Posted 10/19/2011 5:49 pm
Yes, this is an interesting twist in banking. I hope that they can make this work. One way to streamline it might be to issue bank type credit cards for allocated accounts that contain PMs. One could have a silver, gold, or platinum type card that could be used at any merchant now set up to handle VISA or MC charges. When a charge comes in, the appropriate number of grams of metal are sold at the current spot price to settle the debt. Since Mr. Sprott is already in the PM trading business, this would seem a reasonable way to proceed, so long as it does not run afoul of the national banking regs.
Something else mentioned in passing but not emphasized was their rejection of the fractional reserve banking model. This is HUGE, IMO, but is only mentioned as a rejection of the "old model of banking" wherein a bank can loan out much more money than they actually have. I have been wondering when someone would start a bank that was not leveraged and it looks very much like this could be it.
Banking is inherently a VERY conservative business. As long as bankers adhere to a conservative business philosophy, they do well and so does the economy. When they get impatient, however, they tend to become less and less conservative until their "new" and temporarily profitable banking models blow up in their faces. We saw that with the S&L mess back in 1986-7 and again in the 2008-9 banking "crisis". A great deal of these so-called crises seems to be self-inflicted financial wounds born of unfettered greed or incompetent management. I absolutely reject the notion of rescuing or bailing out any business that is poorly run but I do have sympathy for those who invest in such entities in various ways. These businesses should be allowed to go bankrupt. If there is any bailing out to be done, then let it be of the victims of these banksters and not to the banks themselves.
Something else mentioned in passing but not emphasized was their rejection of the fractional reserve banking model. This is HUGE, IMO, but is only mentioned as a rejection of the "old model of banking" wherein a bank can loan out much more money than they actually have. I have been wondering when someone would start a bank that was not leveraged and it looks very much like this could be it.
Banking is inherently a VERY conservative business. As long as bankers adhere to a conservative business philosophy, they do well and so does the economy. When they get impatient, however, they tend to become less and less conservative until their "new" and temporarily profitable banking models blow up in their faces. We saw that with the S&L mess back in 1986-7 and again in the 2008-9 banking "crisis". A great deal of these so-called crises seems to be self-inflicted financial wounds born of unfettered greed or incompetent management. I absolutely reject the notion of rescuing or bailing out any business that is poorly run but I do have sympathy for those who invest in such entities in various ways. These businesses should be allowed to go bankrupt. If there is any bailing out to be done, then let it be of the victims of these banksters and not to the banks themselves.
