tag:blogger.com,1999:blog-2098432983500045934.post7728454057720578564..comments2024-03-12T22:19:32.339-04:00Comments on The New Arthurian Economics: Contradicting Richard DuncanThe Arthurianhttp://www.blogger.com/profile/16501331051089400601noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-2098432983500045934.post-65957060311834074092017-04-08T17:18:22.955-04:002017-04-08T17:18:22.955-04:00and the Richard Duncan part?
and the Richard Duncan part?<br />The Arthurianhttps://www.blogger.com/profile/16501331051089400601noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-7795850974782522362017-04-08T12:21:02.832-04:002017-04-08T12:21:02.832-04:00Gold mines were the central banks of the past. Cen...<i>Gold mines were the central banks of the past. Central banks are today's gold mines.<br />I agree with Nick. It was not going off gold that changed things. And just as the expansion of private credit beyond what gold could support created problems for gold-based money, it is the expansion of private credit beyond what central banks can support that creates problems for central-bank-based money today.</i><br /><br />I might tweak that analogy a bit. For the users of gold, mines add new gold. The mine expands the net supply of risk-free assets. Adding new gold from mining relative to the supply of private credit de-leverages the private sector.<br /><br />Central banks can swap assets, central banks can move interest rates up and down. What the central bank can't do is add net assets to the private sector. The central bank functions to accommodate the expansion of private credit but it doesn't can can't directly de-leverage the private sector. (Consider post-2008 where central banks essentially provided palliative care while a combination of govt deficits and private defaults did the actual de-leveraging)<br /><br />Contrast this with the Treasury where net spending expands the net supply of risk-free assets. Adding net new dollars from Treasury spending relative to the supply of private credit de-leverages the private sector.<br /><br />Seems to me it's the Treasury not the central bank performing the role analogous to the gold mine.geerussellhttps://www.blogger.com/profile/10631984593634015839noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-73962047882233528962017-04-08T05:16:28.851-04:002017-04-08T05:16:28.851-04:00The single most important thing to understand abou...The single most important thing to understand about the dominance of credit is that it undermines not only the money on which it is based, but also the issuing entity, our government.<br />The Arthurianhttps://www.blogger.com/profile/16501331051089400601noreply@blogger.com