Chartalist & Circuitist analyses of money - Page 6

Exactly. Because you won't face up to it. They create net financial assets. That assets still equal liabilities is a trivial matter, since assets and liabilities always equal in double entry accounting.

show me a stock flow consistent model where the banking system creates net financial assets for the private sector as a whole. here is a chartalist stock flow consistent model. billy blog » Blog Archive » Stock-flow consistent macro models

The private sector in aggregate cannot create net financial assets. In order for the private sector in aggregate to have net financial assets, the government sector must be in deficit.

No thats not right. The bankers, given all the guarantees, implicit and otherwise, that they have on the fly, can and do create new financial assets all the time. This is a day to day thing that ought not have slipped your notice.

The chief thing with deficits is that they create the moral hazard for the government to be more inflationary. Here we have a situation where political-economy trumps straight economics. Since I would agree that deficit spending augurs more poorly for inflation than just about anything else. But deficit spending is not so much the direct cause of inflation. It, for the most part, only brings the moral hazard that makes the government want to start feeding the banks.

In the English-speaking world, in the current era at the very least, inflationary money-creation is a private-bank led phenomenon. Until such time as the ponzi-scheme begins to collapse. Thats when the government steps in.

It looks like what we are dealing with here is a school of thought that may have had great validity in the past, but that doesn't really gel with the current scene.

Why go with a model when you have the reality of the Australian banks creating new assets all the time?

its actually the exact opposite. seriously have you followed any of the conversations in this thread? or read any of the things that chartalists have linked to? if you refuse to read or even attempt to understand what we're saying then having a conversation with you will prove fruitless. as has been repeated countless times in this thread, chartalists acknowledge that banks create financial assets. the reason we say that the private sector can not create net financial assets when considering the private sector in aggregate is, in the private sector as a whole a liability is created exactly equal to the asset created. this is simply a fact of accounting. if you refuse to accept this fact then there is no point in having a conversation about it.

An argument's a collective series of statements to establish a definite proposition.

The conversation is going to prove fruitless if you don't admit when you are wrong. Banks are creating new assets all the time. Thats just a fact.

Also hyperinflation is impossible with new money creation. This is also a fact.

I'm not going to claim otherwise simply on account of your whining. You've got to get with reality. I read the links. But you cannot hide behind them. If you cannot explain things in your own words its because you don't have a case.

sigh this is the last time i respond to you. as i keep on saying i agree with you that banks create new financial assets. i have said that repeatedly. if i take out a loan to buy a million dollar house, a million dollar asset appears on the banks balance sheet. let us assume that the person i am buying the house from (to keep things simple) has a bank account at the same bank so that a million dollars gets deposited in their account. the bank now has a million dollar asset on their balance sheet and a million dollar liability on their balance sheet (the person's deposit). the bank's net worth has not increased, my net worth has changed by now oweing 1 million dollars to a bank but owning a (currently) 1 million dollar house and the seller's net worth has gone up a million dollars but down a (currently) million dollar house. thus the bank has not created an asset in excess of the corresponding liability. this is what i mean when i say that the private sector can not create net financial assets. how is this different from government money creation? when the government credits someone's banks account, that person's net worth increases, but their is not a corresponding decrease in net worth from this financial asset creation. when a government runs a budget deficit (surplus), net financial assets are created (destroyed). please stop telling me to "face reality" that banks create assets, i said that repeatedly. attacking my inteligence or ability to face reality does not make you correct and me wrong.

EDIT: i' am a moron and forgot to mention the actual house.