Auros (![[info]](http://l-stat.livejournal.com/img/userinfo.gif){kind=small} auros) wrote, |
Hmm. It looks to me like the base was briefly significantly higher than M1, but now is about equal (so we'd have a money multiplier right around 1.0 -- which means that we're not creating any money through loans)...
I guess a multiplier below 1.0 could also mean that new monetary base going to the banks is being used to retire the banks own debts to other institutions, thus destroying money...
I definitely agree that we likely have a system that is solvent (but illiquid) in aggregate, but with many individual institutions (like AIG) insolvent (in the absence of continual bailouts or an orderly intervention / bankruptcy / receivership / insert your favorite name here).
I guess a multiplier below 1.0 could also mean that new monetary base going to the banks is being used to retire the banks own debts to other institutions, thus destroying money...
I definitely agree that we likely have a system that is solvent (but illiquid) in aggregate, but with many individual institutions (like AIG) insolvent (in the absence of continual bailouts or an orderly intervention / bankruptcy / receivership / insert your favorite name here).
