***] The cash comes into general circulation when the Reserve Bank buys government stock from the government [***
Does it purchase directly from government or indirectly through the so-called "open market" as in the United States? That creates a "rake off" to Wall Street that is effectively interest paid even though it rebates what interest it earns on the securities it holds in its portfolio to the Treasury. It also means that the Fed not the Treasury calls the shots regarding monetary policy. If the SA bank purchases directly from government, does it purchase what it wants to purchase, or does the government sell it what it wants to sell? It comes down to who is actually in control and what institution is the real government for things more significant than deciding which potholes to fill. The question to Keith relates strictly to the currency. Certain people (COMER etc.) allege that in Canada the currency component of M0 is not bank credit but Treasury credit spent into circulation by government. In the United States the currency is merely token for central bank credit that is lent (through the purchase of securities) not spent into circulation. --------- Original Message --------- DATE: Wed, 17 Sep 2003 07:36:01 From: [EMAIL PROTECTED] To: [EMAIL PROTECTED] Cc: >On Monday 15 Sep 2003 10:54 pm, Keith Wilde wrote: >> I presume you mean the question of whether or not any of the Canadian money >> supply is provided by government directly. I still do not have definitive >> answer to that--except for the one bald statement that Bank of Canada is >> responsible for the money supply. I'm not sure how coins get circulated >> once produced at the Mint--but suspect it is via The Bank. I expect to be >> getting back downtown next week sometime, after my radiation treatments are >> finished. >--------------------------------- > >I presume most Central Banks operate in very much the same way. > >Over here, The South African Reserve Bank has the sole right to issue new note >and coinage currency. The Bank issues new notes and coins according to the >public´s cash requirements (aka ´till money requirements´). The cash comes >into general circulation when the Reserve Bank buys government stock from the >government or financial assets from the banks. In the process, credit is made >available to government or banks who then draw cash as required to spend. The >cash then has been spent into circulation. >(Sources: SARB and ´Basic Macro-Economis´, by L J Fourie & F van den Bogaerde, >published by I L van Schaik.) > >Jessop. > ____________________________________________________________ University of Phoenix Online. Free Information - Online Classes http://r.hotbot.com/r/lmt_uopo/http://servedby.advertising.com/click/site=563632/mnum=125825 This offer applies to U.S. Residents Only --^---------------------------------------------------------------- This email was sent to: [EMAIL PROTECTED] EASY UNSUBSCRIBE click here: http://topica.com/u/?a84IaC.bcVIgP.YXJjaGl2 Or send an email to: [EMAIL PROTECTED] TOPICA - Start your own email discussion group. FREE! http://www.topica.com/partner/tag02/create/index2.html --^----------------------------------------------------------------
