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  1. #16
    Ignorant. Just ignorant.
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    Quote Originally Posted by airedale View Post
    Is gold as an "arbitrary thing" any better or worse than paper dollars which can be created by flicking on the printing presses. At least with gold or any other metal you have to expend a bit of effort digging for it.
    Any arbitrary thing based on scarcity is as bad as any other arbitrary thing based on scarcity. Unless the relative scarcity of the chosen arbitrary thing can fluctuate with the economy, then you run into problems.

  2. #17
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    Quote Originally Posted by airedale View Post
    Is gold as an "arbitrary thing" any better or worse than paper dollars which can be created by flicking on the printing presses. At least with gold or any other metal you have to expend a bit of effort digging for it.
    Gold above ground increases around 2% per year

    International Central Banks have purchased more than double the Gold/Silver Bullion 1st Half of 2018 than they did 2017
    (I wouldn't be surprised to see this increase 2H18 and for 2019 etc)
    Last edited by JBmurc; 25-09-2018 at 09:31 AM.
    People don't have ideas, ideas have people

  3. #18
    Senior Member airedale's Avatar
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    https://www.gold-eagle.com/article/c...0-total-market

    It would appear that the central banks are having a bob each way on the price of gold against the price of paper.

  4. #19
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    Quote Originally Posted by Snow Leopard View Post
    Moving from fractional banking to full reserve banking does not, fundamentally, in any way resolve the problem of how much banks lend to whom and for what.
    That would require guidelines/restrictions/laws imposed by the Reserve Bank or Government, same as now.
    It would require different laws for sure, laws that shifted emphasis from banks creating 97% of money by way of debt creation and enriching themselves with the profits. Creating Sovereign money and debarring banks from creating money is a sustainable solution and a step towards a less indebted society.

    How do banks create money out of thin air?
    BAA

  5. #20
    Reincarnated Panthera Snow Leopard's Avatar
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    OK. Let us assume that NZ implements this economic hypothesis.

    The total amount of currency is decided and there are mechanisms in place by which that amount can be increased or decreased as is required.

    We have transaction accounts where you truly deposit money (with a guarantee that you can always get that back out again on demand) for which you pay fees.

    We also have investment accounts where you loan the money to the investment institution for a fixed period in return for the likelihood of some profit but with the risk of loss.

    The institution then lends that money to whom?
    They lend it to the same people in the same proportions as now, based on all the factors that they currently use,
    accepting that these are dynamic judgements.

    When things are good they will be more willing to lend and when things are bad they will be less willing to lend;
    Retail borrowers will still want to buy property as they are safe as while buying shares is gambling;
    Businesses will still moan that banks want too much collateral for their surefire Amazon beating idea and you can not get the money you need to really be successful;
    and human nature will not change.
    om mani peme hum

  6. #21
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    I am the National Spokesperson for Positive Money New Zealand that initiated the petition to require our Reserve Bank to issue all of our currency. This is not a new idea. It was first floated in the 1930's by a number of leading U.S. economists that became known as the Chicago Plan.

    In August 2012 an IMF discussion paper titled "The Chicago Plan Revisited" reviewed the claimed advantages of the Chicago Plan namely:
    (1) Much better control of a major source of business cycle fluctuations, sudden increases and contractions of bank credit and of the supply of bank-created money.
    (2) Complete elimination of bank runs.
    (3) Dramatic reduction of the (net) public debt.
    (4) Dramatic reduction of private debt, as money creation no longer requires simultaneous debt creation.

    The IMF discussion paper studied these claims and found support for all four. Furthermore, output gains approaching 10 percent, and steady state inflation could drop to zero without posing problems for the conduct of monetary policy.

    The Chicago Plan Revisited
    Last edited by bm_me_up; 26-09-2018 at 07:27 PM.

  7. #22
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    Quote Originally Posted by bm_me_up View Post
    I am the National Spokesperson for Positive Money New Zealand that initiated the petition to require our Reserve Bank to issue all of our currency. This is not a new idea. It was first floated in the 1930's by a number of leading U.S. economists that became known as the Chicago Plan.

    In August 2012 an IMF discussion paper titled "The Chicago Plan Revisited" reviewed the claimed advantages of the Chicago Plan namely:
    (1) Much better control of a major source of business cycle fluctuations, sudden increases and contractions of bank credit and of the supply of bank-created money.
    (2) Complete elimination of bank runs.
    (3) Dramatic reduction of the (net) public debt.
    (4) Dramatic reduction of private debt, as money creation no longer requires simultaneous debt creation.

    The IMF discussion paper studied these claims and found support for all four. Furthermore, output gains approaching 10 percent, and steady state inflation could drop to zero without posing problems for the conduct of monetary policy.

    The Chicago Plan Revisited
    Welcome to Sharetrader, thanks for joining the conversation. The Chicago Plan is so compelling one is left wondering how it could not have been embraced and implemented, or whether there are examples where it has been?
    BAA

  8. #23
    Reincarnated Panthera Snow Leopard's Avatar
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    Quote Originally Posted by bm_me_up View Post
    ...In August 2012 an IMF discussion paper titled "The Chicago Plan Revisited" reviewed the claimed advantages of the Chicago Plan namely:
    (1) Much better control of a major source of business cycle fluctuations, sudden increases and contractions of bank credit and of the supply of bank-created money.
    (2) Complete elimination of bank runs.
    (3) Dramatic reduction of the (net) public debt.
    (4) Dramatic reduction of private debt, as money creation no longer requires simultaneous debt creation.

