So you have on-call deposits and term deposits and no fudging between the two. That way the banking cartel cannot get together and pyramid ponzi-money on top of the cash. And the money supply then becomes equal to the cash. That’s dealt with one thieving party but then you really need to deal with the other thieves in this picture by fazing out fiat money in its entirety and phase to private monies backed by various commodities.

Travis, this is actually less liberal (in the pro-liberty sense) than what it’s replacing. Fractional reserve banking exists so those holding the money can have some reason to do so. If I’m ZZ National Bank and I’m not allowed to lend out some of my “on call” deposits, as you term them, what reason do I have to hold these deposits at all? What incentive do I have not just to offer term deposits?

People demand “on call” deposits, you say? Well, since I can’t make any money off them by lending some of them out, I need to recoup my operating costs by say, charging a 2% fee every month on each account. Don’t like having to pay $200 a month on the $10,000 you’ve got on call? Tough, I’ve got expenses.

Now, why shouldn’t the depositor have a choice between my ZZ National Bank, where he has to pay to have money guaranteed there when you need it, or AAA Savings and Loan, where he knowingly risks not having his money during a bank run?

If you had an investor with a dozen houses clearly he was under pressure to offload them onto individuals to stem any cash flow stress he was under, before the prices went down, and so in fact a great deal of society would have been favoring ongoing asset inflation. But once it gets down to the poorer homeowner there is no-one left to unload to.

We ought not be blaming the poorer people who are now being evicted simply because they were the ones caught with the hot potato.

The answer is to get rid of the 77,000 pages of regulation and simply have a regulation getting rid of fractional reserve banking. So any on-call money has to stay at the bank. There has to be a strict segregation between on-call money and lent money.

So you have on-call deposits and term deposits and no fudging between the two. That way the banking cartel cannot get together and pyramid ponzi-money on top of the cash. And the money supply then becomes equal to the cash. That’s dealt with one thieving party but then you really need to deal with the other thieves in this picture by fazing out fiat money in its entirety and phase to private monies backed by various commodities.

Once you have this sort of hard money the investment dollars go to wealth-producing activities. Debt can produce wealth when its used to buy things that improve cash-flow. And this would be the effect. Since banks would have to borrow long and lend less long or they’d go broke. Or if they borrowed short they would have to lend shorter. This would mean that one of the priorities as to how they would allocate loans would be how quickly you could pay the loan back.

Hard money would also mean that they couldn’t rely on asset inflation to back the loan up. This combination would in practice mean that the competitive and surviving banks would be interested in making loans for wealth creation.

That is for people who were buying something in order to improve their cash flow. Since the banks now have a big priority on getting paid back faster to keep their assets on a shorter time frame than their liabilities. In practice that would mean a smart bank would tend to try and use these loans for wealth creation.

Now they are just rip-off merchants who try to use debt for asset inflation and spending addiction.

Which is one of the real reasons your manufacturing goes offshore.

It might seem somewhat implausible that you can go in debt to improve cash-flow but what you must realize is that after a shake-out a lot of these things that you could buy with loan money would be a lot cheaper.