[OPE-L:2016] Re: [MIKE WILLIAMS] electronic money

Paul Cockshott (wpc@cs.strath.ac.uk)
Sun, 28 Apr 1996 13:11:49 -0700

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>> A view which is in deep contrast
>> with the idea that loans make deposits - hence it is wrong, unless you show
>> me that the banking sector is able to collect deposits before making a loan
>> (here Steve K. post is relevant).
>In fact U.S. banks for the last 15 years have been financing marginal
>loans by the sale of Certificates of Deposit and commercial paper at
>market rates, not by the expansion of deposits.
I am not sure that this answers his objection. The point would be that
the ability to sell certificates of deposit is constrained by the
overall balances in the sector financial accounts to be the
difference between the growth of deposits and loans advanced.

Paul Cockshott (clyder@gn.apc.org)