You mentioned market (and general) prices working as complements to other assets with value (such as bonds). And therefore, the fed does not "print money". In fact, they only regulate rates and try to benefit from market asymmetries. This reminds me of the principles of double entry accounting, which all of the big companies, including banks have to follow. According such a standard, money can also not simply be "printed".
George Robertson from the Monetary Frontier suggests that the actual creation of "money" happens when commercial banks grant a loan, therefore creating a new pair of asset-collateral.
Now,
1. with the assumption of money as an asset being a pair
2. And the standards of double entry accounting applying to all banks
do you think that there is a so-called "collateral account" for each citizen of a country from which the money is "created", once the bank agreement for a certain loan or credit is signed? This would be an account which already holds enough money for a lifetime and probably beyond but cannot be accessed as a normal person.
This point is enforced by the fact that so-called "money" is only legal tender as printed on the dollar note (a means to alleviate future debt) according to the bills of exchange act. Therefore, the real money is the collateral to which the legal-tender-money (USD) is tied.
Do you think I am onto something or am I missing something?
Reading through your articles and thus far it's excellent stuff. Nowhere seen a treatment of inflation with such clarity. Will Ch 9 be written out in the future, and Ch 7 still has to be written?
Thanks Maver - unfortunately I'm on a bit of a hiatus, working on other stuff at the moment, so haven't and won't get around to writing those two for a bit. The video hits the points in those two chapters at a high level however
Hey Ritik.
You mentioned market (and general) prices working as complements to other assets with value (such as bonds). And therefore, the fed does not "print money". In fact, they only regulate rates and try to benefit from market asymmetries. This reminds me of the principles of double entry accounting, which all of the big companies, including banks have to follow. According such a standard, money can also not simply be "printed".
George Robertson from the Monetary Frontier suggests that the actual creation of "money" happens when commercial banks grant a loan, therefore creating a new pair of asset-collateral.
Now,
1. with the assumption of money as an asset being a pair
2. And the standards of double entry accounting applying to all banks
do you think that there is a so-called "collateral account" for each citizen of a country from which the money is "created", once the bank agreement for a certain loan or credit is signed? This would be an account which already holds enough money for a lifetime and probably beyond but cannot be accessed as a normal person.
This point is enforced by the fact that so-called "money" is only legal tender as printed on the dollar note (a means to alleviate future debt) according to the bills of exchange act. Therefore, the real money is the collateral to which the legal-tender-money (USD) is tied.
Do you think I am onto something or am I missing something?
Reading through your articles and thus far it's excellent stuff. Nowhere seen a treatment of inflation with such clarity. Will Ch 9 be written out in the future, and Ch 7 still has to be written?
Thanks Maver - unfortunately I'm on a bit of a hiatus, working on other stuff at the moment, so haven't and won't get around to writing those two for a bit. The video hits the points in those two chapters at a high level however