Rabu, 16 Mei 2012

Deflation oriented Bank new procedure v.05

To make the deflation oriented bank at least plausible to be implemented, people could start by implementing these policies:

1. Still give people interests for deposits
2. Give people the option to sign a petition that says they would not withdrew their money while its being used in lending, and the bank has no other alternative to replace the amount.

Now people who agreed to this policy would be given extra interests rate but not much, like 0.3%, and people who disagreed got lower interest rates by the same margin.

People whose money ended up being used, and therefore became binded by the contract, got an increase of interest rates by 1%.
And since the risk of default was a bit lower, the loan interest rates could also be lowered by 0.8%

Now throughout time hopefully this method gets more and more popular. So the true spirit of the philosophy could be implemented. Those that don't put their money at risk would get even less interest, Those who are in the que would get slightly higher interest. And those who got themselves binded ended up deserving for 2% higher interests, like 7.5 to 8%.


This procedure could have a new advantage: People could get high interest rates without committing their money to 6, 12, even yearly periods like the way it is now. If the bank was rich, had many people queing for lending their money. Binders could withdrew their money anytime and the bank could just bind another person from the que list.
No obligation to wait, but in exchange the risk that the whole bank might default and you ended up giving away all of those money legally.

The role of central bank in this system would also change, the central bank now acts as a mediator. Some banks might experience low demands of borrowing, some high, the central bank borrowed with special rates from the banks that had a lot of reserves of committments and transferred it to the banks that needed more investors.

Update: Now I think comitters shouldn't be given high interests at all. This will just lead to similar banking system than before. I don't want that, so, comitters could be rewarded for their comittments, but only as much as marketing expenses, or, very little interests.
The nice way of making money out of money is to work the money, not piling credits over credits, it's just too dangerous and unethical. People should always be able to withdrew their money without feeling guilty.