[e-gold-list] Re: Gary North Response

[unlinQ Marketing]

On Fri, May 30, 2008 at 2:28 AM, Pete Chown <1 at 234.cx> wrote:


> The real problem with fractional-reserve banking is slightly different,
> IMO.  Because of the risk that a bank collapse could spread through the
> system, most countries operate some sort of government guarantee for
> their banks.  This means that the taxpayer has taken on an enormous
> potential liability.  For example, the liquidity provided to Northern
> Rock is around £300 for every UK citizen.  Theoretically it will be paid
> back as the markets stabilise and the Rock is able to sell assets.  In
> practice, who knows.
>
> To protect themselves against this liability, governments regulate banks
> closely.  I'm not sure what else they can do, bearing in mind the size of
> the bill they get when a bank fails.

They can reduce the insurance from 100% to some more reasonable amount
(perhaps 80-90%) that a non-governmental insurer would set as a cap.
In that way depositors would have good reason to treat the banks like
their investors and not ignore the risks.

-- 
unlinQ
Financial Services Marketing Group



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