Switzerland: First country to have national referendum about Sovereign Money • Hacker News Board

Re: Switzerland: First country to have national referendum about Sovereign Money

#31

Post by mkstowegnv » Mon, Apr 30, 2018, 8:06 PM UTC

0x4f3759df wrote: post #15

admiralg wrote: post #14

Earlier quoted context omitted.

(please don't hesitate to correct me if I'm wrong) Say there are 3 customers at a single bank. Customer 1 = Investor, has 100 cash and deposits it into a bank account Customer 2 = Borrower, borrows 100 from the bank Customer 3 = Restaurant, provides a service for Borrower. Borrower pays a 100, and Restaurant deposits it to it's bank account. This is how the "sovereign money" travels: Investor -> Borrower -> Restauran…

You left out the reserve requirements, wiki has a nice chart on how reserves affect expansion. https://en.wikipedia.org/wiki/File:Fractional-reserve_bankin... I've heard people say that the fractional reserve system causes the boom and bust cycle, because when banks lend money, the create the principal not the interest which leads to a shortfall at some point. Not sure if this is right tho.

Money has a very long history and discussions about money are deeply entangled in bitter and fanatical battles between political/ religious/ philosophical viewpoints. Many of those viewpoints ignore the counterintuitive ways that money and banking actually work. For the most part, bankers and economists have a vested interest in keeping as many outsiders as possible from understanding how it really works.

For all its flaws and strange history, the first Money as Debt video [1] still makes the most sense to me and I have yet to find an economist at a dinner party who refutes the disturbing conclusion that modern monetary policy is inherently unstable and depends on continuous economic growth. I welcome any links to any counterarguments that are not a confusing morass of obfuscating terminology. Show me a crystal clear model, or a common sense presentation like this video, that argues that the current monetary system is not a Ponzi scheme.

1 https://www.youtube.com/watch?v=4AC6RSau7r8

Re: Switzerland: First country to have national referendum about Sovereign Money

#32

Post by perilunar » Tue, May 01, 2018, 1:22 AM UTC

hn0 wrote: post #30

perilunar wrote: post #8

Does "Banks won’t be able to create money for themselves any more" mean the same as ending fractional reserve banking, or am I misunderstanding things?

There is no such thing as “fractional reserve banking”, the textbook models on banking taught in schools across the globe are dead wrong . See: Richard A. Werner, A lost century in economics: Three theories of banking and the conclusive evidence https://www.sciencedirect.com/science/article/pii/S105752191... Richard A. Werner, Can banks individually create money out of nothing? — The theories and the empirical eviden…

Thanks for the references. I'll read them when I get time.

On a side note, it seems bizarre to me (as a layman) that economists still debate the the nature of banks and the creation of money, given they are the foundation of the economy. Kind of like physicists not understanding thermodynamics, or something.

Re: Switzerland: First country to have national referendum about Sovereign Money

#33

Post by hn0 » Wed, May 02, 2018, 4:54 PM UTC

perilunar wrote: post #32

hn0 wrote: post #30

Earlier quoted context omitted.

There is no such thing as “fractional reserve banking”, the textbook models on banking taught in schools across the globe are dead wrong . See: Richard A. Werner, A lost century in economics: Three theories of banking and the conclusive evidence https://www.sciencedirect.com/science/article/pii/S105752191... Richard A. Werner, Can banks individually create money out of nothing? — The theories and the empirical eviden…

Thanks for the references. I'll read them when I get time. On a side note, it seems bizarre to me (as a layman) that economists still debate the the nature of banks and the creation of money, given they are the foundation of the economy . Kind of like physicists not understanding thermodynamics, or something.

Economists generally follow the idea that all trade is barter trade and that money is just an indirection layered on top the “real” economy, which alleviates some of the issues with bartering goods.

That’s all fine, but historians and anthropologists have found zero edvidence that the monetary system developed out of barter.

Rather, banking seems to have co-evolved alongside interpersonal informal credit systems (contract based, not spot-trade) and religious practices in early agricultural city states. The first written records are bookkeeping documents of grain supplies and outstanding debts between citizens. In time, people started trading these documents against each other.

E.g. If you need to pay Garry for fixing your plumbing, but Sally still needs to pay you for the 8 eggs she borrowed, you can just tell her to pay it to Garry instead and you’l be even.

What coins are in this model are abstract tokens representing the ledgers inside the third party’s accounting table which denote the debts and credits people hold against eachother. In other words, it’s all about accounting. Economics courses do not include accounting, generally.

The real issue economists fail to “get” it is that it invalidates many of the axioms on which they construct their theory. Economics is still very much a deductive science. Because there is such a large hivemind around these fundamental founding myths the field has been able to get by with simply ignoring outside criticisms, this includes a number of “own goals”.

If you have some econ 101 knowledge you might want to look up the “anything goes” theorem. Many nobel prizes can be thrown out of the window.

I found Steve Keen’s “Debunking Economics” and Phillip Mirowski’s “More Heat Than Light” to be very revealing.