by one of the most prominent central banks, BANK OF ENGLAND, for the first time. It published a paper titled: “Money creation in the modern economy”.
This ability of the modern banks, not just the central banks, to CREATE MONEY led to the FINANCIALIZATION of the US and Developed Economises leading to the Grave Crisis of 2008 from whose deleterious effects the world has still not recovered. Therefore, this news of a referendum to be held in Switzerland to take back People’s control over money creation is heartwarming.
Switzerland will hold a referendum to decide whether to ban commercial banks from creating money.
The Swiss federal government confirmed on Thursday that it would hold the plebiscite, after more than 110,000 people signed a petition calling for the central bank to be given sole power to create money in the financial system.
The Swiss federal government confirmed on Thursday that it would hold the plebiscite, after more than 110,000 people signed a petition calling for the central bank to be given sole power to create money in the financial system.
The campaign – led by the Swiss Sovereign Money movement and known as the Vollgeld initiative – is designed to limit financial speculation by requiring private banks to hold 100pc reserves against their deposits.
The campaign – led by the Swiss Sovereign Money movement and known as the Vollgeld initiative – is designed to limit financial speculation by requiring private banks to hold 100pc reserves against their deposits.
WOULD THE BANKSTERS BE FINALLY REINED IN? Only time will tell.
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