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I agree. I think that the banking system and insurance industries should be nationalized. These are public trusts that collect private profits. I guess I could stand it if banks were more like credit unions. insurance companies collect premiums, make payments and keep the rest. why isn't the government doing this.
There seems to be a problem with terminology in economics. Here they are talking about "money", but that is not a very good use of terminology right there... do they mean the FR Notes? Coins? Account Balances? Numeraire? etc..
It's a bit deceptive/simplistic to use just the term "money" to begin with...
The banks may be driving people away from themselves already (B of A's latest $5/mo debit card fee a recent example). Nobody likes them. Credit Unions are better for individuals who need deposit/payment services... banks are more or less putting themselves out of business but for their current ability to go to the govt for help when they REALLY screw up...
However they’ve slipped up in the introduction to their new book “Where does money come from” (which is on the page Tom links to above). They say that because 3% of money is physical cash ($100 bills etc), therefor 97% is commercial bank created. That misses out bank reserves (as Senexx says above). Those reserves are normally about another 3%, though somewhat more just at the moment.
I don't know whether they include it somewhere else, but they miss the all-important to MMT distinction between horizontal (endogenous) and vertical (exogenous), although it is true that most money creation is endogenous.
But they are bringing up the right issues and talking about the right things. And as the YouTube video says, it's about getting a conversation going. That's a conversation that MMT'ers can welcome and participate in.
Tom, The NEF work I referred to above objects to the very existence of horizontal money. That is they want vertical money only, i.e. full reserve banking. So they do get the distinction.
Yes, I know that, Ralph. I placed a comment at their place some time ago raising some objections to their proposal. But unlike AMI, they seem open to a conversation.
What I meant was that they do not make the distinction between vertical and horizontal in the way that MMT does, and like AMI they seem to think that the way forward is through complete re-do rather than reform, e.g., along lines that MMT'ers like Warren have proposed.
9 comments:
Well they have half the story right.
I agree. I think that the banking system and insurance industries should be nationalized. These are public trusts that collect private profits. I guess I could stand it if banks were more like credit unions. insurance companies collect premiums, make payments and keep the rest. why isn't the government doing this.
Tom,
There seems to be a problem with terminology in economics. Here they are talking about "money", but that is not a very good use of terminology right there... do they mean the FR Notes? Coins? Account Balances? Numeraire? etc..
It's a bit deceptive/simplistic to use just the term "money" to begin with...
Rodney,
The banks may be driving people away from themselves already (B of A's latest $5/mo debit card fee a recent example). Nobody likes them. Credit Unions are better for individuals who need deposit/payment services... banks are more or less putting themselves out of business but for their current ability to go to the govt for help when they REALLY screw up...
Resp,
Great if you're a circuitist.
I didn't notice any mentions of reserves.
I’ve long supported NEF’s ideas on re-jigging the banking and monetary system. See here:
http://www.positivemoney.org.uk/wp-content/uploads/2010/11/NEF-Southampton-Positive-Money-ICB-Submission.pdf
However they’ve slipped up in the introduction to their new book “Where does money come from” (which is on the page Tom links to above). They say that because 3% of money is physical cash ($100 bills etc), therefor 97% is commercial bank created. That misses out bank reserves (as Senexx says above). Those reserves are normally about another 3%, though somewhat more just at the moment.
Or have I missed something?
I don't know whether they include it somewhere else, but they miss the all-important to MMT distinction between horizontal (endogenous) and vertical (exogenous), although it is true that most money creation is endogenous.
But they are bringing up the right issues and talking about the right things. And as the YouTube video says, it's about getting a conversation going. That's a conversation that MMT'ers can welcome and participate in.
Tom, The NEF work I referred to above objects to the very existence of horizontal money. That is they want vertical money only, i.e. full reserve banking. So they do get the distinction.
Yes, I know that, Ralph. I placed a comment at their place some time ago raising some objections to their proposal. But unlike AMI, they seem open to a conversation.
What I meant was that they do not make the distinction between vertical and horizontal in the way that MMT does, and like AMI they seem to think that the way forward is through complete re-do rather than reform, e.g., along lines that MMT'ers like Warren have proposed.
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