"issues loans from the savings accounts of members"
This is (kind of) fine, actually. Savings accounts are not available for immediate redemption. It's banks that write loans from *checking* accounts who are engaged in pure fractional-reserve banking.
There *is* a problem with writing loans from savings accounts whose duration exceeds the source funds, but that problem exists for almost all current bank lending. Banks can get funds from relatively short-term bonds, CDs or "overnight" borrowing and turn around and lend that "money" out for many years.
Moreover, the central bank is the "lender of last resort" that exists to bail out the commercial banks when their depositors demand their "money" back. Without that backstop we'd have one financial crash and everyone would figure out to put deposits in solvent banks instead of insolvent ones.
I think the solution is to return to free banking (ie banks are subject to the same regulations and bankruptcy proceedings as anyone else) and return to directors of corporations being liable for the obligations of the corporation to the limit of their personal fortunes.
asourcefamiliarwiththematter / a source familiar with the matter
npub17k…mhcd0
2025-04-03 20:07:51
in reply to nevent1q…ghyv
Author Public Key
npub17k64766yhzvhk2mws356dftl35lnkthjwq34gdz9cs8va3y9aejqwmhcd0Published at
2025-04-03 20:07:51Event JSON
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"content": "\"issues loans from the savings accounts of members\"\n\nThis is (kind of) fine, actually. Savings accounts are not available for immediate redemption. It's banks that write loans from *checking* accounts who are engaged in pure fractional-reserve banking.\n\nThere *is* a problem with writing loans from savings accounts whose duration exceeds the source funds, but that problem exists for almost all current bank lending. Banks can get funds from relatively short-term bonds, CDs or \"overnight\" borrowing and turn around and lend that \"money\" out for many years.\n\nMoreover, the central bank is the \"lender of last resort\" that exists to bail out the commercial banks when their depositors demand their \"money\" back. Without that backstop we'd have one financial crash and everyone would figure out to put deposits in solvent banks instead of insolvent ones.\n\nI think the solution is to return to free banking (ie banks are subject to the same regulations and bankruptcy proceedings as anyone else) and return to directors of corporations being liable for the obligations of the corporation to the limit of their personal fortunes.",
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