I received a copy of Perkins Consulting's "Technology Matters" Winter 1998/99 newsletter. In it is the following quote:

"... GartnerGroup Vice President and Director of Research Jim Cassell... 'We don't need a run on the banks due to hysteria and panic," says Cassell... He says the the ABA is very concerned about people withdrawing large sums in the days before the rollover. The collective cashing of one month's paychecks, Cassell says, would empty the national till. "There is not enough physical money," he says."

If we can't even cash our pay, (not to mention our reserves at the bank), then is cash even real? Is it really the fault of the boy scout if the bank didn't keep enough money on reserve for him to cash his pay? Is there something I am missing here?

-- Reporter (foo@foo.bar), February 09, 1999

Answers

Here is an excellent article on Fractional Reserve Banking.

http://the-moneychanger.com/html/it_s_funny_money.html

Ray

-- Ray (ray@totacc.com), February 09, 1999.

Less than four out of every hundred "dollars" are paper. 96 are purely electronic. Is this electronic money, mere information, "real?" Only as real as Tinker Bell: if enough little children clap their hands and believe in it, it's real. Otherwise, it's just the light from Venus reflecting off a pocket of swamp gas.

E.

-- E. Coli (nunayo@beeswax.com), February 09, 1999.

Can anyone refute ths statement from the above article?:

"If as many as 1.32% of bank depositors take their advice and withdraw all their money, the banks will close their doors."

Is it really that bad?

-- Reporter (foo@foo.bar), February 09, 1999.

I just wish I could feel confident that "they" care about seeing people "well" prepared, in the same way they care about the money.

Diane

-- Diane J. Squire (sacredspaces@yahoo.com), February 09, 1999.

Same old, same old...............

Look folks. we have a fractional reserve banking system. FACT

We have the world's most succesful economy. FACT

Right. It certainly has its' potential problems, one being that only a small percentage of depositors can get their money at one time.

I'm still waiting however, for a question I asked months ago to be answered.

The question is: Given that we have a fractional reserve banking system, and it has flaws, what better system could we be using and how do we get there from here?

As the old adage goes, don't complain about something if you don't have a better solution.

-- Craig (craig@ccinet.ab.ca), February 09, 1999.

Reporter commented:

"Can anyone refute ths statement from the above article?: "If as many as 1.32% of bank depositors take their advice and withdraw all their money, the banks will close their doors."

Is it really that bad? "

You probably mean if more than 1.32% of deposits are withdrawn rather than all the money of 1.32% of the total depositers. I don't know Reporter, but it sure would be nice if we could get a qualified representative from the banking industry or Federal Reserve to give their views.

Ray

-- Ray (ray@totacc.com), February 09, 1999.

Craig commented:

"As the old adage goes, don't complain about something if you don't have a better solution."

Well Craig we had a better solution when we were on the gold standard. Unfortunately the politicians could not rev up the credit bubble fast enough with this restraint so naturally they did away with the it. Now the piper must be paid.

Ray

-- Ray (ray@totacc.com), February 09, 1999.

Craig:

I just want to know how much cash I can take out without crashing the system... Do you know Craig?

-- Reporter (foo@foo.bar), February 09, 1999.

foofoo: Maybe 1.33% ? :-)
You can take out as much as you can get, now or later (later will probably be less).

-- a (A@AisA.com), February 09, 1999.

>>We have the world's most succesful economy. FACT

Only if you consider the irreparable damage to the environment, and the depletion of non-renewable resources as "externalities." We're so successful we've killed off thousands of unique species (some of them without knowing their value to humanity, which could have been perpetual - calculate that) and we're melting the poles. Animals on the tip of South America are wandering around blind with cataracts because of the UV light. We've increased the natural carrying capacity of the planet by a factor of ten with NON-SUSTAINABLE TECHNOLOGY. But that doesn't have anything to do with the economy, does it? Growth! Unlimited growth! Ahhh, the sweet smell of success! Or did I just foul my nest again...?

E.

