Stung by Financial Crisis, Iceland Wants Soviet-Style Banking
The Icelandic government is considering a radical financial shift that would effectively end banking as we know it.
The exploding volcano above is an apt visual metaphor for what Iceland's economy looked like in the early years of last decade's world financial crisis. Flirting with a total and complete economic meltdown, perhaps even teetering on the edge of becoming a failed state, Iceland mounted an incredible turnaround thanks to several key measures. Paramount was the decision to let the country's banks collapse like a house in a Buster Keaton movie. It's safe to say that the Icelandic people have no problem forcing banks to bend to their will.
A radical plan currently brewing in Iceland's government could lead to more of the same.
As reported by Agence France-Presse and Max Ehrenfreund of the Washington Post, Iceland's prime minister Sigmundur Davíð Gunnlaugsson has requested a report by parliamentarian Frosti Sigurjónsson detailing why the government should disallow banks to create money. Ehrenfreund explains:
"It sounds strange to say it, but creating money is indeed something that banks do all the time. Say you take out a loan to start a business from your bank. You write checks to your workers and your rent and you buy goods wholesale. Eventually, your suppliers and employees deposit that money at their banks, which can in turn make new loans. One of those banks might extend a mortgage to help someone buy a house, and the cycle repeats.
As the checks change hands, the total amount of money out there actually multiplies with each cycle. Even though the homeowner has paid for the house she's now living in, your employee can still withdraw her cash from her bank account. And although you have money to pay all your expenses at your business, your bank's depositors can still take out their money as well. Money has been created."
The current Icelandic government is not a big fan of this! Ehrenfreund discusses the contents of the Sigurjónsson report, which argues that the above system is unsustainable. Instead, what's prescribed is a "sovereign money" system featuring a more centralized banking entity in which the government "would essentially run checking and savings accounts."
While sovereign money systems aren't exactly a new development, a change of this degree would certainly be unprecedented in modern times. Ehrenfreund includes several perspectives that vary from eagerly supportive of the Sigurjónsson plan to vehemently opposed (calling it "Soviet-style"). Check out the piece (linked below) for more info on this interesting idea.
Read more at the Washington Post.
President of Iceland Ólafur Ragnar Grímsson explains how the island nation relied on the potent power of democracy to solve major problems related to economic collapse during the financial crisis.
Photo credit: Gardar Olafsson / Shutterstock
Pfizer's partnerships strengthen their ability to deliver vaccines in developing countries.
- Community healthcare workers face many challenges in their work, including often traveling far distances to see their clients
- Pfizer is helping to drive the UN's sustainable development goals through partnerships.
- Pfizer partnered with AMP and the World Health Organization to develop a training program for healthcare workers.
The stories we tell define history. So who gets the mic in America?
- History is written by lions. But it's also recorded by lambs.
- In order to understand American history, we need to look at the events of the past as more prismatic than the narrative given to us in high school textbooks.
- Including different voices can paint a more full and vibrant portrait of America. Which is why more walks of American life can and should be storytellers.
There is no doubt that the historical Jesus, the man who was executed by the Roman State in the first century CE, was a brown-skinned, Middle Eastern Jew.
I grew up in a Christian home, where a photo of Jesus hung on my bedroom wall. I still have it. It is schmaltzy and rather tacky in that 1970s kind of way, but as a little girl I loved it. In this picture, Jesus looks kind and gentle, he gazes down at me lovingly. He is also light-haired, blue-eyed, and very white.
Orangutans join humans and bees in a very exclusive club
- Orangutan mothers wait to sound a danger alarm to avoid tipping off predators to their location
- It took a couple of researchers crawling around the Sumatran jungle to discover the phenomenon
- This ability may come from a common ancestor
SMARTER FASTER trademarks owned by The Big Think, Inc. All rights reserved.