The Return of Sound Money

[wizardwatson]

Like deposits? You stated earlier that they were explicit loans to the bank from their customers.

I said things like CD's "Certificates of Deposits" were like loans. But in a 100% reserve system they would have to be explicitly loans.

I'm was talking about "time deposits" in that post as opposed to "demand deposits". Contractually a 6 month loan and a 6 month "certificate of deposit" are similar from the customers side of things.

 

[Zippyjuan]

Let me be more clear.

Banks have safety deposit boxes. They already perform a type of 100% reserve system doing that.

With 100% reserve banking it's like everything is in a safety deposit box. Does that change things like using my debit card or writing a check? No it does not. Once you write a check, that's permission for the bank to debit your account and credit their own and dispense the funds to the recipient of your check. (Or use software to clear with other banks).

It also doesn't change the practice of loaning. But anyone with sufficient capital can make loans, and typically loans require some form of collateral anyway. I doubt if 100% reserve banking came into being though that loaning services would remain so tightly coupled.

Writing a check or using a safe deposit box is not taking out a loan. You seem to favor banks being a storage place rather than a transaction place. You can put things there but they can't do anything with it.

 

[Zippyjuan]

I said things like CD's "Certificates of Deposits" were like loans. But in a 100% reserve system they would have to be explicitly loans.

I'm was talking about "time deposits" in that post as opposed to "demand deposits". Contractually a 6 month loan and a 6 month "certificate of deposit" are similar from the customers side of things.

You called time deposits explicit loans. And savings accounts.

The depositor of a C.D. for instance is loaning the money explicitly to the bank. Savings accounts are the same way assuming they are not on demand.

 

[r3volution 3.0]

[MENTION=1144]wizardwatson[/MENTION], still waiting for a response:

That's not what the contract says.

The contract says "I agree to loan $100 to ABC Bank at 1% per year, the loan being callable on demand."

The $100 is not available to two people at the same time.

It's available to the bank until the depositor calls the loan.

I've gone ahead and created a dedicated thread for FRB. You can respond there if you like.

 

[Zippyjuan]

You mail a check. ACH and automatic deposit will also be options.

Back to the thread topic.

So to set up an account, I send you dollars. Since I am in the US (like most here- your site says there is one for overseas customers) I will be charged a fee. You issue me a debit card I can use against that money I sent you- which you use to buy gold (which doesn't really effect me- I am spending my own money I already gave you to get the debit card). I use the debit card and the balance in my account goes down. And only if I don't use all of money and want some back do I actually have anything to do with the gold. From my end, I am not really using gold but dollars. You are tracking my transactions in terms of gold (bookkeeping) but everything on my end is dollars. The stores I use the card at are not getting gold but dollars. I gave you dollars to fund the account. I pretend I am using gold for money but really I am not. I am just adding another layer of complexity and costs to the transactions.

Aren't I better off using accounts and cards I already have and if I want to "redeem" my account for gold buying it myself?

 

[Origanalist]

Back to the thread topic.

So to set up an account, I send you dollars. Since I am in the US (like most here- your site says there is one for overseas customers) I will be charged a fee. You issue me a debit card I can use against that money I sent you- which you use to buy gold (which doesn't really effect me- I am spending my own money I already gave you to get the debit card). I use the debit card and the balance in my account goes down. And only if I don't use all of money and want some back do I actually have anything to do with the gold. From my end, I am not really using gold but dollars. You are tracking my transactions in terms of gold (bookkeeping) but everything on my end is dollars. The stores I use the card at are not getting gold but dollars. I gave you dollars to fund the account. I pretend I am using gold for money but really I am not. I am just adding another layer of complexity and costs to the transactions.

Aren't I better off using accounts and cards I already have and if I want to "redeem" my account for gold buying it myself?

Sure, I guess. But you like a lot of people are missing the point entirely. You take your FRN's, transfer them into gold backed currency, and then spend them at your leisure. I don't see what you're all freaked out about, I'm going to use it and if you don't want to don't. Personally I'm going to do everything in my power to deny the federal reserve any way I can no matter how trivial.

 

[Zippyjuan]

Sure, I guess. But you like a lot of people are missing the point entirely. You take your FRN's, transfer them into gold backed currency, and then spend them at your leisure. I don't see what you're all freaked out about, I'm going to use it and if you don't want to don't. Personally I'm going to do everything in my power to deny the federal reserve any way I can no matter how trivial.

You aren't denying the Federal Reserve anything. You are using Federal Reserve notes. Helmut is the only one using the gold. Plus the Federal Reserve processes a large chunk of credit and debit cards so you may be giving them more money.

