Cykros on Nostr: - Interest - Banks How soon we all seem to forget that the money printer wasn't what ...
- Interest
- Banks
How soon we all seem to forget that the money printer wasn't what started the debasement of money, but the consequence of it being thrown into a state of tumultuous constant debasement (and bubble bursting) thanks to the fractional reserve system atop the hard money we already had. Central banking, and fiat, was brought in on the promise that it would fix the issues everyone recognized this arrangement caused.
I guess there's an argument that full reserve banking (using time deposits) could conceivably work, however, only if depositors are willing to accept the fact that their deposits may be defaulted upon, if the borrowers the bank lends to default. At which point, the bank becomes a matchmaking service -- a fixed income broker. And perhaps most importantly, the negotiability of those deposits becomes pretty tough to sustain, given that you'd have to accept the same terms the original depositor has.
The origination of bank notes in the 19th century came out of a gross ignorance of what was happening, and was predatory. I'd be pretty slow to agree to the justice of any proposed system of banking (and interest) given that it has always led down a path to ruin.
I'm sure you've got a pretty nuanced take on this given your vast experience in the financial space of course. I've gone back and forth on the legitimacy of interest, but the more I look at it, the more I think the multitude of religions banning usury/riba might just be onto something. Any expansion of effective money supply (including credit that eventually blows up) is going to result in the price distortions and many of the other aspects of the Cantillon effect. Seems like it's always a shitcoin.
- Banks
How soon we all seem to forget that the money printer wasn't what started the debasement of money, but the consequence of it being thrown into a state of tumultuous constant debasement (and bubble bursting) thanks to the fractional reserve system atop the hard money we already had. Central banking, and fiat, was brought in on the promise that it would fix the issues everyone recognized this arrangement caused.
I guess there's an argument that full reserve banking (using time deposits) could conceivably work, however, only if depositors are willing to accept the fact that their deposits may be defaulted upon, if the borrowers the bank lends to default. At which point, the bank becomes a matchmaking service -- a fixed income broker. And perhaps most importantly, the negotiability of those deposits becomes pretty tough to sustain, given that you'd have to accept the same terms the original depositor has.
The origination of bank notes in the 19th century came out of a gross ignorance of what was happening, and was predatory. I'd be pretty slow to agree to the justice of any proposed system of banking (and interest) given that it has always led down a path to ruin.
I'm sure you've got a pretty nuanced take on this given your vast experience in the financial space of course. I've gone back and forth on the legitimacy of interest, but the more I look at it, the more I think the multitude of religions banning usury/riba might just be onto something. Any expansion of effective money supply (including credit that eventually blows up) is going to result in the price distortions and many of the other aspects of the Cantillon effect. Seems like it's always a shitcoin.