--- jan carowan <jancarowan at hotmail.com> wrote: >
Don't know if I am welcome here. We'll see.
>
> So as more
> money becomes interest bearing electronic money,
> there is less inflation
> risk since there is no incentive for private banks
> or other financial
> institutions to over issue interest bearing currency
> since it increases
> their own liabilities.
The history of banking would suggest otherwise.
> (This is so because the
> issuance of interest bearing
> 'money' makes the issuer not only liable for the
> principal, but also for the
> interest).
But if that interest is less than the return which can be earned on an alternative asset, the incentive is to multiply liabilities without limit. You might want to leaf through Bagehot's "Lombard Street".
dd
===== “It is necessarily part of the business of a banker to maintain appearances and to profess a conventional respectability which is more than human. Life-long practices of this kind make them the most romantic and the least realistic of men” -- JM Keynes
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