tag:blogger.com,1999:blog-2277215496195926573.post34012940921039524..comments2024-01-01T07:41:51.347-08:00Comments on RALPHONOMICS: Without debt there’d be no money?Ralph Musgravehttp://www.blogger.com/profile/09443857766263185665noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-2277215496195926573.post-8419583168642886632020-05-02T16:48:55.065-07:002020-05-02T16:48:55.065-07:00greatgreatDominickhttps://www.blogger.com/profile/16892760646468170505noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-73957769381137576832015-02-28T19:30:21.833-08:002015-02-28T19:30:21.833-08:00So this is Ralph Musgrave! I see your comments on ...So this is Ralph Musgrave! I see your comments on Cochrane blog, I post at Marcus Nunes' Historinhas often which is worth reading even if you sometimes disagree. I like your stuff. Benjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-23076204682655179072015-02-28T06:27:21.536-08:002015-02-28T06:27:21.536-08:00Yes, it makes sense. I might point out that the mu...Yes, it makes sense. I might point out that the multiplication process is axiomatically a debt based process.Roger Sparkshttps://www.blogger.com/profile/01734503500078064208noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-6845453101971366662015-02-28T06:18:17.937-08:002015-02-28T06:18:17.937-08:00Hi Roger,
Re your para starting “First…”, I agree...Hi Roger,<br /><br />Re your para starting “First…”, I agree.<br /><br />Next para and re a bank lending “its own money”, if by that you mean shareholders’ money, then I’d say no money creation takes place. Reason is that shares are not money, so if I buy £X of shares and the money is loaned to someone, the money is still there, but no money supply increase takes place.<br /><br />In contrast, where depositors’ money is loaned on, I agree that the money supply increases – unless the recipient of that new money puts it into a longish term account. Money which cannot be accessed for more than two to four months is not normally counted as money. That’s more in the nature of a long term loan to a bank.<br /><br />“allows the bank to repair the imbalance created by allowing two depositors (original and borrower) access to the same base money”. That’s where the money supply increase takes place, and it’s not a big problem a commercial bank as long as other banks are doing the same thing (if they aren’t, the first bank will lose reserves).<br /><br />Para starting “From examining….”, I think you’ve gone off the rails there. As I said just above, the money multiplication process is not a problem for an individual bank as long as other banks are doing the same thing on approximately the same scale.<br /><br />Hope that makes sense?????<br /><br /><br />Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-63377363997214778242015-02-28T05:25:33.243-08:002015-02-28T05:25:33.243-08:00Long term loans are part of the puzzle, as you say...Long term loans are part of the puzzle, as you say. Maybe we can think this through for a few possibilities. <br /><br />First, a person to person loan. A wealthy person may make a monetary loan for purpose of building a house. Here, money is being recycled into the economy. There is no creation of money but there is increased economic activity.<br /><br />A BANK loan for a new house. The bank makes a long term loan and increases the deposit available to the builder. Now we have two possible relations. The bank may be lending IT'S OWN MONEY and act like a wealthy person, OR, it may be lending the money owned by depositors. The lending of money owned by depositors is an increase in the money supply and an increase in total bank deposits.<br /><br />The bank sells the home loan to a government sponsored agency. This act is not a lending activity but allows the bank to repair the imbalance created by allowing two depositors (original and borrower) access to the same base money. When the loan is sold to government, government effectively becomes the base lender. The increase in money supply (more total deposits) is sustained.<br /><br />From examining private lending and bank lending, we can see that the addition of government as a final-bank allows the expansion of the money supply for long periods of time. Without the presence of government, bank lending would rapidly find liquidity problems as money flowed away from the originating geographical region or bank.<br /><br />Government 'super-bank lending' could occur with the asset based money supply you are suggesting.<br />Roger Sparkshttps://www.blogger.com/profile/01734503500078064208noreply@blogger.com