What's wrong with the current banking system?

I agree with your observations about money creation and banks being too big to fail. I will make my suggestion now about how to fix these problems, and then probably withdraw because I can guess from experience where the debate will go from here.
I suggest that the proposals for monetary reform, as set out in the book "Modernising Money" be implemented (or check out the website of Positive Money UK, or its local version, Positive Money NZ). In brief, the State should create all of the NZ Money supply, both currency and the electronic money, free from debt and interest, and the commercial banks must be forbidden from money creation. This will fix virtually all problems.

I totally agree Dennis, and in fact that is the exact thing proposed in Value-based Economy :) Thumbs up!

In general, we just need to get rid of debt-based economy. Keynesian Economics worked for a very short while, and this caused the world to think it was THE economic nirvana. Unfortunately, as @marcwhinery has pointed out, the world did not follow Keynesian Economics correctly, and instead, went into a hyper-credit creation frenzy. Also, it is my observation that Keynesian Economics is based on catering to the negative aspects of human nature, namely putting people into perpetual debt so they will be motivated to work. Personally, I'd like an economics that helps us all work less at the menial tasks, so we can focus more on what makes human beings unique...higher-level endeavours. Of course, those who enjoy working at basic-level jobs would be quite welcome to do so. I just think it would be a huge win for humanity if we could find a way to harness energy and automation in really big ways, and that the economic system didn't discourage such advancement.

I'll be quiet now unless somebody asks me something or comments to me.

Here's a talk I did about what's wrong with the banking system:

https://www.youtube.com/watch?v=xb8Zj-f2o_E&feature=youtu.be

Basically, totally agree with Dennis and Kenneth. We must end debt based money. It will be the end of us. The sooner the majority of people realise this, the less suffering there will be ...

@amandavickers if you're interested, I'd like to show you what I've been working on in developing a replacement economic system. I believe it goes beyond PositiveMoney proposals, allowing us (humanity) to do things that we can only dream about doing now. I'm working on a book called "Societism & Value-based Economy: Unleashing the Potential of Humanity". I'm just throwing this out there because I liked your talk and would enjoy discussing this topic with people like yourself who have a passion for it, as I do.

@kennethkopelson "the world did not follow Keynesian Economics correctly, and instead, went into a hyper-credit creation frenzy. "

And the government now spends lots of money on things of no value, so what would prevent them from inflating the value of things, and over-printing money?

A little fraud on a balance sheet never stopped a politician. How many were pointed out for having lied on their taxes, income declarations, or donations? They don't even get punished for such things anymore.

I have seen Abraham Lincoln quoted as having said something to the effect of "Do not judge a law by the good it may bring, but by the harm it might cause when poorly applied." But I haven't seen that, or anything like that properly attributed.

If everyone were good actors, there are lots of systems better than ours. The "value" in ours is that it is sustainable even when full of bad actors. That resilience is often not there in "new" systems that are designed, rather than the one we use now, that was evolved over many centuries.

Those that think of the new systems often are the worst at breaking them "that not how it works" is the common answer I hear. There are two places for holes in new systems. Unconsidered edge cases, and deliberate manipulation. Most system creators get annoyed at the unconsidered edge cases. They are generally trivial things that would have been "fixed" in implementation. But they get really mad over the systemic perversions.

What would stop the first government after the new system declaring that all MPs get a beach-front mansion for life? The people assigning value would value it highly, but the benefit to the country would be zero. Thousands of other similar things, and the economy would collapse.

Are you really trusting politicians to do the right thing?

@marcwhinery As a highly-experienced software engineer I deal with edge cases all the time, and in fact, focus most of my attention there in order to build a robust system. I fully agree that edge cases are where a system either falls down or not. I am working at providing specific mechanisms to counteract the negative forces you have mentioned. This is still a work in progress, and I am continuing to address new aspects every day, recording the solutions in the book I am writing.

@marcwhinery said "The 'value' in ours is that it is sustainable even when full of bad actors."