-- E. Coli (nunayo@beeswax.com), February 09, 1999.

"Can anyone refute ths statement from the above article?: "If as many as 1.32% of bank depositors take their advice and withdraw all their money, the banks will close their doors." Is it really that bad?

-- Reporter "

Wouldn't this depend on which 1.32% withdrew their money? There is a tremendous concentration of wealth these days, and having the top 1% withdraw their money is very different from a "random sample". Probably a more reliable number is that banks are required to keep up to 10% in reserve, although some people indicate that in practice the reserve gets down to 4%.

"As the old adage goes, don't complain about something if you don't have a better solution.

-- Craig" Many people do speak of something we prefer: currency based in tangeble assets. The Fractional Reserve & fiat currencies suffer from periodic "bubble-bursting". This is a problem with "real" money too, but not as bad. Fractional Reserve fans don't consider this a viable option, though, because people would have to live more humbly.

-- Anonymous99 (Anonymous99@Anonymous.com), February 09, 1999.

Italics off

-- Anonymous99 (Anonymous99@Anonymous.com), February 09, 1999.

yes...the fractionated banking system is quite real. It is a way to increase the money supply...there are three levels of money..M1, M2 and M3 Now one of them...real money, is M1..I think..anyway...the fed creates money by lending it to the banks...the banks lend it to you and I. real savings from us is used by the banks...they can lend it out up to 12 times...something like that...because on paper they are supposed to be getting it back... and one other thin...please don't forget about debt... ...most people have no real net worth... but will there, in the final analysis be a run on the banks? absopositivelutly...there will. will it be bad? how can it NOT be bad?..... one more thing to consider... 5.6 trillion dollar government debt...translates into.....no way to build things back....

-- Rick Shade (Rickoshade@aol.com), February 09, 1999.

I recommend sufficient withdrawal to avoid painful withdrawal before banks impose severe withdrawal limitations. Just my 1.32% worth. :)

-- dinosaur (dinosaur@williams-net.com), February 09, 1999.

If everyone thinks their cash is going to be worthless, why would you bother to run to be bank to take it out? If you run to the gold exchange to buy up gold and silver, what are you going to spend it on? What will the basic value of gold and silver be equated to? Now that you are gold rich, but survival equpment poor, how much will you give me for a loaf of bread or a bag of flour? Running low on fuel for your generator or vehicle? The price will be $70.00 a gallon. No gold or silver accepted, only durable consumable goods in exchange.

-- barteronly (barteronly@barter.com), February 10, 1999.

A bank run and a stock market crash will leave many a wealthy person penniless. Wealth will then be calculated into what one has to survive on, that is to say, food, water, durable goods, and shelter.

-- Out2Servive (Out2Survive@free.com), February 10, 1999.

Craig: you stated that you had asked a question and continue to ask, if our fractional reserve system is so flawed, what should we replace it with, what is better? You stated that noone dared to answer you. Well, at risk of many flames, etc. i think i could answer, as long as we realize that this is mostly a theoretical discussion. But, i think, why replace it with any monetary system at all? I know the arguments that it is simpler to motivate externally, it is more efficient, etc. Most who talk about what would we do without our banking system, talk only of replacements-gold, barter, etc. Why replace it with any system that inherently carries with it the flaws of dependence, greed, poverty vs. wealth, etc. I really cannot explain what i am talking about, but if you have the interest to explore various topics for purely the interest involved in finding out what it is about, i will give you a link that can explain it better than i. www.anarchy.org, click on the library and scroll down to everything you ever wanted to know... However, for any alphabet operatives perusing this group, i add this disclaimer, i donot now, nor have i ever supported the overthrow of the united states of america, this is provided purely for entertainment purposes.

I don't necessarily believe everything they say is practical at this time, though i do think that it might be something more people ought to at least think about. After all, it WOULD make the discussion about the federal reserve bank, irs, collapse of the monetary system, fiat money, etc. almost irrelevant wouldn't it?

-- Damian Solorzano (oggy1@webtv.net), February 10, 1999.