On Sep 30, 2008, at 2:09 AM, John Thornton wrote:
> Shane Mage wrote:
>>>
>>> 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.
For me, "nuttery" is accepting the unchangeability of the capitalist financial system. In this sense, talking about the "real world" is the sign of nuttery (C. Wright Mills called it, more elegantly, "Crackpot Realism.")
Shane Mage
"Thunderbolt steers all things...it consents and does not consent to be called Zeus."
Herakleitos of Ephesos