David Hillary wrote:
> Money is means of exchange, a transactional medium, means of payment, it
> is created by banks whose balances can be used and are in fact used to
> make payments.
I don't agree with your definition of money at all. Nor is it the
classical definition.
Let's assume your definition is correct. What then is currency?
> > For an explanation, buy 'Money - Ye shall have honest weights and
> > measures':
> > http://www.bearerinstruments.com/search.php3?Cat1=Publications
>
> >
> > If a bank isn't a currency institution, then what is the difference
> > between a bank and a currency institution? And, where does your
> > definition of currency institution come from? Or is that another one of
> > those phrases that gets thrown around a lot but never defined?
>
> A currency institutions is just an institutions that issues currency,
> such as a currency board, for example the Hong Kong Monetary Austhority.
> The HKMA issues HK dollars against a reserve of USD in US banks and US
> bonds (i.e. a liquid reserve and an earning reserve). This currency is
> the monetary base or high powered money for Hong Kong, banks use it to
> create balances (using fractional reserve banking) in HKD. This is a
> good illustration of how the value of currency is not diminished by
> fractional reserve banking.
No it's not. If the US government devalues the USD, using the fractional
reserve banking system like it's done many times before
for large devaluations and consistently for small devaluations, then
the HKD gets devalued along with it. Fractional reserve banking is
not a bad thing by itself, but if used to defraud and rob, like
governments use fractional reserve banking, then it's a bad thing,
and not "a good illustration of how the value of currency is not
diminished by fractional reserve banking.".
The HKMA exchanges HKD for USD at a fixed
> rate of 7.80 HKD=1 USD. It maintains reserve assets equal to the entire
> monetary base. the reserve is made up of liquid reserves (USD bank
> account balances) and USD bonds. The banks then take this currency
> backed up by debt and use it as the basis for the creation of further
> money in the form of their balances in fractional reserve banking. Thus
> the actual USD bills held to back up the entire HK monetary system is
> close to zero,
Using the phrase "back up" a bit loosely, aren't you?
but since 1983 the HKMA has sucessfully maintained the
> HKD at or close to the target rate.
Ok. There's such things as luck, and chutspah, for a while.
> > >Banking is not fraud and its not warehousing.
> >
> > You're right on the warehousing part. Wrong on the fraud part.
> >
> > 'Money - Ye ... ' might be expensive relative to other books, but
> > it's "Just this side of stealing" relative to the value of the
> > knowledge in it.
> >
> > It usually pays to nail down the most basic stuff first. Then more
> > advanced future thinking (time and energy being non-renewable
> > resources let alone scarce) on the stuff tends not to be wasteful.
> >
> > Bob
>
> where is the fruad or trickery? who is hiding what from whom? Who is
> misleading who? fractional reserve banking is not fraud. There are no
> contracts being broken and no misleading or deceptive actions.
At least you now know where to go to get your answers.
Bob
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