March 18th, 2011 at 14:35 · Reply
I see it differently, Corrigan: with FRFB, you may have rare instances where the supply of bank loans dries up. With Non-FRB’s, the supply of loans is equal at all times to the “dried up” supply under FRFB! You must ask yourself what the people who pine for credit during an FRB crisis will do to finance their enterprises if FRB is altogether banned.
I see it differently, Corrigan: with FRFB, you may have rare instances where the supply of bank loans dries up. With Non-FRB’s, the supply of loans is equal at all times to the “dried up” supply under FRFB! You must ask yourself what the people who pine for credit during an FRB crisis will do to finance their enterprises if FRB is altogether banned.
***They will either wait for prices to drop, or If they were foolish enough to trust a government and to go out on a limb by taking on too much debt, I will wait and start up a company not saddled with debt and thus lower prices, or…***
Toby says:
I was offered the plant and fixtures and fittings yesterday of a competitor to my old meat business. This man in 35 years has never made a loss, never missed a loan repayment. The bank said his PROFIT ratio to his mortgages (100% backed commercial freehold property) , was now not acceptable. Another business bites the dust, one of thousands put out of action so far this year. Bank credit that came from nowhere now goes back to nowhere!
***Buy up the assets of a perfectly good but underwater franchise… or ***
Corrigan
March 21st, 2011 at 10:45 · Reply
I think Professor Selgin is very much mistaken when he says that ‘no credit will exist in a FB system’ – i.e., absent fractional money creation. Even Hayek made this mistake at one point in his canon by rather astoundingly musing that the business cycle might be a small price to pay for the supposed acceleration of economic development which was afforded by the provision of easy (fractional) bank credit
March 21st, 2011 at 10:45 · Reply
I think Professor Selgin is very much mistaken when he says that ‘no credit will exist in a FB system’ – i.e., absent fractional money creation. Even Hayek made this mistake at one point in his canon by rather astoundingly musing that the business cycle might be a small price to pay for the supposed acceleration of economic development which was afforded by the provision of easy (fractional) bank credit
***Sit back and wait out the inevitable wars from the fact that Hayek’s “acceleration of economic development” is limited to the welfare/warfare state, and not to the division of labor in goods and services, eg, true wealth.
Fractional reserve is tradable, but I would to God it was forbidden.***