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European Central Bank’s QE is a missed opportunity (Letter in the Guardian)

draghi

"The EU financial sector does not need to be eased, there is plenty of liquidity in the banks. Quantitative easing, as practised by the Bank of England and the US Federal Reserve, merely flooded the financial sector with money to the benefit of bondholders. This did not create a so-called wealth affect, with a trickle-down to the real producing economy.",writes our supporter from the Devon local group, Tony Pugh, in a letter in the Guardian, 25th Jan 2015 as a response to last week's announcement of quantitative easing programme by the European Central Bank’s president, Mario Draghi:

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 During a French investigation on Clearstream it emerged as much as 17,000 a/c UNPUBLISHED - many owned directly by central banks - for unclear purposes...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...

December 2014

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...

December 2014

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...

December 2014
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