15min of Richard Werner on Money and Credit
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* banks do not secure your deposits. They claim it as an asset and give you a promissory note.
* banks use your deposits to buy assets that generate money.
* this increases the price of assets.
* banks issue credit when they give out loans.
* consumer credit creates inflation without growth.
* financial credit is used to buy assets. This creates bubbles as it does not create growth but the price of assets increase.
* business credit creates growth with no inflation, even if the economy is at full employment. That is, the increase in wages does not cause inflation as it corresponds with increased economic growth.
* OBVIOUSLY countries should ONLY issue credit for businesses trying to grow, not consumer credit or financial credit.
* central banks / regulators are not telling the banks to only issue business credit. Hence, inflation and bubbles.
* the ussr did not allow banks to issue any credit. This doesn't work. China changed to allow it, and it did work.
* the UK has only 5 banks that matter. This fails. 90% is for financial credit.
* the EU centralized credit creation, and got bubbles.
* Japan did the same. They are trying hard not to pop the bubble.
* decentralized credit creation seems better. Germany and China are examples. They tend to issue business credit more often than consumer or financial credit. Small banks lend to small businesses.
* centralized banking systems want to further centralize banking in light of this evidence. They further want to restrict freedom.
Proposal:
* decentralized money creation by small, local, nonprofit banks issuing credit.
* get rid of "too big to fail" banks
* deprioritize financial and consumer credit.