Grim,

From the link: “By law, the state must deposit all its funds in the bank, and the state guarantees its deposits.”

In what universe can this be called a competitive environment?

Dagget,

Any monopoly can be profitable and in your example formed some form of tax. The English saw this as a gold mine and wanted it for themselves, I am not surprised there was a revolt, but what is your point?

Fickle Pickle,

There is a similar system called venture capital. The Islamic banks work this way.

*After the $900 is spent, it inevitably winds up back in the (or 'a') bank again, at which time the bank holds on to $90, and lends out $810; at 4%.
The trick can be played over and over, until the total lent is $9000. ($1000= 10% reserve).*

Yes Grim, that is correct. When it inevitably lands up back in a
bank again, it becomes another deposit, again gaining interest.
Again it can be lent to another customer.

So what exactly is your problem with that?

Now the Reserve Bank, which can change the level of reserves that
banks need to keep, could specify that banks need to keep 100%
of reserves on hand. In that case, banks would simply become
large vaults, to store your money. If you wanted to buy something,
you would need to pay cash.

Now if there was no credit, how many people would build houses,
buy cars, run businesses, grow crops etc? Not too frigging many
lol. I thought that you wanted people to have a job.

The money that banks have for free is shareholder capital or tier
one capital, which our banks at present have at around 8%.
For providing and risking that capital, which shareholders can
lose if there are too many dud loans, shareholders are paid a
dividend.

You too can risk your savings, buy bank shares and obtain a dividend,
if they make a profit. Just recently Australian banks raised another
16 billion $ from shareholders, to guarantee their expanding loan
book, as a number of overseas banks are deserting Australia.

its a little known thing [that fiat currency is a debt]...that we regard as legal tender..[that fraction that they hold in reserve[isnt really..a value..held in reserve..its a debt

i will put up a link that describes the issue..[knowing gabby dont read this stuf anyhow]..cause once he knows the only real value behind the whole fed banking scam...is in our signed promise to repay in the same coin we borrowed...

lol..ie fiat paper..that can only come via the fed...[that isnt really coin]..lol...thus never was LAWFULL nor legally any form of value..[tender]
http://www.worldfreemansociety.org/forum/viewtopic.php?f=49&t=1995

noting the ONLY constitutionally legal tender is coin...its about time people knew that the fed..dont promise legal tender ..anymore[read a pound note it promised to redeem one pound of sterling SILVER in exchange for that note...

the fed dont have that promisary..[on their notes]...as govt is bankrupt...thats the reason the fed took our gold and silver reserves..and gave us a legal fiat..that is a debt note,...its time people knew the truth

We are getting close to a fantasy-land here, where reality no longer seems to matter.

I don't really mind that, there is always a place for an unfettered imagination, but it is a little one-sided.

It seems to be a substantial disadvantage in this discussion to deal only in facts and reality, as I have been doing, when some take it upon themselves to invent a parallel universe.

Fickle Pickle:

>>problem with today's financial systems is that they were designed for pen and quills. Double entry bookkeeping is unnecessary in this day and age as it was invented to make sure that arithmetic clerical errors were picked up.<<

Utter nonsense. It is used to ensure that all parties in a transaction are recognizable at all times for what they owe, or what they are owed.

http://members.iinet.net.au/~patrick6/kiss38.html

>>Pericles, where do you suppose the. money that is paid to your business that, in turn, allows your business to "repay the principal ... and the interest" comes from? It can only come ultimately through someone else having borrowed that money.<<

Only fro borrowed money, daggett? Only?

Utter garbage.

How about where they, too, have created it from the sweat of their brow? What about the millions of wage-earners, going about their business, paying for goods and services from after-tax income?

There is no inevitability about debt. You volunteer for it, when you buy a house or when you finance your new car.

And once and for all, people, there is no such thing as imaginary money. It is created, it is used, and it is extinguished, in a long chain of transactions that until recently were beneficial to every single man woman and child in this country.

If we all stuck to the facts for a change, and stopped relying on tendentious snippets from YouTube for our information, we would all be able to take a more sanguine and constructive view on how to minimize the impact of the current problems.

Seriously. This is not difficult stuff.

It is misuse of the system that is problematic. The system itself is just fine.

Pericles,

The financial system is not fine and the recent activities of many governments would show that others think the same.

The solutions are not going to be found in doing more of the same and simply increasing debt and praying that the system will sort itself out.

The financial problems can be fixed but we cannot do it with the antiquated systems we use today. I used double entry bookkeeping as an example of something that everyone thinks is fundamental but it is not only way to keep track of who owes what to whom. It is one way of solving the problem but it is not the only way and it makes our accounting systems unnecessarily complicated.

We all know that money is created and is not imaginary. But some of us know that the current method of creating money is not the best way. I have given two different methods of creating money without debt or interest and so far there has been no arguments saying why they would not work. The only 'arguments' seem to be that because we can create money with debt we do not need other ways.

In most industries we have evolved our technologies and we do things differently from 100 years ago. Unfortunately the financial industry is still using the same techniques built for small communities, pen and paper recording of transactions and when communication was by horse drawn vehicles. Double entry bookkeeping and creating money through debt are two technologies that can and need to be replaced.

Say what, Fickle Pickle?

>>I have given two different methods of creating money without debt or interest and so far there has been no arguments saying why they would not work.<<

It is possible that they were misunderstood.

Was this one of the two?

>>I am approaching banks with a system to take money on deposit at zero interest and give people who make zero interest deposits of $100, loans of $900 at zero interest.<<

And was this the other?

>>give people loans that have zero interest provided they make a small deposit at zero interest. It doesn't matter where the money comes from as long as it spent on productive assets.<<

But it does indeed matter "where the money comes from". Particularly when there is no visible consideration (interest) in the loan itself.

The $900 has to be sourced from somewhere. It doesn't magically appear, just because you say that it does. It has to be borrowed from another financial institution, or sourced from private wealth.

What you are attempting to describe is a form of "innovation partnership", where the investor shares in the rewards created by the profitable venture. To call them loans in the first place is actually misleading, since the provider of the cash is only rewarded when and if the venture is successful. This is of course why...

>>the system I am proposing will keep very close track of how loans are spent and the lender as well as the borrower will know how each dollar is spent.<<

This is classic venture capitalism, that you have dressed up as lending. The "lender" is in fact committing resources, based on uncertain prospects of a return on that investment.

The existing system, on the other hand, is able to provide cash on the basis of a promised return (interest payments).

It doesn't take a financial genius to work out why there are a great many more interest-bearing loans entered into, than zero-interest "shared destiny" investments.

By the way, in my view Sharia Banking is an admirable system, but is certainly not appropriate for all transactions.