Money and Banking

The present glut in the money markets, with excessively cheap money and its attendant evils and dangers to the credit structure of the country, is due to the concurrence of three main causes.

We have today a hybrid of two forms of banking — loan banking (non-inflationary) and deposit banking (inflationary if not 100% reserve holdings).  The cause of booms is the credit expansion by central banks that is not backed by pools of private savings.

As new money is created by the banking system, it enters the price system as the recipients spend it.

Whenever economic activity stagnates or declines, they quickly lower their interest rates and expand their credits.

The student loan scandal concerns the fact that many colleges and universities chose preferred lenders for financing student loans and then receive

A fun little absurdity — AOL has a teaser that purports to show how a c

I was amazed that when Muhammad Yunus, head of the state-supported, quasi-socialist, regimentation-promoting Grameen Bank, received his Nobel Prize

The absence of a central bank in Panama has created a completely market-driven money supply. Panama's market has also chosen the US dollar as its de facto currency. The country must buy or obtain their dollars by producing or exporting real goods or services; it cannot create money out of thin air. In this way, at least, the system is similar to the old gold standard. Annual inflation in the past 20 years has averaged 1% and there have been years with price deflation, as well: 1986, 1989, and 2003.

MAN Financial chief economist Dr Frank Shostak has a warning for investors.

From Portfolio.com: