The difference between what that article describes and what the normal "lets get rid of fractional lending" stuff I've seen floating around the interwebs is that the offset of the loan is actually government issued security, and not deposit accounts held by other bank customers.|
I don't quite see this. Can some explain to me, as if I'm 5:
1. How exactly is this any different from quantitative easing to compensate for bad loans?
2. "While Washington would issue much more fiat money, this would not be redeemable. It would be an equity of the commonwealth, not debt. " What does that mean? Surely if it can't be used or liquidated in some meaningful way, then it is not collateral?
3. Surely this means that inflation rises if lots of people default their debts, as happened post 2008? A run on the banks would mean inflation rises (as the govt security is cashed to cover bank debts), meaning more people would want to get their hands on their money to invest it in something that will hold it's value, meaning inflation rises further, meaning a further run on banks, etc, etc. No?
4. This centralises wealth creation, possibly a bad thing? Election coming? Free loans for everyone! It also decentralises inflationary control, partially, because the *risk* of lending rests with banks?
Or am I completely misreading an article written by someone who admits he doesn't understand the report?
Edited by Chopsen at 09:26:51 23-10-2012