tag:blogger.com,1999:blog-2277215496195926573.comments2024-01-01T07:41:51.347-08:00RALPHONOMICSRalph Musgravehttp://www.blogger.com/profile/09443857766263185665noreply@blogger.comBlogger2025125tag:blogger.com,1999:blog-2277215496195926573.post-14327236585674882952021-10-02T02:48:12.981-07:002021-10-02T02:48:12.981-07:00Glad to see you nailing Selgin here on this. My un...Glad to see you nailing Selgin here on this. My understanding is that he would want no rules for banks , which to me invariably means banks will make their own reserve/capital ratios. Which will the naturally be the minimum left to banks own devices, which give massive leeway to make super profits in the good times. This goes on for many years and banks appear to be very profitable and confidence is high and everyone is patting each other on the back saying what a splendid job banks are doing. But as you say a crisis always come along and we then see the banks are then extremely exposed....and fail. Only option is to have high capital rules and enforce them.Vincehttps://www.blogger.com/profile/08057936746193286642noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-65568045373800421102021-09-02T09:35:54.207-07:002021-09-02T09:35:54.207-07:00It somewhat boggles the mind to think that our ban...It somewhat boggles the mind to think that our bank accounts, which we call ours and fully owned by us, are really shared claims on money issued by the central bank, yet that is what I describe here:<br />https://www.mechanicalmoney.com/2021/08/government-always-pays-using-real-fiat.html.<br /><br />I argue that private banks making loans are NOT creating money; they are reusing real fiat money. The multiplication factor between money issued by the CB and 'issued' by private banks is a result of how we like to measure the supply of available money.Roger Sparkshttps://www.blogger.com/profile/01734503500078064208noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-72651536531603643452021-08-25T00:20:34.403-07:002021-08-25T00:20:34.403-07:00Yes: the Boe explained it in that article, but the...Yes: the Boe explained it in that article, but the cognoscenti have been aware of the point for centuries. David Hume referred to it, as did the governor of the BoE in the 1920s, Josiah Stamp, as did Keynes and last but not least, Positive Money in the years just prior to the above BoE article. Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-36618568351307764752021-08-24T13:03:05.459-07:002021-08-24T13:03:05.459-07:00Financial Times very slow on the uptake to figure ...Financial Times very slow on the uptake to figure out over the centuries Parliament legislated for the government and licenced banks to create money from nothing. The BoE effectively explained all this in their 2014 paper if you read it carefully!<br /><br />https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economyAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-10630812606247149312021-08-22T08:37:28.227-07:002021-08-22T08:37:28.227-07:00Perhaps I oversimplify things when I divide the ec...Perhaps I oversimplify things when I divide the economy into private and government but my most understandable logic flows from that breakdown.<br /><br />Then I say that government always "pays using real fiat money". That translates into a prohibition on private banks creating money. Which means that private banks must lend real fiat money.<br /><br />That fact that private banks increase the money supply is because we count all the money in private banks as money supply, forgetting that real fiat money, once created, can be re-loaned to anyone, including government.<br /><br />With that background and turning to unemployment, we need to ask whether government or privates should provide jobs (a political question). Government can create money to pay workers (real fiat money) or the private sector can reuse real fiat money to employ and pay workers.<br /><br />I think this comment offers a somewhat heterodox framework for further thinking about stimulus.Roger Sparkshttps://www.blogger.com/profile/01734503500078064208noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-47062300940907608202021-08-20T20:01:57.906-07:002021-08-20T20:01:57.906-07:00I quite agree that shortage of skilled workers pla...I quite agree that shortage of skilled workers places a limit on how far unemployment can be reduced. I actually published an article on a possible way of subsidising the less skilled into work:<br /><br />http://www.kspjournals.org/index.php/JEPE/article/view/1237<br /><br />But the above "Why should taxpayers support...." article was an attempt to deal with the question as to what the best way of implementing stimulus is for a GIVEN AMOUNT of stimulus, or if you like, it addressed the question as to what TYPE OF money should be created in order to bring unemployment down to some GIVEN level.Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-44855188177690157722021-08-16T04:26:27.388-07:002021-08-16T04:26:27.388-07:00There is a third way of thinking about 'multip...There is a third way of thinking about 'multiplier':<br /><br />Assume that people use money as an exchange for goods. How much new GDP could be generated by adding just one new pound?<br /><br />Well, if there was a tax on each transaction, government would eventually recover all of it's original new one pound.<br /><br />The correct formula for increased GDP (IGDP) is<br />IGDP = one / tax rateRoger Sparkshttps://www.blogger.com/profile/01734503500078064208noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-51114205419932796532021-08-15T06:47:24.667-07:002021-08-15T06:47:24.667-07:00The hardest to employ are the marginal workers. On...The hardest to employ are the marginal workers. On the other hand, the skilled workers are the first called upon when new money is created.