ext_90803 (![[identity profile]](https://www.dreamwidth.org/img/silk/identity/openid.png)
badlydrawnjeff.livejournal.com) wrote in ![[community profile]](https://www.dreamwidth.org/img/silk/identity/community.png)
politicartoons2014-04-18 07:54 am
badlydrawnjeff.livejournal.com) wrote in politicartoons2014-04-18 07:54 am
badlydrawnjeff.livejournal.com) wrote in politicartoons2014-04-18 07:54 am
no subject
"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
no subject
No. I. Didn't. Now you're just putting words in my mouth to make claims with no standing.
Waaay up in this thread, I said that I make the distinction between assets and speculation. Assets are things of value that can produce value of themselves; speculative purchases depend upon the market for that commodity rising for their value.
An unsecured loan has no collateral. Duh. However, when a bank issues an unsecured loan to an unqualified borrower because that borrower happens to work at the bank and has an investment idea that has worked for other investors in the past, the loan is doomed to failure once the speculative asset loses its price momentum. I was not referring to reserve assets there, I was referring to the purchase being an asset that could, if collapse came, be liquidated by the borrower to help pay the loan. This type of loan would be a Ponzi type in Minski's three tiered quality index, the lowest type.
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.
I would have to agree, if only because every time I link to a specific Keen quote with a specific refutation of something you say, you ignore it entirely rather than point out what you feel to be the failings in his argument. That way, I learn nothing new, you consider nothing new, and no one gets to progress one inch beyond his own preconceptions. Progress!
Given that the last time you dismissed Keen, rather than type one word (as you state above) about "where he goes wrong from Minsky"—which you never did, by the way—you railed on about his lack of an ooga-booga prize and his ickiness in general, so I'm going to close here and assume more of the same.
It's been fun. Until next time.
no subject