16 comments

• Comment Link Friday, 03 August 2012 19:48 posted by Retireenjoy

  Very supportive of this. Huge respect for BBC in some areas, but in economics tends to reflect the 'Establishment' composition of the Board. BoE in UK is accorded a type of unquestioning respect that isn't the case with 'Fed' in USA. BoE is a private company with 'hidden' shareholders. BoE needs to be more transparent and subject to far greater scrutiny. If you ain't developing you're declining. Scrutiny can make for a much more healthy organisation.
• Comment Link Saturday, 04 August 2012 01:44 posted by IrvSwerve

  What does retireenjoy mean? The Bank of England was
  nationalised in 1947!
• Comment Link Saturday, 04 August 2012 03:21 posted by Christopher Heward

  Slightly insulted to be told that because I have a degree in Economics my understanding of the money supply is probably wrong. Rather the teaching I received was incomplete and I'm rather aware of it; I just haven't got round to ask me lecturers whether they're aware of this or they just couldn't be bothered to explain it. Seriously, I'd be intrigued to sit with down with them and discuss about it.
• Comment Link Saturday, 04 August 2012 17:30 posted by Edward J. Dodson

  In my view, high on the list of the distortions between theory and reality where money/credit systems are concerned is reference to what banks are required to do as a "fractional reserve system." Legal tender currencies are, in effect, promises to pay nothing in particular. One cannot redeem paper currency for a stated amount of precious metals or other goods; thus, modern currencies are neither a partial nor a fractional reserve currency. The last truly full reserve curency existed during the early decades of the Bank of Amsterdam (lasting until the bank's directors experienced hevy losses when the tulip bubble burst).
  
  Monetary stability is not possible without at least three fundamental systemic reforms: (1) establishment of a system of deposit banks empowered to issue certificates of deposit only, such certificates granting thde holder a claim to a specific basket of precious metals and/or other commodities or goods; (2) elimination of rent-seeking incomes associated with ownership of land (i.e., locations in cities and town, natural resource laden lands, and other rent-yielding resources; and (3) prohibiting any financial institution that accepts government insured deposits from providing credit for the purchase of land or acceptance of land as collateral.
• Comment Link Sunday, 05 August 2012 02:07 posted by JamesJohnsonCHR

  Great piece Ross. I am a great admirer of your films and blogs. We need more of these pieces breaking down the false language ("unspeak") and mis-directions of modern economics and politics.
  
  Suggest that a definition of "Quantatative Easing" ("QE") could assist lots of readers.
  
  Here's the @wikipedia spiel:
  
  Quantitative easing
  From Wikipedia, the free encyclopedia
  Part of a series on Government
  Public finance
  
  Quantitative easing (QE) is an unconventional[1][2] monetary policy used by central banks to stimulate the national economy when conventional monetary policy has become ineffective. A central bank buys financial assets to inject a pre-determined quantity of money into the economy. This is distinguished from the more usual policy of buying or selling government bonds to keep market interest rates at a specified target value. A central bank implements quantitative easing by purchasing financial assets from banks and other private sector businesses with new electronically created money.[3][4][5][6] This action increases the excess reserves of the banks, and also raises the prices of the financial assets bought, which lowers their yield.[7]
  Expansionary monetary policy typically involves the central bank buying short-term government bonds in order to lower short-term market interest rates (using a combination of standing lending facilities[8][9] and open market operations).[10][11][12][13] However, when short-term interest rates are either at, or close to, zero, normal monetary policy can no longer lower interest rates. Quantitative easing may then be used by the monetary authorities to further stimulate the economy by purchasing assets of longer maturity than only short-term government bonds, and thereby lowering longer-term interest rates further out on the yield curve.[14][15]
  Quantitative easing can be used to help ensure inflation does not fall below target.[6] Risks include the policy being more effective than intended in acting against deflation – leading to higher inflation,[16] or of not being effective enough – if banks do not lend out the additional reserves. [17]