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Setting the record straight: Sovereign Money is not Full-Reserve Banking

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The German Bundesbank has recently released an interesting report on the role of banks, non-banks, and the central bank in the money creation process. We have a few issues with the Bundesbank article, however, the majority of the analysis is good. More importantly, the conclusions drawn from the report by news outlets and the blogosphere are misleading.

Marco SabaNew money or purchasing power will be created by the central bank when loans are made. The problem will be at the central banking level IF the new money is not accounted for as new cash in the cash flow of the central bank. I.e. full seigniorage will be withheld by the central bank and not given bac...

6 hours ago
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Positive Money’s submission to the Treasury Select Committee on the effectiveness and impact of post-2008 UK monetary policy

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The House of Commons Treasury Select Committee is undertaking a landmark inquiry into monetary policy. Our aim is to persuade the committee to acknowledge monetary policy’s bad side-effects and to consider the benefits of fairer and more sustainable monetary policy tools. With this in mind, we coordinated a joint letter from over 40 leading economists, as well as a statement from nearly 10,000 people.

Chris CookThanks for your response, James.Firstly, in relation to double entry book-keeping, debits and credits are not limited to accounts receivable and payable: they also relate to the equity claims of owners on one side of the balance sheet, and an asset registry (memorandum account) on the other side of ...

18 hours ago

James MurrayThe above article mentions and seems to support the Asian Tigers' use of Strategic QE and the link to the New Economics Foundation article sees it promote the formation of a Monetary Allocation Committee to decide which sectors to focus on to spend the new Public Money.This pointed investment was in...

2 days ago

James MurrayYes, well thanks Chris.I must tell you that, to my untrained eye, your above post suffers from a lack of clear relevance to the PM situation.And I read your linked article and again at the end was no wiser .You lost me when you asked why central banks involve themselves in credit creation if they ca...

2 days ago
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Vince RichardsonHere is yet another way the banks punish those least able to afford it.https://www.theguardian.com......

4 days ago

Hugh BarnardThat's 'meet' not 'meat', though they may use it to put meat on the table....

2 weeks ago
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