On the new single thought in the monetary field.
I thought not having to do more duty, dismantle certain practices, especially coming from someone who claims to champion the poor, the marginalized, state debt, and destroyer of thinking. And yet ... On a blog
known in the French blogosphere, that of Paul Jorion the following comment was posted by a "@ toad red" (February 5, 2010 at 20:44)
"Bravo for the demo! It is very much in the direction of "The Silver manual" which is based on the distinction between "real money" - paper money - and what is simply recorded as giving the impression of be money but that does not deserve the name change. Deposits are merely promises to pay, alias IOUs .. ")
I tried to answer this "Red Toad" the next thing:
You're right: The argument Voyer (author of the ticket denying money creation by private banks) is well within the meaning of the words of Paul Jorion in the " silver, Manual ". The only difference is that Voyer has no literary talent of Paul, and that his arguments are much more boring, so even more objectionable, BL
Comment removed, which act.
course, Paul Jorion has the right to do whatever he wants on his blog: he might just have the decency to write any argument - it was courteous and 'civilized' - in opposition to my ideas will be banned from my blog.
I will say here, in terms courteous and civilized, which to me seems "preposterous" in the theses of Jorion - and Voyer (which is as grammarian, trading, accounting and ... philosopher, since for him "Accounting is an important branch of philosophy").
So back to essentially the monetary issue, and that claim explicitly Jorion and Voyer.
Voyer happen to think " Demonstration of non-money creation by commercial banks and stupidity of the saw "The funds are deposits" . So I will not repeat here the usual "authoritative arguments" used against (most often) or for this thesis, I'll just use this simple common-sense the reader, who will his own opinion.
heading back definitions of money and currency , that what these words represent, both conceptually and practically, for all of us: when it will be necessary for clarity, I will use a concrete example, that of the euro, to avoid ambiguity.
The currency - a term used by all Economists - (English money) is what is used to pay in a given community: the euro in Europe, the U.S. dollar. The term 'popular' to put money, alas, is "money", which leads to confusion semantic regrettable.
We reserve the term " money" to "cash" ("currency" in English): our Canadian friends of the movement "social credit" call "pocket money", those who speak "Franglais" also say "cash" ticket 100 euros is the money. A total of 100 euros , whatever its medium, electronic or paper, is the "currency .
There are different national currencies: the dollar, euro, yen, ruble, are all examples of "money", they are not "silver". A $ 10 bill is money, the sum of $ 10 is money.
Having acquired, at least for the present discussion, what is a "currency" for three things in reality.
1) is a means of payment, universal, accepted everywhere (at least within a certain community: Europe to the Euro, Russian ruble for)
2) is a standard of value, a unit of account (the prices of goods and services are displayed in euros in France - not sheep or kilos of salt)
3) is a store of value (you can keep notes under his mattress, and later use, keep a certain amount of euros on his bank account and use it later without "too much" to lose purchasing power: it all depends of course on the general evolution of prices of goods and services in the community concerned)
On point 1, "payment method" some believe that ticket euro is more effective than a euro bank account. It can pay its bills baker, and any merchant. You may refuse a check payable in euros or using your credit card.
But conversely, I'd rather have 1000 euros in my account to place an order on the internet or pay a deposit for my new real leather sofa. Moreover, above 1500 or 2000 euro, any transaction must use the money "non paper" currency short (either by transfer, either as sending a check or in the form of debit card a bank account).
So, no decisive advantage between cash and currency (banking), except, of course, if you have a certain attraction for the work 'black' and suitcases full of cash to carry in any tax haven.
On item 3, "store of value" may suggest that retain their tickets Devers by itself or under the mattress is more effective than keeping a sum greater or lesser extent, to the bank. If
bank run, you may not have time to collect your tickets, crash, your bank, if everyone wants to do the same. In fact everyone agrees, whether or anti-Jorion jorionaiste or-Jorion, to think that there are fewer tickets available as currency in circulation (I still have not figured out how Jorion, before this finding , could say that money "no money" did not exist without a philosophical mystery doubt).
So if you're interested in tickets, you will think this is a better "store of value" that your bank money: this reserve "tickets" will always be available.
Again, this can be discussed, because in case of bank runs "partial", you can always try to make a transfer to another bank, rather than get trampled at the doors of your agency by a cheering crowd.
