Thursday, 16 November 2017
Former governor of Spain’s central bank is impressed by Positive Money and full reserve banking.
At least that’s the basic thrust of this video clip which lasts about three minutes.
I have just three minor quibbles. First the former governor seems to suggest that modern technology has made it possible for full reserve to work and for everyone to have an account at the central bank – (apologies to him if I’ve got him wrong there).
In fact, full reserve (as indeed the former governor himself points out) is an idea that has been going for decades. E.g. , as he says, the idea was advocated by Milton Friedman.
Thus unless Milton Friedman and other like minded economists were clueless on the practicalities of full reserve, modern technology is clearly not needed in order for full reserve to work: computers and the internet were essentially non-existent when full reserve was first suggested by the Chicago school in the 1930s, or indeed when Friedman advocated the idea in the 1940s, 50s and 60s.
A second quibble is that Positive Money published an article some time ago claiming their preferred bank system was not the same as full reserve. I’ve never been able to work out what the important difference is between PM’s preferred system and full reserve. I.e. I think PM is splitting hairs there.
A final quibble is that the former governor refers to PM as a “left of centre” organisation. That’s not true in the sense that the arguments for full reserve are entirely technical: they should appeal (or not) to those on the right as well as the left. Indeed, Friedman was not exactly noted for being a leftie.!!