
Switzerland: First country to have national referendum about Sovereign Money - mathiasrw
https://www.vollgeld-initiative.ch/english/
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perilunar
Does "Banks won’t be able to create money for themselves any more" mean the
same as ending fractional reserve banking, or am I misunderstanding things?

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hn0
There is no such thing as “fractional reserve banking”, the textbook models on
banking taught in schools across the globe are _dead wrong_.

See:

Richard A. Werner, A lost century in economics: Three theories of banking and
the conclusive evidence
[https://www.sciencedirect.com/science/article/pii/S105752191...](https://www.sciencedirect.com/science/article/pii/S1057521915001477)

Richard A. Werner, Can banks individually create money out of nothing? — The
theories and the empirical evidence
[https://www.sciencedirect.com/science/article/pii/S105752191...](https://www.sciencedirect.com/science/article/pii/S1057521915001477)

Zoltan Jakab and Michael Kumhof, Banks are not intermediaries of loanable
funds - and why this matters [https://www.bankofengland.co.uk/working-
paper/2015/banks-are...](https://www.bankofengland.co.uk/working-
paper/2015/banks-are-not-intermediaries-of-loanable-funds-and-why-this-
matters#)

German Bundesbank, Die Rolle von Banken, Nichtbanken und Zentralbank im
Geldschöpfungsprozess
[https://www.bundesbank.de/Redaktion/DE/Downloads/Veroeffentl...](https://www.bundesbank.de/Redaktion/DE/Downloads/Veroeffentlichungen/Monatsberichtsaufsaetze/2017/2017_04_geldschoepfungsprozess.pdf)

Piti Disyatat, The bank lending channel revisited
[https://www.bis.org/publ/work297.pdf](https://www.bis.org/publ/work297.pdf)

Beardsley Ruml, Taxes For Revenue Are Obsolete
[https://m.huffpost.com/us/entry/542134](https://m.huffpost.com/us/entry/542134)

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perilunar
Thanks for the references. I'll read them when I get time.

On a side note, it seems bizarre to me (as a layman) that economists still
debate the the nature of banks and the creation of money, given they are the
foundation of the _economy_. Kind of like physicists not understanding
thermodynamics, or something.

~~~
hn0
Economists generally follow the idea that all trade is barter trade and that
money is just an indirection layered on top the “real” economy, which
alleviates some of the issues with bartering goods.

That’s all fine, but historians and anthropologists have found zero edvidence
that the monetary system developed out of barter.

Rather, banking seems to have co-evolved alongside interpersonal informal
credit systems (contract based, not spot-trade) and religious practices in
early agricultural city states. The first written records are bookkeeping
documents of grain supplies and outstanding debts between citizens. In time,
people started trading these documents against each other.

E.g. If you need to pay Garry for fixing your plumbing, but Sally still needs
to pay you for the 8 eggs she borrowed, you can just tell her to pay it to
Garry instead and you’l be even.

What coins are in this model are abstract tokens representing the ledgers
inside the third party’s accounting table which denote the debts and credits
people hold against eachother. In other words, it’s all about accounting.
Economics courses do not include accounting, generally.

The real issue economists fail to “get” it is that it invalidates many of the
axioms on which they construct their theory. Economics is still very much a
deductive science. Because there is such a large hivemind around these
fundamental founding myths the field has been able to get by with simply
ignoring outside criticisms, this includes a number of “own goals”.

If you have some econ 101 knowledge you might want to look up the “anything
goes” theorem. Many nobel prizes can be thrown out of the window.

I found Steve Keen’s “Debunking Economics” and Phillip Mirowski’s “More Heat
Than Light” to be very revealing.

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Patient0
Here's a good explanation of what the sovereign money initiative is (and why
it is probably a bad idea) from the chairman of the Swiss central bank:
[https://snb.ch/en/mmr/speeches/id/ref_20180116_tjn](https://snb.ch/en/mmr/speeches/id/ref_20180116_tjn)

~~~
cyann
And an FAQ/rebuttal: [https://www.vollgeld-
initiative.ch/fa/img/English/Clarificat...](https://www.vollgeld-
initiative.ch/fa/img/English/Clarifications_to_SNBs_FAQ_on_Sovereign_Money.pdf)

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garmaine
For a website that proclaims the importance of getting the word out, I didn’t
see any description of what this “sovereign money” proposal actually is. What
is being proposed and why?

