Saturday, September 29, 2012

It's a very hard lifestyle

I am a Ron Paul supporter, but I also think that Ron Paul's explanation of the banking system is somewhat lacking in certain areas. There is no question that his critique of the cronyism between banks and governments is spot on, but he sometimes fails to explain the mechanics of the current banking system that creates the instability and inflation. The fact is that FRACTIONAL RESERVE BANKING is the real culprit for inflation and business cycles. However, Ron Paul chooses to direct most of his criticisms toward the Federal Reserve. In a way the Fed is more of a symbol of the current banking system than anything else. What people need to realize is that the only sound and honest banking model is a free money model. What we need to recognize is the difference between deposit banking and loan banking. Ideally, deposit banking is a service that banks can provide by charging a "warehousing" fee to its customers for the service of keeping their money safe and secure. Loan banking on the other hand is a system where customers willingly send their surplus capital to bank financiers so that they can lend it to other productive sectors of the economy. While this may not be what modern day bankers want to hear, it is exactly what needs to be addressed in order for us to get back on the path to prosperity......