101–106 of 106 posts
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Fiscal injection into private American's bank accounts already happens all the time. So what is your concern here exactly?
Indeed: https://fred.stlouisfed.org/series/M2
The next step would be allowing citizens to vote directly on the laws that govern central bank policy.
Hah, now that is something I'd like to see. I don't have my hopes up though because elitist central bankers don't like to be transparent or be subject to public scrutiny - all documents from the Swedish Riksbank in my country are classified with absolute secrecy (same level as military secrets) and cannot be inspected even by members of parliament as that may threaten "monetary stability". This is in a country where…
People who thing this is a good idea do not understand how our money works. A central bank isn't a bank at all it does not have the function of a bank. It just has bank in its name. If you let banks compete against a central banks you may as well just close them all.
No, because you’d get no interest on your deposits. Private banks would simply have to offer something of value. obviously this conflicts with ZIRP, but that’s of dubious wisdom from the start.
>Private banks would simply have to offer something of value. They do but they can not compete with a central bank.
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The reserve ratio (which in most places is now down to 2% or less), is there to prevent runaway monetary expansion through lending/deposit creation. The Central Bank's role as lender of last resort is the backup for bank runs. In the event of a run, a bank is considered illiquid, an insolvent bank is one where losses on debts exceed loss provisions and capital. An entity that only wrote loans, and didn't have deposit…
The reserve ratio is mostly a historical relic and is zero in many places, yet those places don't see an infinite amount of money. This indicates that the traditional story of how fractional reserve banking causes money growth is wrong. In reality, even a non-zero reserve ratio doesn't limit money creation if you look at the financial system as a whole, because the created money will simply become deposits elsewhere.…
The two issue's with non-zero reserve regulation were (historically) the price of gold was implicitly linked to deposit expansion, and in the Bretton Woods era, all the countries had different expansion rates. Then post Bretton Woods, Basel comes in.
With Basel the Bank's risk weighted capital also regulates the amount of lending, and hence deposit expansion.
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Totally. Curious, do you have any other news/blogs you recommend? I'm always looking for new ones. Epsilon Theory has been a new one for me, although its "pomp" as you put it didn't last long and seems to be on a politically motivated decline, as happened to Venkatesh Rao's blog
FT Alphaville. I don't keep up with this stuff as much anymore but there is a lot out there if you are willing to invest the time (just follow the right people on Twitter, read good books, etc.).