@SmithWillSuffice@climatejustice.social
The commercial money is transitory, but it’s general mass if I want to borrow a term from physics, suggest to me that there’s a lot of money supply that can only continue to exist for a combination of two reasons deficit spending and growth in the size outstanding loans.
This only slightly alters the dynamics, but there should be I think an entry for private money creation
@GhostOnTheHalfShell@masto.ai @SmithWillSuffice@climatejustice.social
The M2 money as a fraction of public debt is 0.6, so it's nowhere near 90+% commercial money.
https://fred.stlouisfed.org/graph/?g=1LeLA
@dlakelan@mastodon.sdf.org @SmithWillSuffice@climatejustice.social
Yeah, I said something poorly, but the idea from Forbes was to say that commercially generated money (bank loans) with something like 97% of all the existing money.. now mind you they didn’t specify money precisely.. (M whateva)
@GhostOnTheHalfShell@masto.ai @SmithWillSuffice@climatejustice.social
Right, but that can't even be close to true, M2 is only 60% of public debt. So that means probably there's a bunch of overseas dollars because it doesn't even exceed the public debt. for 90% of money to be commercially created, the M2/debt would have to be something like 9 or 10 not 0.6
@dlakelan@mastodon.sdf.org @SmithWillSuffice@climatejustice.social
Yeah, like I said, I my eyes sort of likes twitch when I saw that number and I said is this right?.. but your own points bring up an interesting question. Banks do create the principal amount and stuff it into the economy. The total outstanding amount is a function of the total outstanding principle left percolating in economy, or it should be.
.. so the other part would probably be purchased treasuries?
@GhostOnTheHalfShell@masto.ai @SmithWillSuffice@climatejustice.social
I just suspect the Forbes article is repeating something they heard from an economist who didn't have a clue? how could 9 out of 10 dollars come from banks and 1 out of 10 come from deficit spending, yet all money put together is 0.6 of public debt?
@dlakelan@mastodon.sdf.org @GhostOnTheHalfShell@masto.ai @SmithWillSuffice@climatejustice.social
GhostOnTheHalfShell
Daniel Lakeland