Do you think banks are ethical?

[Mar]

Many people know that the money supply used to be backed by something like gold, silver or something else with intrinsic value. So independently of the monetary denomination placed on the currency, the physical currency itself also had its own value in previous metal. Seems like a fool proof setup to me.

Now our money is backed by nothing, it's worth only the denomination of currency that the national financial system places on it and is influenced immensely by inflation and interest, 2 things that the bank creates with their current financial models.

1. Inflation / Deflation
Let's say for example there is a total of $10,000 of money in the Canadian money supply and I, for some reason, have every penny of it. I put that into a bank to protect it from fake cops that want to steal it. The bank, according to law, is only required to keep 10% of reserves so they can lend out 90% of this to someone else that walks in wanting a $9000 loan.
So now I have my $10,000 in the bank and this new guy with his loan has his $9000 in the bank. The bank has just created $9000 in the money supply out of thin air, essentially making them a counterfeiter and devaluing my physical money with their creation of imaginary money that doesn't exist. Isn't this how inflation is created? Is it not necessary?

2. Interest
Let's say again there is only $10,000 in the money supply and the bank has it all. I go in looking for a $10,000 loan and they give it to me at interest. Okay, so I have to pay back the principle which totals all the money currently in circulation and somehow have to come up with money that doesn't exist in order to pay interest.

So by manipulating these 2 systems the bank is counterfeiting money and also creating a debt for which that imaginary money can be paid into. It just seems like the money supply would be impossible to stabilize with this current financial model so eventually it's going to build to infinity, devaluating physical money to a point where it's worthless and electronic money is all that exists. It's bad enough we don't have gold backing our system any more but the loss of our last physical representation of the supply, our bank notes, scares the hell out of me.

And what annoys me most is that some places don't even accept cash anymore......don't accept cash? WTF? We're at a point in society now where we have made it so easy to survive on the imaginary money supply alone that people are ignoring the physical supply altogether. Do you think this is right and what implications do you think it has on our futures? Do you think the electronic supply can be managed as finitely and as greedless as a physical supply can?

Paging ZenOps.

[broken_legs]

nope.

[Dilmah]

no

[max_boost]

No.

[Sugarphreak]

...

[anschutz_92]

Originally posted by Mar
So now I have my $10,000 in the bank and this new guy with his loan has his $9000 in the bank. The bank has just created $9000 in the money supply out of thin air, essentially making them a counterfeiter and devaluing my physical money with their creation of imaginary money that doesn't exist. Isn't this how inflation is created? Is it not necessary?

No they haven't "created" any money. Banks can operate on reserve because that reserve in the hundreds of millions to billions of dollars, which is more than enough to handle every day transactions. Banks borrow money as well. When you hear that the Fed dropped interest rate to 0.X%, that is what the banks can borrow and lend money (to other banks) at. The banks do not get this money for free, they pay for in interest. In turn they lend it to you and me at a higher interest and make money.

How are your napkin checks working out? Anyone accept them as payment?

[CMW403]

Whats unethical about that?

[ZenOps]

To be absolutely perfectly 100% honest - I don't think the gold standard is feasable anymore either.

If you divvied up all the gold in the world and gave a small chunk to everyone - each person would get about 1/4 of an ounce, not even enough to balance on a fingernail. You can't base buying a house - on a fingernail worth of gold.

But if you had to back in on something - I'd choose nickel. Yes nickel. There would be enough to use as commerce and still have a storage of value. If you look at the Euro 1 and 2 coin, it actually is nickel cored.

But its backwards - the nickel coin is the one that should be worth $100. Paper, cotton, plastic money should not even exist, and small change - should be electronic.

I don't even like silver as a currency in itself. It has far more benefit to mankind if it actually used in industrial purposes. Same with copper.

Copper, silver and gold being used as currency since man created fire.

I don't want to touch too much on the "ethical" part, its mostly a matter of perception whether or not money systems are ethical. If Donald Trump goes in for a third bankruptcy - I'm sure hes going to say that Chinas ultra-capitalism is "unethical".

[anschutz_92]

Originally posted by CMW403
Whats unethical about that?

It is completely unethical to give a paper napkin check as a form of payment. It would be degrading to provide a service and receive little more than toilet paper as payment. I find it infuriating that you have the audacity to ask such a question.

Naw seriously I don't think the lending instution as a whole is exceptionally ethical. I believe many of those who work in the banking system are ethical people, but the risks which senior leadership were willing to take to make profit put us in the shitter for years.

[max_boost]

I think Mar is just too smart for his own good sometimes. BTW, have you watched Zeitgeist yet?

[Super_Geo]

Mar, you sure are learning fast... a few weeks ago you were trying to pay someone to so you can have their share of negative equity, now you're preaching the perils of fiat currency systems and fractional reserve banking... what's next, organizing a run on the bullion banks?

Physical gold and silver are the way to go, though

[ZenOps]

Physical assets of any type are what you run to when fiat systems collapse. Zhu Zhu pets are perfectly fine compared to a dollar bill, so is a bag of oatmeal, so is a case of Spam.. MMmmmm spam.

Gold and silver are just convenient and high density. If you have the ability and the room - copper is actually quite good as well (JP Morgan London Metal Exchange theiving bastards!)

