Does fractional reserve banking lead to a cycle of perpetual debt?

Actually I think that it is true to some extent. We have had arguments here at EvC before about this. The Giant Pool Of Money I basically argued that the emerging Third World is grabbing the "share" of the buying power that was always a birthright of the United States. Jar saw no problem with that, but to me it is a war issue.Over the years I have argued in favor of Gold and Silver but was always shot down.These investments are no guarantee of future security--what good does it do in a depression to be the only guy on the block with gold stashed away when everybody else has guns? They are useful in a crash, however, as counter-cyclical investments. They will hold their value in the event of a major correction.

I never said i wanted to attack anyone. What I fear, however, is that the leveling of the playing field will mean a drastic decline in the standard of living of many middle class older Americans who once survived on social security and twenty thousand dollars stashed...whereas now it seems less and less probable. I blame the wealthy. They have no problem with everyone in the working class owing them money forever. It is a steady source of income for them. I don't blame the global poor for wanting to move up. It is good that the overall global standard of living is increasing---but realistically I don't see it working so far that everyone on earth earns a livable wage.As for God, I believe that prayer and humility will help keep people such as myself from wanting a war. Perhaps this is how the future is meant to be.

If there were food shortages, the gold wouldn't work very well. Hopefully there would still be sardines to catch.Assuming the water didn't turn to blood or some other such horrible apocalyptic scenario.The bicycle would be great. Hopefully no one would try and knock me off of it and steal it. Much of the question of survival in such a scenario hinges on the inner Spirit of the people. Would they want to help each other or would they want to tear each other apart?

The dollar's 70-year dominance is coming to an end
Within a decade, greenback's could be replaced as the world's reserve currencyThis will mean major problems with our economy and rate of inflation. I dont see how so many people overlook this! Let there be no illusions! Once the dollar ceases to be King, we Americans will pay a lot more!

quote:

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A reserve currency (or anchor currency) is a currency that is held in significant quantities by governments and institutions as part of their foreign exchange reserves. The reserve currency is commonly used in international transactions and often considered a hard currency or safe-haven currency.

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So whats your point?

I mean what is your point aside from asking me if I understood the term? I had to look it up---I have always been told that it will be a crises, (If we are no longer the dominant reserve currency) and what I have read seems to confirm that " People who live in a country that issues a reserve currency can purchase imports and borrow across borders more cheaply than people in other nations because they don't need to exchange their currency to do so." also that " the world's need for dollars has allowed the United States government as well as Americans to borrow at lower costs, granting them an advantage in excess of $100 billion per year.[2] However, the U.S. dollar's status as a reserve currency, by increasing in value, hurts U.S. exporters.[3]"The article mentions that there are several "reserve" currencies, though the dollar makes up over 2/3 of the mix.
The article also says Finally, I don't know why you always make me look stuff up! Your socratic dialogue style of asking questions can at times be annoying!add by edit: And this is our right! If we dont export inflation it will become our exclusive problem. Edited by Phat, : No reason given.

All I'm saying is that the reserve currency status is one of the last effects of the aberration period after WWII. I dont deny that it has been advantageous. What I fear is that once we step off of that artificial construct it will mean a major decrease in the standard of living and buying power for many middle class/working class Americans. Im all for doing it gradually over several decades.

How far would you go in not caring, however? What if more than a few Westerners had their retirement savings cut in half? What if the effect was not a latte but a LOT,eh? Like say twenty five-fifty thousand dollars per household?

Im still questioning whether or not there is some way to avoid the pain. I am well aware that I need to tough it out. I am also planning for the inevitable. He will have to do it for us eventually. We are charged to try, but we will fail. Your pride will have to be laid at His feet.And what does all of this have to do with fractional reserve banking? The fact that money too will fail at some future point.

I believe so, yes.

I suppose the only counter-argument I can come up with--and not that I agree with it--is that how can we change the banking system? By necessity it operates the way it does...it has to make money. Helping the third world is quite simply not profitable. Profit drives the machine.

The only problem I see here is that the pay rate for the First World worker sent to the Third World would likely not be enough to cover First World expenses. People may gladly work for 1x per hour in the third world whereas in the first world it takes 15x an hour to maintain minimum cost of living.

Your idea sounds plausible. Isn't it true though that now as it stands only the Federal Reserve is authorized to create money? Perhaps a question: How Easy Would It Be To Overhaul The Federal Reserve?

You replied to me by mistake, but I will comment. Or why not blame human nature? Greed?We have talked about changing the Federal Reserve.They dont want politics involved, and seem to think the fed as it now stands is not political ...apart from being loyal to the banks and bankers themselves. Seems the Fed is nearly sacrosanct.

Im not sure I understand this. Is our collective debt bigger than the value we have generated throughout time? In other words, do we owe each other more than we've given each other?