Great Depression Myths

[Burke]

You are right about the money supply being expanded by debt and contracted when that debt is repaid, but

So what?

[Minister_of_Information]

Look, Burke, I agree that the money supply is expanded by fractional reserve banking, but I see it more like dollars being borrowed from the future rather than being conjured in the present and vanishing in the future (when debt is repaid). Maybe it's a fine distinction, but when you say banks "create" money it can give people a false impression that the process is asymmetric or unbounded.

[Burke]

MOI,

Virtually everyone who knows anything about this calls it money creation. It's not even my idea. Google "money creation."

When you put $1000 bucks into a bank and it is transformed into $10K, it's money creation.

[orangeblueorangeblue]

Originally Posted by Burke

The fact is that five years ago, not one person in a hundred (probably a thousand or more) knew that banks create the money they loaned.

This is nonsensical.

This was taught when I was doing my master's econ stuff in the early 00s. Hell, it was taught when I was in high school. This isn't some secret data that only the few were privy to.

[T3goalie]

Originally Posted by orangeblueorangeblue

This is nonsensical.

This was taught when I was doing my master's econ stuff in the early 00s. Hell, it was taught when I was in high school. This isn't some secret data that only the few were privy to.

A masters in econ puts you close to the top of the food chain (my son studied at LSE and loved it). Information is not secret by any stretch. But after seeing some of the man on the street interviews my guess is that rampant ignorance has the % it closer to 1/10,000.

[orangeblueorangeblue]

Originally Posted by T3goalie

A masters in econ puts you close to the top of the food chain (my son studied at LSE and loved it). Information is not secret by any stretch. But after seeing some of the man on the street interviews my guess is that rampant ignorance has the % it closer to 1/10,000.

If you'll note two things:

1. It was also taught in high school, as I noted

2. He said an "economist" argued this wasn't the case. No "economist" that has taken more than one economics course in college would believe this.

[Burke]

I wrote that someone with an economics degree didn't know.

He was a lawyer about 60 years out of school.