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[quote user="histhasthai"] [quote user="LanceH"]Under a gold standard, no interest would be paid on any deposits which were withdrawable on demand. On the contrary, you would have to pay the bank's safe-keeping costs. [/quote] That's simply untrue, at least in an anarchic commodity money regime... It's almost guaranteed
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[quote user="Harksaw"]if you go by M3, around $11 trillion, you'd have to set an ounce of gold to be equal to around $40,000[/quote] M3 is not appropriate because it includes time deposits, which are actually loans to the bank. M2 also includes time deposits under $100K. MZM would be a better measure, but then much of MZM probably consists
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Go back 200 years and there is no problem. At common law, land ownership extended up to the sky (ad coelum), beneath the surface (ad inferos), and to the center point of any bounding road or river. The rights to the sky overhead were confiscated by the State when aircraft started flying. It was a free gift to the nascent air industry. The State now
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[quote user="Fred Furash"]The interest we pay back adds to the bank's reserves, allowing them to loan out more than $900. That interest must also be drawn from somewhere else in the economy, since interest itself is not created by loans, hence the need for new debt to be created faster than it is paid off. We are at a point that if everyone
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The central bank does not inject new cash into the market. The banks do that, when they lend money. They in turn require injections of cash from the central bank only when their capital ratio or reserve ratio is becoming tight. Is an investment which is funded by created money necessarily unprofitable? No. If it were, then no country with a modern banking
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The main influence on the T-bill yield is the anticipated FFR. It would be surprising if the T-bill yield did NOT lead FFR. I would expect the market to have a better idea of what the Fed will do than the Fed itself. That said, the T-bill yield is not the best leading indicator of the FFR. A better leading indicator is the FFR futures rate. That is
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[quote user="jimmy"]Is it simply assumed that because buying securities from the market pumps money into the system (and increases the ratio of reserves available to reserves required) that the interest rates will adjust accordingly, given a sufficient delay?[/quote] The securities are a red herring. The Fed trading desk effectively lends
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[quote user="leonidia"]even in tha absence of margin (which is a kind of performance bond I suppose) the answer must be that futures and options contracts would be fully enforceable in a free society[/quote] Enforceable, yes. Workable, no. In the course of a day a contract may change hands hundreds of times. The system works, and works extremely
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[quote user="leonidia"]there are some things that still aren't that clear to me[/quote] They weren't that clear to me either. I followed Rothbard's link to Hobbes' Leviathan to be sure. "I will agree to buy your house next month." Unenforceable because tense of verb is future. "I promise to buy your house next
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[quote user="leonidia"]by virtue of the fact that the broker has this power, he can force you to abide by the contract.[/quote] Yes, but that power is something I've given to him voluntarily by accepting him as my broker. The Exchange in turn will only deal with brokers because only brokers are insured against failure to perform. It is