The latest in the Bulgarian bank saga. The audit report on Corporate Commercial Bank is out. It's very grim reading, but does that mean the bank will be closed down? Not necessarily.....
In my post " The Nature of Money " I noted that money's use as a store of value is secondary to its function as a medium of exchange, and commented that long-term savings should not be held as "money" but rather as hard assets or investments in productive activities. I made it clear that my personal belief is that the latter is far preferable, because it benefits not only the holder but the rest of society too. This attracted the attention of a number of people who appear to have an almost religious belief in the virtue of gold as a store of value. The result was a bruising three days of intense debate on twitter, which was only ended when I blocked several of these people and warned off the rest. I was frankly shocked by the fervour of their belief: the more convinced they were that eventually I would "see the light" the less I wanted to have anything to do with them. I felt much as an agnostic must feel when subjected to the attempts of religious c...
Someone has just put this comment on my post " The Golden Calf ": Luke 10:30-37 Jesus replied, “A man was going down from Jerusalem to Jericho, and he fell among robbers, who stripped him and beat him and departed, leaving him half dead. Now by chance a priest was going down that road, and when he saw him he passed by on the other side. So likewise a Levite, when he came to the place and saw him, passed by on the other side. But a Samaritan, as he journeyed, came to where he was, and when he saw him, he had compassion. He went to him and bound up his wounds, pouring on oil and wine. Then he set him on his own animal and brought him to an inn and took care of him. And the next day he took out two denarii and gave them to the innkeeper, saying, ‘Take care of him, and whatever more you spend, I will repay you when I come back.’ Which of these three, do you think, proved to be a neighbor to the man who fell among the robbers?” He said, “The one who showed him mercy.” And Jesu...
I am tired of theories of monetary expansion that ignore the considerable role of both commercial banks and fiscal authorities in the creation of money. To hear some people talk, you would think that all that is needed is for the central bank to increase base money (M0), and the total amount of money (M3) circulating in the economy will magically increase. So when the economy is on the floor, monetary conditions are tight and commercial banks not lending, inflate M0 by any means available and wait for life to return. This amounts to believing, in the face of considerable evidence to the contrary, that the earth is flat. In a credit money system, the vast majority of money in circulation is created not by the central bank but by commercial banks. Furthermore, government deficit spending increases the total amount of money circulating in the economy (unless this money expansion is actively neutralised). Therefore the combination of fiscal authorities and commercial banks can create all...
Glad to know that the "Payment" arrow at the top right hand side is also new money.
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