[lbo-talk] Kucinich on money

John Thornton jthorn65 at sbcglobal.net
Mon Sep 29 23:09:42 PDT 2008


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



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