Money, Bank Credit, and Economic Cycles - The Ludwig von Mises ...

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The Credit Expansion Process 221(39)Bank CBalance Sheetc=0.1 and k=0.2AssetsLiabilitiesCash 94,021 Demand deposits 940,206Loans 846,185Total Assets 940,206 Total Liabilities 940,206And if Creditor T, upon receiving the money he was owed,deposits it in his own bank, Bank D, these entries wouldresult:(40)Bank DDebitCredit676,948 Cash Demand deposits 676,948(made by T)742,992 Loans to S Demand deposits 742,992594,393 Demand deposits Cash 594,393The bank would make this last entry in its journal when Spays his creditors.At this point, Bank D’s balance sheet would appear as follows:
222 Money, Bank Credit, and Economic Cycles(41) Bank DBalance Sheetc=0.1 and k=0.2AssetsLiabilitiesCash 82,555 Demand deposits 825,547Loans 742,992Total Assets 825,547 Total Liabilities 825,547The process continues in this way, and the chain ofdeposits and loans extends to all banks in the system. Oncethe effects of the original deposit of 1,000,000 m.u. have completelydisappeared, the total deposits created by the bankingsystem would be the sum of the following sequence:[21]1,219,512 + 1,219,512 x 0.878 + 1,219,512 x 0.878 2 + ...∞= a + ar + ar 2 + ... = ar n ; where a = 1,219,512Σn = 0and the common ratio r = (1 – k) (1 – c)1 + k(c – 1)This is due to the fact that, in our example, r would beequal to 80 percent (1 – k) of the proportion of deposits newlycreated by each bank at each stage. This proportion comesfrom formula [3] and is equal to:Therefore: [22](1 – c)1 + k(c – 1)r = (1 – 0.2) 1 – 0.1 = 0.8 . 0.9 = 0.721 + 0.2(0.1 – 1) 1 + 0.2(0.1 – 1) 1 – 0.18
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MONEY,BANK CREDIT,ANDECONOMIC CYCLE
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CONTENTSPREFACE TO THE THIRD ENGLIS
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xiiMoney, Bank Credit, and Economic
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xivMoney, Bank Credit, and Economic
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xviMoney, Bank Credit, and Economic
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xviiiMoney, Bank Credit, and Econom
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PREFACE TO THESECOND ENGLISH EDITIO
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Preface to the Second English Editi
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PREFACE TOTHE THIRDSPANISH EDITIONI
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Preface to the Third Spanish Editio
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xliiMoney, Bank Credit, and Economi
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INTRODUCTIONThe economic analysis o
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Introductionxlviiand foreign exchan
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IntroductionxlixThis book comprises
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Introductionrecurrent phenomenon. I
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Introductionand Professors Hans-Her
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2 Money, Bank Credit, and Economic
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4THE CREDITEXPANSION PROCESSThis ch
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The Credit Expansion Process 169dif
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6ADDITIONALCONSIDERATIONSON THE THE
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7A CRITIQUE OFMONETARIST ANDKEYNESI
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A Critique of Monetarist and Keynes
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8CENTRAL AND FREEBANKING THEORYThis
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Central and Free Banking Theory 603
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9A PROPOSAL FOR BANKINGREFORM: THE
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A Proposal for Banking Reform:The T
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BIBLIOGRAPHYAbrams, M.A., Money in
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Bibliography 815Bajo Fernández, M.
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Bibliography 817Borch, K.H., Econom
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Bibliography 819Coronel de Palma, L
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Bibliography 821N. Durlauf and Lawr
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Bibliography 823Galiani, F., Della
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Bibliography 825Graham, F.D., “Pa
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Bibliography 827——, Prices and
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Bibliography 829translation by N. K
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Bibliography 831——, “Keynes
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Bibliography 833Russian edition by
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Bibliography 835Keeler, J., “Empi
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Bibliography 837——, “On Crisi
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Bibliography 839——, “Professo
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Bibliography 841Miller, H.E., Banki
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Bibliography 843Neira, Alonzo, M.A.
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Bibliography 845Raguet, C., “Repo
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Bibliography 847——, “The Myth
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Bibliography 849——, “Banking
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Bibliography 851M.C. Marcuzzo (Chel
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Bibliography 853——, “A Critiq
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Bibliography 855Walker, A., The Sci
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INDEX OF SUBJECTSAccelerator princi
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Index of Subjects 859Banking reform
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Index of Subjects 861objection to t
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Index of Subjects 863Goal, concept
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Index of Subjects 865See also Fract
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Index of Subjects 867Plan, definiti
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Index of Subjects 869Tragedy of the
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