> Here is a more academic article from someone I like and respect, > although most likely I differ from him politically: > > http://www.stanford.edu/~duffie/BIS.pdf
On another note, in this article Darrell says: "Even if the total risk to be borne were to remain within the banking system, credit risk transfer allows banks to hold less risk, because of diversification. In practice, some risk is transferred out of the banking system, for example to institutional investors, hedge funds, and equity investors in specialty finance companies, all of whom are not as critical as banks for the provision of liquidity." My question is this: what is the difference between banks and the rest of the institutions Darrell mentions above? Are they all not in the business of borrowing short term and lending long term? So, are they not all banks with no reserve requirements? Think about a mutual fund, for example: can I not withdraw the money I paid any time I wish if and when I am willing to forgo the loads (penalties) I paid in the beginning? Are the mutual funds not "banks," looked at this way? So, how large is the banking system in the US and who is in charge of "creating/destroying/controlling" the money supply? Best, Sabri _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
