The existence of the money multiplier is the outcome of fractional reserve banking, writes Frank Shostak, which the current banking system makes possible. The money multiplier is not only real; it is a good tool to help us understand the process by which the banking system creates inflationary credit and all of its associated effects.
Most commentators have focussed, with merit, the Fed's official's alarmingly sanguine view that monetary inflation is a tool to combat evils and achieve all manner of economic good. But Ben Bernanke's most revealing remarks concern his subtle references to the Fed as just another branch of the federal government.
The Fed has changed the rules under which it can inject liquidity into the system, says Sean Corrigan in this wide-ranging interview. The Fed has made several overt statements of intent that, if necessary, it will buy anything—corporate securities, mortgages, physical assets—it will conduct a "money rain" if it has to.
No one can contend that the Federal Reserve System has brought economic stability or conquered the trade cycle, writes Hans Sennholz. On the contrary, its critics are convinced that a politically conceived and administered money monopoly, such as the Federal Reserve System, is the worst of all money systems. It will breed business cycles as long as it lives.
The best thing Greenspan can do, other than to close down the fraudulent entity known as the Federal Reserve System, is to sit back and do absolutely nothing. A sedentary Alan Greenspan harms no one. When he is active, however, watch out, says William Anderson. The man is dangerous.
Frank Shostak explains why Greenspan's latest move to cut interest rates will not only not help, but it will actually delay recovery by months or even many quarters. The fundamental problems inhibiting recovery are too severe to be fixed by mere money creation.
The Spitzer restructuring of Wall Street will not achieve its stated objective of restoring confidence in the stock market, writes James Sheehan. Instead, it will create a government sanctioned stock research cartel, the legacy of which will be higher costs, more inefficiency, and less competition.
The idea of resorting to work and entrepreneurialism as a means to material well-being has historically become a poor second to the idea of acquiring resources through theft. This robbery is always most effectively perpetrated when disguised and when legally underwritten by the threat of political violence–-i.e., when it is committed by the State.
There is something about monetary phenomena that make them a particularly misunderstood aspect of economic life. Deflation is no exception. There seems to be little understanding as to what it is, what causes it, and whether or not it is something that should be prevented. The effects of deflation, like the quality of drinking water, cannot be considered without regard to its source.