<br /><br />As a result, to relate loans to full employment is to misapply a tool toward solving a much more nuanced problem.Roger Sparkshttps://www.blogger.com/profile/01734503500078064208noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-64752418638739463292021-08-03T06:51:09.653-07:002021-08-03T06:51:09.653-07:00Is the basic rule of a fiat based economy simply t...Is the basic rule of a fiat based economy simply that "government always pays using real fiat money"? <br /><br />If so, we can follow ownership of 'real' fiat money. Fiat money, once issued, must exist until destroyed by government.<br /><br />While in existence, 'real' fiat money can be loaned. This is what private banks do, creating risk of private bank runs.<br /><br />However, the Central Bank can also loan existing 'real' fiat money. Thus government can borrow from the CB and receive 'real' fiat money to spend, thereby preserving the "government always spends real fiat money" rule. So, how do we distinguish when the CB has created money or simply reloaned existing money?<br /><br />My answer is that the CB owns no money of it's own to lend. Therefore, when the CB issues money, it can only issue new 'real' fiat money. CB's create 'real' fiat money when they lend.<br /><br />If you accept this line of thinking, it will raise questions of what 'money' really is. I won't go down that path in this comment.Roger Sparkshttps://www.blogger.com/profile/01734503500078064208noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-80228868661228460862021-08-02T09:43:48.225-07:002021-08-02T09:43:48.225-07:00What Ann seemed to be most concerned about was the...What Ann seemed to be most concerned about was the shadow banking system, which in her view was being stimulated by QE. She seemed to attribute its rise, indeed, its existence, to QE. So, her reasoning appears to be that as it would be very difficult to do much about shadow banking, why not cut off the supply by stopping QE. To me that seems like worrying about online gambling and then trying to sort it by restricting monthly data quotas for mobile phones. If the problem is shadow banking, then deal with that. Maybe direct QE money into genuine investment in infrastructure - for example retrofitting all UK homes to meet net zero. QE could be used for the benefit of all, rather than to enrich the already wealthy.Dr Zoltan Jorovicnoreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-63148816624568096762021-07-26T07:41:38.885-07:002021-07-26T07:41:38.885-07:00In addition to your point about the Treasury askin...In addition to your point about the Treasury asking the BoE to create money for its own funding Richard Murphy pointed out this is as a result of an Act from 1866. See here https://www.taxresearch.org.uk/Blog/2020/12/22/uk-law-has-already-enacted-modern-monetary-theory-and-was-last-updated-to-do-so-in-2000/Vincehttps://www.blogger.com/profile/08057936746193286642noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-30760802533628834872021-07-19T07:40:31.286-07:002021-07-19T07:40:31.286-07:00I've read some of Bootle's work and was ta...I've read some of Bootle's work and was taken in. His predictions about Brexit and the euro are turning out to be horribly wrong. Lesson: Don't take heed of any economist's forecasts or predictionsPSenguptahttps://www.blogger.com/profile/01478088818330985776noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-37350136463117611272021-05-21T07:13:44.879-07:002021-05-21T07:13:44.879-07:00A comment follow-up:
The bank lending to workers ...A comment follow-up:<br /><br />The bank lending to workers has a choice of lending standards: Lend based on ability to repay or lend based on asset value (thinking that repossession is an acceptable method of repayment).<br /><br />The problem with the second method is that valuation is extremely volatile. Think bitcoin volatility like. Think the root of boom and bust.Roger Sparkshttps://www.blogger.com/profile/01734503500078064208noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-58108824334153152532021-05-21T06:41:39.245-07:002021-05-21T06:41:39.245-07:00What you have here is pretty much the way I unders...What you have here is pretty much the way I understand things.<br /><br />The curious fall-out is where we find ourselves in world economies today.<br /><br />Let's suppose that a commercial bank makes a loan to car makers to make cars. Money flows to car makers, then workers, then diffuses, but never leaves the bank(s).<br /><br />So then, for a while, we have the situation where the car maker has cars but can't repay the bank. Well, that can be fixed by lending to car buyers, so money can flow back to car makers who repay the banks, all while this same money is stored safely in bank(s) accounts.<br /><br />But then the workers say THEY can't repay the loans unless you give us work. It's HERE where we are today.<br /><br />So, what is the solution?<br /><br />It seems to me that building cars steadily is the solution. An inherently jerky building cycle can be smoothed by a slower, steady lending pattern. Roger Sparkshttps://www.blogger.com/profile/01734503500078064208noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-3069042446064942022021-05-12T07:11:05.020-07:002021-05-12T07:11:05.020-07:00Central banks create paper wealth when they create...Central banks create paper wealth when they create money. Do they expect an increase in real wealth to follow?<br /><br />Private banks create 'on-deposit-money' when they lend wealth. In general, they expect loaned wealth to be used to buy real wealth but that action leaves 'on-deposit-money' floating around.