Pericles I tried to explain in 350 words but failed miserably.

Here is an explanation that is much longer. Hope it helps. If it doesn't please come back with more questions.

http://cscoxk.wordpress.com/2009/08/27/reply-to-pericles/

That's certainly one way of circumventing the word limit, Fickle Pickle. But unfortunately only adds to the confusion.

I queried your assertion:

>>I know how to build the loans system... because we have built, constructed and are selling a technically similar system<<

You responded

>>what is the common ground between an article on penguins and an article on fractional reserve banking. The answer is they were both prepared using Word.<<

So the relationship between your online identity management system and your loans system is that they are both computer programs?

That confuses medium with content. Presumably you are equally confident building airline reservation systems?

But this worries me most.

>>The bank does not lose because under the scheme the bank does not have to make up the money<<

You are suggesting that the government underwrites every loan made under this scheme. I'm not sure that I would vote for a government that displayed such fiscal recklessness.

The intention of the "bank guarantee system is not to pour money down the drain.

http://www.tresscox.com.au/resources/resource.asp?id=385

The existing guarantee applies to wholesale funding.

>>The government does not lose because all that has happened, as far as they are concerned, is the money supply has increased<<

And this is a good thing... how?

I thought that your idea was to avoid printing money?

>>Rewards is different from “user pays” because people who use more of the common good pay more but give the extra money to those who consume less.<<

That is "user pays". People who use more, pay more. What happens to the "extra money" is irrelevant.

Either there is something very basic missing from your explanation, or I am looking in entirely the wrong place.

Pericles,

Yes we can build an airline reservation system and we can do it for a fraction of the cost it would been 5 years ago. My estimate is 2 million dollars for the first functioning system. It will not have all the bells and whistles but it will do the minimal functions. That is another thing about modern systems - you do the minimum necessary to get a system to do something useful and you let it evolve through use.

People do not realise the advances we have made in how we can construct information systems

We use a technology that some people now call "cloud computing". Our organisation owns no servers, we do not own any system software, we manage no computers. This immediately reduced our costs by half compared to our previous method of supplying our systems.

The scheme I am proposing is for the government to guarantee the money deposits NOT the loans - and they are already doing this. It is called the bank guarantee. The risk on the loans is taken by the borrower and the borrower alone.

Where did I say that I wanted to stop printing money? This is what the idea is all about. We print money but we make sure we create a productive asset with the money we create. The key to the whole idea is that we have devised a way that ensures that productive assets for a particular section of the economy will be built for the least cost. Where the money comes from does not matter as long as the money has zero interest, and if it has to be repaid the repayments come from earnings.

I would prefer for the money not to be repaid but that is too much for anyone to accept just now and it does not involve the banks. We have to involve the banks because they dominate the financial landscape and I think zero interest, no risk to the bank loans, is acceptable to them and to the government.

I don't believe you, Fickle Pickle.

>>Yes we can build an airline reservation system and we can do it for a fraction of the cost it would been 5 years ago. My estimate is 2 million dollars for the first functioning system<<

It would need to have extremely limited function at that price. Have you any idea of the scope of Amadeus, or Galileo, or SABRE?

And there's no need to try to snow me on the topic. I am fully aware of the technology, having run - and founded - software development companies in the past, and my present business being heavily technology-dependent to this day.

I'm sorry, but your ideas become increasingly obscure with each new post. Something of a feat, really.

I'm just going to have to resign myself to remaining in the ranks of the ignorant, when it comes to your financial theories.