Silicon Investor (SI) -- The First Internet Community

STOCKTALK

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 : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Moominoid who wrote (11819)	12/13/2001 2:41:04 AM
From: Don Lloyd	Read Replies (1) \| Respond to of 74559

David - ...If it went to 100% only the Central Bank could lend and all other banks would in effect cease to exist. The quote below would indicate otherwise. As I currently understand it, only lending based on checking accounts would be nullified by a 100% reserve requirement. Note that lending and credit creation are separate concepts (as I think I remember CB noting). The wording gets in the way, but it appears that a 100% reserve system would allow only up to 100% loans on time deposits and the like, but 0% on checking accounts. The key general rule is not to be able to increase the money supply out of thin air. From Reisman, Capitalism, Chapter 12, Money and Spending, pg 514 - "...The 100-percent-reserve system is logically urged only for checking deposits and banknotes (currency), not for savings deposits or time deposits. There is a crucial difference in that savings and time deposits do not represent spendable money as such. When an individual makes a savings deposit or a time deposit, he temporarily gives up the use of his money. He cannot spend the savings or time deposit as such. If he wants his money, he must go and withdraw his deposit or wait until it matures. He must obtain actual money. When a bank lends the proceeds of a savings or time deposit, therefore, it is not engaged in the creation of money, but merely in the transfer of a given amount of money from a lender -- that is, the savings or time depositor -- to a borrower. Under the 100-percent-reserve system, therefore, banks would continue to lend out savings and time deposits, just as now. ..." Regards, Don

To: Moominoid who wrote (11819)	12/13/2001 4:57:37 AM
From: LLCF	Read Replies (2) \| Respond to of 74559

Yes, that assumes you can loan longer term vs a demand deposit... a 10% reserve requirement has a nice kick to it. YUM, it will be very interesting to see who's right, Friedman or Rothbard??? newaus.com.au DAK