Not sure he has a grip on actual operations and he ignores the global financial system and global economy.
Alt-M
On Free Banking, Monetary Rules, and Crusades
George Selgin | senior fellow and director of the Center for Monetary and Financial Alternatives at the Cato Institute and Professor Emeritus of Economics at the University of Georgia
ht Art Shipman at The New Arthurian Economics
5 comments:
A Douglas has went through this before....
https://originofspecious.wordpress.com/2015/11/26/free-banking-wishful-thinking/
Alex makes good points. I would add transaction costs. This is big in a national economy and huge in the global economy. Selgin seems to ignore this.
Lowering transaction cost is a reason that digital currencies has a much greater chance of replacing the current system than so-called free banking. Digital currencies are more efficient. However, there are inefficiencies with block chain, too.
The direction seem to be heading toward a cashless society, which means digital currency of one form or another, whether central bank created or block chain. But digital currencies are subject to most of the issues that Alex points out.
We've never really had "free banking", at least not in the US, since it is apparently an inherent duty of a monetary sovereign to provide a risk-free storage and transaction service for its fiat, ie. a central bank for all citizens and not just for depository institutions, aka "banks."
At least in the US, we've NEVER had such a service and much misery has been caused thereby.
Alex Douglas is coming to the meet up with Warren Mosler in Milton Keynes (UK) on Wednesday evening. Tickets here:
https://www.eventbrite.co.uk/e/audience-with-warren-mosler-tickets-23899462937
I have a horrible feeling I'll try to say "Milton Friedman" during the evening, and it'll come out as "Milton Keynes"..:-)
Nice to see Selgin coming round to something close to MMT. That’s in his 2nd last para where he says “It follows from this that, so long as an economy relies on fiat money, the quantity of standard money itself, instead of being regulated by private market forces, has to be regulated by some other means. That must either mean discretionary control by bureaucrats, or control by means of some sort of monetary rule.”
Quite. The MMT “discretionary control by bureaucrats” is: in a recession have the state print and spend money, and/or cut taxes.
As to letting private banks to print and lend out money, why do we allow that? If I can obtain money to lend out just by cranking up my printing press, obviously I can lend at a lower rate than those poor sods to go out to work, save up money and then abstain from consuming it so they can lend to someone else.
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