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Non-Tech : The Woodshed -- Ignore unavailable to you. Want to Upgrade?

To: critical_mass who wrote (30778)	7/23/2005 2:07:23 PM
From: Elroy Jetson	Respond to of 60908

Monetarists fool themselves into thinking that Fractional Reserve Banking defeats the utility of sound money, but nothing could be further from the truth. During the real estate boom of the 1880s in Southern California, real estate prices increased seven-fold and by 1892 had collapsed to nearly their original level. You might easily guess that this leveraged speculative bubble wiped out the local banking system - but you'd be wrong. Banks in Southern California, like all banks in the pre-Monetarist era, maintained 25% Capital Reserves. The also distributed their loans over a variety of types and areas following sound banking practice. Although they took serious losses on the real estate collapse, not one single bank came close to failing. Monetarists have reduced bank Capital Reserves to 5% then to 3.5% and some operating banks have as little as 1%. Monetarists claim this is an "efficiency" made possible by their advanced central banking system. But the collapse of significant portions of the banking system during the early 1990s came as a result of these unsound Monetarist ideas which have corrupted the banking system just as they have corrupted the currency. The taxpayer bail-out of the banking system costing hundreds of billions, reveals the lie behind the ostensible Monetarist "efficiency". Gold Backed money combined with sound banking systems, which have historically needed 25% Capital Reserves, have been proven reliable through history. Monetarists have repeatedly proven then can pervert the banking system just as they can corrupt a currency. In their smug way they feel their irresponsible behavior has demonstrated supposedly inherent flaws in sound money and sound banking which require their personal assistance and the implementation of additional unsound ideas. Instead track record only serves as an indictment of the bankrupt Monetarist philosophy which has borough collapse and destruction in every time and place it has been implemented. .