There is obviously a crisis in the banking system since the
Global Financial Crisis of 2008 (GFC). "Too-Big-to-Fail"
(TBTF) Banks were bailed out by the taxpayers and by the federal
reserve bank. According to William Black, an S&L
Regulator and investigator, the GFC was 60 times bigger than
the Savings and Loan crisis of the 1980's, yet not a single banker
was investigated or indicted for misdeeds, while the Savings and
loan scandal resulted in thousands of indictments and many
convictions. Numerous banks were put into receivership, bad
assets sold off, and the remaining solvent portions put back into
business. None of this happened during the GFC. In
fact, global financial regulators have put into place a system of
"bail-ins" where depositor funds will be used to bail out the big
banks (*G-SIFIs and *D-SIBs) during the next financial
crisis. This scandal has resulted in a great deal of
interest in reforms to monetary policy and interest in public
banking.
*G-SIFI = Globally Systemically Important Financial Institutions
*D-SIB = Domestically Systemically Important Banks
Recently during the "net neutrality" debate President Obama
proposed the idea that the internet should be perceived a public
utility, since it has become so pervasive in our lives, and equal
access so important. This is even more true of the monetary
system, which should be a common asset we all share. Instead
of treating the money supply as a public utility, something that
we all use and need access to, it is primarily a source of profit
for the private banking system.
97% of the money supply is created by private banks in the form
of interest-bearing loans, mainly for real estate. Only 3%
are bills and coins. This may be shocking to some people to
realize, since neo-classical economics claims wrongly that banks
are just intermediaries loaning out savings of depositors to
borrowers. This misunderstanding is widespread. The
monetary system has lost all connection to the real economy as
Investment Banks, Hedge Funds, etc. primarily speculate in
existing assets and commodities using computer arbitrage, and
simultaneously the real sector is starved for credit. The
fact that every dollar created requires interest paid back on it,
makes infinite growth an absolute necessity to generate the
growing returns needed to pay back the dollars loaned.
Nothing is more fundamental to ecological economics than the fact
that infinite growth is impossible on a finite planet.
Therefore the monetary system must change, and money must not be
created with interest. Many ecological economists are
calling for 100% reserve requirements, so banks no longer could
produce the money supply, and it would returned to government.
There are many possible approaches to monetary reform. Some
current areas of exploration are complementary currencies, time
banks, mutual credit, cryptocurrency, public banks, and public
credit. Gund has done work on several of these topics.
Documents
Links
Monetary Policy
Documents
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