I'm not an economist either, but I don't think you have your facts straight. Fractional reserve banking doesn't mean I deposit $1000 and the bank loans out a percentage of that deposit. It means that the bank loans significantly MORE than my deposit. Commercial banks extend credit that EXCEEDS their reserves, and that's where extra money enters the system. EDIT: It seems like I didn't have my facts straight!
I'm no expert (EDIT: demonstrably), but I did happen to be reading a book by Adair Turner about this today. These things aren't secrets, there are books about them all over the place!
Who's running the show? No one, we are adrift on a vast ocean. That's partly why government debt exists - governments do not have a free hand to do whatever they want (except in conspiracy theories).
I'm no expert (EDIT: demonstrably), but I did happen to be reading a book by Adair Turner about this today. These things aren't secrets, there are books about them all over the place!
Quote from: monkey424 on Sat 07/05/2016 14:45:18One big reason, which you mentioned, is that Governments/Central Banks printing money can lead to disastrous hyperinflation. Look at Zimbabwe or Weimar Germany.
If the US central bank is controlled by the government, then why isn't the money held in surplus used immediately to service the government debt?
Quote from: monkey424 on Sat 07/05/2016 14:45:18I don't know about the US, but in the UK the Central Bank is largely independent and mainly responsible for making adjustments to the wider economy by setting interest rates. The debt is there because governments borrow, for instance by selling government bonds, which are treated as 'risk-free' investments because the government is very unlikely to default. Government debt is particularly troublesome now (post-2008) because (according to a graph I saw in that book) the enormous private-sector debt built up before the crash has effectively been shifted onto government in order to get the economy moving again.
More pertinently, why is the debt there in the first place? Again, if the central bank is controlled by the government, why does the government effectively pay interest to itself and perpetuate the debt? Who's running the show?
Who's running the show? No one, we are adrift on a vast ocean. That's partly why government debt exists - governments do not have a free hand to do whatever they want (except in conspiracy theories).
Quote from: monkey424 on Sat 07/05/2016 14:45:18Because the money is created AS credit. Because debts and debt derivatives are valuable in modern, complex financial markets. A commercial bank can make a loan, and then the debt itself can be sold, sliced, repackaged and bet against. It possible for this liquidity to benefit the real economy by (for instance) making it easier to invest in new businesses. It's also possible for banks and other financial organisations to make (and lose) a lot of money trading derivatives back and forth without adding any value to the economy as a whole. It's also possible that this could crash economies across the western world (See 2008).
If most of the money across the world is digital (and costs next to nothing to create) then why is there this disproportionate debt attached to the money in its creation?