> While money is essential to facilitating purchases and sales of real resources outside the banking system, it is not itself a physical resource, and can be created at near zero cost.
> The fact that banks technically face no limits to instantaneously increasing the stocks of loans and deposits does not, of course, mean that they do not face other limits to doing so. But the most important limit, especially during the boom periods of financial cycles when all banks simultaneously decide to lend more, is their own assessment of the implications of new lending for their profitability and solvency. By contrast, and contrary to the deposit multiplier view of banking, the availability of central bank reserves does not constitute a limit to lending and deposit creation. This, again, has been repeatedly stated in publications of the world’s leading central banks.
The current model of understanding is broken. To issue money nothing has to be created, therefore if one issues money whilst wealth creation stands still one appropriates some of the total wealth through inflation.
Before if you wanted more money you had to have more gold reserves, or the govt/central bank had to lower the exchange rate.
Because new production of gold would add only a small fraction to the accumulated stock, and because the authorities guaranteed free convertibility of gold into nongold money, the gold standard ensured that the money supply, and hence the price level, would not vary much.
> the availability of central bank reserves does not constitute a limit to lending and deposit creation
Private banks decide how much land costs. And they always lend as much as they can, so land will always be as much as people can possibly pay. This means that no amount of efficiency gains will ever improve life. All you will see is inflation and people who bought just before the jump have a gain, but again the next batch are pushed into servitude. Because we haven't had a big step-change in efficiency for a couple of decades (and in part because it's not passed on due to globalisation / migration) it's misery all round, unless you are a usurer.
Of course a gold standard would limit the creation of money, but the ability of banks to increase the money supply would still exist under fractional-reserve banking.
> While money is essential to facilitating purchases and sales of real resources outside the banking system, it is not itself a physical resource, and can be created at near zero cost.
> The fact that banks technically face no limits to instantaneously increasing the stocks of loans and deposits does not, of course, mean that they do not face other limits to doing so. But the most important limit, especially during the boom periods of financial cycles when all banks simultaneously decide to lend more, is their own assessment of the implications of new lending for their profitability and solvency. By contrast, and contrary to the deposit multiplier view of banking, the availability of central bank reserves does not constitute a limit to lending and deposit creation. This, again, has been repeatedly stated in publications of the world’s leading central banks.
The current model of understanding is broken. To issue money nothing has to be created, therefore if one issues money whilst wealth creation stands still one appropriates some of the total wealth through inflation.
Before if you wanted more money you had to have more gold reserves, or the govt/central bank had to lower the exchange rate.
> http://www.econlib.org/library/Enc/GoldStandard.html
Because new production of gold would add only a small fraction to the accumulated stock, and because the authorities guaranteed free convertibility of gold into nongold money, the gold standard ensured that the money supply, and hence the price level, would not vary much.
http://www.shadowstats.com/imgs/charts/m1.gif
Again the boe blog from above:
> the availability of central bank reserves does not constitute a limit to lending and deposit creation
Private banks decide how much land costs. And they always lend as much as they can, so land will always be as much as people can possibly pay. This means that no amount of efficiency gains will ever improve life. All you will see is inflation and people who bought just before the jump have a gain, but again the next batch are pushed into servitude. Because we haven't had a big step-change in efficiency for a couple of decades (and in part because it's not passed on due to globalisation / migration) it's misery all round, unless you are a usurer.