Some shit I found on Slashdot, in case anyone happens to like watching hour-long videos: (Feel free to stop watching when each video starts suggesting possible solutions, as that's where the fun ends.)
The first is an interesting-enough explanation of how fractional reserve banking works, which does well with a nice story of a goldsmith deciding to scam everyone. The second really isn't worth watching unless you watch the first, since it doesn't try very hard to make what it says believable, and so if you don't already believe it, it likely isn't going to convince you of anything.
However, the second video is still interesting because it proposes an answer to a question I've had for some time: How the hell can the economy just stop working? People need stuff, people can work to create stuff, and as long as people can meet each other's needs, there's no logical reason why an economy should fail. That is, until you realize the whole damn thing is based on debt rather than wealth, as the first video explains.
If the economy were based on wealth, then even with a completely broken economy, some farmer could still use some of his wealth (what land and seeds and machinery he has) to grow some food. Other people could use their wealth (materials they have on hand) to make clothing or build houses. Then everyone could trade what they have for what they need. Thus, economy failure should be impossible.
However, since it's all based on debt, a farmer can't just grow some food. He has to make mortgage payments on his land, buy seed, hire workers, pay the people who own the harvesting equipment to harvest it, etc. Similarly, someone can't just make clothing. They have no materials on hand. We do everything based on debt, so when someone wants to make more clothes, they borrow some money to buy fabric, pay workers, etc., then repay the loan with their profits. So if the economy dies and money stops flowing, no one can do anything, even though we all know that if we just kept doing what we were doing the day before, life would go on like it always had, just without the money.
The first video really makes a lot of sense out of the otherwise confusing numbers on this site: http://www.usdebtclock.org/ It currently indicates $47,702 of debt per citizen. That includes not just national debt, but all debt, including mortgages, business loans, etc.
When I first saw that number a few months ago I wondered how the hell it was even possible. Who is loaning all of that cash? Those videos explain it rather well. No one is loaning that cash because the cash doesn't exist. Our whole damn economy is based on everyone being in debt.
I always thought those people wanting to return to using gold as money were just a bit crazy. After all, as long as people accept money for stuff, it works just as well. However, when you consider that banks are allowed to create money, using something else for money, something that people can't just create more of, does seem rather attractive. ...but it ignores the main problem. Sure, creating money whenever someone wants a loan is a problem, but even without doing that, loans are still a problem.
I've said before that I think loans are inherently evil, and I think those videos, the first in particular, show a side of that evil that even I hadn't really considered before. I've always been concerned with the aspect that loans eliminate the hard wall that people run up against when they run out of money, forcing them to realize that they need to start living differently, and also that loans make it easier for people to pay a lot of money for things, reducing the free-market force that keeps prices low. The videos show that loans as they exist today aren't even made of real money, but instead are just the result of the government authorizing banks to create money whenever someone asks for it, then collect interest on the money loaned, even though that money didn't really exist before it was borrowed and so the bank is receiving interest despite not really having to part with very much money at all. The bank may only get 10% interest, but since the bank is only required to have 10% of the money it loans to you, it's technically getting 100% interest on the money it has invested in making that loan to you. ...and, even if the banks weren't allowed to do that, there's still the problem of interest which the videos do well at showing to be a bad idea, yet in the end, fail to condemn as something that should be illegal.
However, nevermind people getting rich for illegitimate reasons. The big problem is the economy grinding to a halt, and the source of that isn't people getting rich by illegitimate reasons, it's people having no resources on hand to do anything because loans have allowed them to reduce their capital to negative values, and so if credit dries up, no one can do anything. Indeed, loans may well have required this, since any business that doesn't choose to go this route will be at a disadvantage to those that do take advantage of loans.
Let's just make interest illegal. Then people will stop making loans except in the most honest "I just want to help out a friend" cases, people will then be forced to maintain positive amounts of capital if they want to stay in business, and then even if all of the money in the world disappears overnight, people will still be able to do things and so the economy will be able to start itself up again the next day.