Thanks. That’s a useful

June 19, 2014 at 9:19 am #86879

Keymaster

Thanks. That's a useful summary of this school of economic thought's point of view, but it looks as if for once students of economics are generally being taught the accurate thing:

Quote:

Endogenous money is the idea that rather than the central bank determining the amount of money in the economy – exogenously, the amount of money is instead determined by the supply and demand of loans. In shorthand, MMTers (and Post Keynesians in general) would say, “Loans create deposits”. That is to say that banks create money by extending loans to customers, while at the same time creating a corresponding deposit. This runs contrary to what is generally taught to students of economics – that savings are loaned out with banks acting purely as intermediaries, or at best leveraging an initial injection of government money by a predetermined ratio.

Meanwhile in China the view that early goldsmiths issued more receipts for gold than they actually had and that this was the origin, and still the practise, of modern banking is being refuted by events. If they had done this (and any that did) this would have been exposed sooner or later and could not be the basis for a viable and stable banking system:http://qz.com/216059/chinas-investigation-into-missing-metal-could-spark-a-much-bigger-crisis/and this from the Financial Times of 12 June:http://www.ft.com/cms/s/0/85f594a8-f210-11e3-9015-00144feabdc0.html#axzz354iGvZZ7