Monday, December 27, 2010

The Kucinich Bill...


"prohibits the creation of private money through the establishment of lending credit against depository receipts, sometimes referred to as ‘fractional reserve banking’."

Sec. 402 (f) (2)... Page 41 of the PDF.

Unrealistic, I think, to try to prohibit fractional reserve banking.

It is like trying to prohibit gunpowder, or the spread of nuclear weapons, or any technological advance. It is like trying to prohibit the sunrise.

3 comments:

Gene Hayward said...

After reading your post, I came across the posting below which describes QE 1 and 2 (not explicitly but implicitly) and why these policies are not inflationary, although the popular perception that they are/will be. In your opinion, is this an accurate description of how the process is working and why it is not inflationary at this time? Seems to me the banks have a "second" required reserves account that the QE "credits" are going into and do not become a part of the fractional banking system. In your opinion, is this a good thing/bad thing/no choice thing or none of the above. As always, I respect your opinion and comments...

Gene Hayward said...

I guess I should have included the link...that would be helpful to you.... :)

http://blogs.wsj.com/economics/2010/12/22/is-the-fed-printing-money/

The Arthurian said...

...I love it when that happens!

For a response to the WSJ link, see my next post.