Tuesday, September 20, 2016

Ellen Brown — Central Bank Digital Currencies: A Revolution in Banking?


Hypothetical at t his point but the people that are in a position to do it and talking about it.

Web of Debt Blog
Central Bank Digital Currencies: A Revolution in Banking?
Ellen Brown

31 comments:

Andrew Anderson said...

One novel possibility he suggests is that everyone could hold an account at the central bank. That would eliminate the fear of bank runs and “bail-ins,” as well as the need for deposit insurance, since the central bank cannot run out of money. Accounts could be held at the central bank not just by small depositors but by large institutional investors, eliminating the need for the private repo market to provide a safe place to park their funds. It was a run on the repo market, not the conventional banking system, that triggered the banking crisis after the collapse of Lehman Brothers in 2008.

Private banks could be free to carry on as they do now. They would just have substantially fewer deposits, since depositors with the option of banking at the ultra-safe central bank would probably move their money to that institution.
Ellen Brown

So far, so good.

That is the problem Broadbent sees in giving everyone access to the central bank: there could be a massive run on the banks as depositors moved their money out. If so, where would the liquidity come from to back bank loans? He says lending activity could be seriously impaired. Ellen Brown

The needed new reserves could/should be distributed equally to all adult citizens.

Perhaps, but here is another idea. What if the central bank supplanted not just the depository but the lending functions of private banks? Ellen Brown

No since this violates equal protection under the law.

Matt Franko said...

". Nearly 97% of the money supply is created by banks when they make loans, "

.????

Govt will spend 4.5T this year and bank credit is up only 800b...

Matt Franko said...

She's a lawyer.....

Matthew Franko said...

"where would the liquidity come from to back bank loans?"

Bank loans are "backed" by the price of the collateral... what does this have to do with bank liabilities?

So people deposit with the CB and total system liabilities on the right side of the depository institutions declines so what? This is offset by reduction of the reserve assets on the left side so what?

Somebody comes in to borrow $20k against a 2017 Camry and can point to an income flow in order to make the payments and the deal will get done...

What are these people even talking about???

Andrew Anderson said...

1) The money supply is a stock, not a flow.
2) Spending by the monetary sovereign is increased during a poor economy via automatic stabilizers.
3) Bank lending typically decreases during a poor economy.

Andrew Anderson said...

This is offset by reduction of the reserve assets on the left side so what? Franko

And if the banks don't have those reserves, what then?

Surely you know what bank runs are, Franko?

Now it may be that the banks are awash in excessive reserves due to the illegitimate buying of private assets...

Matthew Franko said...

If they dont have the reserves then they increase liablities account "Federal Reserve USD balances payable" by a corresponding amount so what?

"money supply is a stock"

So is the pork chop (oops, sorry I mean lamb chop...) when it is sitting on your plate ... then you eat it and it becomes a flow...

AA, If you eat and shit in the same day do you think you are starving?

Andrew Anderson said...

If they dont have the reserves then they increase liablities account "Federal Reserve USD balances payable" by a corresponding amount so what? Franko

No, instead their checks at the central bank would bounce due to "insufficient funds" since the payment system would no longer have to work through depository institutions and thus a lender of last resort would no longer be necessary.


Btw, I had a BACON cheeseburger yesterday as far as your attempt to slur me.

Andrew Anderson said...

Also, i played with a pet pig.

Matthew Franko said...

"No, instead their checks at the central bank would bounce"

try it again leaving out the metaphor....

Matthew Franko said...

Here this is no metaphor:

"credit liability account: "US Federal Reserve Bank USD Payable"

This is an actual accounting transaction... not a metaphor...

Matthew Franko said...

AA,

Ever take an Accounting course?

Matthew Franko said...

I'll bet Ellen Brown never took an Accounting course...

Hey AA,

Is there a Commandment in "the bible!" that says "thou shalt not make accounting transactions..." ???

I could have missed that one....

Andrew Anderson said...

Hey Franko,

How can one have honest accounting with liabilities that are largely a sham wrt to the population?

Ya can't.

Andrew Anderson said...

My degree is in engineering but my job experience is computer programming.

The first taught me honesty, the second taught me logic and the Bible is my ethical guide.

Accounting? Ya mean Assets = Equity + Liabilities? I'd say I understand it better than Yves Smith who insists that Equity is a liability and banned me for insisting otherwise. Admittedly, she calls Equity a residual liability but still ...

Matthew Franko said...

Just because something is an abstract concept doesnt make it "a sham"....

Matthew Franko said...

"One newton is the force needed to accelerate one kilogram of mass at the rate of one metre per second squared in direction of the applied force."

https://en.wikipedia.org/wiki/Newton_(unit)

What are going to tell me now that "a Newton is a sham!" ?

