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Ruud Harmsen> No one said money creation was unlimited.One of the banking 101 videos by Postive Money does. I'll write about it later in detail. I may take a few months, possible years, before I find the time....

4 weeks ago

Andrew BuckleyNo one said money creation was unlimited. What PM says is that money creation (creation of new bank deposits) is limited by the availability of credit-worthy borrowers, and only that. Many other things indirectly limit money creation by affecting the availability of credit-worthy borrowers (such a...

4 weeks ago

Ruud Harmsen> You've basically just told the "money multiplier" story in that link there I'm afraid.In my articles 1 and 2, yes, but see also 10 and 11, for the seemingly different, but essentially equivalent everyday reality. http://rudhar.com/economi/mony...And money creation is not unlimited (even if the ...

4 weeks ago
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Why we disagree with Ann Pettifor

ann4

A couple of months ago, Positive Money's proposals to reform the creation of money were featured by Martin Wolf (the chief economics commentator at the Financial Times). In an article entitled "Why I disagree with Martin Wolf and Positive Money", veteran campaigner and economist  Ann Pettifor responded that the proposal is 'deeply flawed', 'outlandish', and would lead to "a shortage of money, high unemployment and low economic activity".

jakeSo how do Bank of England interest rates have an effect on Prive bank credit allocation at all?This is a real blindspot in my understanding of the monetary system.I understand that banks create credit.But what is the realtionship between BOE interest rates and Private bank lending.What are reserves?...

July 2014

simonThe credit multiplier has been shown not to be an accurate description of how the current banking sytem works, although it wrongly still gets top billing in economics text books. Banks tend to lend first, then seek the reserves later to support that lending. The book "Where does money come from" giv...

June 2014

David CroxtonSurely, if banks just electronically print the money they choose, then they can print the reserves also. It's only ordinary working people who suffer, who are then fooled into thinking they can safely borrow. We need politicians bright and strong enough to both understand the real situation who will...

June 2014
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Ruud Harmsen==How this is a roundabout way of issuing debt-free money into the economy [...]==Debt-free money is a myth. It is impossible. Money by definition is what banks owe the public.Because a balance sheet, as the name implies, needs to be balanced, those claims by the public (right side of the bank's bal...

last month

Ruud Harmsen==The Bank of England could create money, without relying on anyone to go further into debt. ==No, they can't. Not until you change the definition of money. Money = what banks owe the public.You can pay with money (= part of your claim on your bank) because everybody trusts banks. What kind of money...

last month

Steve Wallis"This saves the government annual interest on £50bn of the national debt, freeing up more money for government spending."I've just checked interest rates on government bonds at http://markets.ft.com/research... and 3-year bonds are just over 1% (and only 3.37% on 30-year bonds). The annual interest...

June 2014
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bill439Has Coppola never heard of shadow banking. In 2013 its total assets were $21trillion ($67tr in 2007). Wha do they do with them? They lend them and they are outside the commercial banking system....

May 2014

SimonIt is difficult to understand why Coppola and Pettifor think that the existing system has merit when they must be able to see the negative effects it has had in recent times. Coppola has worked for a bank, and raises accounting objections to changing things, when an engineering solution is required....

May 2014

Sanjay MittalFrances Coppola’s claim that “Banks are not fund managers” is a joke. If she looked at the Financial Times she’d find that every large bank “manages” a whole string of mutual funds or “unit trusts” as they’re called in the UK. Indeed, in Laurence Kotlikoff’s version of full reser...

May 2014
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