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Anonymous Coward writes:
"http://www.theguardian.com/commentisfree/2014/mar/ 18/truth-money-iou-bank-of-england-austerity
Back in the 1930s, Henry Ford is supposed to have remarked that it was a good thing that most Americans didn't know how banking really works, because if they did, 'there'd be a revolution before tomorrow morning.'
Last week, something remarkable happened. The Bank of England let the cat out of the bag. In a paper called "Money Creation in the Modern Economy", co-authored by three economists from the Bank's Monetary Analysis Directorate, they stated outright that most common assumptions of how banking works are simply wrong, and that the kind of populist, heterodox positions more ordinarily associated with groups such as Occupy Wall Street are correct. In doing so, they have effectively thrown the entire theoretical basis for austerity out of the window."
(Score: 3, Interesting) by unitron on Tuesday March 25 2014, @12:54AM
Perhaps not as far apart as you think.
Anything only has value if you can get a buyer and seller to agree on that value, which is why anyone selling Beanie Babies needs to find a buyer other than myself.
But the law of supply and demand applies to both "goods and services" and to "money".
If there's a lot of money floating around out there, bread is going to be $4 a loaf instead of $2, because the increased supply of the money results in a perception that the value of each individual unit of it is less.
If there's a lot of money available for lending, borrowers can "buy" it for an overall smaller "interest plus principal" because the lenders are competing with one another to get you to "buy" their supply rather than the other guys, but if money is tight lenders compete with each other by offering to repay a higher total.
Supply and demand is like the broad concept of evolution--once you start looking for it, you find it everywhere, in one form or another, and they can even be inextricably intertwined.
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