Contains download link to article at Sage.
The Vineyard of the Saker
Michael Hudson | President of The Institute for the Study of Long-Term Economic Trends (ISLET), a Wall Street Financial Analyst, Distinguished Research Professor of Economics at the University of Missouri, Kansas City, and Guest Professor at Peking University
1 comment:
The power of private banks over government stems to a significant extent from government itself assisting private banks’ money creation activities – the assistance coming in the form of deposit insurance and bank bailouts . That’s about as daft as banks giving automatic weapons to criminals and then complaining when criminals use the weapons to rob banks
Under full reserve banking, in contrast, private banks get none of that assistance. Literature issued by private banks has to make clear that depositors can lose money if the bank is incompetent, except where bank accounts are 100% backed by reserves at the central bank. Another bonus is that it is plain impossible for banks to go bust because all loans are funded via equity: i.e. if a bank makes silly loans, all that happens is that the value of its shares decline. That bank does not actually go bust.
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