Would you accept 0% interest for 100% security

MarkyMarkD

What a pointless poll, given that you can already invest in National Savings, or Northern Rock, and have your money 100% guaranteed by the government PLUS a decent rate of interest.

And as soon as anyone starts spouting about "fractional reserving", you know they have completely lost the plot.

MrOrchard

player wrote: »

Keeping cash in your house is hardly 100% secure.

I live in a castle. A fireproof one.

1694

Everyone accepts an rate now that is well below real inflation. THE RPI is not an accurate measure of inflation as of course it excludes house prices or shares which are assets that provide a return on investement and tend to apprecaiate (you could also include commercial veichels).

Real inflation is a measure of money being created, so you have too look at the amount of money being create through the fractional reserve system of commercial banks.

By removing saving from many commercial banks and centralising them in one account, would you remove the amount of terms that money can be multiplied by nine?

genny

1694 wrote: »

Banks savings as secure as the confidence in them from saying they are secure.

Many people are withdrawing cash to keep at home. So if you had 60G in wobbly RBS and the govt said you can have the same bank account with them but 100% secure and 0% interest?

No that would be ridiculous, you can apply the same arugment to the government, what if it became unstable, went bankrupt and the country went mad, your savings wouldn't be safe then at 0% or otherwise.

You'd be utterly mad to keep significant savings at home, as per explained.

The government already offer accounts over 4% with 100% protection at NS+I (100% government protected), N+R etc. So I can't see the point.
So if they offer a new account at 0% with the same 100% protection, how many people do you think will chose to save in that one?!?

If you had 60K with RBS and were worried, anyone in their right might would reduce their holding to 50,000 or under to be fully covered by FSCS and still receive interest, and save the rest elsewhere, or just withdraw and split and save with any number of the full £50K protected banks in the UK. Still fully protected, but with interest.

For me it's a complete non-argument.

1694

MarkyMarkD wrote: »

What a pointless poll, given that you can already invest in National Savings, or Northern Rock, and have your money 100% guaranteed by the government PLUS a decent rate of interest.

And as soon as anyone starts spouting about "fractional reserving", you know they have completely lost the plot.

and yet fractional reserve is the foundation of the banks everyone has so much faith in. you invested your money with people you think have lost the plot?

1694

Someone please explain to me how northern rock, or even the governemt holds enough paper and coin to honour all savings in the event of a run.

Let alone everyones deposits upto 50g in every bank. The security is in the claim, not any actual system of security.

1694

MrOrchard wrote: »

I'd accept interest that was at least a little better than Inflation less Tax. I don't see anyone else accepting a lower rate as they'll essentially lose money whilst it was in an account that paid them less than that.

Assume inflation is 5%, and that I pay 20% tax.on my interest earned. How much interest is required just to ensure that my money buys me the same number of Mars bars next year as it did this year?

I have amended the original post to show how the short term attitude might not be so beneficial.

Rafter

There is so much rubbish being banded around about the supposed money creation generated by fractional reserve banking.

Just because the individual balance sheets of banks add up to a huge number, doesn't mean that there is money created from nowhere to lend to actually purchase real things or to somehow magically pay off the government debt.

There also seems to be a huge misunderstanding that somehow wanting to pay 5% for a mortgage at the same time earn 7% on savings is somehow going to lead to secure savings and cover the costs and losses of the banking system.

R.

MrOrchard

You refer to and are named after something 300 years ago, I think, in context, that your view of short term might be warped....

Also that's just your opinion of what Might Happen in the future. Guarantee your 'alternative' will become reality and people mgiht listen.

1694

Rafter wrote: »

There is so much rubbish being banded around about the supposed money creation generated by fractional reserve banking.

Just because the individual balance sheets of banks add up to a huge number, doesn't mean that there is money created from nowhere to lend to actually purchase real things or to somehow magically pay off the government debt.

There also seems to be a huge misunderstanding that somehow wanting to pay 5% for a mortgage at the same time earn 7% on savings is homehow going to lead to secure savings and cover the costs and losses of the banking system.

R.

That is exactly how it happens. Rather than argue with me here, just do a little research.

Start here: http://www.prosperityuk.com/prosperity/prosperity.html

Or even just read this: http://wakeupfromyourslumber.blogspot.com/2005/12/origins-of-fractional-reserve-banking.html