>
>
> I'm out of my league here, but I think Doug is saying No. A bank creates
> new assets by loaning money, and if reserves are 10%, it creates 90 cents
> worth for every dollar deposited. But a MM acccount doesn't create
> assets. It simply buys and sells created ones.
The only reason a bank "creates" money is because the borrower gets her money whereas the depositor *thinks* it's still there - a system that is stable as long as most depositors do not go for their money simultaneously, which is true 99.9% of the time and, in the US over the last 70 years, thanks to FDIC, 100%.
An MMMF does the *exact* same thing, doesn't it? The only difference I can think of is that the bank has the explicit right to borrow directly from the printing presses at the Fed if too many depositors come for their money, but outside of a serious crunch this seems to me a very minor difference (banks hardly ever borrow reserves from the Fed). And, as you well know, we don't have serious crunches any more.
I insist that the crux is what people consider "money". If people start accepting wampum shells as a means of payment and consider their value essentially fixed, then wampum growers become creators of money, regardless of what the legal defintions of money are. Or so I think.
-- Enrique Diaz-Alvarez Office # (607) 255 5034 Electrical Engineering Home # (607) 272 4808 112 Phillips Hall Fax # (607) 255 4565 Cornell University mailto:enrique at ee.cornell.edu Ithaca, NY 14853 http://peta.ee.cornell.edu/~enrique