Re: Banks vs Capital Markets

["ÁÎ×Ó¹â Henry C.K.Liu ¹ù¤l¥ú" <hliu@xxxxxxxxxxxxxx>]

Below is the source for the Fed flow of funds:

http://www.bog.frb.fed.us/releases/z1/Current/data.htm

As for your second question, several others on the list who are more expert than me have been debating the same issue.
Perhaps they can answer your question.

>From my simplistic point of view, according to Levy, money is created by credit.  The capital market, through the
securitization of debts, is taking credit market share from banks.   Unlike banks, the capital markets are not regulated by
the Fed, but by the SEC and the CFTC, under the Commodity Exchange act (CEA), which is under review by Congress.  Whether
economists recognize it or not, the capital markets affect fundamentally the money supply.  Yet only the banks' share of the
credit market is regulated by the Fed through reserve requirments and discount rates and ff rates.

Henry C.K. Liu



Kazuhiro Kurose wrote:

> Dear "ÁÎ×Ó¹â HenryC.K.Liu ¹ù¤l¥ú" <hliu@xxxxxxxxxxxxxx> and others
>
> You said as follows in the mail at Feb. 27. I would like to ask you concerning that.
> > Banks' share of net credit markets, according Fed data on flow of funds,
> > drop from a peak of over 62% in 1975 to 26% in 1995 and still falling
> > rapidly, while security markets' share rose from negligible in 1975 to
> > over 20% in 1995 and still rising rapidly, with insurers and pension
> > funds taking the rest.
>
> Fisrt of all, I would like you to tell me the date source. What a kind of Fed date is it? I would like to know the title
> or name of date source.
> At second, there is what I can't understand. Endogneous money supply theorists argue that loans of banks make deposits,
> so money demand induces money supply. That is to say, money supply is the endogneous variable determined by money
> demand. However, in the recent circomstances that 'Disintermidiation', just like the quotation abverb showed, have gone
> on, is money really endoginously supplied?  If not, how money is supplied?
>
> Sincerely
>
>  **************************************
>   Kazuhiro Kurose
>   Hokkaido University, Faculty of Economics
>     Kita 9 Nishi 7, Kita-Ku, Sapporo, Japan
>     060-0809
>     TEL: ++81-11-716-2111 ex:4065
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