The History of Paper Money - V: Working out the Kinks - Extra History
Added 2016-10-28 07:37:18 +0000 UTCThe first question of paper money is not how much you can print, nor even what its value is - but who prints the money?
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I recommend looking at Noam Chomsky's extended interview "Requiem for the American Dream", for a further treatment of the issue: <a href="https://www.youtube.com/watch?v=lfajXvTYChI" rel="nofollow noopener" target="_blank">https://www.youtube.com/watch?v=lfajXvTYChI</a> Social mobility is important. Social mobility at the expense of others' safety is not a good system. You should either borrow existing money, or a better system should be used for such social advancement. And I ask you where this social advance even is, as we are seeing a larger poor and elite class than many periods of history, the middle class beginning to disappear. If this is good for social advancement, why is there so little social mobility? The truth is, it doesn't supply means to greater social mobility, we have ALWAYS had money lenders. But the ability to acquire such massive amounts of wealth that 1% of the population own 50% of the world's wealth, is an advent of modern banking. Government run banking where all interest profits go directly to public funds would be the most moral solution. As it is, you are not gambling your safety alone, but helping the banks to gamble the safety of everyone who has their money tied to them (which is everyone). That's why economic crises can harm those who were not taking such risks. As it is, the banking system is an incredibly simple formula. Everybody makes up money, coining or printing it or whatever. But the issue with fractional reserve banking is that they make it up, and then require it to be repaid at interest. That is, the amount of debt will always exceed the money supply, by whatever the interest rate is. The only way to pick up the slack is to destroy anybody foolish enough to become involved in this ... which they do, with great pleasure. The only way to repay the interest is with more debt, which accrues more interest, which requires more debt to pay it off. The simple exponential curve this creates spells out very clearly that such a system is not sustainable, as long as we live in a finite world. And there's nothing hyperbolic about that video ... it is accurate, and precise. It merely speaks of things that have not yet happened, i.e. the point where the debt exceeds the finite world to such a degree that banks can simply foreclose on everybody and everything, and everybody will have to either be their slaves or start a war.
Mask
2016-11-02 06:19:51 +0000 UTCThat documentary is a little hyperbolic. It's no more "money they don't have" than the government printing money, except that without fractional reserve banking to expand the money supply what happens is when you want to start that business and you need $500,000 that $500,000 simply doesn't exist and it can't be created on the fly. This leaves you without the ability to start your business and thus stifles social mobility. Fractional reserve banking and how it allows greater lending allows you to gamble on you, for you to say "I want to start a business and I'm willing to take those risks". Now I'll be the first to agree that we need to have more oversight and carefully regulate our financial industry (as the credit default swap crisis of 2008 made fairly clear), but as I'm going to say in lies to call for getting rid of fractional reserve banking to solve the dangers it brings with it is like calling to halt the use of electricity to halt anthropogenic climate change. Trying to turn back the clock like that would be disastrous. Instead the discussion we need is just how to regulate and oversea the financial industry because financial technology, like any technology, can be abused. Right now there's literally no country in the world that requires full reserve banking, no matter how liberal and no matter how equal the income distribution in the country is. It's easy to choose a single cause and decide that's the heart of all of our problems, and with fractional reserve banking makes for an easy target because it really does sound like "look, those bankers just get to make up money, isn't that incredibly unfair", but it's not that simple, and tragically income distribution wasn't actually better before fractional reserve banking, in fact it was much much worse. -JP
Extra History
2016-11-01 21:15:48 +0000 UTCI strongly recommend you and all the viewers watch a documentary called Money as Debt: <a href="https://www.youtube.com/watch?v=jqvKjsIxT_8" rel="nofollow noopener" target="_blank">https://www.youtube.com/watch?v=jqvKjsIxT_8</a> I'm a bit concerned by Extra History saying the fractional reserve banking is unequivocally good. It is a system that is worse than usury. You're not only getting rich off producing nothing for your fellow man, you are getting rich off money you don't have. What's worse is the nature of how they earn this money. They are, essentially, gambling on your wellbeing. Let me give you an IOU for $500,000 (which I don't have). Use that to start your own business. You will, if at all possible, pay me back the money plus $5,000. If your business collapses... I'm going to leave you. Declare bankruptcy, get protected and bailed out, while you're left with a ruined business and its debts--and a debt for $500,000 you never had. What am I going to do in this system? Gamble more, of course. I can't lose, so I will gamble the safety of as many as I can. Worst of all is that your debt to me, I will use as money to lend to others, allowing me to increase my fractional reserve to lend almost infinitely. It is not a good system, it is one that has harmed the lives of millions of people. It has created an elite class where 1% of the world owns half of its wealth (I don't think that even counts the derivatives).