I would suggest that our system is NOT at all sustainable, and in fact, the people in our world are only NOW waking up to the fact that they have had VAST quantities of their wealth robbed from under their noses though all manner of corruption at every level.

One major area of financial devastation is the growing upside-down pyramid for ageing populations. Japan is now facing this, and all other developed countries will soon follow in their footsteps:

http://www.ibtimes.com/japans-demographic-doom-214188

Q: "What would stop the first government after the new system declaring that all MPs get a beach-front mansion for life?"

A: No economic system can exist in isolation from a governmental system that goes along with it. That is why I am specifying "Societism" as well as "Value-based Economy". It is the mechanisms of societism that will prevent the scenarios you have mentioned. Our present system has very weak mechanisms to guard against what you have stated, and in our systems politicians DO give themselves all kinds of benefits, and the people just stand by and watch. Care to guess how much the board members of the Federal Reserve benefit in unknown ways?

Q: "The people assigning value would value it highly, but the benefit to the country would be zero. Thousands of other similar things, and the economy would collapse."

A: This statement totally presupposes that there is just a group of folks sitting around assigning value to things in some arbitrary manner. In the very preliminary documents you received, there is little to nothing said about which projects and services will be undertaken, how they are valued, and also how the members of society are able to police what is going on.

Q: "Are you really trusting politicians to do the right thing?"

A: This type of comment is precisely why we tend to get into disagreements. Why couldn't you simply ask "How do you intend on dealing with potential political corruption?" which would be a lot less loaded, assumptive, and accusatory? It now forces me to counter your loaded question, instead of simply answering a non-loaded question. Quite simply, I don't trust politicians at all, and that is why everything I've ever proposed has mechanisms for monitoring, remedy and redress.

@amandavickers I was thinking more about discussing the economic proposals, rather than the currency proposals. There are some things about the PositiveMoney economic proposals that I'm unsure about, and would like to work the ideas through with someone who has studied them at length.

@marcwhinery asked:

Q: "And the government now spends lots of money on things of no value, so what would prevent them from inflating the value of things, and over-printing money?"

A: Value is not something that the government decides. As I said earlier, all value is decided by both buyer and seller of a transaction. Remember that the "value" we are talking about here is NOT the long-term value, but rather the "Transaction Value" or "Exchange Value". I could have a little toy from my childhood that I value at $10,000 simply because I would not want to sell it, but will take that extreme amount if somebody offered it. It is unlikely anybody will, unless I became very famous, and then the toy became that valuable to others. Normally, a toy like that would only be worth $10 or so to others, so no trade would happen, and no value could be assigned.

So, to determine what street sweeping is worth, the government offers $25/hour let's say, believing that to be fair. If the public thinks that is too little, nobody will apply. If they think it is too much, too many people will apply. So, we use the principles of market price setting to determine the societal value. So, what about government workers offering to pay an exorbitant amount for some materials to build a bridge or building? When those materials are purchased, the money is created by the mint and transferred to the seller's Asset Bank account. One of the features of the mint is that all transactions can be viewed and audited by the public. This is because the mint only creates money for societal value, so the society has the right to see where the money is spent.

Another important feature of the money creation process is that all newly proposed projects and services are put onto a website where they are voted on by the members of society. @marcwhinery I'm surprised that you seem to have forgotten our discussion at your house. You are the one who actually suggested the mechanism where the people use a type of "predictive success", which would then determine what projects get done, and in what priority. Why have you forgotten all that, and talk as if none of that had ever been addressed with you? This is what makes me question the honesty of our discussions, because when Ryan and I were at your home, you were positive, and full of ideas in how to make a new system work. Then, after that, you are full of negativity, and seem to have developed amnesia in regard to all we discussed in person. Why is this?

Hi @kennethkopelson. You did say you want to "replace the economic system and go beyond what Positive Money proposes". Whereas I am representing only a Positive Money solution. However, if you are wanting to question what Positive Money proposes then fire away. But realise, Positive Money does not advocate any economic proposals beyond fixing a broken monetary system.