Obama Admin. Favors Global Deal To Increase Bank Capital

From Link

Capital is the body fat of banking: too much is debilitating, too little is fatal. During the financial crisis, as large banks burned through their capital reserves, governments were forced to add padding at public expense.

Now one of the most consequential decisions about new restraints on the banking industry — how much more capital banks should hold in their rainy day reserves — is being decided not on Capitol Hill but far from Washington, by a committee based in Basel, Switzerland, The New York Times’s Binyamin Appelbaum reports.

The Obama administration is pursuing an international agreement to make banks hold significantly larger reserves, which it regards as essential to increase the stability of the global financial system. It wants to complete the negotiations, which are being coordinated by the Basel Committee on Banking Supervision, by the end of the year.

The world’s largest banks have responded with consternation, arguing that the proposed standards would tie up too much money that otherwise could be used for lending, a loss that would curtail economic growth.

The debate between regulators and banks is about the proper balance of growth and safety, but the implications are much broader. In fixing reserve requirements, governments are deciding how much horsepower belongs under the hood of the global economy.

Admittedly, I know little of economics nor what is being said between the lines here. Is the request being made for the availability/printing of more money? If so, is this not the engine of inflation?

Seems to me this is just another excuse to fire up the printing presses on a global scale.

You can not create capital out of thin air, its just paper. As more and more useless paper gets printed, its value drops in comparison to capital that is of real value, commodities, gold, silver, and other precious metals.

It will be a sad day when the few coins left in your change jar are worth more than the bills in your wallet.

I dare say that day is rapidly approaching.

Perhaps I read this wrong, but I get the impression that if banks are required to hold more "capital" that "capital" will have to come from somewhere, my only logical guess being the printing press.

[edit on 26-5-2010 by djzombie]

Originally posted by djzombie
Perhaps I read this wrong, but I get the impression that if banks are required to hold more "capital" that "capital" will have to come from somewhere, my only logical guess being the printing press.

That seems to be what I get from it too. Print more money.

This will serve to cause serious inflation at some point down the road.....