That's a little patronizing, daggett.

>>Pericles, I can see that the point of post has gone right over your head. Obviously it is possible for some individuals to repay their own loans to the bank, but if we understand that all money in circulation has originated as debt to a bank somewhere, and that banks have only created the principle and not the interest, there cannot possibly be enough money for everyone to repay their debts to the banks.<<

For start, there's nothing obvious about it.

If I can generate the productivity necessary to repay the principal (note the spelling, by the way; it could come in useful), thus extinguishing it from the economy, and the interest, which becomes an element in the growth of the economy, then so can everyone else.

Simply calling all money "debt" makes not the slightest difference. It is still money. The fact that it is money that is owed to someone else does not diminish its ability, in the hands of competent business people, to generate economic growth.

The YouTube piece you refer to uses verbal sleight-of-hand to avoid this obvious truth.

This comment of yours reveals the trickery involved:

>>Similarly, some inevitably must default on their loans<<

Explain, in your own words, why this is "inevitable".

Some will, of course. And the Bank takes the hit. If there are too may of them, the economy takes a hit.

But it is by no means "inevitable"

>>It is like a game of musical chairs<<

That is simply a childish - and mendacious - verbal device. It has no contact with reality.

>>that is what happens in practice, wherever governments have handed over what should be their own responsibilities to private bankers.<<

What has not been made clear, of course, is how matters (loans, repayments, capital, interest) would work differently, if governments took over the functions of Banks.

Perhaps you could tell us, daggett?

Well said Pericles.

None of the interventionists has said how having a government printing money is going to be any improvement on the original problem. And that is to say nothing of government's interest in endless inflation.

To talk of the government being 'accountable' to the people at the ballot box is simply fiction. And talk of 'democratic' control is base economic ignorance.

The choice is not between a government monopoly of fraud or a banking monopoly of fraud. The very fact that the interventionists think in terms of that false dichotomy is because they are ignorant of the theory of money and credit, and cannot imagine a system in which government control is not spreading chaos into every corner. They think fraudulent chaos is inherent in money somehow.

It is ironic that those who are most opposed to the bankers' privilege, are most in favour of the government control of the money supply which is what is causing the problem in the first place.

Money is not instrincally based on debt. Money *substitutes* are. For example, gold as money does not appear as a debt somewhere else in the economy.

The problem is, those advocating intervention simply don't understand what they are talking about. They do not understand the difference between money properly so-called, and money substitutes. They call both of them "money", and even insist they are the same thing, thus displaying their utter confusion. Like Fozz and Grim, they are economically illiterate socialists entertaining a fantasy of magic pudding based on government's having a power of endless inflation (theft) which is what caused the entire meltdown in the first place, and no understanding of how wealth is actually produced in the real world.

Pericles,

Your post ignores the sorry record of our financial system.

Whether or not it is inevitable that there will be loan defaulters, that is certainly the record.

Pericles, wrote, "What has not been made clear, of course, is how matters ... would work differently, if governments took over the functions of Banks."

I would have thought that would be obvious. Firstly there would be no imperative to gouge every possible dollar from the bank's customers. The bank would simply be required to perform a service and balance its books, that is, unless it is used to raise revenue to spare the Government the need to raise taxes as the American colonies successfully did.

Furthermore, Government banks could take care to only lend money to truly productive businesses. They would have little interest in lending money for land speculation or company takeovers as examples.

The fact is that government-owned banks do work better. They worked better in the American colonies. President Lincoln funded the war against the British-funded Confederate States' rebellion by simply issuing dollars as legal tender on behalf of the US Government, instead of borrowing it from banks. As a consequence the war was won without the US Government incurring crippling debt (although at a terrible human cost).

Today, the US state of North Dakota, with its state-owned bank is solvent, whilst nearly all the rest who rely on private banks are not:

"North Dakota is a sparsely populated state of less than 700,000, known for cold weather, isolated farmers and a hit movie -- Fargo. Yet, for some reason it defies the real estate clich&#56319;&#57065; of location, location, location. Since 2000, the state's GNP has grown 56%, personal income has grown 43%, and wages have grown 34%. This year the state has a budget surplus of $1.2 billion!" (See "Cash-starved states need to play the banking game: North Dakota shows how" of 2-Mar-09 at http://www.webofdebt.com/articles/state_bank_option.php)

See also "But Governor, You CAN Create Money! Just Form Your Own Bank" of 29-May-09 at http://www.opednews.com/articles/But-Governor-You-CAN-Crea-by-Ellen-Brown-090529-87.html, "Revive Lincoln's monetary policy - an open letter to President Obama" of 9-Apr-09 at http://www.globalresearch.ca/index.php?context=va&aid=13118

Just for the record Jardine, I am not a socialist; I'm a firm believer in private ownership of property and small business. I just don't see how having everyone work for a global corporation is better than working for a democratic government.
As to your comments about banking, governments print money now, as you know. The point is, the amount of money the government prints, is only about 3% of all the money in circulation.
Statistically, about half the cost of any item you buy is interest; loans by the producer, the wholesaler, suppliers, transporters, the retailers... If you want to talk about 'distorting the market' how about that distortion?
I suggest you check out Wikipedia, on fractional banking, and review the money multiplier effect for a simplified explanation of how banks can lend many times more money into the system than they borrow; the root cause of inflation.
There is a very good vid here:
http://www.brasschecktv.com/page/642.html
which demonstrates very clearly how Americans are worse off today, than they were a few decades ago. In the US, the median wage has actually dropped, while the average wage has risen. With better regulation, the situation in Australia isn't quite as bad, although the difference between the median and average continues to increase.
To me, it is all about Democracy. The difference between one person, one vote, and one share, one vote. Banks and businesses that were 'too big, to be allowed to fail', are now merging and amalgamating.
I guess they found the very idea that some tax payers might jack up, a little disturbing.
At the end of the day, borrowing money is simply living beyond your means. That 97% of the money in circulation which is credit, is a debt we force on our children and grandchildren. We just take it for granted that a home today is supposed to cost 8 times or more times more than when we boomers bought our homes.
We are frogs in a pot which is slowly coming to the boil.

You miss the point again, daggett.

>>Pericles, Your post ignores the sorry record of our financial system. Whether or not it is inevitable that there will be loan defaulters, that is certainly the record.<<

You contend that it is the system itself that causes the problem, with your insistence that "there cannot possibly be enough money for everyone to repay their debts to the banks".

This is nonsense.

The fact that some are unable to repay does not prove that they are prevented from doing so by some magical formula created by the Banks.

The manner in which you envsage your nationalized Bank would work is also a trifle bizarre.

>>The bank would simply be required to perform a service and balance its books, that is, unless it is used to raise revenue to spare the Government the need to raise taxes<<

How do you suggest it raises this revenue, if not from its customers? Would that not tread into the "gouging" territory that you accuse the banks of occupying?

>>Furthermore, Government banks could take care to only lend money to truly productive businesses.<<

That is *most* humorous. Anyone who imagines that public servants have the faintest clue as to what constitutes "truly productive business" has never been in business themselves, for sure.

And what you describe as "the sorry state of the financial system" is to me the result of its abuse, and not the system itself.

It's like blaming the bridge that someone jumps off for their suicide

*of how banks can lend many times more money into the system than they borrow*

Ah Grim, you had better tell me which bank can do that, for I am
really keen to buy some shares in it! Sorry, but the Reserve Bank
does not sell its shares.

My poor old Westpac can't do that, they actually have to pay
interest.