Big news at the beginning of last week involved Warren Buffett, Berkshire Hathaway, and the holding company’s sale of 50 percent of its Apple stake. The meaning of the sale, and whether it signals rising bearishness on the part of Buffett and Berkshire is for readers to decide.
Rather than focus on unknowns, it’s more useful to cover a known: the Apple sale increased Berkshire’s cash holdings to roughly $279 billion. Stop and think about that, and in particular think about it in light of what proponents of the so-called “money multiplier” theory tell us with conspiratorial regularity.
They claim that banks, seemingly for being “banks,” multiply money and credit through their loans of the money entrusted to them. This theory carries particular currency within the “Austrian School” community. Though they fancy themselves proponents of free markets, their odd belief that banks play the role of “counterfeiters” and “thieves” through their fractional lending has long had them wanting to ban what they claim banks do.
Read the full article at Forbes
