----- Forwarded Message -----
From: G W Gardiner <[email protected]>
To: [email protected]
Sent: Friday, 8 June 2012, 18:09
Subject: Re: [gang8] Fwd: The Soros view of the euro - Comments
My recollection is that post 1945 the British government banned borrowing for
the purchase of financial assets and the ban was removed very slowly until
Thatcher had a clean sweep of controls. I remember being worried that she was
making a repeat of 1929 possible.
In the fifties some of the bank managers I knew, who had got their posts during
the war when 80 per cent of bank lending was to the government, were happy to
let things continue that way. As it always the case, both extremes are bad.
Geoff
From: Gunnar Tomasson
Sent: Tuesday, June 05, 2012 4:02 PM
To: [email protected]
Subject: RE: [gang8] Fwd: The Soros view of the euro - Comments
I agree, Michael.
The system-wide equality between assets and liabilities is one thing.
From a policy point of view, there are two key points.
1. Ensure that the system-wide ratio between financial and non-financial
components do not grow to a point where it threatens system-wide stability.
In my Icelandic presentation in 1982, I likened it to the ratio between a
ship’s superstructure and the ship itself.
Excessive growth of the superstructure will at some point overturn the ship.
2. Establish and enforce a Glass-Steagall-like firewall between provision of
financial services to the financial and non-financial sectors.
Institutions can become too-big-to-fail only if the non-financial sector is
hostage to the uncertain financial investment/speculative outcomes.
There will always be investment/speculative outcomes which threaten to bankrupt
financial institutions.
To bail them out without re-installing a Glass-Steagall-like firewall is to set
the stage for an encore down the road.
Gunnar
From:[email protected] [mailto:[email protected]] On Behalf Of Michael
Hudson
Sent: Tuesday, June 05, 2012 9:51 AM
To: [email protected]
Subject: Re: [gang8] Fwd: The Soros view of the euro - Comments
But remember, Gunnar, there is a disparity between “imports” and exports”
because of f.o.b., c.i.f. friction.
Best to divide economies into financial and non-financial, or at least
separate out the FIRE sector.
Michael
On 6/4/12 11:01 PM, "Gunnar Tomasson" <[email protected]> wrote:
>
>
>
>
>
>
>Sent from my iPhone
>
>Begin forwarded message:
>From:"Gunnar Tomasson" <[email protected]>
>Date: June 4, 2012 2:00:55 PM EDT
>To: "'Gunnar Tomasson'" <[email protected]>
>Subject: RE: The Soros view of the euro - Comments
>Briefly, the world monetary system is a CLOSED system whose balance sheet is
>always in equilibrium irrespective of the volume of credit/money creation -
>the system's assets (loans) are always equal to its assets (IOUs of
>borrowers).
>
>
>
>Read:
>
>
>
>Briefly, the world monetary system is a CLOSED system whose balance sheet is
>always in equilibrium irrespective of the volume of credit/money creation -
>the system's liabilities (loan deposits) are always equal to its assets
>(IOUs of borrowers).
>
>
>
>
>
>From: Gunnar Tomasson [mailto:[email protected]]
>Sent: Monday, June 04, 2012 1:56 PM
>To: '[email protected]'
>Subject: The Soros view of the euro - Comments
>
>
>
>Dear Gang.
>
>
>
>Here are comments which I posted just now on Facebook on the Soros view of
>the euro as summarized at:
>
>
>
>http://www.businessinsider.com/george-soros-speech-goes-viral-2012-6
>
>
>
>The euro crisis is rooted in the same set of international banking
>Ponzi-financing norms that sank the Icelandic banks and much else in October
>2008.
>
>In turn, these banking norms evolved - slowly at first but then more rapidly
>- after, and as a result of, the scuttling in the early 1970s of the Bretton
>Woods System which had acted as a brake on domestic U.S. and
>(dollar-denominated) international credit expansion.
>
>Leading mainstream and monetarist economic scholars applauded the demise of
>the BW System and welcomed what was thought to be the advent of more
>efficient allocation of capital across the globe.
>
>But one thing was overlooked:
>
>"Capital" - as in real goods and services used for productive purposes - is
>not the same as "money" whose supply, for the world banking system as a
>whole, is subject to NO quantitative limitations.
>
>How so?
>
>Briefly, the world monetary system is a CLOSED system whose balance sheet is
>always in equilibrium irrespective of the volume of credit/money creation -
>the system's assets (loans) are always equal to its assets (IOUs of
>borrowers).
>
>By overlooking this elementary lesson of double-entry book-keeping, the
>guardians of world monetary and financial stability (the U.S. Federal
>Reserve Board, the International Monetary Fund, and national Central Banks)
>collectively launched the international monetary system on a 40-year path of
>structural disintegration.
>
>Now, with the end result looming, neither Angela Merkel nor an angelic choir
>of thousands can undo what mainstream economic orthodoxy has wrought.
>
>
>
>Gunnar
><winmail.dat>
>
>
>
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