Important Economic Understanding: Steve Keen Explains the Endogeneity of Credit Money -- Post-Keynesianism

"Talk about centralisation! The credit system, which has its focus in the so-called national banks and the big money-lenders and usurers surrounding them, constitutes enormous centralisation, and gives this class of parasites the fabulous power, not only to periodically despoil industrial capitalists, but also to interfere in actual production in a most dangerous manner— and this gang knows nothing about production and has nothing to do with it." Ten years ago, a quote from Marx would have one deemed a socialist, and dismissed from polite debate. Today, such a quote can and did, along with Charlie's photo appear in a feature in the Sydney Morning Herald—and not a few people would have been nodding their heads at how Marx got it right on bankers.

Karl Marx

via Steve Keen's DebtWatch No 31 February 2009: "The Roving Cavaliers of Credit" | Steve Keens Debtwatch.

Steve Keen explains that credit money has been created before the Fed issues money for reserves. The reserves have actually been obtained after the loans have been made and at a 36+:1 ratio (fractional-reserve rate, not 10:1). Steve explains that this is called endogenous money-creation.

Steve is a Post-Keynesian economist who speaks against neoclassical economics.

He explains that Bernanke's attempts to use fiat issuance hasn't worked because Ben is pushing on a string — banks won't lend.

However, I believe Ben knows that and is really engaged in buying time for the banksters by refusing to make them mark-to-market and by forcing taxpayers to absorb the hit for the banksters in the form of taxes and working harder for less, as pre-planned by the banksters and over the long haul. It's either that or Ben's even dumber than I think. (I mean by that, that evil is a form of stupidity regardless.)

Here's an interesting aside-quote from Steve:

...Austrian economics, whose analysis of money is surprisingly simplistic. Though Austrians advocate a private money system in which banks would issue their own currency, they assume that under the current money system, all money is generated by fractional reserve lending on top of fiat money creation. This is strange, since if they advocate a private money system, they need a model of how banks could create money without fractional reserve lending. But they don't have one.

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    About Tom Usher

    Employment: 2008 - present, website developer and writer. 2015 - present, insurance broker. Education: Arizona State University, Bachelor of Science in Political Science. City University of Seattle, graduate studies in Public Administration. Volunteerism: 2007 - present, president of the Real Liberal Christian Church and Christian Commons Project.
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