    The IMF discussion paper studied these claims and found support for all four. Furthermore, output gains approaching 10 percent, and steady state inflation could drop to zero without posing problems for the conduct of monetary policy.

    The Chicago Plan Revisited
    This Working Paper, which is but 1 of the 6410 on the IMF website that cover a very broad range of economic situations and theories contains on page 1 the following:

    "This Working Paper should not be reported as representing the views of the IMF."

    The paper discusses using a Dynamic Stochastic General Equilibrium (DSGE) model to simulate the first 12 plus years of a US economy after a rapid change from the current fractional banking system to banking under the Chicago Plan.
    In particular the word 'assume' appears, 58 times, during the paper when defining parameters of the model.

    But DSGE models have their uses, set them up right and you can prove that the current system works fine and does not need changing.
    Last edited by Snow Leopard; 27-09-2018 at 10:22 PM. Reason: indeed, it needed a' need' in the screed
    om mani peme hum

  9. #24
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    Quote Originally Posted by Baa_Baa View Post
    ...The Chicago Plan is so compelling one is left wondering how it could not have been embraced and implemented, or whether there are examples where it has been?
    Whilst there is much to dislike about the way it all works at present, there are many criticisms of the positive/sovereign/100%/whatever money alternatives.

    I am not aware of any modern economy who have been brave enough to give this compelling idea a go.
    Iceland & Switzerland thought about it, but no one wants to be the guinea pig.
    om mani peme hum

  10. #25
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    Quote Originally Posted by JBmurc View Post
    Gold above ground increases around 2% per year

    International Central Banks have purchased more than double the Gold/Silver Bullion 1st Half of 2018 than they did 2017
    (I wouldn't be surprised to see this increase 2H18 and for 2019 etc)
    Gold above ground increases by 2% pa....It would be interesting to compare that with the increase in the number of humans above ground and the USD wealth per extant human?

  11. #26
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    Quote Originally Posted by Baa_Baa;72892)


    Petition reason

    Private banks create 98% of our money. They pump too much money into housing, creating huge profits for themselves but skyrocketing house prices, inequality, and poverty for ordinary kiwis. NZ successfully used Reserve Bank credit in 1936 to build thousands of state houses and we can do it again.

    Sign the Petition here:
    https://www.parliament.nz/en/pb/peti...ve-bank-of-new
    Governments have and have had the ability via tax policy and other policies to make the investment in residential land not the overwhelming dominant priority for NZ households. They would therefore likely ignore the petition.

    If households found it equally tax effective and/or more desirable to invest in financial investments, industry and commerce then housing inaffordability would be more likely to cease to be a major issue.
    Last edited by Bjauck; 28-09-2018 at 11:24 AM.

  12. #27
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    The paper MONETARY REFORM - A BETTER MONETARY SYSTEM FOR ICELAND March 2015, by Frosti Sigurjonsson, commissioned by the Prime Minister of Iceland, is a much easier read than the Chicago Plan, it's well thought out and articulated. https://www.stjornarradid.is/media/f...ary-reform.pdf

    PositiveMoney NZ advocacy and lobby for Sovereign money is well worth considering in light of the NZ monetary system where banks have the right to create money and allocate money creating distortionary effects and unintended consequences.

    The current labour government would potentially be very interested in how a Sovereign money system creates startup income and ongoing revenue for the Crown, reduces taxes, and certainly reduces the obscene profits of the banking sector.

    The petition asking the House of Representatives to inquire into giving the Reserve Bank of New Zealand the sole ability to issue all New Zealand money, is here http://www.positivemoney.org.nz/Site/petition/
    BAA

  13. #28
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    Quote Originally Posted by Bjauck View Post
    Governments have and have had the ability via tax policy and other policies to make the investment in residential land not the overwhelming dominant priority for NZ households. They would therefore likely ignore the petition.

    If households found it equally tax effective and/or more desirable to invest in financial investments, industry and commerce then housing inaffordability would be more likely to cease to be a major issue.
    The effect of a Soveriegn money system on housing seems to be the angle that PositiveMoney NZ are pursuing, probably due to the topical nature of the subject, but it is only one of the beneficial effects such a system has.
    BAA

  14. #29
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    I think its worthy of discussion and have signed and shared the link around. Thanks BB.

  15. #30
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    Quote Originally Posted by Baa_Baa View Post
    The effect of a Soveriegn money system on housing seems to be the angle that PositiveMoney NZ are pursuing, probably due to the topical nature of the subject, but it is only one of the beneficial effects such a system has.
    I agree that there is a problem.

    So much of the bank created money ends up in residential land as they are prepared to and are able to lend such a large proportion of the price. Government policy could easily have resulted in not making housing investment so desirable and consequently valuations would now be lower.

    I think that there would not be the same issue if tax paying businesses had been given greater priority than they have had in relation to residential land. Requirements to have greater deposits etc would have gone part of the way to stifling the pyramid scheme aspect with residential land price inflation.

    Governments inaction and policy contributed to residential land inflation and complicit in the banks ability to do what they did, and I think to tighten up now would risk a backlash from a significant and influential section of voters with a vested interest in banks remaining able to create debt that they can use.
    Last edited by Bjauck; 29-09-2018 at 09:40 AM.

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