But regardless, even if one can admit that the "Notes", the paper money is on this point - the store of value, "better money" that the "currency in general," currency "scriptural" and 100 000 in tickets, your home is preferable to 100 000 euros to a numbered account, somewhere, the question arises here how money "non-paper" is issued, how it "begins" how it "ends", in fact how money is created and how it is destroyed, and by whom .
Historically, the story is well known. The currency began as a currency "goods", and between 1700 and 1900, this commodity money was mainly for gold, at least in the West.
This gold was "stored" in bank vaults. Bankers were just "custodians" This gold guards safes. Their clients brought their gold, and received in return a certificate of deposit (it was a real submission, customers deposited something, unlike what is happening now in bank deposits which, in general, are not customers' deposit "money" hard currency ").
This certificate of deposit, or received, could be used in 2 ways.
The first way, of course, is whether the trustee sought to recover all or part of this gold.
The second way was to use the receipt as a ticket to bearer to purchase goods or services for hire. This receipt could then pass from hand to hand, the holder of such receipt (sometimes cons authenticated by a signature, or a series of cons-signatures) using it as currency (exchange), as payment.
The "store of value", it was the stock of gold.
We all know, more or less, the rest is history. Not content to get paid for the service of "security" of gold to their customers - which is quite normal, of course - the bankers, noting that they rarely came to claim their gold, began to emit Nor receipts, but loans. These loans were not secured on the gold they possessed (most bankers did not "own funds", or if it did, it was a small part of the stock of gold that they "kept") but the gold they had on deposit.
And instead of being limited to the beginning of this scam: lend other people's money, but without paying more than their stocks are not allowed (if they had one million euros gold, paying the same amount it there would have been two million in circulation, one million "100% or" corresponding to the received gold deposits of their customers, one million loans "Ex nihilo" based on wind, and a clear deception), they went much further
. Noting
"empirically" (the word scientist, scientist who wants to "empirically" or "pragmatic" .... is "statistically") less than 10% of "their" gold was claimed to be withdrawn and that the withdrawal movements were mostly offset by movements of deposit, bankers these "guards" went to emit 10 times - for the more timid - to 100-fold - for the most "audacious" - the value of the stock that they had in custody.
Hence, of course, recurrent banking panics, when the dispossession of gold trying to return for more than expected, their gold.
Well it is exactly the same today, gold had 'just' been replaced by paper money and bank loans have become the bank money, instead of little words written on a piece of paper by their banker, "bank-note"
If you look at the "bank capital," their "equity", European banks are required by law to possess 2% of the money that 'they lend. With cash reserves (money, paper stocks of euro banknotes) that banks are also more or less required to have, or can be obtained very quickly in the day, we arrive at a possible loan of about 7 to 8.
Holds specifically and concretely, with twenty billion euros of capital, and reserve tickets 150 billion euros, the European banking system can lend up to 1 trillion , these loans are 80% built on "trust", the word noble to say "wind", the "vacuum" of money created ex nihilo.
The facts speak for themselves. Over the past 20 years the ratio "Money" / "cash" or, more precisely M1 / "cash" in Europe has fluctuated between 4 and 9.4, to oscillate, since 2003, between 4.4 and 6.2. This ratio is currently 5.95. (M1 is the sum of accounts - wrongly called "deposits", while most of the time these deposits were created by loans, and not by an initial savings - and tickets, euro-notes, outstanding)
What do Jorion and his disciples, while not disputing that figure, they say simply that this ratio does not make sense, we should not compare the bank money and money (I dare not assume that they have also refused we examines the ratio between loans based on gold and gold itself there a century or two, the "sign" not "the thing")
So back to this issue of creation Money-destruction.
Taking into account the banking system as a whole (you can also see one of my previous posts), we can consider that this system - all commercial banks - has a certain amount of euro banknotes, tickets that were issued by the ECB, European Central Bank.
Until we pay in euro, whether in notes or coins (scriptural) - Checks, credit card, wire transfers or other - there is no problem, no "leakage" outside the system.
problems can come from three sources:
a) if for some reason or another, customers want the system removing more "liquid" (the equivalent of "more gold") that the banking system possesses.
b) if for some reason or another, the central bank requires a change in the ratios of banks, whether liquidity ratios or capital ratios.
c) whether the purchases made outside the euro area are more important than sales, and if the euro is considered a more attractive currency.