Mask
2016-10-30 05:04:17 +0000 UTCI would say it's like using duct tape to fix a problem when the idea of a "welder" hasn't actually been invented yet, though people have talked about it for years; now you're hoping the duct tape holds together long enough for the first generation of welders to train up, even though you know that they'll be pretty new at this "welding" thing and so their work will be flawed, meaning you have to wait for those welders to become skilled enough to develop a sort of craftsmen's code, and then... wait, I think I'm losing the metaphor here. Suffice to say that the early implementation is definitely a temporary and imperfect fix to a persistent and complex problem, and our society is still in the process of figuring out ways to improve that implementation, because the old way wasn't working either. ;)
Extra History
2016-10-29 21:47:12 +0000 UTCIt sounds like it applies all too well. :(
Extra History
2016-10-29 21:41:31 +0000 UTCI hadn't seen it before, but that felt... prescient. <a href="https://www.youtube.com/watch?v=O4ne13Zft9Q" rel="nofollow noopener" target="_blank">https://www.youtube.com/watch?v=O4ne13Zft9Q</a>
Extra History
2016-10-29 21:40:00 +0000 UTCInteresting to see how some of this (regarding banks) seems to apply somewhat... poorly... to some of us in Eastern Europe: there is still an awful lot of money getting kept out of the banks, exactly for the reasons mentioned: everyone can easily remember at least a few of the slightly shadier ones going belly up. Typical savings are guaranteed to be reimbursed, but it will also take many years to get your money back so why would the hassle be worth it - your mattress is actually significantly less likely to go up in smoke than your bank. And the interest on savings being practically zero obviously doesn't help much. Assuming you ever had any money you didn't immediately spend on simply paying the bills, anyway...
Porcupine
2016-10-29 14:33:19 +0000 UTCDoes anyone else have Jimmy Stewart's desperate speech from "It's a Wonderful Life" in defense of his Savings & Loan playing in the back of their minds throughout the bank run segment? Just me? Okay then.
Joel Robinson
2016-10-29 13:30:09 +0000 UTCI'm no economist, but fractional reserve banking and leaving the gold standard sounds to me like using duck tape to fix a problem when you really need a welder.
Parker
2016-10-29 03:36:00 +0000 UTCFor all of the freedom Lincoln brought about by the end of the civil war, he certainly did his fair share of the opposite. Separation of currency and what attaches value, freedom of press being destroyed, the draft becoming law. Ironic.
chamillitary
2016-10-28 21:31:45 +0000 UTCBut will people accept treasury notes? "The people or anyone else will not have any choice in the matter, if you make them full legal tender."
Extra History
2016-10-28 18:47:13 +0000 UTCYou can get the whole track already! There will be a music video when Lies comes out too of course, but if you just want to listen, go here: <a href="https://www.patreon.com/posts/history-of-paper-7043244">https://www.patreon.com/posts/history-of-paper-7043244</a>
Extra History
2016-10-28 18:43:59 +0000 UTCThat is awesome. Now, I have to visit those banks and exchange some euro's for sterling next time I'm over.
Dani McKenzie
2016-10-28 18:42:21 +0000 UTCThis conversation delights me more than I can say.
Extra History
2016-10-28 18:40:08 +0000 UTCNI notes always confused the hell outta non-NI shops. I remember going to Scotland to visit family before the Euro kicked in and paid for something in the newsagents with an NI note and was told by the cashier, "Sorry, we don't accept Punts." (Republic of Ireland money)! Had to explain to her it was actually sterling!
Astrid Stormborn
2016-10-28 17:42:56 +0000 UTCFor those not in the know, the NI Banks that can print their own notes include Bank of Ireland, Ulster Bank, First Trust and what was known as Northern Bank. However a bank from Denmark, surprisingly called Danske Bank, bought Northern Bank and retained their right to print notes, but rebranded them to Danske Bank. So we have legal Sterling Tender that proudly says Danske on it.
RMS Oceanic
2016-10-28 14:38:33 +0000 UTCAbandoning the gold standard? Damn you, Lincoln!
chamillitary
2016-10-28 11:57:35 +0000 UTCMy favourite Norn Irish notes are the Danish bank ones. Those really mess with peoples heads when I go to spend them back home.
Stu Shepherd
2016-10-28 09:58:11 +0000 UTCI should probably save this for the next episode or, when the Kinder Audio track video comes... but I really really love the accompanying song that went with this series. Maybe it's the vocals, maybe it's the soothing strings, I don't rightly know. Just want to say, good work Kiner Bros.
Zachary Taylor
2016-10-28 09:20:56 +0000 UTCI love spending my Bank of Ireland and Northern Bank and Ulster Bank notes in mainland Britain just to confuse people. Even in Scotland, who you think would be used to someone in Exeter giving Bank of Scotland notes a sideway glance. :) The obvious nitpick is those Irish banks only now print in Northern Ireland, as the Republic founded a new centralised currency also called the Pound (or the Irish version the Punt) and then moved onto the Euro. As a side note, the One Punt coin is the most satisfying coin to flip
RMS Oceanic
2016-10-28 09:14:03 +0000 UTC
