Some of the most interesting of that new work is from, and about, central banks. As an example, here is a remarkable speech by BIS economist Claudio Borio. I am not sure when I last saw such a high density of insight-per-word in a discussion of money and finance, let alone in a speech by a central banker. I could just say, Go read it. But instead I’m going to go through it section by section, explaining what I find interesting in it and how it connects up to a larger heterodox vision of money....J. W. Mason's Blog
“On money, debt, trust and central banking”
JW Mason | Assistant Professor of Economics, John Jay College, City University of New York
2 comments:
Well I read the first thousand words or so and was underwhelmed. But perhaps someone can tall me what I've missed.
“Two-tier monetary system” is a compressed version of Mehrling’s hierarchy of money. The second point, which Borio further develops further on, is that credit is integral to the payment system, since the two sides of a transaction never exactly coincide – there’s always one side that fulfills its part first and has to accept, however briefly, a promise in return. This is one reason that the dream of separating credit and payments is unrealizable. [bold added] J.W. Mason
A two-tiered monetary system is a consequence of needlessly expensive fiat and is thus as obsolete and unjust (if privileged by government) as the Gold Standard itself.
Inexpensive fiat allows the entire population to use fiat directly via debit/checking accounts at the Central Bank or Treasury itself and all other privileges for the banks (e.g. government-provided deposit insurance) abolished.
Then instant clearing at point of transaction between individuals, businesses, State and local governments, etc. disallows any need for overdraft protection since accounts with insufficient funds would only prevent the specific account holder from paying his/her/its bills and not a bunch of innocent depositors as is now the case with "the banks" and their captive depositors.
Your thinking is thus obsolete and your disparagement of separating credit and the payment system is unwarranted.
Nor are high interest rates a necessary consequence of separating credit from the payment system since equal fiat distributions to all citizens (i.e. a Citizen's Dividend) should lower them as desired. How to finance? Overt Monetary Finance and/or negative interest rates on large and non-citizen accounts at the Central Bank or Treasury.
Post a Comment