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If fractional reserve lending was outlawed and only full reserve lending was legal as a form of lending then that would reduce the prices of houses and rent relative to the average median income

13 people · Oct 18, 2024, 18:58
· · Web · 3 · 1 · 1
🐘🐘 Humpleupagusto 🐘🐘
What's full reserve lending? When the banks can't lend out anything because they're require to hold onto 100% of the deposits? 🤔
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Rudolf Hess`s Ghost
i dont really get it either .. i just know what we are currently doing , is bullshit
END THE FED
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That guy who never proofreads his posts before sending
@shortstories Not going to lie, I have no idea what than means for me.
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🐘🐘 Humpleupagusto 🐘🐘
The question doesn't make any sense anyways.

Fractional reserve is what allows lending from deposits in the first place. If banks had to keep 100% of the reserves, they basically couldn't lend.
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Ardainian Right
@Humpleupagus @shortstories @Monsignor_DickFace
They'd have to have an extra pool of savings to lend from in addition to the money deposited by customers. Under such a system banks would charge customers a fee for storing their money, as opposed to giving them a dividend, since they wouldn't be able to profit off holding customer deposits.
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🐘🐘 Humpleupagusto 🐘🐘
There's not going to be much money available if they only lent from capital or capital returns, and interest rates would be high af. It's hard money.
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🐘🐘 Humpleupagusto 🐘🐘
I also imagine that underwriting would be way harder. Without available liquidity, people who did own property would be locked in. Alienation would be hard.
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🐘🐘 Humpleupagusto 🐘🐘
An easier solution would be to raise the discount on a portfolio note. Then the bank can choose between having $100,000 dollars or lending the money and having a $100,000 note that regulation values at $60,000.
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Frondeur
@Humpleupagus @ArdainianRight @shortstories @Monsignor_DickFace Chicago school economists have been arguing for full reserve banking forever. The basic idea is that if banks lending adds value they can price it competitively by selling stock in their investment wing.

static1.squarespace.com/static/5e6033a4ea02d801f37e15bb/t/5ee29c9444361d44254a6be5/1591909525521/run-free_talk_mn_2016.pdf
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Wrath
@Frondeur @Humpleupagus @ArdainianRight @shortstories @Monsignor_DickFace Wow, that's a compelling argument. Right this way Mr. (((Economist))).
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Frondeur
@Eiswald @Humpleupagus @ArdainianRight @shortstories @Monsignor_DickFace >argues against usury being allowed to bankrupt depositors and nations...
>gets crucified...

😭 😭 😭
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shortstories

@ArdainianRight @Humpleupagus @Monsignor_DickFace

"They'd have to have an extra pool of savings to lend from in addition to the money deposited by customers"

The customer would deposit money into two categories

1 Is money the depositor can access any time that can not be used for loans

2 Is money the bank is given permission to use for loans, but the bank depositor can not access for a certain tine frame. The bank depositor would earn a share of the profit the bank made off these loans.

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shortstories

@ArdainianRight @Humpleupagus @Monsignor_DickFace

For example a customer might have two accounts

1 A checking account that can be used any time

2 A savings account that can only be accessed during certain time frames

The bank can not lend the money in the customer checking account

The bank can lend money in the customer checking account to other customers and that customer earns a portion of the profit from these loans

They can only take money out of savings at designated times

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shortstories

@ArdainianRight @Humpleupagus @Monsignor_DickFace

Another simpler way is the customer can put money in a checking account that earns no interest or negative interest for the protection fee

or give the bank money to lend to other customers they find in exchange for the bank sharing a portion of the profits from lending

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shortstories

@ArdainianRight @Humpleupagus @Monsignor_DickFace

This video explains how a customer could make money through a bank in a full reserve system

youtube.com/watch?v=bZ8g_1BmDf

Fractional Reserve Banking vs Full Reserve Banking | How Do They Work?

EconClips

youtube

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EvilSandmich
@Humpleupagus @Monsignor_DickFace @shortstories I will grant that some systems are more prone to corruption than others but I think this is a case where the issue isn't the system but the people running it. IOW, changing out the system but keeping the same people would result in the same outcome.
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🐘🐘 Humpleupagusto 🐘🐘
Agreed. I'm not against banking / fractional reserves per se. I think there's a lot of regulations that could be altered though to better account for true value of assets and risk. I think depositors should have greater recourse against bank operators too. The corporate shield should be weakened.
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Koropokkur
@Humpleupagus @EvilSandmich @shortstories @Monsignor_DickFace they charge 30% for a credit card, they should be paying customers at least 10% for their savings and checking accts.
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EvilSandmich
@Koropokkur @Humpleupagus @shortstories @Monsignor_DickFace It's hard to picture it now but 50-ish years ago banks were treated (and acted) like utilities. For example, crap like "credit cards" were unknown because letting the backbone of one's financial system act like a bunch of low-watt loan sharks was considered a bad idea.
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🐘🐘 Humpleupagusto 🐘🐘
Imagine if deposits were treaded more like convertible equity. You get dividends as long as you leave deposits, but can also convert it to bank debt and withdrawal.
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Frondeur
@Koropokkur @Humpleupagus @EvilSandmich @shortstories @Monsignor_DickFace There is a nice chart showing that US banks don't competitively pass on the higher interest rates they get to borrow from the fed at...even compared to places like Argentina...that needs to be fixed for sure...
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Frondeur
@Humpleupagus @EvilSandmich @shortstories @Monsignor_DickFace I am against fractional reserves for the systemic crises it causes through bank runs...the solution we have now of guaranteeing deposits just encourages bad investments...there isn't any way to escape excess risk under a fractional reserve system...
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Thickasabrick Uralista
@Humpleupagus @Monsignor_DickFace @shortstories Don't the choos get interest-free loans.....from other choos?
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Wrath
@shortstories No, because houses aren't massively overvalued only because of lending practices but because they are treated as appreciating assets when in reality they are depreciating commodities that get flipped over and over to increasing their 'value'.
The real estate market is almost entirely financialized and exploited by both the most evil and the more retarded people in existence.
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