SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Tommaso who wrote (49283)1/9/2006 8:54:00 PM
From: basho  Read Replies (1) of 110194
 
Tommaso, I'm quite sure Frank Shostak is aware that demand deposits don't work that way in our current system but is instead making the case that they should. I had some communication with him many years ago and found him extremely well informed but very doctrinaire.

It seemed to me that his unwillingness to accept that the dividing line between money and credit in our financial system is inherently ambiguous leaves him with little choice but to seek to impose precision where none is possible. Once we get beyond the monetary base, the distinction between money and credit is not in my view an easy one to make. Attempts to do so can even obscure rather than clarify the essential issue which to my mind is the degree to which holdings of these credit instruments take on some or all of the characteristics of money in the eyes of their owners. Given that in a fiat fractional reserve monetary system all is based on confidence, perception is as important to consider as "reality".

As for the viability of banking under a 100% reserve regime, remember that this strict rule was only ever meant to apply to demand deposits. Any genuine term deposits would be free to be lent out on whatever basis the bank considers prudent. The net result of the total constraint on lending demand deposits would simply be a considerably slower rate of money and credit growth and a less fragile banking system.
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2026 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News