Home > Work > Naked Money: A Revealing Look at Our Financial System
21 " The ratings agencies were supposed to be the ones who made sense of this process by evaluating individual securities and assigning them a rating based on their relative risk: AAA, AA, BBB, and so on. "
― Charles Wheelan , Naked Money: A Revealing Look at Our Financial System
22 " Commodity money solves the hyperinflation problem. No government can produce huge new quantities of gold, silver, or mackerel. "
23 " For now, the key insight is that changing the number of chips on the table does not change the value of what’s in the shoebox, which is all anyone cares about at the end of the night. "
24 " The Fed could not create new money to act as the lender of last resort for failing banks, as new money had to be backed by gold. "
25 " The Financial Crisis Inquiry Report describes, “By the time the process was complete, a mortgage on a home in south Florida might become part of dozens of securities owned by hundreds of investors—or parts of bets being made by hundreds more. "
26 " (Here is a statement of the obvious: banks with “state” in the name are chartered by the state; those with “national” in their name are chartered by the feds.) "
27 " One currency can be swapped for another at whatever rate two parties are willing to make a voluntary trade. "
28 " What was different about this crisis was that the institutional structure was different. It was not banks and depositors; it was broker-dealers and repo markets, money market funds and commercial paper. But the basic idea of providing short-term liquidity in order to stem a panic was very much what Bagehot envisioned when he wrote Lombard Street in 1873.” 37 "
29 " Something really wacky happens when rice bankers start loaning out other people’s capital: money is created. "
30 " The harvest is good. Families are awash with rice. Deposits at the rice storehouses climb, enabling more loans. Land values are rising, both because credit is more readily available and because villagers believe future harvests will continue to be bountiful. "
31 " Let’s start with three crucial wrinkles in the aforementioned logic. "
32 " Bert confused a burst of new spending caused by growth in the money supply with an increase in demand for his products. "