[lbo-talk] Kucinich on money

[John Thornton]

Shane Mage wrote:
>
> On Sep 29, 2008, at 9:52 PM, John Thornton wrote:
>
>> Doug Henwood wrote:
>>>
>>> On Sep 29, 2008, at 6:09 PM, Shane Mage wrote:
>>>
>>>> Revolutionary socialists have always, always, always advocated 
>>>> nationalization of the banks and democratic accountability of the 
>>>> Central Bank.   That is what should be meant by fundamental change 
>>>> in the monetary system (any monetary system, like money itself, is 
>>>> by definition debt-based).  Isn't it time for fundamental change?
>>>
>>> I really doubt that that's what Kucinich meant. His language had all 
>>> the marks of hard money nuttery.
>>>
>>> Doug
>>
>>
>> Kucinich opposes the privatized nature of the Federal Reserve but he 
>> also rails against fractional reserve banking and believes we should 
>> require all banks to have full reserves for the money they lend.
>>
>> Nationalizing the Fed COULD be a fine idea (but this is really 
>> dependent on many things) but abolishing fractional-reserve banking 
>> is nuttery.
>
>
> Not the least little bit.  My venerable Keynesian professor of 
> monetary economics at Columbia 60 years ago, J. W. Angell, was a 
> long-time advocate of what, back in the day, was called "100% money."  
> By eliminating fractional-reserve banking, the amount of credit 
> provided to the economy is determined by the sum of voluntary savings, 
> long-term investment in bank capital, and credit provided by the 
> central bank.  Thus the central bank could at will limit credit 
> expansion in inflationary conjunctures and increase the supply of 
> credit in deflationary ones.  This mechanism is vital to any real 
> economic planning and supremely so to socialist economic planning.

With all due respect to J.W.Angell eliminating fractional-reserve 
banking in the real world is nuttery.
More than the least little bit I might add.

John Thornton