I still haven’t gotten around to reading this paper, The Chicago Plan Revisited, but Mike has a nice summary of some pieces. He wonders if the IMF hasn’t been reading some of our work:
Then, the observation we’ve somehow given banks complete control over our money supply:
”In a ﬁnancial system with little or no reserve backing for deposits, and with government-issued cash having a very small role relative to bank deposits, the creation of a nation’s broad monetary aggregates depends almost entirely on banks’ willingness to supply deposits. Because additional bank deposits can only be created through additional bank loans, sudden changes in the willingness of banks to extend credit must therefore not only lead to credit booms or busts, but also to an instant excess or shortage of money, and therefore of nominal aggregate demand.”
Huh. Seems close to plagiarism of Cullen Roche if you ask me.
“The US monetary system is designed to cater for the creation of the public’s money supply primarily by private banks. Most modern money takes the form of bank deposits and most market exchanges involving private agents are transacted in private bank money: it is “inside money“ which rules the roost so to speak in the day-to-day functioning of modern fiat monetary systems. The role of the public sector “outside money” creation is comparatively minor.
It seems like we’d have to change the nature of our institutions to be able to accomplish the Chicago Plan. Here’s JKH’s contingent institutional approach.
Check out the full post on the MR site.
PS – I plan on reading this paper over the weekend. I’ve just been slammed getting Orcam up and running and some other things that have been keeping me from doing a lot of the reading I have on my plate. If anyone has a brief summary before I read it I would be eternally thankful. I know some of you (REN, T Brown, etc) have been discussing it so thanks in advance.