Iceland plans to take back power to create money

[Futuristic Eskimo]

Well, correct me if I'm wrong but I dont think the piddly commercial banking itself doesnt make much money on its own... its the ability to securitize those activities and use that capital as backing or w/e that enables their gambling that much more. I feel like separating commercial and investment banks would go a long way in curbing credit abuse. Maybe 80% of the way this measure would. Investment banks would be "naked out here B"

Commercial banks ability to create credit does lead directly to the prevalence of securitizations. Still. even if you separate the two, it is still within the interest of commercial banks to extend credit above and beyond the needs of the economy because that is where they make their money. Separation might create a healthier financial system, but I am not sure it will do anything to curb the expansion of credit.

Edit: To your point, a standalone commercial bank can always sell its loans to another entity if it chooses. Another effective approach could be to require the original lender to hold a loan on its books for a specific period of time or to require that they hold a certain percentage of the loans they've made.

 

[TLR Is Mental Poison]

Commercial banks ability to create credit does lead directly to the prevalence of securitizations. Still. even if you separate the two, it is still within the interest of commercial banks to extend credit above and beyond the needs of the economy because that is where they make their money. Separation might create a healthier financial system, but I am not sure it will do anything to curb the expansion of credit.

Edit: To your point, a standalone commercial bank can always sell its loans to another entity if it chooses. Another effective approach could be to require the original lender to hold a loan on its books for a specific period of time or to require that they hold a certain percentage of the loans they've made.

I think we are arriving at the same conclusion... I think consumer loans like auto loans and mortgages etc could probably be wholly administered and controlled by the govt. Ah but then we run into the problem of having Congress directly involved in shaping the monetary policy of the country. Id honestly still rather take my chances with commercial banks. Banks and Congress are greedy but on top of that greed Congress is also not very bright. Im going with the less bad choice,.

 

[Domingo Halliburton]

Commercial banks ability to create credit does lead directly to the prevalence of securitizations. Still. even if you separate the two, it is still within the interest of commercial banks to extend credit above and beyond the needs of the economy because that is where they make their money. Separation might create a healthier financial system, but I am not sure it will do anything to curb the expansion of credit.

Edit: To your point, a standalone commercial bank can always sell its loans to another entity if it chooses. Another effective approach could be to require the original lender to hold a loan on its books for a specific period of time or to require that they hold a certain percentage of the loans they've made.

there was a provision in Dodd-Frank to hold something like 5% of the securities you create on your balance sheet for a period of time. It was quickly shot down.

Maybe I'm missing something here, but if I'm reading this correctly wouldn't this proposal essentially end fractional reserve banking?

 

[Futuristic Eskimo]

there was a provision in Dodd-Frank to hold something like 5% of the securities you create on your balance sheet for a period of time. It was quickly shot down.

Maybe I'm missing something here, but if I'm reading this correctly wouldn't this proposal essentially end fractional reserve banking?

I don't believe it would. You can still extend credit at whatever pace you want under that rule. It would just swell the balance sheets of the entity that originated the security.

 

[Domingo Halliburton]

I don't believe it would. You can still extend credit at whatever pace you want under that rule. It would just swell the balance sheets of the entity that originated the security.

I should have been more clear I was referring to the Icelandic proposal is that what you were talking about?

 

[Futuristic Eskimo]

I should have been more clear I was referring to the Icelandic proposal is that what you were talking about?

Oh, yea it would.

 

[Curtis Nightfish]

http://www.forbes.com/sites/traceyg...ilized-economy-is-a-surprising-success-story/

"Instead of allowing the criminals responsible for bank fraud to run free as the years passed by, Iceland thought it might be wise to actually indict bankers who committed serious financial crimes that contributed to the collapse. By paying off loans for consumers, forgiving homeowner debt (up to 110% of the property value), and throwing the offenders in prison, Iceland was able to bounce back. Now, its economy is “recovered” and is growing faster than both the US and European economies.

When Iceland’s President Olafur Ragnar Grimmson was asked whether or not other countries – Europe in particular – would succeed with Iceland’s “let the banks fail” policy, he stated the following:

“Why are the banks considered to be the holy churches of the modern economy? Why are private banks not like airlines and telecommunication companies and allowed to go bankrupt if they have been run in an irresponsible way? The theory that you have to bail out banks is a theory that you allow bankers enjoy for their own profit, their success, and then let ordinary people bear their failure through taxes and austerity. 
People in enlightened democracies are not going to accept that in the long run.”

 

[thekingsmen]

support adult literacy, brehs


#thekingsmen
#lowerlearning

Do you go outside? Do you have a job? You spend an awful amount of time on the coli worried, wondering and focused on my topics.

 

[88m3]

Do you go outside? Do you have a job? You spend an awful amount of time on the coli worried, wondering and focused on my topics.

I've been chillen in Brooklyn and Manhattan all day not a care in the world. I have my own business. You deserve to be ridiculed.

 

[thekingsmen]

I've been chillen in Brooklyn and Manhattan all day not a care in the world. I have my own business. You deserve to be ridiculed.

Yes Chillin all day thinking about how you want to redicule me. Get real....26,000 Messages in less than 3 years....you ain't got no job.

 

[88m3]

Yes Chillin all day thinking about how you want to redicule me. Get real....26,000 Messages in less than 3 years....you ain't got no job.

Nah, most my of my comments are offhand you're pretty easy to pan. When you're not working for the man it's pretty easy.

 

[thekingsmen]

Nah, most my of my comments are offhand you're pretty easy to pan. When you're not working for the man it's pretty easy.

26,000 posts.....living the life.

 

[Domingo Halliburton]

Oh, yea it would.

I was just reading tighter bank regulations can lead to a big drop in broad money. I don't know how well this would work coming off a downturn in the economy.

 

[Futuristic Eskimo]

I was just reading tighter bank regulations can lead to a big drop in broad money. I don't know how well this would work coming off a downturn in the economy.

I dont think there would ever be a period of time where the results of implementing this system would be less painful in the very short term. Besides, most money out there is sitting around doing nothing. Velocity of money is very low these days.

 

[Domingo Halliburton]

I dont think there would ever be a period of time where the results of implementing this system would be less painful in the very short term. Besides, most money out there is sitting around doing nothing. Velocity of money is very low these days.

how are they calculating velocity? does it factor in the increase in supply?