Talk:Real bills doctrine
From Wikipedia, the free encyclopedia
Fixed it best I could. I think it's looking good now. Needs a bit more help with wikification, though. It currently reads like an old ecomomics textbook, however I think the sources are documented well enough. Sim 19:03, 29 April 2006 (UTC)
I'm starting a thorough revision of this page, as part of my slow project to update the Gold Standard and 19th century monetary policy economics pages. The introduction got a first whack, next is the history of the RBD and the bills clearing system of the 19th century. When this is done I will add material at Gold Standard since RBD is relevant to that - I simply have not had time to update this page and wasn't going to link in the condition it was in previously. Stirling Newberry 12:38, 22 August 2006 (UTC)
[edit] Real Bills and Fiat Currency
In a regime not backed by some specific specie, there is no real bills doctrine, because the central bank uses open market operations for its portfolio - that is, it deals in government securities - and alters reserve requirements. Banks can make loans based on anything that they can show bank examiners has a market value. For example the Import-Export Banke makes loans to businesses to buy goods for sale abroad, the collateral being the goods themselves and their expected resale. Central banks don't need to concern themselves with, and neo-classical economic theory suggests that they avoid - purchasing private securities or other privately created instruments. This rule isn't universally adhered to.
There is also no inflationary, or non-inflationary, question being raised by the purchase of private securities or other instruments. If the central bank is allowing the creation of more currency than the economy can support, there is inflation, regardless of what the central bank is exchanging new federal reserve notes, or what banks are lending. The RBD controversy isn't unimportant - there are countries that go on dollar boards for example - and as a proxy fight over monetarism there is some interest, but the reason for the very thin literature on the subject is that it doesn't have general applicability for most currencies. Stirling Newberry 12:20, 29 August 2006 (UTC)
[edit] Reply to the above
The point of the RBD is that it doesn't matter what kind of asset a bank gets in return for its money. All that matters is that the assets have adequate value. As long as bank assets move in step with the amount of money issued, the money will maintain its value. It is not a question of matching the amount of money to what "the economy can support". It is a question of banks getting adequate assets to back the money they issue.
[edit] Currency
A handful of articles in 20 years does not make this an important controversy in present circles. Indeed the articles were already in the article - checking I put the references in to two of them myself.
Misrepresentation by overweighting minor view points - and indeed you misrepresent even the minor viewpoints that I, in fact, cited in the first place - is against both intellectual honesty and the NPOV policy. Stirling Newberry 01:36, 19 March 2007 (UTC)
