Topic: How the rich got rich and stayed rich without lifting a finger. (Read 3887 times)

Therefore, on the blockchain = money.  Not on the blockchain = NOT money.

http://www.ft.com/intl/cms/s/0/7f000b18-ca44-11e3-bb92-00144feabdc0.html


"What is to be done? A minimum response would leave this industry largely as it is but both tighten regulation and insist that a bigger proportion of the balance sheet be financed with equity or credibly loss-absorbing debt. I discussed this approach last week. Higher capital is the recommendation made by Anat Admati of Stanford and Martin Hellwig of the Max Planck Institute in The Bankers’ New Clothes.

A maximum response would be to give the state a monopoly on money creation. One of the most important such proposals was in the Chicago Plan, advanced in the 1930s by, among others, a great economist, Irving Fisher. Its core was the requirement for 100 per cent reserves against deposits. Fisher argued that this would greatly reduce business cycles, end bank runs and drastically reduce public debt. A 2012 study by International Monetary Fund staff suggests this plan could work well."

We say: Use the Blockchain to ensure 100% per cent reserves and zero FRB.  The Blockchain was designed to do this exactly.

Looks like the opposition beat a hasty retreat from the conversation. They have no evidence.

Wealth inequality buddy. FRB steals from everyone except the 1%.

The answer to this is the Blockchain.  On blockchain = money; off blockchain = not money.

FRB is theft in plain sight. Everyone needs to understand exactly how it works. Use the article and inform others.

Actually, maybe I'm wrong. Perhaps Banks do lift a pinky. See what they do: http://t.ritholtz.com/bigpicture/#!/entry/53700120025312186c0577e9?origin=http%3A%2F%2Fwww.ritholtz.com%2Fblog%2F2014%2F05%2F6-years-after-financial-crisis-big-banks-are-still-committing-big-crimes

Well the multiplier is out of the control of central banks because it is in private hands. The central bankers admit this themselves.

I don't think printed funds end up in the economy. I think they end up mostly as bank reserves that the Fed pays interest on.

The dilution of the value of money (inflation) is caused by central banks. FRB is just a multiplier. A central bank could create $100,000 with no FRB or $10,000 with 10% FRB, and the result is the same.

I don't think you understand. Banks do take risk when they make loans, this is true. The problem comes from the fact that the managers/owners of the bank don't take much of that risk, and the laws & regulations that are supposedly making a more stable economy really serve to reduce this risk.

Let me quickly explain how banks work these days: There's three "tiers" really, of ownership that is. Managers, who run the bank, and whose job is basically to make the bank as risky as possible; creditors & investors, whose job is to provide the bank with capital, and depositors, whose job it is to be screwed.
The
Managers try to get the bank to be as risky as possible because with more risk, comes more reward. This causes higher profits for the bank, which means bigger bonuses for him. Then there's the investors and creditors, who get a relatively fixed cut of the bank's profit. Finally there's the depositors, who just get a percentage far less than what the bank is making, even during good economic times. The moment there's a problem, borrowers default. Depositors think they will be out of money, but the government steps in, prints them some money to pay them back. The investors and creditors lose some money, and the managers don't lose anything.

What's the result? Depositors think they haven't lost anything, but in reality they've lost to inflation. Creditors and investors have made a bit more than inflation, but lost most of that profit when the bank experienced problems and the government bailed it out. Over the long run they should end up in profit a bit relative to inflation. And the managers made the most, because they got the bonuses proportional to the profits of the company (like an investor) without taking any of the investors' loss when the company went under.

So what?  And lots of smaller banks became insolvent throughout history.  Most people rather give bail out than Great Depression 2.0. 

Dont get your point.  You act like FRB is some big secret.  Then you conclude banks make money "without lifting a finger".  Either cause you don't understand what the business is or you're trying to scare suckers into your Ozzie coin

Banks take risk? Heard of TBTF? Give us all a break.  I rest my case. 

Who said I was an aristocrat?  You say landlords don't need to work.  I'm saying they do.

Banks also take risk when they create loans.  There is few instances where people make money without lifting a finger. Maybe BTC speculators can be said to do that.  But they'll tell you they are taking risk as early adopters

You just sound envious

Interesting article and it was easy for me to understand even though English is my second language. Really explained to me what fractional banking is about. Thank you.

You're in luck mate.  We are releasing such a coin: ozziecoin.com

It is always so in market economy. The rich gets richer and poor gets poorer. As big companies try to monopolize the market they receive more money. As poor people try to save money they just inflate. It always will be so, until totally new approach of creating money will be released.

Sorry mate, you do not even rate on the scale of landownership: http://www.businessinsider.com.au/worlds-biggest-landowners-2011-3?op=1

Below those people are the aristocrats.  Below them are other very large land owners.  Then maybe you fit in below them.  Then the ordinary workers who have zero chance of getting anywhere.

Please, less personal insults.  It's a sign of maturity.

WTF? You going on about.  I own 3 building in Brooklyn.  My point is if he thinks being a landlord is "a guy who makes money w/o lifting a finger", then he is a naive child.  Being a landlord is A LOT of work.

Are you a slum lord in Detroit or something?

There's many people here on Bitcointalk (and in society as a whole) who either own rental units or buildings, and nobody shares your opinion.  If you hate chasing down junkies who are late on their payment, then get a building manager.  As for taxes - most of here are presumably adults and file taxes (including tax on rental income).  If you hate doing your taxes then seek a CPA or tax accountant like a normal sane person.


Though if Bitcointalk is any indication - there's always been a minority of money nutters here who think of crazy ways to save money, when they're only stressing themselves out over a few bucks.  

FRB is completely unavoidable given a somewhat stable currency.

1) Stable currency gives lending less risk, requiring a < 100% reserve requirement.
2) With < 100% reserve requirement, banks can pay interest to depositors while forcing investors to take minimal risk (maximum interest = their interest rate ( 1 - 1/reserve requirement)
3) Investors accept interest for minimal risk originally in the form of bonds/CDs.
4) Since there's minimal risk, bond/CD notes become as effective a store of value as normal money.
5) Merchants begin to accept bonds/CDs in lieu of "base currency" because there isn't any downside to doing so (they were going to buy bonds/CDs anyway because they have minimal risk and provide interest, and accepting bonds/CDs increases the supply of tender available with which to buy merchant's products, increasing demand for merchant's products, creating more sales == more profits).

And a fractional reserve system is born.