This is an interesting revelation of how Steve Keen does Not understand the concept of credit so he can't understand how private banks create credit fiat money just like the Reserve bank creates fiat credit money when they lend new fiat money to the Federal Treasury taking Treasury bonds in return. Keen's statement that the only way the bank's fall in equity can happen is if the withdrawal is in paper money means he does Not even understand the simple fact that it matters nothing in what form money is withdrawn from the bank because paper money is also used to pay bills and buy goods and pay taxes so it makes it's way back into the banking system because it does Not leave the economy.

@linguistengineer588

2 жыл бұрын

Surely in the fractional reserve banking idea, (and according to many videos on it) the money is duplicated electronically... with cash it's accounted for as an absolute reduction.

@Rob-fx2dw

2 жыл бұрын

@@linguistengineer588 Threis no diffference between the impact of digitally created money and fiat paper money apart from the ease of expansion and reduction.

False explanation by Keen when he says the 'assets of the bank fall by 90 that also means their liabilities also fall by 90 OR their equity has to fall by 90. Now that can only happen if the person who takes out the loan actually takes it out in cash so the only way the fractional reserve works is if all loans are in cash". Nope ! Completely wrong because payments in cash or any form are when properly accounted for no differently than payments in digital money because all the money in the system is accounted for. The percentage in cash these days is close to 3% which is far different than many years ago when there was relatively much less easy credit in digital form like bankcards or master cards and EFTPOS. Money in the form of cash still gets deposited into the banking system because it is spent by the person who has obtained it to pay others and ends up in their bank as a deposit. It does Not disappear from the economy.

00:00 - 00:09 - 00:17 - 00:39 - 00:49 - 04:24 -

So Keen creates his own interpretation of credit and debt is and it doesn't follow what is conventionally thought of as credit so then he tries to explain what others think and act on as credit by applying his own self created theory which turns out to not explain it. - Of course NOT !! An elephant described as a chicken will not fit in a chicken coop and will not prove chickens do not lay eggs just because the misdescribed elephant does not lay an egg.

@Rob-fx2dw

2 жыл бұрын

@@leightonwatkins9486 What are the independent facts that support this systems analysis. Not supplied ! It is also Not based on any recognition of prices and the fact that the expansion of the money supply is purely fiat credit money that the private sector is forced to pay off because it is all created out of debt. It also ignores the fact that government is not an organization that has any wealth itself that it has to spend so taxes are always the ultimate source of wealth that government spends. Keen points out the B of E explanation "Money Creation in the Modern Economy" which I have personally been bringing to prominence for several years ( before he did) but he even failed to understand it because it points to the process which contradicts his and MMT beliefs and shows his analytics to be a failure The relevant point is that money today is fait credit and this is supported by the explanation in the Bank of England's video ( kzread.info/dash/bejne/rJ2Ip5VrmMy9lM4.html) It is an IOU and IOU's all involve a debt obligation which Keen's "analytics" ignores. You have to ask yourself where is the debt that more fiat money creation produces and where and how and by whom does it get paid off?

@Rob-fx2dw

2 жыл бұрын

@@leightonwatkins9486 That's about Keen's fantasy. Pretending he is up a mountain running a country when he is down in a dungeon dreaming .

@Rob-fx2dw

2 жыл бұрын

@@leightonwatkins9486 You are WRONG again. All of the sovereign money today is FIAT CREDIT MONEY . It is essentially an IOU - You may not know what an IOU is - It is a document taht is defined as " a signed document acknowledging a debt". Most money is created by Private banks when the make loans to people and that money circulates paying taxes and people's incomes and for goods and services taht peole need. A public debt becomes private debt because ther is nobody called "government" to pay it off when itmatures and ALL government debt matures and has to be paid off. All of the treasuries that were sold to the central bank and form the government debt mature in time (maximum 30 years) and are paid off through taxes. Read the or at least listen to it when it is expalned by the Bank of England " Money Creation in the Modern Economy" kzread.info/dash/bejne/rJ2Ip5VrmMy9lM4.html It is simple straight forward explanation of what money is today. Steve Keen refers to the Bank of England's explanation himself - although he stops shrt and doesn't take notice of this part.

@Rob-fx2dw

2 жыл бұрын

@@leightonwatkins9486 Well ! - IOU's have a debt attached. They are worthless without that debt and all money today only exists today with equivalent debt. Point proven unless you want to argue with the Bank of England.

@Rob-fx2dw

2 жыл бұрын

@@leightonwatkins9486 That is correct. The advantage government has in spending money it has borrowed by selling Treasury securities to the Central bank or to the public or to overseas entities is the government can tax you and me. Those central bank securities that are a gauranteed to lose money savings scheme because the interest rate over the longer term is always behind general interest rates on investments and behind the inflation rate. It isa One way cart. - You and I cannot just tax the government to pay for our spending even if it is in deficit (i.e our personal spending more than we earn) . But the government does and we pay for it.