[v2kai]

The current economic system is definitely flawed, finite and corrupt beyond all shit. I don't think banks are ethical nor the system built on them sustainable; as we're seeing in the current state of global economic affairs. With the efficiency technology offers and the right implementation I think it only seems logical currency be electronic, and given the right system implementation it has the possibility to be efficient and greedless.

from the majority of the replies to this thread so far, and I think the growing sentiment and more common knowledge is that its clear the current system is unethical, corrupt and having identified the problem we really should be developing an alternative solution.

naturalmoney.org


focus more on the economic stuff its kind of a loaded site. Interesting concept and info though on an alternative monetary system that has actually been implemented at one point in human history and flourished only to be put down by law at the request of the central bank. see Wörgl (http://www.naturalmoney.org/introduction.html)


I'm still trying to read it and form an opinion on all the subject matter it touches on. It deals with many other complex societal and religious issues which are inherently tied to humanity but maybe not so much directly to a debate on monetary policy. Definitely intriguing at first glance, still some big what ifs in there but not bad.

[BigMass]

Originally posted by ZenOps
To be absolutely perfectly 100% honest - I don't think the gold standard is feasable anymore either.

If you divvied up all the gold in the world and gave a small chunk to everyone - each person would get about 1/4 of an ounce, not even enough to balance on a fingernail. You can't base buying a house - on a fingernail worth of gold.

There is always enough gold. It’s not a matter of quantity but price.

[ZenOps]

Originally posted by BigMass
There is always enough gold. It’s not a matter of quantity but price.

Thats just it. Because of how much the US dollar has been diluted, it would have to be like $80,000+ per ounce of gold.

I mean - you could do it... But the leap is too far.

Although if you look at where the bullion is stored in the world - the US appears to be aligning themselves for this exact scenario.

Even Alan Greenspan seems to champion the idea. *IF* and it a very big IF - gold gets to $8,000 per ounce that will be the warning sign to me that the US will move the paper dollar back to a paper gold backed dollar, at a rate of perhaps... Six-digits per ounce.

http://www.youtube.com/watch?v=yRJs5yL62BA

[Mar]

Originally posted by anschutz_92
How are your napkin checks working out? Anyone accept them as payment?

Somebody's always trying to bust my balls. I researched it, if you have the more expensive magnetic ink in your printer they'll cycle through the bank's sorter exactly the same way and will work fine (assuming it's some sort of paper and not a napkin). And even without the magnetic ink it will also be acceptable, they just might try and charge you an extra processing fee for having to do it manually. </derail>

Originally posted by max_boost
I think Mar is just too smart for his own good sometimes. BTW, have you watched Zeitgeist yet?

I've seen all 3.....over and over and over and over and over.........
I know they're not all fact but some of it is and the message is clear.

Originally posted by Super_Geo
Mar, you sure are learning fast... a few weeks ago you were trying to pay someone to so you can have their share of negative equity, now you're preaching the perils of fiat currency systems and fractional reserve banking... what's next, organizing a run on the bullion banks?

Physical gold and silver are the way to go, though

Financial economics is something I've been interested in since I was old enough to have a debit card, I always wondered why I needed it when I can just pay cash for everything. I still pay cash for anything they'll let me (buying my first car was interesting) but it's getting harder now with places that flat out refuse it. I don't like the idea of having all my money represented by a memory address on a server somewhere that someone else can turn up and down whenever they feel like it. But at the same time even if I have physical bank notes, they're still changing the value of it the same way so I'm probably no better off.

The way I viewed my house was that any house I buy would need that downpayment plus the first year's mortgage payments and this one already has that paid for. So why not just take this one for $7500 and keep the $20,000 put into it? It made sense until Jordan laid it all out for me and explained negative equity, flipping my entire understanding upside down. Now I get it.

Our current financial system just scares the hell out of me, I have a feeling it's all going to fall apart one day if they're unable to produce money fast enough to keep up with demand or too many people want to cash out their accounts or some other weird phenomenon. We're going to have to temporarily rely on some other intrinsic currency or the barter system (which I favour) in order to get by and with a laptop as my most valuable asset I really have neither of those to offer. Or maybe I could stop making software and start selling tinfoil hats?

[anschutz_92]

Originally posted by Mar

Somebody's always trying to bust my balls. I researched it, if you have the more expensive magnetic ink in your printer they'll cycle through the bank's sorter exactly the same way and will work fine (assuming it's some sort of paper and not a napkin). And even without the magnetic ink it will also be acceptable, they just might try and charge you an extra processing fee for having to do it manually. &lt;/derail&gt;

lol glad you can take a joke. Keep it up Mar.

You really want to have your mind fried look into high frequency trading. It's how big instituations bend markets in their favor and play by rules that the common person can't.

[Sorath]

when money is involved no one is ethical

[TheRealTimHorton]

Originally posted by anschutz_92


lol glad you can take a joke. Keep it up Mar.

You really want to have your mind fried look into high frequency trading. It's how big instituations bend markets in their favor and play by rules that the common person can't.

The Germans are probably going to outlaw HFT.

[anschutz_92]

Originally posted by TheRealTimHorton


The Germans are probably going to outlaw HFT.

It should be illegal. It's a punch in the dick to every trader out there who doesn't have millions to invest in rooms full of servers and a team of programers and analysts to develop the algorithims which know in advance where the price is going.

HFT is like having a guy play roulette and he keeps playing red, except red is 95% of the wheel. You and me only have the option of picking specific numbers. While we have the possibility of hitting it big in one trade, the HFT'ers are winning .25%/day every day with minimal risk. Shit isn't fair at all.