In these three cases, the European Central Bank would intervene. She will do for the common good?: This is another story.
Now, if we look at what happens inside the system, the story is a little complicated.
So far we have considered a cluster of banks, the banking system as a whole. Talk of euro in general had a meaning, and a ticket of 100 euros had a specific meaning, speaking of a count of 100 euros - that this account is at Societe Generale, the BNP, Credit Agricole that the Post Office or Banques Populaires also had a specific meaning.
But if we speak of competition between banks, this is no longer necessarily true. One euro BNP does the same as a euro CA, BP one euro, one euro Post.
The answer is ambiguous: it depends. If competition is "oligopolistic" and "stable", ie if each bank is satisfied with its market share, not trying to attract new customers, "leakage" between BBP euro, euros and CA euros to compensate for other "statistically".
The key word here is compensation: overall, checks, wire transfers that go to a banking group to others will be compensated by check, bank transfers and other transfers which come from other groups, and this will be true for each banking group. It is obvious, and there is no need, I think, to be an expert in accounting to understand. It is a game of musical chairs, but where there are as many chairs as people.
In case of "turbulence" bank, what are the biggest risk that "statistically" the least, unless the rumors are more specific groups: General and society could be attacked during the episode Kerviel. The banking system did not like too much turbulence, it is rare that they are trying to grow "in house" market share: they prefer to buy banks that grow at their expense. Otherwise, if banks want to increase their share of cake, if some people want more seats than they have initially, it can go bad, of course.
course, they may also try to acquire customers "liquid", for example those who have "real" savings. And hunting of Caisses d'Epargne customers and owners of Book A (Squirrel or La Poste) has enabled Crédit Agricole attempt to win customers providing them with a little more security.
Returning leakage "of money", we have seen that they could occur within the banking system. They can also occur between the commercial banking system and the central bank, if more tickets are suddenly needed. But historically, the ratio of "Money" / "liquidity" is very rarely changes abruptly, and the "panic" for lack of tickets has never happened in France since the 1930s or even earlier.
This bank money, which comes from banks, which circulates primarily between bank accounts, deposit accounts (called, wrongly, we have already said "deposits"), where is it? Banks, course.
This currency is issued in connection with loans, and is destroyed during reimbursements: this is why some call this currency a currency "credit" or "money -debt. "
How can one explain, then, that this money, especially when measured statistically by the M1 (bank money more cash in circulation) is growing faster than GDP, ie the measuring the aggregate production and consumption of wealth?
If repayments are lower borrowing is good for one simple reason, as highlighted by Louis Even and supporters of social credit in the mid-1940s: banks lend cons interest. can repay the principal, since money that banks created to serve it. But you can not pay the interest with money originally created .
Therefore new debt and / or destruction of wealth, to allow the money supply to grow faster than GDP. Borrowers, without new borrowing, will never, overall, statistically, repay all their loans. This is true for individuals is true for states.
course some individuals can pay, but by condemning other individuals to be driven to bankruptcy : in this case the relevant currency will actually be destroyed. Either the banks will use the guarantees that the borrower has deposited ruined for his loan. Thus, overall, banks always come out winners, as the system will work well.
And it is the same for the public debts. Less than coerce borrowers into bankruptcy, or obtain a moratorium on banks, public debt will never die.
It is amusing to see some good apostles, including P. Jorion and consort, the question of where this economy is from debt, then they deny the phenomenon that causes the creation of money through loans.
One last question, maybe. If money grows faster than the wealth produced, why the money-liquid itself - the banknotes in circulation - roughly follows the same curve, if one believes the ratio "M1/Argent. Currency "non-paper" is increasingly used (more than 95% of exchanges are otherwise than by the use of cash), less money and less.
The central bank is it simply "Follower" : it transmits the monetary base (notes and central bank money) to support the growth of debt, ie money (scriptural) bank, or is it vice versa?
I leave this question open. The reader to see.
last remark finally. Can we get out of this deadly system (for the economy in general and for the excluded, the humble, those without degrees in particular)?
I believe, and have identified two ways to do this, that I would resume in a future post, that of social credit of Louis Even and his successors, that of monetary reform described by Allais in his book "capital tax and monetary reform" and in subsequent articles.
Good reading, critical comments welcome.
0 comments:
Post a Comment