tag:blogger.com,1999:blog-2277215496195926573.post912704689774487551..comments2024-01-01T07:41:51.347-08:00Comments on RALPHONOMICS: Fractional reserve makes for instability. Full reserve is more stable.Ralph Musgravehttp://www.blogger.com/profile/09443857766263185665noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-2277215496195926573.post-30295816645286748832010-10-20T16:16:00.073-07:002010-10-20T16:16:00.073-07:00Full R is the way to go. There has been fraud in ...Full R is the way to go. There has been fraud in the fractional-reserve so it is time to end it.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-86506922861780006282010-01-18T06:13:58.662-08:002010-01-18T06:13:58.662-08:00Tom: You make some good points. I’ll certainly thi...Tom: You make some good points. I’ll certainly think about them.<br /><br />Re the need to give Lerner’s ideas a boost, I’ve just done something along these lines: I’ve just put a 6,000 word paper on the net in the last few days which supports his ideas. This paper is not about your central concern: better control of aggregate demand. It’s about the pointlessness of government debt where a country issues its own currency. See http://mpra.ub.uni-muenchen.de/20057/. But anyway, it’s a boost for Lerner enthusiasts, I hope. Warren Mosler agrees that national debt is pointless, I think.<br /><br />Re your final para, and whether full reserve would help control the oligarchs, my guess is “yes”. Reason is that as Milton Friedman pointed out, full reserve is a nice simple rule which substitutes for more complex rules. Where there are complex rules, I think the oligarchs will tend to outwit the politicians.Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-10676705937717706592010-01-17T07:46:24.504-08:002010-01-17T07:46:24.504-08:00I posted a comment in the discussion of FR at Bill...I posted a comment in the discussion of FR at Bill Mitchell's (link in post) that I didn't think that FR is the fight we need to be having because it seems to be me to be politically impractical under the circumstances. Friedman's proposal was not only FR but also bank decentralization. Bank decentralization is the fight we should be having. <br /><br />The financial oligarchs have successfully hijacked the apparatus of the state. Getting anything through Congress and signed by the president is going to be extremely difficult under these conditions. I would recommend picking the top priority and going for that without complicating it with other issues that will serve to distract. <br /><br />Then, we need to get the people and politicians to understand and adopt Abba Lerner's functional finance as updated and elaborated by MMT, repealing the $4$ deficit spending offset now required by law, which is based on the erroneous analogy between government and household finance.<br /><br />These two reforms would do much more than anything else to put the US back on track, IMHO. This would do more than anything else to produce stability. In fact, it seems to be a necessary condition for stability, because otherwise the oligarchs will just find ways around obstacles eventually, presupposing that strong reform legislation could be passed. So far, everything proposed has been riddled with loopholes almost from the get-go.<br /><br />However, this will involve one hell of a push and probably one hell of a fight, too. So let's concentrate our ammo on the core objective of ridding ourselves of the oligarchy and establishing the principle of money as a public utility provided by the government as a sovereign prerogative, with the corresponding responsibility always to provide the correct amount to balance nominal AD and real output capacity, thereby avoiding both inflation and economic contraction, which adversely affect both capital and labor.<br /><br />The question is then, does FR aid in achieving the main objective of throwing off the yoke of the oligarchy by breaking up the financial behemoths that are holding the country hostage and establishing money as a public utility?Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-15330409528746467372010-01-16T17:37:31.478-08:002010-01-16T17:37:31.478-08:00Thanks for posting this.
I agree that there is not...Thanks for posting this.<br />I agree that there is not enough discussion taking place on the issue of full-reserve banking.<br />It is a pity that FR is seen by progressive economists to be an evil tool of libertarians and Austrians.<br />On this point I am right there with them. At the same time many progressive economists also supported FR, for good reason, as you have indicated here.<br />Hopefully, the consideration of FR is just beginning to enter the discussion that will look for real solutions to prevent this type of crisis from repeating itself.<br />Only the Congress shall create ALL the nation's circulating medium, and regulate the value thereof in our sovereign realm, and of foreign coin.<br />Then, let's have free enterprise.<br />Economic democracy.<br />Power to the depositor.<br />The Money System Commonjoebhedhttps://www.blogger.com/profile/17113967013126217266noreply@blogger.com