Saturday, 24 September 2011

The crisis has nothing to do with Greece

Even if God himself came down and magically cured the Greece problem then we'd simply be having a Portugal crisis a few months down the line. If it wasn't for Portugal it would be Italy, if it wasn't for Italy it would be Spain. The list goes on and on and ultimately includes the UK and the US.

The problem lies with fractional reserve banking and the ability of banks to create money for non productive purposes like trading shares on margin. In our current fractional reserve monetary system, the idea is that money gets created and destroyed at approximately equal rates. But if there is a lack of enthusiasm for trading on margin then the money supply starts shrinking and share prices fall. The normal trick of lowering interest rates to encourage more trading on margin can not work right now, so we are on a one way ticket to a shrinking money supply and lower share prices and lower house prices. This should bankrupt most banks, but it seems that governments can't bear for this to happen. Instead they will tax the poor and donate that money to the bankers to keep them afloat. At some point the poor will get fed up and take to the streets - the sooner the better I say.

For years I have been telling people that the crash of 2007 was the hors d'oeuvre, you'd better brace yourself for the main course.

Thursday, 22 September 2011

Guest blogging for PositiveMoney

I have started writing guest blog entries for where I can reach a larger audience. PositiveMoney are a group campaigning for debt free money. My latest blog entry is called How fractional reserve banking leads to booms and busts.