"I did it not to seemingly fail to see that these were loans made without collateral requirements as you seem to imply (duh), but to note that the assets were in reality quite empty of real value when the crash came."
No, you failed to realize that "no collateral" is "not relevant"
Loans are not assets qualified to be reserves for banks even though, yes, they are assets. You should know this if you've taken any finance or accounting classes (or worked in any finance or accounting firm)
The quality of the loans that bank make (unsecured, poor return, high risk) doesn't matter when discussing the endogeneity/exogeneity of money. That was my point. Stability of banks? Doesn't matter. Talking about crashes? Doesn't matter. Not with regards to the endogeneity/exogeneity of money.
All that matters is whether or not banks are constrained by their reserve requirements (and they are)
We even have pretty clear evidence of this. If it is the case that money supply is endogenous then we should see that the money supply is pro cyclical. That is, money supply follows the business cycle. This is because when things are good banks loan more and leverage higher and when things are bad, banks loan less and leverage lower. But when the fed is taking action the money supply is counter-cyclical. That cannot happen under endogenous money.
That isn't to say that there haven't been times when money supply is endogenous(Free Banking Period) or when monetary policy had been pro cyclical (the Great Depression is a good example) but neither of these mean that money supply is now endogenous.
Talking about Keen (and where he goes wrong from Minksy) is a whole other discussion. I don't want to get into it because I've had this discussion with you already. I know its not productive
![[community profile]](https://www.dreamwidth.org/img/silk/identity/community.png){kind=small}
![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png)
timeasmymeasure
no subject
Date: 2014-04-25 05:57 pm (UTC)"I did it not to seemingly fail to see that these were loans made without collateral requirements as you seem to imply (duh), but to note that the assets were in reality quite empty of real value when the crash came."
No, you failed to realize that "no collateral" is "not relevant"
Loans are not assets qualified to be reserves for banks even though, yes, they are assets. You should know this if you've taken any finance or accounting classes (or worked in any finance or accounting firm)
The quality of the loans that bank make (unsecured, poor return, high risk) doesn't matter when discussing the endogeneity/exogeneity of money. That was my point. Stability of banks? Doesn't matter. Talking about crashes? Doesn't matter. Not with regards to the endogeneity/exogeneity of money.
All that matters is whether or not banks are constrained by their reserve requirements (and they are)
We even have pretty clear evidence of this. If it is the case that money supply is endogenous then we should see that the money supply is pro cyclical. That is, money supply follows the business cycle. This is because when things are good banks loan more and leverage higher and when things are bad, banks loan less and leverage lower. But when the fed is taking action the money supply is counter-cyclical. That cannot happen under endogenous money.
That isn't to say that there haven't been times when money supply is endogenous(Free Banking Period) or when monetary policy had been pro cyclical (the Great Depression is a good example) but neither of these mean that money supply is now endogenous.
Talking about Keen (and where he goes wrong from Minksy) is a whole other discussion. I don't want to get into it because I've had this discussion with you already. I know its not productive