Money and Banks

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.

From BigWhiteGuy.com (”Adventures of a BigWhiteGuy living in Hong Kong”), comes

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.

In the history of money, bartering was awkward because wants were not divisible. Direct exchange depended upon a double coincidence of wants. Demand for a medium of exchange grew until a general medium of exchange emerged, like gold and silver.

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.

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

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

It seems that the policy of transparency (transparent tampering) that Fed policy makers are striving to implement under the banner of achieving price stability might not be that good for the health of the economy. Also, it is a contradiction in terms to suggest that by means of manipulation of the price indexes and interest rates the Fed could somehow set the basis for the efficient allocation of resources and fulfill the role of an agent for economic growth.