The Swiss are getting a bad reputation for starting to have some off-the-chain socialist nut-job groups who obviously do not understand humanity, desire to suppress it and control it, and never bother to investigate an issue before blurting out solutions. The latest proposal is to effectively destroy banking completely assuming that leverage is the problem. They obviously do not understand the difference between a Dark Age and Economic Freedom. They also fail to comprehend the history of banking or even what is really money.
These Socialist-Swiss are trying to move to what they call a Full-Money Initiative with the goal to break the power of the banks and send us all back into the Stone Age.. This new proposal is  the referendum on the money order. In the future, these socialists only want the Swiss central bank be allowed to create money. Commercial banks may grant loans then only if they are backed by 100% sufficient reserves at the central bank. They clearly do not understand even the problem for they think this will suspend the Business Cycle. In their deranged and uneducated minds, they assume that it is the uncontrolled expansion of the money supply that creates financial bubbles. Interest would soar to 20% if not more without any leverage and real estate would collapse for the total value could never exceed the money supply. You could not buy a house on time.
We are plagued by these people who do not understand what is MONEY and they think they are targeting the problem of bubbles. They want “sure money:â€Â They assume that just because whenever a commercial bank makes a loan based on securities and real estate, this is the problem. This is called liquidity and if someone could not borrow against such assets, governments could not sell debt. OOPS! Looks like half-thinking again.
The leverage from banking is a problem when banks are also proprietary trading. The problem that resulted in the original design of the Federal Reserve was rather simple. Banks use demand deposits to lend long-term based upon the model that ins NORMALtimes, at best 10% of the total demand deposit is more than enough for reserves. In other words, not more than 10% of all depositors will withdraw their money under NORMALeconomic conditions. The bank failure (aside from proprietary trading) takes place when some economic event shakes confidence and people then rush to the bank to get their cash placed on demand. The bank is borrowing short-term and lending long-term. This mismatch creates banking failures since they cannot liquidate the assets they lent money on long-term. As they stop lending, assets prices collapse be it stocks or real estate.
