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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (53698)	2/13/2006 12:38:53 PM
From: gpowell	Read Replies (2) \| Respond to of 110194

I presume you would also let the free market as opposed to the FED set interest rates as well. In fact, are you proposing abolishing the FED? Interest rates would reflect the marginal efficiency of capital and time preference. Yes, the fed would be abolished, although it is likely that a “fed like” central clearinghouse would be created by a free market. Anyway how does free market creation of money work in your system? One must allow the market to devise its own system(s), however it is likely that multiple monetary systems would emerge ranging from pure credit systems to hard money systems. Prior to its usurpation by government, the market system most widely used was commodity based fractional reserve, although that was under very different conditions than exist today. Do you allow for fractional reserves? I don't have the type of pretense to knowledge such that I would allow or disallow anything. Are you really creating money or credit or do you make a distinction? I think there are only qualitative distinctions between a widely and easily exchanged commodity, paper claims to that commodity, and pure credit, such that any can be considered money given certain conditions. The beauty of the market is that it can respond to changing conditions better than the Fed.