On the other hand, a number of central banks have taken the dangerous approach of simply tailoring their message based on their audience: when speaking to technical experts, say one thing, and when speaking to the public, say another. The janus-faced SNB is a case in point. This rhetorical duplicity is important as it allows central banks to both assuage popular concerns over the stability of money, by fostering the illusion that they maintain control over price stability and monetary conditions, while similarly soothing markets with the impression that they possess a nuanced and empirically accurate framework of how credit creation works. For both audiences, this produces a sense of institutional commitment which sustains both public and market trust in money under conditions of uncertainty.
Yet this newfound duplicity in central bank communications is perilous, and risks further undermining public trust in money should they not succeed in straddling this fine line. Continuing to play into folk theories of money as these drift further and further away from the reality of credit creation will inevitably have unsettling ramifications. For example, it might lead to the election of politicians keen to exploit and pressure central banks, or the production of crises in the form of bank runs.
Economic Questions
Central Banks and the Folk Tales of Money
Pierre Ortlieb
or the production of crises in the form of bank runs.
ReplyDeleteBank runs would not be a threat except for the implicit and explicit privileges bank deposits enjoy over a Nation's fiat.
Remove those privileges and then bank failures are no more a threat to the general economy than other business failures and would serve to keep banks disciplined.
Remove the banks and eliminate the possibility of bank runs altogether, as well as their thieving, extortion, and corruptive influence on government.
ReplyDeleteWhy do you insist on keeping private banks? Are you a banker?
Why do you insist on keeping private banks? Noah Way
ReplyDeleteI do not insist on private banks. I insist that they be killed in such a manner that they'll stay dead, i.e. ethically killed.
Besides, by charging the banks and other large users of fiat sufficient interest on their reserves (negative interest) is the same as killing their ability to create deposits since they would have to pass on those costs to their depositors. But why would a depositor desire a non-insured deposit at a bank when he/she might have an inherently risk-free account at the Central Bank itself FOR FREE (if an individual citizen below a reasonable account limit) or for not much more?
So basically, de-privileging the banks is the same as killing them but in a manner that no one can complain about as un-ethical.
You try to phrase this in such a way that it is not a threat, as if bankers would not see it that way.
ReplyDeleteDo you think anyone is fooled? What kind of ethical protection do unethical banks need - or deserve? Fuck 'em. The sooner they are gone the better off we will be. They can go quietly or they can go down in flames with the rest of "civilization".
Those who cannot remember the past are condemned to repeat it.