Saturday, July 26, 2008
Could this be the money model for a world economy to replace the dysfunctional financial system now in crisis?
The Chinese government does not seem to carry a national debt and sells Chinese Treasury bonds to cool its economy not to finance it! With so much mind boggling infrastructure construction pouring yuan into circulation, some cooling seems necessary. This May China increased the commercial bank reserve requirement again to now 16% reducing the quantity of loans they can make to a maximum of 6X their reserves. This is an alternate way to reduce bank money creation rarely used in the USA in preference to the “one blunt tool” of increasing interest rates which bankers like! Could this be the money model, a Chinese model, for a world economy to replace the dysfunctional financial system now in crisis? The Committee on Monetary and Economic Reform