Social and Behavioral Sciences Commons^™

Bank Solvency And Economic Activity, Lester G. Telser

Lester G Telser

This note explains why bank solvency is extremely important in a modern economy. Although banks provide many services including loans to business and households, these are secondary. Provision of the means of payment is primary. Every transaction in a modern economy involves a means of payment offered by the buyer and acceptable to the seller.

Ii Keynes On Safe Assets, Lester G. Telser

Lester G Telser

Only the monetary authorities can create and issue safe assets. A safe asset is not offset by any liability so no private entity can issue it. The nominal value of a safe asset is fixed and it usually offers no nominal yield. The rationale for safe assets can be traced to the factors underlying the Keynesian liquidity trap. Since late 2008 the Fed has paid 0.25 percent on member bank reserves held in deposits at the Fed. This is part of the program known as ‘quantitative easing.’ It may have presented collapse of the U.S. banking system.

How Default Probability Affects Returns On Loans, Lester G. Telser

Lester G Telser

Even the simplest kind of default as an independent random event poses difficulties. The correct formulas for the nominal return on a default free loan and the revisions to apply for a loan that may default follow from 2 assumptions. 1. A good now is better than a good later because survival from now to later is not sure. 2. Private loans occur only if the probability of default does not exceed an upper bound set by the reciprocal of the nominal return on a default free loan. This upper bound makes sense if and only if the nominal interest …

How Low Interest Rates Impede Recovery, Lester G. Telser

Lester G Telser

A super market and a bank in the money market treat their customers differently. A supermarket stands ready to sell to any customer any amount available of a commodity at a given price without regard to the customer’s credit standing. The credit standing of a potential borrower is paramount to a bank. Whether a bank offers a loan, its size if it does, and the interest rate it asks all depends on its assessment of the credit risk. Keeping interest rates low impedes lending and economic recovery.

The Actual Economy Versus A Fictional Economy, Lester G. Telser

Lester G Telser

This note describes some practical problems of the actual economy ignored by the standard theory

An Economist's Analysis Of The Voting Paradox, Lester G. Telser

Lester G Telser

It has been said that democracy is the worst form of government except all the others that have been tried. The best argument against democracy is a five-minute conversation with the average voter. Winston Churchill

Lessons From The U.S. Great Depression And The German Hyperinflation, Lester G. Telser

Lester G Telser

Abstract. The German hyperinflation and the U.S. Great Depression have in common the effects of an insufficient amount of useful media of exchange. In Germany too much currency was printed and in the U.S. widespread bank failures undermined confidence in all demand deposits so all bank checks were regarded suspiciously. The effects were the same in both countries, very high rates of unemployment coupled with collapse of their economies. The German Hyperinflation gives evidence against the Phillips Curve. JEL E65 Study of Particular Policy Episodes

Non Profit Suppliers Of Higher Education: Corollaries, Lester G. Telser

Lester G Telser

The American Association for the Advancement of Science bills Harvard University $26,675 for a one year subscription to their weekly publication Science. That anon profit suppliers of higher education is willing to pay such amounts far above the true incremental cost of supplying it with such publications is a corollary of the economic explanation of their behavior. Nonprofit Organizations JEL L30

Digital Storage In The Computer Age And The Irish Potato Famine, Lester G. Telser

Lester G Telser