One of my most implacable critics, "X", very clever moreover asked me to comment on the following dialogue, which took place on the blog Paul Jorion between one of its readers ("I") and Paul Jorion himself
is the dialogue:
"I said April 24, 2009 at 09:43 @ Paul Jorion
While this article seems vague and I do not understand the concept of "real cash flow."
A and B have an account in Bank X
C and D have a bank account in the Y
A to C buys a property and pay by credit card.
D buys a property to B and pay by credit card.
Both properties have an equivalent value.
Where is the "real cash flow " since the bank X and Y will tell them" we're even "when the compensation?
The only thing that has occurred is a flow of debt from A (X) to C (Y) and D (Y) to B (X).
Logically, economists say here bank money was used as currency for transactions AC and DB.
Response P. Jorion Jorion Paul
said April 24, 2009 at 23:40
@ me
Suppose transaction A / C takes place in the morning and the transaction D / B takes place in the afternoon .
Banks reconciled their accounts at the end of each day decide to reconcile now twice a day: at noon and midnight.
Old formula: zero backlash.
New formula: offset = first A / C, 2nd off = D / B.
Your illustration suggests that the system would be different in both cases, compensation or result of the fact that it reconciles transactions in different time intervals - which is immaterial, except that extending the time it provides an opportunity for more business in the opposite direction to eventually neutralize each other.
"Scriptural" refers to the support or the support is irrelevant, only the difference between money (hard currency) and IOU is essential, because the money is 100% liquid, then an IOU did is not. The two can not go to equivalents that when all is well. "
End of exchange.
Here is my comment:
For Paul Jorion, compensation can be done only monetary base (central bank money at times, currency "physical" often).
The monetary base, when under "paper" actually is, so to say "hard cash".
course P. Jorion is right in saying that the compensation, either on the interbank market or the money market, or by interacting with the central bank, can not be done in central bank money.
exchanges between individuals are in euros BNP in Euro or Euros Post Credit Agricole compensation can be done in euros all.
But manipulation is not there: P. Jorion denies cash flow corresponding to the passage "Euro X" to "eurox Y" and / or vice versa,
by introducing a temporal concept that has no place, and speaking to exchange debentures, and no exchanges or cash flows (always slipping or semantic vagueness I noted in my primary ticket)
IT IS ONLY IF COMPENSATION was making for the nearest second that we could be asking questions.
balances that should be "monetary base" of each bank are balanced at all times to the hundredth of a second, it would be right. (Probably the principle of "conservation quantities ")
But in this case, IT COULD NO LONGER BE A TRADE Bank, no movement of funds, no money creation since bankers would be taken by hand in the bag . We would be" 100% Money " (I do not think it desirable, for that matter).
dint of focusing on the "creationist", ie supporters of the thesis (wrong according to him) of "money creation" P. Jorion forgets, or pretends to forget that the "creationists" are also "destructionists" or "abolitionist" because if the currency (I almost fell into the trap, and say "money") is created when the appropriations, it is destroyed at the time of repayment. It's the same for the phenomenon of compensation.
If everything was instantaneous, there would not even need money, paper money as bank money.
It is because there is a time between production and consumption, sale and use of the equivalent "financier" of the sale, we need "money", especially its function "store of value" - essential in an economy that is more "barter" and where the process of production as exchange and consumption, take some time.
To return to the original question of "me", it is right to resume the argument of "economists" (who do not always wrong ;-)) that would:
bank money was used currency for transactions AC and DB. , small flat near:
The bank money was not used as currency is a currency ... (when everything goes well: when everything goes wrong, there is more money and even more monetary exchange, we return to the barter economy to a non-monetary)
Comments and criticism welcome, as usual.
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