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the_austrian

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Everything posted by the_austrian

  1. We have a central bank so the credit is already money... it is already state credit... and it has been since 1694. If they were only promises as you suggest we could have a bank run but as the evidence of Northern Rock shows bank runs are impossible if you have a central bank. It is too late to think that credit and cash are any different. Centuries too late.
  2. It's difficult for people to see what's going on... The media doesn't help.
  3. Agree also. People can be complacent about the banking system because they are told (if they are curious) that it is backed by the state. Remove the deposit insurance and the dynamic shifts. Most people assume there is enough petrol in the pumps but a rumour can spread quickly.
  4. Do you assume the population know about cash and credit or do they think it is all cash... or do they not care??
  5. They are choosing bank credit as well. Why? Because they don't know about fractional reserve banking (and think deposits are cash) or because of the guarantee? Curious to know your position.
  6. Is cash money? What's the difference both are recognised by the state.
  7. Sorry don't really understand the point you are making. Too subtle for me.
  8. For me there are only two types of money: Narrow and broad. Narrow is cash (notes and coins) Broad is bank credit (guranteed by the taxpayer) plus cash outside the banking system. Cash inside the banking system (reserves) doesn't count in the broad money aggregate because it has no direct impact on prices.
  9. Fine but you're kind of saying that we need deposit insurance... (do you think that?) either that or that banks print money which has not typically been your position.
  10. There would be no need for deposit insurance if bank credit is not money.
  11. Banks should be allowed to fail even if they practice fractional reserve banking... no deposit insurance caveat emptor.
  12. In the present system of banking... it is the government, not the banks, which creates new money when banks issue loans. Government credit is money because it can be used to settle a debt of taxes. When a bank issues a loan, new government credit is created to replace the bank credit which previously matched the cash in the bank. The cash (held by the bank) is now free to be loaned into the economy... it is no longer required to provide full reserves. This process is equivalent to the creation of money because government credit has been created (out of nowhere) to replace the bank credit, which can no longer be backed at the bank by physical cash.
  13. No doubt he is an adherent of the velocity theory of inflation which states that spending money makes it less valuable. Like a second hand television set, the more people that have used it the less valuable it gets. Except that the note still says £10 on the front.
  14. Eminently qualified to sit on the board of the Bank of England. It's not inflation it's economic growth.
  15. Everyone hates the banks now but they didn't get the praise when they were inflating the economy with easy credit.
  16. They will do anything possible to help debtors. If the banks can no longer print money because no one is taking out loans, then the BofEng acts as backstop making sure that savings will lose value. The free market will attempt to correct for the malinvestment but it is powerless against the printing press, as history shows.
  17. I'm not so cynical about their attitude to the mom and pop savings; in my view they genuinely did not want to be the ones responsible for a collapse of the monetary system on their watch. And, according to the accounts we have heard, it came close to it at some points.
  18. No one can outlaw FRB, their only aim would be to get rid of deposit insurance so that the losses are not Socialised. This prevents the banks 'printing money' because without deposit insurance, the bank credit is merely credit like that of any normal organisation.
  19. Actually, no it isn't, my quick-and-easy glance at the How It Works section left me with a different impression of what you are proposing. You say that no new deposits may be created unless a similar amount is withdrawn from somewhere else in the system. So far so good. But the obvious question is what happens to money that has been loaned (taken out of the banking system), presumably banks can still lend the money they have in their vaults(?) Your proposal is complicated. On this forum you are engaging with (albeit cynical) monetary 'enthusiasts' if it is not easy for people to understand here, you can be certain it will not be more widely understood, perhaps that is your intention. It's not too late to redraft the proposals, I'm sure many here would help. In my view you need to put the deposit insurance at the very centre of what you are trying to do. We can't prevent people being drawn into inflationary banking, as Injin has explained, but we can remove the (false?) sense of security given by the State deposit guarantee. The obvious problem with doing this would be the disruptive and unstable banking collapse which would inevitably follow. So the answer is to Nationalise those deposits which you want to preserve (my guess would be most of them) and remove the guarantee from all other institutions.
  20. My guess is that they are aware of the system, fairly well, but they can't afford to be seen to be too hysterical, on their website, otherwise it will be more difficult to be taken seriously.
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