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  #61  
Old 02-02-13, 15:12
AndyMMT AndyMMT is offline
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Originally Posted by Fearless Greg Lemond View Post
http://www.volkskrant.nl/vk/nl/11105...-het-nog.dhtml

In short: Holland has nationalized another failing bank and 'we, the people' can pay for this crap. That's how economics work thanks to the capitalistic experiment.
Banking as we know it will not survive, Just about all of them are de facto nationalised anyway as without the states implicit guarentee they would be under water.
Look around the world you will see whats happening in the US with the carnage in regional banks which are all being swallowed up by the big boys who were kept on life support by the state. In the UK 2 of our big 5 remaining are nationalised and the other 3 have used very dodgy tactics to keep themselves "free" Barclays with the Qatar SWF loan, HSBC & Standard Chartered through money laundering and sanctions busting.

Next the Central Banks will try NGDP targetting but it will not work and i bet at one stage they will head to nominal negative interest rates and that will be the death of banking. See the Kalecki quote in a previous comment of mine and here for what that world will be like http://coppolacomment.blogspot.co.uk...-interest.html
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  #62  
Old 02-02-13, 20:01
RetroActive RetroActive is offline
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@ AndyMMT

To make the statement that "The money multiplier is a complete and utter myth." is to misrepresent what those who were designing and running the system themselves believed, along with the role of reserve ratios as a brake on credit creation.

With new markets opening up in the last 30 yrs., the world becoming wired and the subsequent "innovations" in finance it's understandable that demand would be the driver of credit creation. What effects has that had on already mature markets? Were the housing markets around the world not used as a lauch pad for all this "innovation" and expansion? I suppose what I'm asking is how is this system grounded? That's somewhat rhetorical as you'll say by demand I suppose. I recognize that bad often leads to worse but that doesn't negate that bad as a condition existed.

YOUR TEXTBOOKS LIED TO YOU – THE MONEY MULTIPLIER IS A MYTH
http://pragcap.com/your-textbooks-li...lier-is-a-myth

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Our findings are also consistent with the predictions of Bernanke and Gertler (1995) from over a decade ago that the importance of the traditional bank lending channel would likely diminish over time as depository institutions gained easier access to external funding.
Quote:
All of these points are a reflection of the institutional structure of the U.S. banking system and suggest that the textbook role of money is not operative. While the institutional facts alone provide compelling support for our view, we also demonstrate empirically that the relationships implied by the money multiplier do not exist in the stem from the demand side, and that a better test for the lending channel is to check whether bank loans are financed by reservable deposits. Our findings suggest that this is not the case.
How's this all working out btw?

Quote:
In general, our results echo Romer and Romer (1990)’s version of the Modigliani-Miller theorem for banking firms. They argue that banks are indifferent between reservable deposits and non-reservable deposits. Hence, shocks to reservable deposits do not affect their lending decisions, and changes to reserves only serve to alter the mix of reservable and non-reservable deposits. Our findings in this paper support the argument that shocks to reservable deposits do not change banks’ lending decisions.
I'm flying, gravity is a myth.

Quote:
To be sure, the low level of interest rates could stimulate demand for loans and lead to increased lending, but the narrow, textbook money multiplier does not appear to be a useful means of assessing the implications of monetary policy for future money growth or bank lending.”
We can now abstract it to the moon, the only tether being the space itself in which we operate, and that's virtual.

Once debt saturation has been reached does demand actually dry up or simply the ability to realize that demand through more debt creation? Rhetorical.

Some say banking should return to or become simply like public utilities, I suppose that's just a quaint notion though.

When all else fails...
https://www.youtube.com/watch?v=wcW_Ygs6hm0

Last edited by RetroActive; 02-02-13 at 20:19.
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  #63  
Old 02-02-13, 21:42
RetroActive RetroActive is offline
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Originally Posted by AndyMMT View Post
Banking as we know it will not survive, Just about all of them are de facto nationalised anyway as without the states implicit guarentee they would be under water.
Look around the world you will see whats happening in the US with the carnage in regional banks which are all being swallowed up by the big boys who were kept on life support by the state. In the UK 2 of our big 5 remaining are nationalised and the other 3 have used very dodgy tactics to keep themselves "free" Barclays with the Qatar SWF loan, HSBC & Standard Chartered through money laundering and sanctions busting.

