The New York Times seems to think Ireland is a candidate to default just like Dubai. The Irish government may want Irish commentators to ‘wear the green jersey’ and do the economic analysis equivalnent of smiling and nodding – but then those pesky Americans go and mention the unmentionable.
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Hi,
Sorry, this is kind of off-topic, but i would be interested to hear a local economist reaction to it, as it seems to be completely absent from the Irish economic discourse.
Rep. Dennis Kucinich is planning to introduce the The American Monetary & Financial Security Act in the US Congress over the coming months. In a nutshell, the act would end fractional reserve banking. A Government Central Bank would be the only authority allowed to create money and banks would no longer be allowed to create credit money out of thin air.
I am not an economist, but it seems clear to me that this crisis was not, at root, caused by houses. It was caused by a fundamental flaw in the monetary system and i cannot see any proposals , bar this, that deal with the systemic problems. Is monetary reform a good idea or is it, as i have heard off some, fundamentally flawed itself? I would be interested to hear an economist’s opinion on the subject.
Here is a link to the act: http://www.monetary.org/amacolorpamphlet.pdf
Alfred O’Rahilly wrote a book, titled ‘money’, on the subject in, i think, 1941. It was published by Cork University Press. In it, he argues for monetary reform along similar lines as Kucinich’s act.
Kolchak,
I am not convinced that moving away from a fractional reserve system would avoid the problems that led to the current crisis. The crisis was fundamentally about lack of regulation of the shadow banking system.
Of course the Fed (and other central banks in fractional systems) control the level of the required reserve ratio – it is not as if the banks are allowed free rein (or at least should not be) and banks generating cash ‘out of fresh air’ will simply be replaced by monetary authorities creating money out of fresh air.
Seems excessive and will not remove need for appropriate and enforced regulation.
Declan