Banker’s Win

Sound Money is Defeated!

Swiss voters reject campaign to radically alter banking system

ZURICH (Reuters) - A radical plan to transform Switzerland’s financial landscape by barring commercial banks from electronically creating money when they lend was resoundingly rejected by Swiss voters on Sunday.

Contrary to common belief, most money in the world is not produced by central banks but is instead created electronically by commercial lenders when they lend beyond the deposits they hold for savers.

This arrangement, underpinned by the belief that most debts will be repaid, has been a cornerstone of the global capitalist system but opponents say it is unstable because the new money created could exceed the rate of economic growth, which could lead to inflationary asset bubbles.

Support for reform had grown in the wake of the 2008 economic crisis, with campaigners saying their ideas would make the financial system more secure and protect people’s savings from bank runs.

DYI:  An article of surprising amount of honesty from the main stream press.  Of course it is far easier to be honest now that the Swiss referendum failed to pass.  Allowing commercial banks to loan beyond their deposits is what creates the great booms and subsequent horrific busts along with bank bailouts all paid for by the respective countries tax payer.  The bankers get the thrill [profits] and the tax payers get the bill [losses].  If you or I were bankers would we want to give up this cozy relationship of heads the bankers win and tail’s the tax payers lose?  Obviously not; as I wouldn’t be surprised if there was some ballot box stuffing to make sure it failed miserably.

When confidence in the economy is high and building up to a point of crescendo banks will throw caution to the wind loaning more and more money to less and less qualified customers.  Eventually loaning massive amounts of money to sub prime corporations and individuals and when the economic boom ends the obvious occurs substantial bank losses and in the case of the 2009 downturn colossal debt defaults.  This leveraging up of bank loans beyond their deposits creates the great rises and falls of the underling assets that are purchased with these loans.  This excessive money seeps into the stock and bond markets not just the most obvious direct link to bankers which is real estate.

A sad day in the pursuit of sound money the bedrock of liberty hopefully committed Swiss patriots will continue their efforts.  I wish them well.

 DYI