[OPE-L:434] Re: Comments from Riccardo-2

Steve.Keen@unsw.edu.au (Steve.Keen@unsw.edu.au)
Mon, 6 Nov 1995 00:23:30 -0800

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As an aside to the discussion on money:
I am generally sympathetic to what I have read of your work on
the role of money in reproduction. I also agree that we should
treat bank debt as the normal or characteristic form of money
in capitalist societies. But what constitutes the reserves of
the banks, if one abstracts from state money?

I'm currently working on a discrete dynamic multi-sector model
with bankers. One thing I've realised in doing this is that
a banker is someone you go to to ask for credit because you
believe they have a hoard of money somewhere. But they don't
have to: the belief alone is necessary in any system where
money is not a producible commodity. In a system where money
is simply promissory notes (or some such) initiated by a
bank, bankers' "hoards" could be negative, with no impact on
the system--so long as no-one checks behing the vault.

What our system of reserves and state money does is simply
provide some control and accountability on the existence of
bankers hoards. The function of banks can exist quite easily
without such controls.

Steve Keen