"...banks don’t keep the cash we lend to them in a vault; they invest the money by making their own loans or buying securities."
Ack! That crap again!
Yes, they do use deposits to <b>back</b> lending, or <b>money they create out of thin air</b>; meaning a depositor run can drop the bank below its fractional reserve requirements and close the bank.
It doesn't mean, as he states, though, that "…deposits are… used as money…." They back created money.
In hewing to the neoliberal denial of our banking system's actual function, this guy just misses the point, which skews how well I can consider his conclusions. Seriously, if he got this part so wrong, what else did he miss (or fail to understand)?
"...banks don’t keep the cash we lend to them in a vault; they invest the money by making their own loans or buying securities."
Ack! That crap again!
Yes, they do use deposits to <b>back</b> lending, or <b>money they create out of thin air</b>; meaning a depositor run can drop the bank below its fractional reserve requirements and close the bank.
It doesn't mean, as he states, though, that "…deposits are… used as money…." They back created money.
In hewing to the neoliberal denial of our banking system's actual function, this guy just misses the point, which skews how well I can consider his conclusions. Seriously, if he got this part so wrong, what else did he miss (or fail to understand)?
(Sorry to rant.)
—Perry