| Subject: | Re: [socialcredit] U.S. Economics Test | | Date: | Tuesday, August 14, 2007 11:52:54 (+0930) | | From: | John Hermann <hermann @............au>
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In some countries, use of the term 'reserves' is going out of
fashion. That's because many financial economists prefer to describe
monetary operations exclusively in terms of so-called 'base money' (
= reserves plus cash in the hands of the public) and
'credit'. According to the conceptual framework of these economists,
only creditary deposits created by the central bank plus cash are
real money, while creditary deposits created by commercial banks
(which they simply label 'credit' in order to rob it of its monetary
status) are not real money but are merely a claim on real money. This
new interpretation (or reinterpretation) of monetary mechanics is
nothing other than a dogma, and is devoid of any logical or
experimental foundation. And the stupidity of the description becomes
fully obvious when it is recognized that deposits created by
commercial banks (a) make up well over ninety percent of the 'money
supply' (as universally defined by central banks), (b) are regarded
as money by the entire population, and (c) perform all of the
essential functions of money. Moreover, numerous Royal Commissions
and other inquiries into the operation of the banking industry have
occurred within various English-speaking countries (Australia,
Canada, New Zealand, United Kingdom, etc) during the past century,
and all have come to the conclusion that banks create the money they
advance to their borrowers. The current fad for denying what is
obvious to logical and rational people, and for simply ignoring the
findings of previous banking inquiries around the world, reveals much
about the state of mind of modern financial economists.
- John Hermann
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