(That didn't need solving, only properly using.)
This report imagines going from "fractional fiat" to100% reserve fiat?
Doh!
That's what you get when you hire a British Bankster to report on YOUR fiat currency system.
Repeat after me.
There is no "fractional reserve" in a fiat currency system.
Only on an archaic gold-std currency system. For Pete's sake! What does "fractional fiat" even mean? Arbitrarily keeping some Public Initiative in reserve? Why? For what?
A "fiat" currency system is SUPPOSED to automatically denominate any & every transaction that is both desired-AND-allowed (by public feedback). Adding cash hoards in various places doesn't solve the need for increasingly distributed feedback within growing, national economies.
The solution is to REGULATE and oversee all credit underwriters, public & private ... and NOT to restrict the access to denomination numbers. That way the "currency supply" is always what it's supposed to be, neither too large nor too small ... and both inflation & appreciation become trivial, archaic metrics coincidental to sustainable systemic development. Rather like Cubits. Or released "demonic airs" once said to possess the ill.
Currency supply or liquidity logic is similar to the logic of a blood circulatory system. We don't regulate personal + group behavior by squeezing the oxygen supply in the air (good luck with that). Similarly, banks can't Centrally Plan currency supply - and they admitted so back ~1933, on account of abject failure. Quit beating our aggregate heads on that discredited idea. Instead, since ~1933 we've been fitfully practicing distributed regulation of our net & local goals, activities, methods, tactics & tools ... plus a host of local/aggregate tricks ... to utilize, on demand, as much of an inexhaustible metric as is PRACTICALLY needed.
If this is hard to follow, please read this little bedtime story.
Then please read about Marriner Eccles, Abba Lerner, William Vickrey, Warren Mosler, Abe Lincoln, Benjamin Franklin and John Law. And about the fact that "Success follows the quality (including tempo) of DISTRIBUTED decision-making."
A currency system involves drop dead simple operations. It takes ideology (and lots of self-deceiving fraud) to make it seem complicated.
There are other issues with "Lord" Turner's claims, but there's no use beating a dead horse. It just distracts people from the fact that it was dead on arrival.
ps: You can't even comment at the Icelandic Review without capitulating to use of the Narcissist's Network. How's that for democracy?
ps: ps: Will someone who's already a narcissist please post this commentary at Icelandic Review? Thanks.
9 comments:
Note how "study by four central bankers" conveniently leaves the entire currency system in the complete control of ....
you guessed it ....
Bankers!
Is anyone surprised?
oops,
was referring to yet another commentary regarding this story
http://www.france24.com/en/20150401-fed-crises-iceland-mulls-monetary-revolution/
"direct the income from creating money to the state instead of commercial banks" ?
They never heard of Ben Franklin, or Beardsley Ruml? Or anyone in between?
A fiat currency issuer doesn't effing NEED income from issuing fiat.
It's like talking to a Kabuki master while he's busy placing lumps on his own head.
When will they stop?
The good thing about foundering this idea on the rocks in Iceland is that it won't affect anywhere that important.
You'll notice the banks aren't lobbying against it.
Which should tell anybody with a brain that it is good for banks - primarily because the dimwits in charge will think they have 'fixed' the problem and don't have to regulate the banks that hard any more.
Remember how the Eurozone was going to unleash the magic of the market economy without interference from government.
Here we go again.
Right on, Roger! Nice post.
Neil,
You'd think so ... but already the "Positive Money" folks from multiple countries have sent emails wondering why I'm not SUPPORTING the people of Iceland.
"Positive" semantics apparently don't include thinking deeply enough to see reality on the ground.
Glad you appreciated this view, Circuit.
As you know, there's a huge mass of unwashed, non-thinkers who can't yet.
I hope you pointed them to my debunking of the whole SM concept
Why is it that people cling to these simplistic notions once the systemic weaknesses have been highlighted.
The currency view comes from the 19th century!
Actually, I didn't Neil.
Because I found that your argument against State Money seemed to go off course.
Yes, the volume of currency denomination units in a fiat currency system supposedly waxes & wanes according to the (allowable) range of aggregate demand of the populace.
Yet a STATE is also set up by those same citizens, to:
a) create the biggest single sources & sinks of currency supply (public spending & public taxing), and
b) regulate what distributed activities are & aren't allowed, or deprecated through various tax levels ( indirectly affecting currency supply)
It's a spurious point to argue absolutes about state or non-state currency supply. Seems like the wrong question.
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