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Is it possible to stop banks creating money? Or would shadow banks just take over?

FT alphaville public money

In a recent FT Alphaville article Izabella Kaminska argues that it is ‘naïve’ to attempt to constrain banks’ ability to create money, because this will only prompt other financial sector firms (‘shadow banks’) to create other forms of money that could be used as a substitute for money created by the state. Naturally, we disagree. Kaminska’s article misses some key points of economic history, and also overlooks other reasons why it is unlikely that substitutes for money will compete with state-created money.

Marco SabaYou have to monitor very strictly the international clearing systems. During a French investigation on Clearstream it emerged as much as 17,000 a/c UNPUBLISHED - many owned directly by central banks - for unclear purposes... it was (and it IS) mostly money laundering by the very same institutions th...

Yesterday

RJNo Bob would not borrow £500,000 to give it back to lloyds (or another bank) Bob would say use the money to buy a house. The money woudl then move to say Janet (the house seller) who may buy another house or invest the money with Lloyds or another bank. Maybe short term until she finds the right h...

2 days ago

plainmoneyUnder the PM system, suppose that I start with £500,000 in my transaction account at Lloyds, and I lend it to them at say 3% p.a. I move the £500,000 into my Lloyds investment account and I forego access to it. Lloyds has a customer Bob who borrows the £500,000 from them at say 5% and the money a...

2 days ago
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Osborne moves to cut spending to 1930s levels in dramatic autumn statement

osborne autumn statement

The chancellor, George Osborne, has set out dramatic plans to move Britain from the red into the black that will see public spending as a percentage of GDP fall to its lowest level since the 1930s and could require cuts in non-protected departments such as police, local government and justice amounting to a further £60bn by 2019-20, reads the Guardian, 4th Dec 2014.

montmorencyHere is the link for anyone who hasn't seen it:http://princesoftheyen.com...

2 days ago

ConradJonesmontmorency:"Princes of the Yen" looks like an interesting Book and I will look forward to watching the Film, which I believe is available now.Richard Werner is a safe bet for anyone who wishes to understand the Financial System."Princes of the Yen:Japan's Central Bankers and the Transformation of t...

2 days ago

montmorencyIt's worth considering that the rich expensively-educated Tory-boys master-minding our economy (including the Lib Dem Tory boys) may be ugly, but they are not stupid. They must know exactly what they are doing.They have a similar agenda to the Bank of Japan (see "Princes of the Yen" - book and now a...

2 weeks ago
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montmorencyA revised version of that paper:http://www.paecon.net/PAERevie......

2 weeks ago

montmorencyAn interesting analysis of Modern Money Theory and New Currency Theory by Joseph Huber, prepared for the American Monetary Institute:http://www.monetary.org/wp-con......

2 weeks ago

GuyHarper"Where did you read this?"I have never read any MMT stuff which contradicts it. It is my interpretation of all the MMT stuff I have read I suppose. MMT (my interpretation, is it correct?) focuses on the point that the sum of all sectoral balances is zero. This is of course true and if people underst...

3 weeks ago
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