tag:blogger.com,1999:blog-2277215496195926573.post2090055172096944618..comments2024-01-01T07:41:51.347-08:00Comments on RALPHONOMICS: Loans create deposits? Not in one sense of the word “loan”.Ralph Musgravehttp://www.blogger.com/profile/09443857766263185665noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-2277215496195926573.post-41512232264556381092014-03-23T08:25:33.904-07:002014-03-23T08:25:33.904-07:00Citizens can get money in three ways:
1. They ca...Citizens can get money in three ways:<br /><br />1. They can work or exchange property.<br /><br />2. They can borrow from an individual.<br /><br />3. They can borrow from a bank.<br /><br />With money-in-hand, the citizen can do the reverse of any of these three choices.<br /><br />With choice 3, make a DEPOSIT, the citizen with money-in-hand always expects to be able to withdraw upon demand.<br /><br />The money supply measured by citizens is the sum of all the deposits that they think they can withdraw upon demand. That number is the wealth available for use and is the basis of daily decisions.<br /><br />It is easy to see that borrowed deposits would be converted to work-and-exchange-sourced deposits as soon as any borrowed money was spent. <br /><br />At this point in the discussion, we can ask your question again: Has the bank loan been a "transfer of real wealth"?<br /><br />Without going into the explanation, I suggest the answer is that money (or the accounting equivalent) is more like a financial share of the economy than it is an I.O.U.. Whether earned, borrowed from an individual or borrowed from a bank, money-in-hand is the key to the resources of the economy. Money-in-hand is financial capital.<br /><br />Roger Sparkshttps://www.blogger.com/profile/01734503500078064208noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-49869917205943631022014-03-22T14:15:51.175-07:002014-03-22T14:15:51.175-07:00I like this
Another way of describing the "t...I like this<br /><br />Another way of describing the "transfer of real wealth" sense is the library view. When I go to the library and borrow a book no one else can read that book, real wealth has been transferred but nothing was created. When I go to the library and get a code to download a book a new reader has been created out of thin air but the library hasn't lost the ability to give out more codes.<br /><br />Tom Brown originally used the term library view when discussing banking with some extreme hyperinflationistasGreghttps://www.blogger.com/profile/03139782404004492965noreply@blogger.com