Posted: Sep 26, 2013 6:33 am
stevecook172001 wrote:FIAT FRB money is a double accounting fraud.
[snip]
FRB-based money-supply is always a car-crash waiting to happen and on a finite planet of finite resource you can be guaranteed it will happen
Ahh, this takes me back about 20 years.
Fractional reserve lending/banking isn't a fraud, accounting or otherwise, it’s a fundamental part of the classical banking system. Without it, there are almost no incentives to deposit money, apart from safety, and that’s what a safe deposit box is for. Its only an accident waiting to happen if the central bank is powerless and there's no insurance.
However, there is evidence emerging that the neo-classical model of money creation, of which fractional banking is a big part, isn’t all that correct. Like a lot of things in economics though, its not exactly clear what the real root is, and the emerging exogenous money theories have just as many problems as the classical endogenous money theory.
Even with the unparallel, massive increase in the money supply seen in the last five years, inflation expectations have stabilised at the ~2-3% level seen across most advanced economies.
It sounds bizarre, but its actually quite an interesting time to be an economist. Plenty of theories that we knew were proven, or at least weren’t really bothering arguing about as they had worked really well for four or five decades, have all of a sudden turned out to be not reliable after all. A lot of the standard neo-classical Keynesian and Freidman-style monetarist arguments are being rehashed.
Personally, I think we’ll probably see some re-writing of the economic textbooks over the next 5 to 10 years, sort of a ‘what we learned from the 2007 to 201X great recession’ style of thing. This could be the biggest shift in economic thinking since the 1970s. My education in economics ended in the late 1990s, and its pretty ratty around the edges at the moment. Perhaps I’ll have to go back to university…