Why I think the current banking system is a failure. I'll keep it short. The word default would not exist if it did work. The term in itself is evidence of the exisiting fiancial failure. Default = failure.
Banking systems is US and EUR are great success They got the government and the central banks printing trillions and giving it to them Scott free! Doesn't get any better than that!
Didn't it all start when the goldsmiths started issuing paper and figured out they could issue more paper than they actually held in gold. Their worst fear was always that too many people would try to withdraw their gold at once therefor causing a default. Really not much different than todays banking con is it? Now days they just use bigger words and more complex ideas.
the USA and the Federal reserve is a model most emerging economies envy and are striving for. Just look at Europe, with a strong Federal Reserve they wouldn't be in the shape they are in now. Your idea to eliminate risk from lending is quite naive. There can be no lending without the risk of default. didn't they teach you kids anything? Risk=Reward that's the first thing they teach you once you figure that out you can open a lemonade stand (if your Dad can buy off the cops)
Isn't it the Fed's job to reduce the risk? If so that is another reason why the system fails. You also put the reward purely in the realms of the borrower. They might personally do well from the deal but dose society as a whole do well out of the risk reward concept? The current situation would suggest not.
well, at one time, the Catholic Church prohibited usary. If you got caught doing it you could go to hell. However, if you were Jewish, you were exempt. So if you were Catholic, and wanted to wage war on your Catholic brother, but you needed to borrow money to wage the war, you could simply go to your local jew (Rothschild) and he would arrange the loan with virtually no risk of going to hell since that is where he was already going because he was Jewish (at a small cost of course, after all, he was giving up eternal salvation, and that should at least be worth something.)