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Answer To Cyprus? 100% Reserve Banking!


If you deposit $5000 (in a full reserve bank) then the bank must keep the $5000 there. The bank can ASK you if they can lend out - say $500 of it and you and the bank receive any dividends from that investment.

The money the bank lends out, you cannot spend. Thus - the amount of money supply in the system is stable.

However the rest of your $4,500 they must keep on-hand and cannot lend out. The bank can/will charge fee's, for those who won't let them lend anything out, for holding their money.

So you'll have a choice - let the bank lend out some as a way to reward the bank for protecting ALL OF your money or PAY THEM to hold it without lending it out.

This works much better because any losses will be much smaller and less catastrophic than what happens today. It'll also help create a more stable money supply.

And anyone who loses money - agreed to take on that risk. Those who did not agree to, can't lose any money unless the bank commits fraud. But this potential exists in virtually every transaction. If the bank commits fraud then you can sue them to get your money.

I really love the concept of 100% reserve banking, especially in light of the Cyprus deal. Can you imagine if a 100% reserve bank started popping up now? Surely people would be interested, especially people with over $250,000. I'm just doubtful that the Fed, Treasury and Congress won't try to annihilate such a bank.








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Cyril's picture



"Cyril" pronounced "see real". I code stuff.


"To study and not think is a waste. To think and not study is dangerous." -- Confucius

Cyril's picture

Great educational content. And how about starting the tickling?

Great educational content. And how about starting the tickling?

The Truth Rises - Coordinated Strikes Work Both Ways : May 1st, 2013


Shall we?


"Cyril" pronounced "see real". I code stuff.


"To study and not think is a waste. To think and not study is dangerous." -- Confucius


Under the central-banking, fiat money system, all money is borrowed into existence. Without fractional reserve lending, the money supply would dry up to nothing as loans were repaid. The problem is the central-banking, fiat system itself.

1. When banks create new money, it is indistinguishable from all other money, rather than being an obligation of the bank that issued it. That means that banks inflate everyone's money supply. (In the days of free banking in the US, bank notes were obligations of the issuing banks to pay the bearer in gold coin.)

2. Government insurance programs like FDIC exacerbate the moral hazard.

Do away with fiat money, central banking, and government insurance of bank accounts, then let banks issue all the paper they want - and caveat emptor to those who accept it in lieu of specie. No laws needed, just a free market.

Ĵīɣȩ Ɖåđşŏń

"Fully half the quotations found on the internet are either mis-attributed, or outright fabrications." - Abraham Lincoln

I respectfully disagree.

Sounds like you are approaching this from a greenbacker point of view, which in my opinion is drastically flawed in some of its basic assumptions. One of those assumptions being that "all" of our dollars are backed by debt.

Tom Woods does a good job of correcting those assumptions from an Austrian Economists point of view.

More info here: www.tomwoods.com/paper/

Yep ...

... there is a concept in banking called "matching maturities" or "mismatching maturities."

If you put money into a bank and agree to keep it there for a specific period of time, say 5 years like in a Certificate of Deposit, then the bank pays you a certain interest rate. If that bank then lends that money out for the same period of time, say for a 5-year car loan, then they have matched maturities because the car loan will be paid off about the same time that you are due your money. The bank has liquidity because they only pay you interest each year and principal at the end, while they collect principal and interest each month on the car loan.

However, if the bank lends the money out for 30 years on a home mortgage, then they have mismatched maturities and the bank is not liquid. This is one of the big differences between a sound banking system and one that is geared to self-destruction by too aggressive lending or leveraging.

this should be read by

this should be read by everyone.