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Silence8 -> RE: Thomas Jefferson said THIS would happen (12/1/2009 1:30:16 AM)
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Basically, the printing of money has been relegated to the private sector. Not paper money, but virtual money, through loans and leverage. If our intuitions were better, I think it would be obvious how strange this is.
I'd recommend the work of Frederick Soddy for a text on banking that actually makes sense.:
quote:
...Soddy was "routinely dismissed as a crank" when considering his five prescriptions, amid the Great Depression, for creating a sensible global economic structure.
The first four were to abandon the gold standard, let international exchange rates float, use federal surpluses and deficits as macroeconomic policy tools that could counter cyclical trends, and establish bureaus of economic statistics (including a consumer price index) in order to facilitate this effort. All of these are now conventional practice.
Soddy’s fifth proposal, the only one that remains outside the bounds of conventional wisdom, was to stop banks from creating money (and debt) out of nothing.
This last, in essence, would crash the cards of modern fiscal structures: the entire concept of "leveraging," with the same money is loaned out multiple times, would be constrained. If all loans had to be balanced with real assets (remember that old community Savings & Loan where neighbors were able to buy homes using the Christmas accounts of those around them?), much of the House of Cards that have tumbled around us all in the past year would be impossible to recreate.
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