Responsible Money Banking - Part Three Of A Three Part Blog Series   

 Money issues faced by the majority of the central banks have to do with that they are associated with the financial instability that continues to grow. Each cycle that involves credit expansion for the banks results in a bust, and at this time each successive bust happens to be greater when compared to the previous. 

Money issues faced by the majority of the central banks have to do with that they are associated with financial instability that continues to grow with each cycle that involves credit expansion

Since the time of the massive financial crisis that occurred between 2007 and 2009, quantities of the bank credits has increased in a significant way. It has been estimated that a rise in the US interest rates that involve 1 to 2 percent can be enough to force another banking crisis.

It can only be assumed that return from the fractional reserved onto "sound" deposit banking will definitely not be a straightforward process. The fractional-reserve banking happens to be so established that a path to "sound" banking is at this stage unclear on every level of regulatory and financial establishments. 

One of the current solutions to these issues will be to prohibit cash. This means that the standard citizens will have no choice but to deposit their money into the banks. This is regarded as the last stride into a last-chance saloon. In addition, no-one in these establishments has an understanding of what "sound" banking happens to be anymore.

 Another banking crisis is associated with tidal certainty which is associated with consequences of abusing citizens funds that should be kept safe. However, it is very unlikely that early acceptance of this issue is regarded as unsound banking or unsound money. What we can expect is that there will be a greater expansion from the central-bank funds in order to help and bail out banks. If something does come forth from the expected banking dilemma, it is very unlikely that it will be "sound" banking.

Responsible Money As True Separation Of Assets 

Without responsible money banking such as true separation of loan business from the deposit, banking needs to remain the long-term objective. In fact, history shows us that this will return. However, this will only become apparent after the last dis-creditation of the fractionally-reserved banks. Up until this stage, a very small percentage of the public understand these dangers have managed to stockpile silver and gold in a physical form as their alternative in maintaining balances at their banks.

 However, using the sound money to replace the fiat unsound currency is starting to become the practical alternative over conventional banking. Emerging nations located in Asia still have the populations which have never given up on gold as a form of currency. In fact, in the populous countries like Indonesia and India, there are networks involving pawn shops that allow savers a way to finance their capital spending by using gold in the form of collateral. This is no longer regarded as backwaters of global economies, provided they are able to resist movements towards the ban on cash in regards to favoring fractionalized bank accounts.

The citizens that reside in advanced economies happen to be the more exposed when it comes to unsound currency. These citizens are owners of massive deposits which have increased so quickly since the previous financial crisis. This has resulted in the expansion of the bank credits which is not associated with accumulation of wealth that is genuine.  

 On the day that the central banks are unable to stop the global-banking crisis, will be the same day that deposits will mean nothing. When the dust starts to settle, there will be a high chance that our world will be able to make its way back to "sound" money. This will necessitate its distribution which will be banking systems that are linked to the separation of the safe-keeping function from the arrangements linked to loan finance. 

To read part 1, click here now!

To read part 2, click here now!

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