Summary: Great Britain’s decision to leave the EU presages a global financial meltdown that could resemble the 1930s. Banks will demand massive bailouts. We will be forced, if the banks are bailed out again, to endure harsher austerity and a prolonged depression.Michale Hudson
EU Bankster Contagion
Chris Hedges interviews Michael Hudson
Accounts for all at the central bank advances a bit (I hope):
ReplyDeletehttp://positivemoney.org/2016/06/bank-of-england-uk-banks-to-lose-their-status-as-gatekeepers-to-the-payment-system/
Not really, what is going to happen is a displacement from bank accounts to accounts based on payment services based on block chain or similar technologies in the future. this is a positive change don't get me wrong, but far from 'public accounts at central banks'.
ReplyDeleteThis will force central banks to monetize credit with 'high powered money' as it flows from traditional banks to other payment services corporations. Don't expect it to happen over night though, it will take a very long time due to institutional inertia and costumes. But the monetization of credit has been going for almost 10 years already will all the swap programs from the various CB's so it's not really much different. Downsizing of traditional banks is due.
This won't stop the ability of banks to create credit, as they are constraint by capital, neither would 'accounts at central banks'. Maybe, just maybe, it would force governments to run higher deficits, but due to out of paradigm views of 99% of the population, I don't expect this happening soon (and we would rather enter a deflationary spiral).
Galbraith disagrees:
ReplyDelete"And most likely, since the apocalyptic predictions of economic collapse and “Lehman on steroids” that preceded the Brexit referendum will not come true, such warnings will be even less credible when heard the next time."
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DeleteThat's good news, Matt. We don't want turmoil.
DeleteKevin we just have to watch prices for financed material for clues...
ReplyDeleteWe survived a collapse in oil price of over 50% so if we made it thru that relatively unscathed I dont see anything here right away that could have a larger impact than oil was...
So I'm in the Galbraith camp on this one...
Hudson should retire already.....
Plus this probably puts the Fed on hold at 0.5% effectively permanently so that has an effect of reduced price volatility also in here...
ReplyDeleteThere is no reason for a banking crisis right now, unless the euro collapses for good, then it's unlikely anything will happen.
ReplyDelete... neither would 'accounts at central banks'. Ignacio
ReplyDeleteThe allowance of inherently risk-free accounts for all at the central bank would make government-provided deposit insurance very difficult to defend. Soon, other privileges for depository institutions would be abolished too.
Then banks could still create deposits, of course ("loans create deposits"), but the corresponding liabilities would be REAL indeed wrt to the public and the banks would have to be a LOT more careful wrt to creating them or go bust. There's GENUINE liability side discipline, something never tried before that I know of.
Financial liabilities are non-real by definition... 'liabilities' are an abstract accounting construct...
ReplyDelete'liabilities' are an abstract accounting construct... Franko
ReplyDeleteWell, duh.
But they're real enough when enforced by law.
That statement doesn't make sense ....
ReplyDeleteYou seem to be really big on "the law" it self as some sort of enforcement mechanism it's not ....
The law is not the enforcement mechanism the enforcement mechanism is supposed as the punitive actions that are imposed if the law is seen to be violated/broken....