Positive Money quotes David Graeber as saying how much we borrow limits how much money is in circulation. See the item put on Instagram by Positive Money below.
Well both Positive Money and David Graeber have gone off the rails there. Reason is that if commercial banks were putting an insufficient amount of money into circulation, there is no limit to the amount that CENTRAL banks can put into circulation.
Indeed, central banks have been putting record and astronomic amounts into circulation over the last ten years, first in reaction to the 2007/8 bank crises, and second, in reaction to Covid. Do we take it that neither Graeber nor Positive Money noticed that?
Moreover, one of the main claims made by Positive Money since it’s foundation, is that it is central banks which should do all the money creation!!!! Perhaps the people in the PoMo London office have temporarily forgotten that.....:-)
To a certain extent that is correct, you haven't linked the article so it's hard to get the context. Banks cannot lend if no one wants to borrow, which usually happens in a recession, of course many do want to borrow in a boom and the banks fall over themselves to oblige.
ReplyDeleteThe article is here:
Deletehttps://www.theguardian.com/commentisfree/2014/mar/18/truth-money-iou-bank-of-england-austerity
On re-reading the article, I see I've rather misrepresented Graeber's views. But PoMo's short summary of his views in the above image misrepresents too. So my final judgement is: Graeber is top of the form, with me and PoMo in the dog house.