Banking as Property Rights Creation

Situation Structure Performance

Good = Unused resources, especially labor during the business cycle.


Who can use?

Who is entrepreneur?

"Factor ownership"

1. Stick. Administration. Command. State owned firms. Former USSR.

2. Totem. Status

3. Dollars. Market via bank loan.

A. Loan to private party.

B. Loan to government.

C. Zero-interest public debt.

All structures select who gets to be the entrepreneur.

A. Limited during recession.

B. Interest liability. Tax transfer, poor to rich.

C. No interest.

(None of the above affect inflation per dollar of new money.)