The governor of the Bank of England actually mentioned the possibility of a Misesian-style reform toward 100% reserve banking, according to the Financial Times. “Or, in an idea that would mean the radical reshaping of the banking system, banks could be forced to match each investment made with funding over an equivalent time period, Mr King said.” Credit to the Cobden Centre for changing the terms of debate here.
Source link: http://archive.mises.org/14370/the-unthinkable-becomes-sayable/
The Unthinkable Becomes Sayable
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Ok, is it just me… but what are the chances that this goes through, then well lowwww and behold – the system collapses.
What & who gets the blame? The market. “We tried it, look what happened!?” they will say. “It’s time we get that world central bank formed.”
/le sigh
If it goes through, the system WILL collapse. It will be the fault of the design, which is plain stupid.
A sudden drastic conversion to 100% reserve banking will bring an economy to its knees. If done carefully such a transition could be done, but it would be a foolish waste of resources with little to no benefit.
And I’ll bet heavily they’ll try to do it with fiat money, too, which essentially defeats the purpose.
It’s much, much worse with fiat money. Because it means that the regulator will gain manipulative powers vastly superior to whatever it has now, the commercial banks will be completely stripped from their semi-free market control over credit and rates. Every dollar/GBP/whatever will originate in the central bank or the Treasury (depending on the view), no more fiat credit expansion. I don’t think that morphing a mildly socialisque system into a fully fledged fascist-communist monetary regime is such a good idea.
On the other hand, if a serious war is in the cards, this is exactly what the goverment(s) need(s) to proceed.
Let’s hope Richard Cobden completely trumps John Maynard Keynes in the minds and hearts of the Brits (and beyond)!
More idiotic Keynes bashing. Please do check who said the following: “By a continuous process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method, they not only confiscate, but they confiscate arbitrarily; and while the process impoverishes many, it actually enriches some”. Tip: whoever said it was sane, sober and serious. Tip #2: whoever said it was actually a very successful investor and in contrast to one pivotal Austrian school scholar did not drive the bank he was heading into bankruptcy.
Which Austrian school scholar bankrupted his bank?
Joseph Schumpeter, you lazy ignorant.
panika, your brain and anus are indistinguishable.
Well then it might have been his anus, but it made a good point. If the reserves are still fiat currency, then it’s really just the state cutting the banks out of the con, and further centralizing power where the money is created. The worst part will be when they pin the disaster on sound money economics.
Oh, and Dick Fox doesn’t know what he’s talking about. A real move to sound money would be the best-case scenario.
Even if it was true, I don’t think it would change the fact that Keynes was actually a very successful investor and at the same time (early 20s) Schumpeter went totally bankrupt along with the bank he was presiding.
BTW, it makes Schumpeter a bankster, right?
It doesn’t matter if Keynes was a successful investor or not, that is irrelevant. Basing your monetary and banking policies on honesty is a form of respect. In this case, Brits will be finned, severely taxed, or imprisoned for not using the currency which yokes them to the plow. They do not have a choice in the matter; It is not at all voluntary. How can this possibly be a good thing if it lacks any glimmer of human decency? Austrians fight a philosophical war in which the END does NOT justify the MEANS. That’s why Keynes is the metaphorical Anti-Christ here. This is why you are so terribly misguided.
John Maynard Keynes was very intelligent, and was great at his job. But that job was not “economist,” it was “propagandist.” He knew full well that the theories he promoted were nothing but a cover for despotism, and that was his aim.
“Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.” –J. M. Keynes
BBC blogger Robert Peston has more (not 100% backing of deposits, more like 30% ‘capital’ reserves but at least a categorical recognition of expropriation of demand deposits not fair re: risky loans) :
http://www.bbc.co.uk/blogs/thereporters/robertpeston/2010/10/mervyn_king_says_banking_must.html
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