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Originally Posted by pai mei
Watch more, after 20 minutes it begins with the entire history of money and banking, from the Roman empire until today. It explains everything very well, fractional reserve banking is not good, it creates inflation and it's just wrong that I have to work for real to repay money created from nothing - to some private people - it should be illegal.
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Fractional reserve banking IS good. It allows banks to make some profit, allows the economy to grow (more), and does not automatically lead to inflation.
Inflation is caused by many different variables, often interconnected. In the context of this discussion, inflation occurs when there's more money than the economy needs. Creating too much money with "fractional reserve banking" is bad (inflation), creating too little is bad too (slows down the economy), creating enough is good. And enough is not necessarily the amount dictated by a government's stack of gold/silver.
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Originally Posted by pai mei
Money need not be backed by anything as long as banks do not create them out of nothing and the government prints them and is the only one in control over the money volume. Does the economy need more ? they print more, need less - then take some away. It's as simple as that , no need for gold standard, the government must do it's job and control the money volume, also the government must be the only one that creates money - printed and electronic, and no private banks that make money from nothing , they just lend what they have in reserves. That means real control over inflation
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Total government control over the printing of money is simply not needed. You can control inflation by setting the total amount of money. One way to control "fractional reserve banking" is to set the percentage cash vs. loans, as I've explained. If a government or central bank dictates that banks can only loan, say, 10 times their amount of cash (= savings), you have effective control of the amount of money. I suggest you read some books about Keynesian economics, which should explain the principle.
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Originally Posted by pai mei
It is not natural for the economy to have ups and downs, that is only because "fractional reserve banking" - inflation, recession, economic growth - more borrow - more money from nothing, again inflation ,recession and so on
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Yes it is natural, and it's not only because of evil banks. Just look at the oil crisis of the 70's, which was caused by an essential commodity (oil) getting more expensive. It had NOTHING to do with "fractional reserve banking".
Or look at the hyper-inflation and depression in Germany in the 30's, which was caused by a government printing excess money to pay *external* debts. The cause there wasn't fractional banking, it was the external debt. It was either printing more money, or defaulting on the debt; that had led to France's occupation of German industrial areas in previous years, so was not an option.
Total government control of the money supply is not a solution to the US' economic problems. A sound fiscal policy and overall economic policy is.
(I have to admit I didn't have the time to read your quotes, nor watch the documentary. I'll see if I can do that today. But I doubt that would change much about my statements here. I do know what I'm talking about.)