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> If you have an argument why these IOUs should not be considered money, I would love to hear it. Otherwise, let’s conclude that non-bank corporations can somet
by x87678r 6y ago
> If you have an argument why these IOUs should not be considered money, I would love to hear it. Otherwise, let’s conclude that non-bank corporations can sometimes create money out of thin air.
It comes down to the definition of money. Yes non-financial intermediaries are very similar to banks and "create money" but money is defined as the amounts on bank's balance sheets so by definition non-financial intermediaries cannot create "money", but they are doing something very similar.
Also Nonintermediated debt is probably a better example. If you own a CD from a AAA corporate its effectively money but technically isn't.
- anticristi 6y agoFor my own clarification, are financial instruments "money"? I think common people, like me, have a hard time to distinguish money from cash and cash-equivalents. A bond from an AAA corporate might not be money, but it's so liquid that it's as good as cash to me. :D
- x87678r 6y agoNo one can agree exactly what money is so that's why you see a bunch of arguments like this. A stock market billionaire who has a small mortgage on one of their properties has no money - he owes money. You can see different countries have different definitions. https://en.wikipedia.org/wiki/Money_supply#Definitions_of_%22money%22 https://en.wikipedia.org/wiki/Money_supply#Definitions_of_%2...
- SpicyLemonZest 6y agoThey're not. There are actually multiple different definitions of "money" in use, because it's complicated to define exactly what distinguishes money from a financial instrument, but corporate bonds aren't included in any definition I'm aware of.