Matthew Franko said...

Or was there some OT commandment I missed that said "thou shalt not use abstract methodologies in administering your material systems..." ?

Simsalablunder said...

The war of the trolls…

Andrew Anderson said...

Just because something is an abstract concept doesnt make it "a sham".... Franko

Let's get concrete then to illustrate a sham liability.

Open your checkbook and look at a check. Printed on it is "Pay to the order of _____" "_______dollars". Now suppose physical fiat has been abolished. Then how in the heck can someone get dollars UNLESS he has an account at the Federal Reserve? He can't. Hence a sham liability for dollars wrt to the population.

However, the population can still use unsafe, inconvenient physical fiat to some extent so one can only say that bank liabilities wrt the population are "largely" a sham.

Comprende?

Matthew Franko said...

AA,

Nobody does what you are describing today they all pay with some non-physical form of USDs which settle thru the banking system electronically...

Dont you ever go to grocery stores and check out?

Maybe buying a pack of gum or a 40 oz. of malt liquor they might use your 'physical fiat' but for any substantive purchase, they use some non-physical form of 'fiat'... criminal activity probably also uses 'physical fiat'... thats about it...

Your example is a transaction that nobody does.... nobody legit.... nobody gets paid with a check and then goes to the teller window of the payors bank and demands 'physical fiat' at the teller window.... they simply deposit the check in their (payee) account and then have their bank contact the other bank and get the payees account credited...

You and Ellen should take an accounting course together sometime theyre offered at most Community Colleges if Hillary wins the course there might even be free of charge for you two....

Andrew Anderson said...

Your example is a transaction that nobody does.... nobody legit.... nobody gets paid with a check and then goes to the teller window of the payors bank and demands 'physical fiat' at the teller window.... they simply deposit the check in their (payee) account and then have their bank contact the other bank and get the payees account credited...? Franko

Thanks for making my point - that we all need accounts at the central bank so we won't have to work through a government-privileged usury cartel with only largely sham liabilities wrt the population.

You're the one who doesn't understand accounting if you think sham liabilities are not a problem.

Matthew Franko said...

LOL if they were a sham none of the checks would clear...

You already have an account at the CB.... THROUGH the Federal Reserve SYSTEM....

They are MEMBER Institutions of the Federal Reserve SYSTEM...

Dont tell me there is another commandment I missed here or something "Thou shalt not deal with intermediaries...."

Andrew Anderson said...

LOL if they were a sham none of the checks would clear... Franko

I said "liabilities wrt the population", not among banks themselves.

Dont tell me there is another commandment I missed here or something "Thou shalt not deal with intermediaries...." Franko

People could still deal with 100% private banks with 100% voluntary depositors.

Andrew Anderson said...

You already have an account at the CB.... Franko

No, only depository institutions in the private sector may have accounts at the central bank - the citizens must work through them or be limited to mere physical fiat.

Matthew Franko said...

You have a bias that is adverse to mediation...

How do you feel about this scripture:

"For there is one God and one mediator between God and mankind," 1 Tim 2:5

Consider all of your OT focus is somehow putting you off the acceptance of mediation in general.... you are very biased against mediation.... and its manifesting in all of your talk about not wanting to deal with a member bank as an mediator or agent between you and the Central Bank...

There is nothing wrong with the CB, as the fiscal agent of the US Treasury, being seen to delegate responsibility for account management for our citizens to member institutions or credit unions....

Andrew Anderson said...

There is nothing wrong with the CB, as the fiscal agent of the US Treasury, being seen to delegate responsibility for account management for our citizens to member institutions or credit unions.... Franko

You're completely ignoring that "loans create deposits" but only largely sham liabilities wrt the public since the public MUST keep their deposits within the usury cartel or else be limited to unsafe, inconvenient physical fiat, a.k.a. "cash."

This not only makes a mockery of honest accounting it also systematically loots the poor, the least so-called "creditworthy", for the benefit of the rich, the most so-called "creditworthy."

Yes, Jesus Christ is the ONLY mediator between God and mankind. I suggest you don't know Him if you think systematic oppression of the poor is acceptable in His sight.

Matthew Franko said...

Well here:

"The poor you will always have with you," Mat 26:11

His words (to Israel) not mine... seems like He's not getting all riled up about it...

What creates the conditions under which this is a true statement is not the minutia details of how a nation arranges its banking system to delegate functionality in the system...

Matthew Franko said...

"systematically loots the poor,"

If they are 'poor' then they dont have anything to loot....

Auburn Parks said...

AA-

For the love of Earth, go away troll. Obviously you are not convincing anybody here with your nonsense, so why dont you take your act somewhere else. You dont contribute anything positive to the community. Please leave. Thanks and have a nice day.

Matt Franko said...
This comment has been removed by the author.