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| Mar 16, 2010 12:34 pm |
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Economic Capture - Money Power in the World |
John Stephen Veitch
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Hello James
There's not too much we disagree about, I think.
Usury, has the taint of illegal or grossly unfair about it. Most of the interest rates in developed countries are not like that.
When I said "inflation is normal" I was not suggesting that inflation was desirable. I meant "normal" in the sense you yourself explain, because governments choose NOT to restrain the money supply.
What is money?
There are many definitions. One is that money is the currency created by banks as debt under an arrangement between the banks and the government, whereby this "currency" is recognized as legal tender.
There is a sound reason for both interest rates, and for government borrowing from banks and paying interest on the money borrowed, even though we all agree that the money was "created" by a book entry and is essentially "free".
The thing that maintains the value of money in the market is its relative short supply. Think of the money supply as a net spread across the market. If the money supply is too easy, interest rates are too low, and the net goes slack, and inflation occurs.
With interest rates at the right level, tension is restored to the net, and inflation is checked, but so are sales and employment and taxes, and everyone feels a bit of "tension" from the pressure in the net. Nobody likes that, but it's probably the most healthy economic situation.
We do use the money other people have banked, too. Only some of the money that banks lend us is "new money". The fractional reserve process does restrict the banks if the rules are enforced. I agree that authorization is just a signature, but it's an important step just the same, there is an approval process, even if that process is commonly abused and over used.
I agree that inflation is a hidden form of taxation.
I don't know how much if any of the propaganda about the Federal Reserve is true. I expect some of it, like being hand in glove with the government, is true. I expect connections to some secret group of people, including the Queen of England, is nonsense.
Finally:
"The 100.00 is created out of thin air, because it has no backing with precious metals, but the usury [interest] is not created thus leaving the system short?"
$100.00 is created by a double entry in a cash book.
The idea that money was backed by precious metals was debunked 200 years ago. That illusion was maintained for a long time, but it was almost always fraudulent. (The Romans created fake "real coins" and so the Henry the VIII of England.)
The system is not "left short" by the charging of interest. Interest is "pressure" or as I explained before "tension in the net" that forces the person borrowing the money to put it to good use. You are supposed to use the borrowed funds to increase your income, or to decrease your costs, and that "revenue" is used to pay the interest. Banks are not supposed to lend you money at all unless you can make a case that you will use the money to do that.
Interest is one of the ways banks earn money to pay their own expenses. They also charge bank fees. Most of that money goes to pay bank expenses, wages, rents, interest costs to depositors, so it goes around like all the other money.
If the argument that there is no "money" to pay the interest was valid, then there is no money to pay wages, and no money for profits, and no money for taxation. If that was the case money would be useless, and clearly that's not the case.
Other ways to create money:
Green Dollars, Time Banks, LETS systems, all create "money". So does ordinary business to business credit, or person to person credit. The problem is that this sort of money isn't accepted by trading banks to settle debt, nor by the government to pay taxes. That's a really good reason why a local community might choose to operate such a scheme. This locally created money is ONLY useful locally, so the "money" never leaves the community. Like, all other money, the "value" lies in the acceptability of the currency by other people, in their confidence that they will get "value" when they choose to pass that currency on to others.
John Stephen Veitch; The Network Ambassador
Open Future Limited - http://www.openfuture.co.nz/
Innovation Network - http://veech-network.ryze.com/
Building an Open Future - http://openfuture-network.ryze.com/Private Reply to John Stephen Veitch (new win) |
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