Petition on Banking Reform A friend has emailed me with her concerns about making Open Bank Resolution public. That is when the banks demand their customers bail out a failing bank and it is coming to a bank near you soon. See website of Reserve Bank of New Zealand. She said if everyone knew, they would take their money out of the bank and they would collapse. My friend has drafted a great letter to the Dominion Post but has qualms about sending it. Well that is exactly why we have launched a petition asking for a Parliamentary Enquiry into the best ways of making banks stable. You see right now, because banks create loans and control the amount of credit in the economy, only 8% of the deposits now in banks could be redeemed at any time. (That is if everyone went to the bank at the same time for their deposits. What an incredible dilemma. No wonder the Government isn't telling us that as customers we might, after June 30 be required to help bailout a bank. Join our FB page at http://www.facebook.com/pages/Petition-for-a-Parliamentary-Enquiry-into-making-banks-stable/420764948002065 What we are suggesting is that Government takes the recent IMF paper by Jaromir Benes and Michael Kumhof seriously. It is called The Chicago Plan Revisited. It designs a system where banks have 100% backing for deposits, not just 8%. All the good economists who nutted out solutions after the Great Depression seemed to agree this was necessary. Ones like Milton Friedman, Henry Simons, Irving Fisher. So back to the dilemma of to tell or not to tell the public. The banking system is inherently instable because it relies on fractional reserve banking, where the bank creates credit but doesn't have a supply of what the authors call "indestructible money" to back it up with. This used to be gold. But it can be the type of money created by the Reserve Bank, the notes and coins we use. They don't carry debt. Is the current banking system inherently unstable? Yes. According to IMF data, there were 145 banking crises, 208 monetary crashes and 72 sovereign debt crises between 1970 and 2010. This represents a total of 425 systemic crises, an average of more than 10 countries getting into trouble every year. How are we going to reform it if the public doesn't have the knowledge? In countries like Argentina, Greece and Iceland they learn fast after a crisis.