There is No Conspiracy: The Federal Reserve is Not a Private Banking Cartel

Loanable Funds Theory is dead. Of that, there can be no question. The remaining stragglers who believe in this particular banking fairy tale – the mainstream – persist with their mystical ramblings about the zero lower bound which depend on loanable funds nonsense. The credit creation model is a thing these days, because it is[…]

“Cash” is Only a Physical Manifestation of a Number

I was asked a couple of days ago what I mean when I say that cash is only a physical manifestation of a number. It’s a good question. First, we need to ask “what is a monetary instrument?” I just ran a poll on Twitter about gold to see how many people actually think that[…]

You Need to Know Your Tobin – Ex Post Nonsense

If you are from Champaign Illinois or study economics at the University of Illinois, then you know who James Tobin is. Fig. 1: Tobin! Tobin was from Champaign Illinois. I, too, was born in Champaign-Urbana. Now, some of you might be wondering what all this “Tobin business” is that I’m up to. Well, frankly, it’s[…]

The Money Multiplier: How Banks Operate In The Land of Make Believe

M = 1/RR A simple little expression. It says that the money multiplier (M) equals one divided by the reserve requirement (RR). For those of you mathematically inclined, it says that the money multiplier is the inverse of the reserve requirement. This cute little expression and the concept that it describes is taught to economics[…]