Next the Central Banks will try NGDP targetting but it will not work and i bet at one stage they will head to nominal negative interest rates and that will be the death of banking. See the Kalecki quote in a previous comment of mine and here for what that world will be like http://coppolacomment.blogspot.co.uk...-interest.html
Bill Gross Warns Investors To Be Wary of the Fed's Cheap Money Fueling the Bull Market in Stocks
https://www.youtube.com/watch?v=E2MimXXeZu4
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  #64  
Old 02-02-13, 23:58
AndyMMT AndyMMT is offline
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If you have read Cullens take down of the money multiplier I am really not sure that I have anything to add! he is of course correct there its the standard Post Keynesian critque we dont do money multiplier, from memory he links to a Fed paper which I think you have quoted here who reject it as well.
Which is all kinda of curious that the fed know it, bankers know it and yet the fed went ahead with QE which requires the money multiplier for it to work like they "suggest"* (well apart from the intial collapse that QE prevented... I would suggest QE was anti deflationary, but that doesnt mean its inflationary)
QE though really had 2 parts, the first is that it means banks have more reserves so able to lend more but we know banks do not lend reserves so thats not right.
The second part (and this is related to Gross's comment although he has it wrong why) is that QE is intentionally designed to chase investors out of bonds and into riskier assets by driving yields down so far that the interest rates are negative (that is "real" not "nominal") this is what the fed/BoE hope will cause a "wealth affect" that is stock markets going up everything fine sort of thing so we spend more, again its Jedi Mind tricks in action (Jedi mind tricks btw was the Financial Times description not mine alas)

*when i say suggest it is more correct I think to say sold, it is after all a complex subject that somehow they had to get politicians/general public to go with so used the "banks will lend more" line instead of what they were really doing... if everyone knew what they were really doing it would have been a complete failure.
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  #65  
Old 02-03-13, 02:51
RetroActive RetroActive is offline
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lolz, I'll have to do more reading. I've thought economics was a voodoo science for decades, it just keeps getting better and better. Golem lives.
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  #66  
Old 02-03-13, 11:53
AndyMMT AndyMMT is offline
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Originally Posted by RetroActive View Post
lolz, I'll have to do more reading. I've thought economics was a voodoo science for decades, it just keeps getting better and better. Golem lives.
Then can I give you a couple of suggestions?

moslereconomics.com Warren Mosler has some mandatory readings but you only need a couple 7 deadly innocent frauds & soft currency economics. Both free and easier reads than some, both give you a good idea of banking and the monetary system. Pragcap is fine i comment there myself now and again but its very finance orientated which of course is the reason its there.
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  #67  
Old 02-03-13, 12:48
RetroActive RetroActive is offline
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Originally Posted by AndyMMT View Post
Then can I give you a couple of suggestions?

moslereconomics.com Warren Mosler has some mandatory readings but you only need a couple 7 deadly innocent frauds & soft currency economics. Both free and easier reads than some, both give you a good idea of banking and the monetary system. Pragcap is fine i comment there myself now and again but its very finance orientated which of course is the reason its there.
Thanks for that. I've watched more than a few Keen videos over the last year or so, enough to know that there was a fundamental conflict going on but I didn't realize it was that fundamental. Keen makes sense in what he's saying, at least to my relatively ignorant understanding.
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  #68  
Old 02-03-13, 13:46
AndyMMT AndyMMT is offline
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Originally Posted by RetroActive View Post
Thanks for that. I've watched more than a few Keen videos over the last year or so, enough to know that there was a fundamental conflict going on but I didn't realize it was that fundamental. Keen makes sense in what he's saying, at least to my relatively ignorant understanding.
I like Steve as well, the one book I keep next to my PC is debunking economics to see where the neoclassicals are coming from and the ridiculous models and assumptions they use.

Wait until you look at the completely insane assumptions that Friedman put into "inflation is everywhere and always a monetary event"

Yep there is a war going on in the econ-blogosphere especially.
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  #69  
Old 02-03-13, 14:28
RetroActive RetroActive is offline
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Originally Posted by AndyMMT View Post
I like Steve as well, the one book I keep next to my PC is debunking economics to see where the neoclassicals are coming from and the ridiculous models and assumptions they use.

Wait until you look at the completely insane assumptions that Friedman put into "inflation is everywhere and always a monetary event"

Yep there is a war going on in the econ-blogosphere especially.
Krugman's assumptions, as Keen explains it, about the relationship between savers and borrowers and the intermediary function of the bank is hilarious enough.
If we can't get the most basic assumptions correct, it really makes one wonder, how in the world is this functioning? And these are systems that we have created, all of a sudden it's become like quantum physics. If anyone knows they're not telling.
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  #70  
Old 02-03-13, 18:14
AndyMMT AndyMMT is offline
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Originally Posted by RetroActive View Post
Krugman's assumptions, as Keen explains it, about the relationship between savers and borrowers and the intermediary function of the bank is hilarious enough.
If we can't get the most basic assumptions correct, it really makes one wonder, how in the world is this functioning? And these are systems that we have created, all of a sudden it's become like quantum physics. If anyone knows they're not telling.
Ah that Keen/PK was a good one PK took a bit of a kicking there but as i noted in a reply to Ferminal that PK has been interesting lately and taking the MMT line. There is an interesting story told by Bernard Lieter whos a Belgian economist that he was talking to PK years ago who warned him not to go near the monetary system as it was professional suicide. So without mentioning it PK seems to be playing a strategic game now and slipping it in. Also mentioned where Delong is at the moment (through his wife) and having tea with the MMT economists, the post keynesian schools have put aside their differences (mostly minor and symantic anyway) seems the Keynesians are mobilizing...watch this space.
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