The Fed's income comes primarily from the interest on government securities that it has acquired through open market operations. Other sources of income are the interest on foreign currency investments held by the Federal Reserve System; fees received for services provided to depository institutions, such as check clearing, funds transfers, and automated clearinghouse operations; and interest on loans to depository institutions.

https://www.federalreserve.gov/faqs/about_12799.htm

You are right it is up to the individual to decide if it could work for them. If you like it, great.

 

[Origanalist]

You aren't denying the Federal Reserve anything. You are using Federal Reserve notes. Helmut is the only one using the gold. Plus the Federal Reserve processes a large chunk of credit and debit cards so you may be giving them more money.



https://www.federalreserve.gov/faqs/about_12799.htm

You are right it is up to the individual to decide if it could work for them. If you like it, great.

While my money is in that account it's not fiat money. Tell me why I'm wrong.

 

[Zippyjuan]

While my money is in that account it's not fiat money. Tell me why I'm wrong.

Only while it is in that account. The money you put in is fiat, the money you take out and spend is fiat. Unless you take him up on his gold redemption offer. But if you like the idea, go for it.

 

[wizardwatson]

While my money is in that account it's not fiat money. Tell me why I'm wrong.

Do you ever feel like you are in the twilight zone?

RPF 2008: End the Fed! Only gold and silver based constitutional money!

RPF 2017: Fractional Reserve Banking is sound money. If you invest in gold and keep it as savings, really you're still using fiat currency because you bought the gold with FRN's.

..ugh.

 

[Origanalist]

Only while it is in that account. The money you put in is fiat, the money you take out and spend is fiat. Unless you take him up on his gold redemption offer. But if you like the idea, go for it.

I am. And while my money is in there it is gold backed currency, not fairy dust bullshit monopoly money created by the federal reserve. It may not be a huge game changer but it's a move in the right direction.

 

[Origanalist]

Do you ever feel like you are in the twilight zone?

RPF 2008: End the Fed! Only gold and silver based constitutional money!

RPF 2017: Fractional Reserve Banking is sound money. If you invest in gold and keep it as savings, really you're still using fiat currency because you bought the gold with FRN's.

..ugh.

RPF's has undergone quite the transformation.

 

[Zippyjuan]

Do you ever feel like you are in the twilight zone?

RPF 2008: End the Fed! Only gold and silver based constitutional money!

RPF 2017: Fractional Reserve Banking is sound money. If you invest in gold and keep it as savings, really you're still using fiat currency because you bought the gold with FRN's.

..ugh.

True. Unless you pay somebody with gold for something. Otherwise you are using fiat Federal Reserve Notes.

 

[Origanalist]

True. Unless you pay somebody with gold for something.

Hey slippy, you are paying with gold.

 

[Zippyjuan]

Hey slippy, you are paying with gold.

So when you use that debit card, the merchant gets paid in gold. Does Helmut ship it to them?

 

[Origanalist]

So when you use that debit card, the merchant gets paid in gold.

Yes. And it get's transferred to FRN's at that point. That is my understanding.

 

[Zippyjuan]

Yes. And it get's transferred to FRN's at that point. That is my understanding.

I could be wrong but I think they are getting paid in FRNs. The "gold balance" in your account gets converted back into FRNs and that is what the merchant receives. It is only gold while it is in your account as I understand it.

 

[wizardwatson]

I could be wrong but I think they are getting paid in FRNs.

Zippy, think of it as Originalist lives in Ron Paul country and Zippy lives in FRB loving Bankster country.

Originalist opens an account at Ron Paul's 100% gold backed awesome bank, and Zippy has an account in Baby-killer Luciferian FRB Bank of the Jesuits in Bankster country.

Just because Originalist writes you a check and some exchange is doing the conversion doesn't mean his account isn't gold-backed. It is.

 

[Zippyjuan]

Okay. Since it is gold backed, can I insist that Helmut gives me gold instead of FRNs when Originalist buys something from me? Or is it only convertible by Originalist into gold since it is his account? Does the gold always stay there until he has no more money in the account? If I can get gold from him, then yes, it is really gold backed. Otherwise it is just a bookkeeping thing.

 

[r3volution 3.0]

Do you ever feel like you are in the twilight zone?

RPF 2008: End the Fed! Only gold and silver based constitutional money!

RPF 2017: Fractional Reserve Banking is sound money.

You're mixing up different ideas.

One can (and should) both (a) end the Fed, (b) return to hard money, and (c) allow fractional reserve banking.

There's no contradiction there at all.

The base money can be gold (or whatever the market chooses), and that can be the base for fractional reserve banking.

That's in fact how banking worked in the past.

And it worked just fine; the problem has always been state interference (chiefly by bailing out failing banks).