Sunday, April 05, 2009

FRB and printing money

I've been thinking of this clip while reading some of the wibble on the libertarian right about how bad fractional reserve banking is, and how terrible it is when a reserve bank prints money.

Uncle Milt again - perhaps a voice they'll listen to:

Friedman believed in intervention to prevent deflation and depression.


TDK said...

Is this the sort of thing you had in mind?

Peter Risdon said...

Yes, that's a good example. Mind you, there is a distinction between printing money at a time of bank runs, and doing so during a boom.

Anonymous said...

I have to say I sit in the fence

The pre-requisite for government action is to recognise that it only maintains the playing field, it isn't a player. That is to say that the recovery will come from the private sector and that the government's role is to do what is necessary to ensure private investor confidence.

Unfortunately as in the 1930s with the New Deal and today, governments see themselves as not just a player but the striker. For example, across the spectrum there is consensus that we need to invest in Green jobs. Even my eleven year old understands that if you take money from a relatively productive sector and move it to a relatively unproductive sector you destroy net jobs. That's true "wibble".

So, what Friedman says is eminantly sensible. He is advocating a fairly strictly defined role for the banks to prevent runs. Unfortunately in both the US and the UK, all the mainstream political parties don't understand their principle role.

TDK said...

bah that Anon is me

Trooper Thompson said...

This is not a new debate, as you no doubt know. Defenders of 'free trade' and the current banking system like to play the 'global warming consensus card', in other words claim that the debate is long over, but it ain't.

The question is not about printing money per se, but who controls that process, for whose benefit? To think that the banking oligarchs will act in the interests of anyone or anything other than themselves is the epitome of naivity.

The banksters are committing fraud and larceny on a grand scale. All this political action, such as G20, is to cover the banksters from revealing the true extent of their exposure to the derivatives blackhole.