Nevertheless, that function could not exist without the capital (8%). Ancillary comes from anchor, no? The capital allows to resist to unexpected withdrawals, without borrowing in despair from the central bank.

Historically banks lent from what they had in capital. No more capital, no more lending. Applied to central banks, that was the idea of the gold standard.

It is obsolete, but as you point out, "long term funding of productive assets" is imploding because credit was given in a self feeding loop to the financial system, a bit like when an amp feeds a microphone, that makes the loudspeaker scream even louder, etc...

What has been missing is the notion of PRODUCTIVITY, indeed. Instead short term profits to "credit institutions"(whatever that means, $12 billion of TARP gift through AIG in the case of Goldman) have been confused with long term profits to society.

So society stopped being profitable, basically... Ethics is the way out.
PA  

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