Mosler is using a different definition of the term here. There is an old-school use of the term, which is probably what he is railing against here. 'Fractional reserve' simply means 'promises issued out exceeds reserves'. It need not mean 'I have to keep a fraction of reserves for promises issued out'
Great, glad you liked it. Yep, I think what Mosler probably reacts to is the old notion that the central bank reserves somehow 'constrain' bank money issuance, which may have been the case under the gold standard etc, whereas the polarity can actually be the other way around: bank issuance of promises in excess of reserves can lead to a central bank expanding reserves in response. Nevertheless, in both cases there is greater number of promises issued out than there are in reserves - I touch on this is the piece where I note that central banks can expand the 'floor space' at will
I much appreciate the unique exposition of "banking".
Glad you like it Scott
Thanks Brett. This reminds me of Joe Brewer's excellent piece 'The Pain You Feel is Capitalism Dying':
https://medium.com/@joe_brewer/the-pain-you-feel-is-capitalism-dying-5cdbe06a936c
Thanks Shaun - I'll check it out!
Would you call this "Fractional Reserve"?
https://moslereconomics.com/2011/01/03/ami-perpetrated-innocent-fraud/
Mosler is using a different definition of the term here. There is an old-school use of the term, which is probably what he is railing against here. 'Fractional reserve' simply means 'promises issued out exceeds reserves'. It need not mean 'I have to keep a fraction of reserves for promises issued out'
Love it thank you Brett. Loved the video too
Great, glad you liked it. Yep, I think what Mosler probably reacts to is the old notion that the central bank reserves somehow 'constrain' bank money issuance, which may have been the case under the gold standard etc, whereas the polarity can actually be the other way around: bank issuance of promises in excess of reserves can lead to a central bank expanding reserves in response. Nevertheless, in both cases there is greater number of promises issued out than there are in reserves - I touch on this is the piece where I note that central banks can expand the 'floor space' at will
You are a wealth of knowledge and I am grateful to support your work.