<br /><br />The problem is that no one can distinguish between 'on-deposit-money' and original CB created wealth. We can only observe a paper trail.<br /><br />Maybe we should just think of private banks as controlled extensions of the CBs.<br /><br /><br /><br />Roger Sparkshttps://www.blogger.com/profile/01734503500078064208noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-30285641272777614032021-05-11T01:52:21.857-07:002021-05-11T01:52:21.857-07:00Hello, I have browsed most of your posts. This pos...Hello, I have browsed most of your posts. This post is probably where I got the most useful information for my research. Thanks for posting, maybe we can see more on this. Are you aware of any other websites on this subject. <a href="https://slickcashloan.com/online-installment-loans-instant-approval.php" rel="nofollow">https://slickcashloan.com/online-installment-loans-instant-approval.php</a>Roberthttps://www.blogger.com/profile/12114479635982380752noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-39203896659702699082021-04-23T04:42:38.149-07:002021-04-23T04:42:38.149-07:00Yes: that ties up with a point I have made elsewhe...Yes: that ties up with a point I have made elsewhere, namely that there's not much wrong with privately issued money as long as it is made very clear that such money is not safe. Bitcoin is of that nature.<br /><br />Your idea of privately created money units NOT DENOMINATED in pounds, dollars etc comes into the latter category.Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-16792456619550758152021-04-23T00:53:59.355-07:002021-04-23T00:53:59.355-07:00I think that DI is only one part of the financial ...I think that DI is only one part of the financial system and a secondary one at that. The initial deception is that the govt allows private bank credit(all lending monies created by a bank when they male their loans) to be denominated in Pounds Sterling.(the national currency) After that the govt HAS to insure bank credit because it has authorised the bank to issue its national currency. Money creation is in this way privatised to some extent, but only partially so. The govt remains the lender of last resort as we saw after 2008. If more people understood this they might see DI for what it really is.Vincehttps://www.blogger.com/profile/08057936746193286642noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-48385055717964351062021-04-15T13:00:13.098-07:002021-04-15T13:00:13.098-07:00Eurosharp is a diversified medical and salon store...Eurosharp is a diversified medical and salon store, created with the vision of Sam to provide you with unique medical and salon accessories. Founded in 2019, located in Manchester, Eurosharp brings you dental kits, dental articulators, <a href="https://eurosharp.co.uk/product-category/saloon-products/barber-scissors/" rel="nofollow">saloon products</a> and razers , orthopedic and ENT.Euro Sharphttps://www.blogger.com/profile/07687974116753534914noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-85038161816239667472021-04-12T08:50:22.458-07:002021-04-12T08:50:22.458-07:00As that book also points out any Sovereign that al...As that book also points out any Sovereign that allows another power to create momey undermines its own Sovereign power and the population then "serves two masters". Which is indeed what we have now, we serve the govt AND private banks who create money via debt. This gives banks way too much power.Vincehttps://www.blogger.com/profile/08057936746193286642noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-85124057281794404132021-03-21T15:32:33.907-07:002021-03-21T15:32:33.907-07:00What "back to the 60s"?? I've been f...What "back to the 60s"?? I've been following Cochrane's blog for years and find abaout 95% of his stuff OK. I've known him make a few bad mistakes, but we all do that..!!!Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-74121876045936541672021-03-18T17:55:04.876-07:002021-03-18T17:55:04.876-07:00Ralph,
John Cochran is still clueless about macroe...Ralph,<br />John Cochran is still clueless about macroeconomics. See his back to 60s. Take the p*ss out of his blog, please.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-45289501779396982602021-02-20T09:56:38.172-08:002021-02-20T09:56:38.172-08:00Dear Prof Awrey, I find your claim that your paper...Dear Prof Awrey, I find your claim that your paper is not concerned with banks very bizarre. The words "bank" and "banking" appear over FIVE HUNDRED times in your paper..!!!Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-26159605561347721572021-02-14T16:40:55.229-08:002021-02-14T16:40:55.229-08:00Hey, Dan Awrey here. Thanks for your interest in m...Hey, Dan Awrey here. Thanks for your interest in my paper! However, you seem to have missed a rather fundamental point: my proposal expressly does *not* apply to banks. It applies to firms that accept deposit-like liabilities that are not currently regulated as banks. Indeed, the reason why I don't mention the Fisher/Friedman/Chicago Plan/Positive Money literature is precisely to avoid this type of confusion. I hope my proposals, of which the 100% reserve requirement is only one, make more sense when viewed in this light!Dan Awreyhttps://www.blogger.com/profile/07513752756984192483noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-90577179653599965472021-02-14T04:40:28.543-08:002021-02-14T04:40:28.543-08:00Agreed. Re "deposit insurance has to go"...Agreed. Re "deposit insurance has to go", that of course is implicit (if not explicit) in Positive Money's "investment accounts". Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.com