Frank Shostak is an Austrian-school banker who understands banking from a practical point of view. If you read him, he gets to Shariah-compliant banking requirements.
Now, these are also Christian banking requirements. These threads need to be pulled together into a coherent whole. So much work, so little time.
Please feel free to share this post with three of your friends.
Once the bust emerges this will affect a large percentage of bubble activities and hence banks that provided loans to these activities will discover that they hold a large amount of non-performing assets.
A likely further decline in lending is going to curtail lending out of “thin air” further and this will put a further pressure on the growth momentum of money supply.
In fractional reserve banking, when money is repaid and the bank doesn’t renew the loan, money evaporates. Because the loan was originated out of nothing, it obviously couldn’t have had an owner.
In a free market, in contrast, when money i.e. gold is repaid, it is passed back to the original lender; the money stock stays intact.
Since the present monetary system is fundamentally unstable it is not possible to fix it. The central bank can keep the present paper standard going as long as the pool of real wealth is still expanding.
Once the pool begins to stagnate – or worse, shrinks – then no monetary pumping will be able to prevent the plunge of the system.
A better solution is of course to have a true free market and allow the gold to assert its monetary role. As opposed to the present monetary system in the framework of a gold standard money cannot disappear and set in motion the menace of the boom-bust cycles.
Now, these are also Christian banking requirements. These threads need to be pulled together into a coherent whole. So much work, so little time.
Please feel free to share this post with three of your friends.
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