Replies to Response on Fact 2.1 - Rev 11
Date: Sun, 31 Mar 1996 18:37:20 -0800 (PST)
From: ftbrady@cosmoslink.net
(Frank T. Brady)
Subject: Debate Facts
The way Mr. Flaherty signed his e-mail leads me to suppose that he is a
teaching Professor at Florida State University rather than just a student.
If that is so, I'm happy to see an Economics Professor taking an active part
in our debate. The name sounds familiar, I believe he may be one of the
people I invited several months ago after seeing some debate threads on
another part of the Internet.
There are a couple of points I would like to make:
1) My use of the term "The Fed" in 2.1 may have been misleading. I was NOT
referring ONLY to the twelve Federal Reserve Banks. I meant the entire
"Federal Reserve System" (the twelve PRIVATE "Federal Reserve" Banks AND the
entire system of private commercial banking institutions that the "Fed"
controls). Mr. Flaherty's statement that "the banking system can create
money via the deposit expansion process in the form of checkable deposits"
goes without saying. We have discussed the ways in which money is created
and put into circulation many times. It starts with the Fed's FOMC Security
purchases creating "Reserves" which are leveraged through fractional reserve
banking practices by the remainder of the banking system to create money
through loans.
2) Mr. Flaherty is correct in pointing out that I neglected to mention the
miniscule $300 million (maximum) that CAN be created in the form of U.S.
Notes, although I don't know how often they take advantage of that token
"privilege." My thanks to Mr. Flaherty for pointing that out, however.
I agree that the sentence in 2.1 could have been more precise, but I do not
agree that it was "incorrect." Every bank in this country takes part in the
creation of our money supply, and every last one of them are controlled by
"The Fed."
Regards,
Frank T. Brady
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