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To add on "who should decide who gets money" ... Let's not forget the equity capital markets and private lending institutions. Banks don't have a strangle hold
by IanDrake 7y ago
To add on "who should decide who gets money" ... Let's not forget the equity capital markets and private lending institutions.
Banks don't have a strangle hold on providing capital.
- roenxi 7y agoActually they do; banks can create new money. It is practically impossible to compete with an institution that can create new money when providing capital. It is called Fractional Reserve Banking and only licensed institutions can do it as far as I recall. I'm not intimately familiar with US markets, being Australian, but the M2 suggests that half the money currently in existence was created since 2007. If whoever is creating that money doesn't have a stranglehold on providing capital they are going to, at a minimum, have massive influence. It is worth focusing in on, it may only be half the money in the system but that is actually a big deal.
- pjc50 7y agoTo the extent this is true, anyone can create new money by extending credit - such as when issuing an invoice with delayed payment terms. There's a not-inconsiderable amount of money floating about in trade credit.
- IanDrake 7y agoI think you're talking about the ability of the federal reserve to print money and buy US treasures, thus increasing the money supply. The thing is, US currency is global commodity and as such is subject to supply and demand forces. The Fed targets a 2% inflation rate, which strikes a nice balance. If the currency appreciates, people will hord it and a currency bubble will cause major economic problems. Just look at bit coin. It currently worth $20,000, no wait $10,000, no wait $17,000, no wait... Now try to base a functioning economy on a commodity that has wild swings. It can't be done well.