From South of the Suburbs' comments in nakedcapitalism.com
Let’s face it; no one in the mainstream has got a clue about the monetary system.
Milton Freidman thought bank lending was controlled by central bank reserves; this is why monetarism didn’t work. (Fractional reserve theory)
Ben Bernanke thought banks were financial intermediaries; this is why he couldn’t understand debt deflation in his work in the Great Depression. (Financial intermediation theory)
Our knowledge of privately created money has been going backwards since 1856.
Credit creation theory -> fractional reserve theory -> financial intermediation theory
The central banks have now set the record straight (credit creation theory) and shown Milton Freidman and Ben Bernanke didn’t understand the monetary system.
The US wants to balance the Government budget and run a big trade deficit.
This is the US (46.30 mins.)
https://www.youtube.com/watch?v=ba8XdDqZ-Jg
https://www.youtube.com/watch?v=ba8XdDqZ-Jg
They wouldn’t if they knew what they were doing, but they don’t.
2008 – “How did that happen?”
It was a black swan.
It was a black swan.
Bankers were inflating asset prices with the money they create from loans leading to Minsky Moments in 1929 and 2008.
Money is power and if you know how the system works and others don’t you can make lots of money.
“If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks…will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered…. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.” – Thomas Jefferson in the debate over the Re-charter of the Bank Bill (1809)
“Let me issue and control a nation’s money and I care not who writes the laws.”
A lot of time and effort has gone into ensuring people don’t understand the monetary system, MMT could ruin everything.
If they find money comes out of nothing, they won’t need to bow and scrape to those with capital to invest. The banks can create the money out of nothing to invest in business and industry.
that is just the point
ReplyDeletethey/we DO have to bow and scrape
For business finance they demand huge safety margin
The more marginal (often the more beneficial) potential businesses thus have no chance. If it is created money there could be assessment of eco-benefit to encourage such investments.
Currently as much gas is used in colder months as the elecricity for the whole year.. A huge amount. Ultra-insulation of sides and rear (at least) reqd. US does not need growth, more needs to think half of what they had in 2006, part-time jobs, A slice off interest from created money to public purse into special ecofund, maybe "retail" banks should be just that re-selling money issued at base rate. simple eh?