100% reserve banking
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alanjjohnstone wrote:Graeber in the Guardian seiing on the reporthttp://www.theguardian.com/commentisfree/2014/mar/18/truth-money-iou-bank-of-england-austerity.The actual report can be read herehttp://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q102.pdf
Someone else making the same criticismas us of Graeber here:http://libcom.org/forums/theory/has-david-graeber-become-currency-crank-22032014?page=2#comment-536963Especially, this:
Quote:But more to the point, the argument about the possibility of a Keynesian fix for the crisis doesn't really have anything to do with the BoE "letting the cat out of the bag" about how money is created. It's not at all obvious – and imho Graeber doesn't come close to demonstrating – why an acknowledgement of how money creation works means austerity is unnecessary and basically limitless money can be conjured up to fund social programs.The (returned) TSB has been advertising it's banking model. Clearly they are evil lying lizards:http://www.abouttsb.co.uk/truth_and_banking.html(actually a clever and informative video, we should make maximum use of it).
Conspiracist will indeed accuse it of being a cover-up white-wash since it ignores fractional reserve banking and how banks create credit by treating every loan debt as an asset. However, it is the same bank model, i believe, the Greens wish to follow. Nice bank managers and not those nasty corporate speculators, to go with the local corner shop, and not the multinational supermarket chain, and the small farm down the road and not any of those agricultural conglomates, all offering genuine customer and consumer satisfaction as they take money from our fair wage earned by an honest days work at the local worker-owned co-operative.TSB – The Sincere Bankers !!! But i agree it is a good PR effort.
alanjjohnstone wrote:However, it is the same bank model, i believe, the Greens wish to follow.No it's crankier than that. The Greens want to stop commercial banks from issuing loans at all, since it is new loans that 'create money'http://policy.greenparty.org.uk/ec#MonetaryAnother part of it seems to suggest that debts written on paper are OK, but those stored in a computer are not.
These might be of interest, criticism of this article http://www.ft.com/intl/cms/s/0/7f000b18-ca44-11e3-bb92-00144feabdc0.htmlhttp://ftalphaville.ft.com/2014/04/25/1836542/martin-wolf-on-funny-money-creation/http://www.forbes.com/sites/timworstall/2014/04/26/where-martin-wolf-goes-wrong-with-modern-monetary-theory/
i thought this article provides a counter to those who believe that capitalism can be managed. Mostly about the Fed and interest rates but i'm sure it can be expanded to how capitalism has a life of its own and world impact restricts domestic manipulation of it of even an economy the size of the USAhttp://blog.heritage.org/2014/05/18/behold-power-fed/
We often come across the reposte that when banks receive deposits/fees it cannot be from the old granny savings. But lets look at some figures."the assets by the rich increased by roughly 10%, reaching a combined total of roughly $46.2 trillion. With this growth in extreme wealth, the wealth management business is itself becoming a major growth industry, with independent firms competing against the big banks in a race to manage the spoils of the world’s super-rich."Of course much is in shares and bonds but i'm sure a lot of it is also hoarded cash. The world’s big banks want to get more of this investable wealth. For example, Goldman Sachs has boosted its private wealth management services. The number of partners at the bank working in asset management in 2010 represented 4.5% of the bank’s total partners, a number which grew to 12% by 2012.
Found this a very useful summary, of relevance to the debates on here:http://alittleecon.wordpress.com/2014/06/03/the-basics-of-modern-monetary-theory/
Thanks. That's a useful summary of this school of economic thought's point of view, but it looks as if for once students of economics are generally being taught the accurate thing:
Quote:Endogenous money is the idea that rather than the central bank determining the amount of money in the economy – exogenously, the amount of money is instead determined by the supply and demand of loans. In shorthand, MMTers (and Post Keynesians in general) would say, “Loans create deposits”. That is to say that banks create money by extending loans to customers, while at the same time creating a corresponding deposit. This runs contrary to what is generally taught to students of economics – that savings are loaned out with banks acting purely as intermediaries, or at best leveraging an initial injection of government money by a predetermined ratio.Meanwhile in China the view that early goldsmiths issued more receipts for gold than they actually had and that this was the origin, and still the practise, of modern banking is being refuted by events. If they had done this (and any that did) this would have been exposed sooner or later and could not be the basis for a viable and stable banking system:http://qz.com/216059/chinas-investigation-into-missing-metal-could-spark-a-much-bigger-crisis/and this from the Financial Times of 12 June:http://www.ft.com/cms/s/0/85f594a8-f210-11e3-9015-00144feabdc0.html#axzz354iGvZZ7
It was touched on early on the thred – China's shadow banking system. It popped up again on an article i'm reading on China's property bubble.
the authorities set the interest rate on deposit accounts at 0.72 per cent and left it there. By 2008, inflation was 7.9 per cent. So the real rate of return on a deposit was -7.2 per cent – which helped to dampen consumption to a record low for any country: 34 per cent of GDP.This must have seemed pretty smart to the authorities when they first thought of it. But there is no such thing as an economic policy that doesn’t fall foul of the law of unintended consequences. Instead of accepting this massive dose of financial repression, the Chinese became a nation of property speculators and shadow bankers.They borrowed money short term from unofficial lenders [/quote] http://www.ft.com/intl/cms/s/0/965c4744-8fb4-11e1-98b1-00144feab49a.html?siteedition=intl#axzz35kOePnl2
One of the main proponents of banks create money out of thin air, Ellen Brown, appears to have recanted…or at leat in this article.
Quote:The fractional reserve banking scheme is a form of shell game, which depends on “liquidity” borrowed at very low interest from other banks or the money market.http://www.counterpunch.org/2014/07/16/did-the-other-shoe-just-drop/As a member of the Californian Green Party she has a menu of financial reforms rather than simply create credit at the stroke of a pen.
Been a while since this thread has been activated Came across this article on Bella Caledonia http://bellacaledonia.org.uk/2014/11/17/whos-making-all-the-money/ i missed the debate on on the Parliament channel
I think the debate will be in Hansard. It will be interesting to see who the currency crank MPs are apart from Douglas Carswell (UKIP) and Austen Mitchell (Labour). Maybe there will even be some who do understand banking properly.
Interesting breaking news:
Quote:A bipartisan subcommittee report issued Wednesday showed that parent companies of major U.S. banks have acquired massive trading positions in commodities even as businesses under their control sell uranium, operate coal mines and metal warehouses, stockpile aluminum and operate power plants.http://www.usatoday.com/story/money/business/2014/11/20/goldman-sachs-jpmorgan-morgan-stanley-senate-hearing/19293581/If banks can make money simply by creating money out of thin air and charging interest on it why do they bother to acquire physical commodities, not just to trade in them but in their production? Answer: because they can't and don't create money out of thin air.
Quote:Steve Baker: I think I hear the echoes of a particularly fashionable economist there. If the hon. Lady is saying that she would like rising real wage levels, of course I agree with her. Who wouldn’t? I want rising real wage levels, but something about which I get incredibly frustrated is the use of that word “capital”. I have heard economists talk about capital when what they really mean is money, and typically what they mean by money is new bank credit, because 97% of the money supply is bank credit. That is not capital; capital is the means of production. There is a lengthy conversation to be had on this subject, but if the hon. Lady will forgive me, I do not want to go into that today. I fear that we have started to label as capital money that has been loaned into existence without any real backing. That might explain why our capital stock has been undermined as we have de-industrialised, and why real wages have dropped. In the end, real wages can rise only if productivity increases, and that means an increase in the real stock of capital.No dissenting voices, they all agree the 'Banks create money' orthodoxy.
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