Options for Banking Reform

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Andrew BuckleyThe most pernicious case of this with regards to MMT is their definition of money creation, and how they carefully (almost dangerously) distinguish it from bank credit. It's this financial asset thing again. Their take is that only the government can create money, because bank loans create no net ...

6 days ago

montmorencyI have posted this in another thread, but it seems relevant here:http://www.monetary.org/wp-con..."A Discussion of Modern Money Theory and New Currency TheoryPaper prepared for the American Monetary Institute's 9th Annual MonetaryReform Conference, Chicago, 19–22 September 2013Joseph Huber"It comp...

2 weeks ago

Captain AmericaOf-course money spent on taxation is redistributed within the economy. It is debt-based money gong round and round....

2 weeks ago
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Can we remove state support for banks?

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"Just remove state support for banks and let markets hold them to discipline!" -This argument often comes from the Austrian school of economics, and proposes that banks would not have taken so much risk without the safety nets provided by governments and central banks. Furthermore, without these safety nets, those banks that were mismanaged would have been liquidated and would have made way for new market entrants with better business practice: in other words, bad businesses would make way for good ones.

RJFran. No I'm not re risk. Its to do with double entry book keeping."In the present system the banks are doing the equivalent of using money ..." Can I suggest you read the PM articles carefully. Not mine because even PM do not agree with this.And maybe try to understand (it is tricky to understand b...

last month

Fran GriffithsRJ, you are confusing liability with risk. If I look after £10 for someone, I am liable to pay it back when they ask for it. There is little risk as long as I don't use the money to pay for the rail fare to the next town (say) in the hope of earning £100.In the present system the banks are doing t...

last month

solutreanNo RJ The confusion is on your part. You are describing things as they are under the debt based money system of which you are supportive of, even though by your own admission it is doomed and will collapse. I am describing the system that hopefully will replace it. Some of the things in your post d...

last month
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jakeThis Maxim that “Investors can always borrow if they are credit-worthy” confuses me, wasn't the credit crunch a demonstration that viable businesses were unable to access affordable credit from the banks due to the banks having too many toxic assets and the cost of credit going up?But the actual...

October 2014

RJBanks can only loan money if there is a willing borrower. And if Govts had increased interest rates then there would have been a lot less than there was before the crash. Or even required house buyers to have a bigger deposit. Govt could ahve stopped the overheating housing market but they did nothi...

October 2014

RJNotes and coins are not free of debt. Money (bank credit) is created when a bank loan money. Say £1000 to bob The banks JE isDEBIT Loan account (banks asset/Bobs debt) £1000CREDIT Bobs Bank account (Banks liability/ Bobs money) £1000Bob then exchanges £100 for 10 * £10 Notes. The bank JE isCRED...

October 2014
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solutreanRJ. Should not your first paragraph regarding what the banks do read. “They create new money when people 'BORROW' money?” The loan is an asset of the bank and a liability of the 'borrower'. The money that is created is a liability of the bank and an asset of the 'borrower'....

last month

RJInteresting book. But what put me off reading it was this"Fiscal policy does not in itself result in an expansion of the money supply. Indeed, the government has in practice no direct involvement in the money creation and allocation process. This is little known, but has an important impact on the e...

October 2014

RJThanks for posting this. Interesting is the point about notes being a liability of the central bank (page 2). Notes then are not debt free. Notes have value only because they are backed by the Govt. And can be used to pay tax.Re ignorance. I gave examples of this. I did not include anything about US...

October 2014
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