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Money
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Nicely written0
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I've just published the next one
http://anothereconomicblog.blogspot.com/2010/07/creating-money-in-days-of-commodity.html0 -
A thought just occured to me. What would be the implications for the money supply if a bank were to collapse? Since one feature of the fractional reserve system is the fact that money is deposited, lent out and then 're-lent' frequently and often through the same bank, if a big one were to go down, wouldn't a huge amount of money disappear?“I could see that, if not actually disgruntled, he was far from being gruntled.” - P.G. Wodehouse0
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A thought just occured to me. What would be the implications for the money supply if a bank were to collapse? Since one feature of the fractional reserve system is the fact that money is deposited, lent out and then 're-lent' frequently and often through the same bank, if a big one were to go down, wouldn't a huge amount of money disappear?
Yes it would if the Government didn't print money to plug the gap.
In fact money is destroyed when an individual or company defaults, that's why the money supply is falling quickly in the US.0 -
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If they'd had notes issued against gold held in a vault somewhere I suspect there would have been a very similar outcome, whether issued by a fractional reserve banking system or at parity with the gold held. If they'd had actual gold coins then they wouldn't have suffered any loss particularly unless the East German government had propped up the value of gold against output by diktat which would be possible in a closed market with fixed prices.
The problem is that historically speaking, in gold currency regimes, when the government collapses it normally doesn't do so immediatly, and they have the nasty habit of nicking normal peoples gold. For example, in the great depression, holding currency gold became illegal.“The ideas of debtor and creditor as to what constitutes a good time never coincide.”
― P.G. Wodehouse, Love Among the Chickens0 -
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BTW I'd be very glad to get feedback on this one in particular. I'm hoping it is really simple to understand and would love to know if it isn't, either on here, on the blog or via PM.0
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Finding this all very interesting stuff
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BTW I'd be very glad to get feedback on this one in particular. I'm hoping it is really simple to understand and would love to know if it isn't, either on here, on the blog or via PM.
The series is a good, simple introduction to what money is and nicely written.
Perhaps though you could explain to people some of the problems inherent in a debt-based money system."The problem with quotes on the internet is that you never know whether they are genuine or not" -
Albert Einstein0
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