Comments by "k98killer" (@k98killer) on "Werner Economics" channel.

  1. Macroeconomics will never succeed. Only a catallactic approach will have a principled position on which to base economic analysis. Everything else is a contrived mathematical hallucination. Also, Mises and Keynes both wrote about bank credit creation in the early 1910s and 1920s: The Theory of Money and Credit by Ludwig von Mises, Part 3: Banking; and A Tract on Monetary Reform by John Maynard Keynes, Chapter 5, Section 1 (pages 178-179). Perhaps there is something special about an empirical study of the matter, but it was plainly obvious by examining the bank balance sheets what entries must have occurred, and at any rate the exact mechanism seems to have been already known to economists a hundred years ago. That this has been successfully suppressed within academic circles to the point of near total collective amnesia is a noteworthy fact, and I suspect this is because of the entrenched interests of the banking cartel that founded and has benefited from the Federal Reserve System.
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  2. Antal Fekete, in his Monetary Economics 101 lecture series, advocated for the endorsement and discounting of bills of exchange as the sole mechanism for circulation credit creation, a practice which was fairly common in the late 18th/early 19th century, the Real Bills Doctrine. His idea, like yours, is to finance the production of real goods and services, but he explicitly tied it to real production processes for consumer goods rather than productive enterprise generally. His rationale is that it is a self-liquidating credit system, so it will not be inflationary; his system assumes chartering only credit unions as (full-reserve) depository institutions. There is an interesting overlap between the two concepts in that they both have the financing of real economic activity, and not asset bubbles, as their primary goal. However, unless Dr. Fekete wrote, somewhere in one of his writings that I have not yet read, an explanation for why the commercial paper market no longer exists and why it would be resurrected under a hard money standard, I will be unlikely to ultimately conclude it would be a workable system -- it could be akin to genetic drift in our monetary evolution, but it probably deserves a thorough analysis. And under the current fiat-credit money standard, lending to SMEs by small and medium-sized banks would probably be significantly more efficacious than resurrecting a dead market with dead practices. So long as the credit creation is mostly for capital production, the result should be a real and somewhat sustainable improvement in living standards.
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