tag:blogger.com,1999:blog-6089228851855763774.post9037776741923131225..comments2024-02-05T17:24:09.663+08:00Comments on Gold Chat: The roving cavaliers of creditBron Sucheckihttp://www.blogger.com/profile/00530576934994289879noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-6089228851855763774.post-44366161965529312692009-08-11T08:53:58.908+08:002009-08-11T08:53:58.908+08:00I'm sure the actual mechanism in Australia mus...I'm sure the actual mechanism in Australia must be buried in the RBA website somewhere - I've never bothered to look.Bron Sucheckihttps://www.blogger.com/profile/00530576934994289879noreply@blogger.comtag:blogger.com,1999:blog-6089228851855763774.post-23858877479264372372009-08-10T20:50:03.104+08:002009-08-10T20:50:03.104+08:00Hi Bron,
Related to the whole fractional reserve ...Hi Bron,<br /><br />Related to the whole fractional reserve banking thing, do we australians have a similar setup with our central bank as the americans do with the fed - the government swapping bonds/debt for money? And does the RBA pass on earnings to external entities? I'm having difficulty making sense of conflicting information on the topic. If you issue your own currency like Guernsey does it seems that you can't be a member of several international clubs.goldnoobnoreply@blogger.comtag:blogger.com,1999:blog-6089228851855763774.post-82234085913742785282009-02-21T22:11:00.000+09:002009-02-21T22:11:00.000+09:00The central bankers realize that mandated reserve ...The central bankers realize that mandated reserve ratios are largely irrelevant as they are only short term liquidity measures and not long term solvency measures. That is why reserves are required only on MZM money. The money multiplier matters only as a limiting factor and even then it is a minor one at that. As such, the chicken or egg question is academic.<BR/><BR/>The real issue is regulatory capital, which is actually outside the Fed's control. Banks cannot simply inflate their balance sheets by equal debits (loans) and credits (deposits) as is being suggested for the simple reason they must set aside capital along the way. Such capital, unlike reserves, cannot be borrowed but must either be raised or earned. It can also be reduced through losses. This fully explains why banks are not lending today even though plenty of people still want to borrow.<BR/><BR/>In essence the Fed and Treasury have solved the bank and credit liquidity problems for the most part but they have not addressed the capital problems. Geithner's "bad bank" proposal does nothing in this regard as it is a liquidity, not capital, measure. The only possible solutions to the capital problem are to recapitalize banks that suffer massive losses or to guarantee the banks against such losses in the first place.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6089228851855763774.post-80753569762148842512009-02-03T18:09:00.000+09:002009-02-03T18:09:00.000+09:00Bron,Completely totally brilliant. I'm going to qu...Bron,<BR/><BR/>Completely totally brilliant. I'm going to quote you with a backlink. Should be required reading in every uni and newspaper office. Simple and clear as a bell.Anonymousnoreply@blogger.com