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lucozade
There's a link on that site [0]. Essentially they want just the central bank
to be the source of money supply.

[0] [https://www.vollgeld-
initiative.ch/fa/img/English/2015_10_22...](https://www.vollgeld-
initiative.ch/fa/img/English/2015_10_22_Swiss_Sovereign_Money_Initiative_-
_five_questions_with_answers.pdf)

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nickik
As somebody from Switzerland I think this is insane. I will vote against it.

Honestly, most people who want this dont have a clue about monetary policy.

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another-one-off
I'd liken it to Repblicanism vs Monarchism. The differences between the
positions are pretty extreme; to the point where it is hard for normal people
to educate themselves.

It looks like something I'd be in favour of. Not because I don't understand
monetary policy but because I disagree with its goals, methods and outcomes.

~~~
akhatri_aus
Repblicanism vs Monarchism seems a terrible comparison.

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teilo
I don't see what this will actually change. If the SNB is the sole provider of
money, whether electronic or currency, they will inevitably become the sole
provider of loans, with the banks serving as brokers for those loans. Net zero
game.

~~~
jabgrabdthrow
Personally I am peeved that I can’t individually make fractional reserve loans
in genuine fungible currency (costs ~$30m to be a bank), so I’d like to choose
a zero-sum point where the rich don’t get richer by default

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newscracker
I have to admit to not understanding this, though I think I know somewhat well
about money. Isn't this "sovereign money" the way it is in other countries,
where banks either have money deposited by some customers and/or borrowings
from a central (government controlled) bank or reserve that controls the total
amount of the currency/money?

If banks create money on their own for lending, wouldn't that cause an
uncontrollable chain reaction on the valuation of the currency, on the ability
to control inflation (to some extent) by policy measures like interest rates
and other things?

Any explanations, or better, links to articles would be helpful.

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admiralg
(please don't hesitate to correct me if I'm wrong) Say there are 3 customers
at a single bank.

Customer 1 = Investor, has 100 cash and deposits it into a bank account

Customer 2 = Borrower, borrows 100 from the bank

Customer 3 = Restaurant, provides a service for Borrower. Borrower pays a 100,
and Restaurant deposits it to it's bank account.

This is how the "sovereign money" travels: Investor -> Borrower -> Restaurant

But the customers see the following account balances

Investor : 100

Borrower : -100 (owes the bank 100)

Restaurant : 100

If now Investor and Restaurant both want to withdraw their money the Bank
would be in trouble. The bank only has 100 "sovereign money" on their books.
Investor and Restaurant won't care who owes the bank, they want their money.

But the solution for this would be easy, Investor must be given the choice if
he wants to allow/disallow the bank to loan out his deposit. Similarly how it
works with long positions at a brokerage firm.

~~~
0x4f3759df
You left out the reserve requirements, wiki has a nice chart on how reserves
affect expansion. [https://en.wikipedia.org/wiki/File:Fractional-
reserve_bankin...](https://en.wikipedia.org/wiki/File:Fractional-
reserve_banking_with_varying_reserve_requirements.gif)

I've heard people say that the fractional reserve system causes the boom and
bust cycle, because when banks lend money, the create the principal not the
interest which leads to a shortfall at some point. Not sure if this is right
tho.

~~~
mkstowegnv
Money has a very long history and discussions about money are deeply entangled
in bitter and fanatical battles between political/ religious/ philosophical
viewpoints. Many of those viewpoints ignore the counterintuitive ways that
money and banking actually work. For the most part, bankers and economists
have a vested interest in keeping as many outsiders as possible from
understanding how it really works.

For all its flaws and strange history, the first Money as Debt video [1] still
makes the most sense to me and I have yet to find an economist at a dinner
party who refutes the disturbing conclusion that modern monetary policy is
inherently unstable and depends on continuous economic growth. I welcome any
links to any counterarguments that are not a confusing morass of obfuscating
terminology. Show me a crystal clear model, or a common sense presentation
like this video, that argues that the current monetary system is not a Ponzi
scheme.

1
[https://www.youtube.com/watch?v=4AC6RSau7r8](https://www.youtube.com/watch?v=4AC6RSau7r8)

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jacknews
Wow, I really hope they have success. Private money creation through
fractional reserve is a real con, and completely unnecessary with modern
communications.

