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Economic Capture - Money Power in the WorldViews: 801
Mar 03, 2010 2:15 amEconomic Capture - Money Power in the World#

John Stephen Veitch
James Booth Wrote:

"Some of the people can be fooled all the time.

I have no doubt that "small groups of thoughtful and committed individuals anonymously work at changing the world" and that is happening all the time, though it does not happen with the "show" of any parade and, I believe, does not happen at all unless such *change* is compelling and rewarding to those who pick up such a banner to carry as their own.

Meanwhile, those with money, or the "promise of wealth" given through emission of colourful, though worthless, paper, as IOUs or symbols of "precious metal" which may, or may not, actually exist, but which images by themselves corrupt no less than the actual metals, are able, through constant repetition, of truth or lie or some combination of both, to "engineer" public opinion, more often toward hate than toward conciliation, in any case to instil fear with the object of being THE "power" which can provide "safety" from such fear, although that "safety" is realized no more than actually possessing silver or gold is a natural consequence of accumulating paper currency.

The "dominant theme" chosen by such Money Power is reinforced as long as belief in that theme is in the interest of Money Power which would not "promise to pay" for such reinforcement if the outcome of engineered belief did not align mass thinking toward Money Power goals.

Where, then, is the fallacy ?

Money Power will not devote energy to promoting any dominant social theme which will suit its own ends but is already gaining popularity on its own, unless to "hurry it up" in process of achieving some other urgent end."


JB

Private Reply to John Stephen Veitch

Mar 03, 2010 2:20 amre: Economic Capture - Money Power in the World#

John Stephen Veitch
Thomas Holford Replies

James Booth sayeth:

> The "dominant theme" chosen by such Money Power is reinforced as long as belief in that theme is in the interest of Money Power which would not "promise to pay" for such reinforcement if the outcome of engineered belief did not align mass thinking toward Money Power goals.

> Where, then, is the fallacy ?

It's not clear to me what you're getting at. I'm particularly curious as to what the term "Money Power" encompasses.

"Money" is a very slippery concept. It is both very simple but yet complicated, depending on what aspect you are talking about.

Is this your own formulation, or is this based on some external analysis or book?

If so, who is the author or what is the book?


T. Holford

Private Reply to John Stephen Veitch

Mar 03, 2010 3:03 amre: Economic Capture - Money Power in the World#

John Stephen Veitch
It's almost impossible to understand how the very biggest banks have developed a system to capture all the economic surplus in the world.

Our economy is built on credit. The money you borrow from the bank has zero cost. It's merely a book entry. $100,000 in your bank account and $100,000 in the banks debtors ledger. It's just a double entry accounting entry.

Banks have traditionally financed business and real estate purchases, on terms that seem very reasonable. The borrower promises to pay, and to pay the agreed "interest" on the loan, backing that promise with title to land or other saleable assets. This process is supposed to provide the economy with low cost capital, and the banks are supposed to be in a "no-lose" situation.

But there's little profit there, for the bank.

So many banks have tried to find new sources of money. They start out by lending money to more risky ventures. This is attractive because the interest rate isn't constrained by rules, or community pressures, and they can charge fees to set up transactions that might be massive compared with the cost and risk of transaction. So they look at the profit potential of the "deal" and try to milk as much profit off the "deal" at the front end as possible. That leaves the client relying on the back end of the deal to get their share of the "deal".

Not happy with that, the bank recognises another "profit centre". The possibility that the "deal" we just set up will fail. That the borrower will "default" on the transactions agreed too. So they have developed these new securities, "credit default swaps" which are "insurance" that "we" will get paid whatever happens.

Now they collect "economic surplus" when things are going well, and they also collect "economic surplus" when deals go bad. More-over the existence of credit default swaps help grease the track to make default more likely.

This is a bit like going to the race track and backing every horse in the race for a win. Of course that's not a success strategy. You have to "know" which ones are more likely to win. (Or which ones are likely to fail.)

Big banks are in exactly that position. They are to a large extent able to set up the "race", and put handicaps to suit themselves on the various horses. As a result, whatever happens, the banks win, and ALL the horses lose, even the winning horses. Where-ever there is economic surplus in the economy the banks vacuum it up for themselves.

Modern banking has become a predator on the real economy.

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

Mar 03, 2010 9:07 pmre: re: Economic Capture - Money Power in the World#

Thomas Holford
For what it's worth, here is an intriguing piece of data:

"Fifteen years ago, the combined assets of our six biggest banks totaled 17 percent of our GDP. By 2006, that number was 55 percent. Right now, it stands at 63 percent."

http://www.washingtonsblog.com/2010/03/15-years-ago-combined-assets-of-6.html


There are an almost endless number of conspiracy theories and villains that one can fixate on in the arena of money and banking. My attitude is that where money is concerned, human beings are inexorably tempted to do selfish, unethical things.

Over the course of human history, there have been greedy and unethical bankers, politicians, regulators, borrowers, lenders, etc. etc.

Every party to a financial or monetary transaction needs to be suspected, monitored, and verified. Paraphrasing Ronald Reagan: "trust, but verify".

I prefer not to single out one group and say that they are the problem. Instead, I take the attitude that there is some temptation for everyone, and everyone needs to be watched. In particular, the watchers especially need to be watched.

In my opinion, I ascribe most blame for the current financial crisis to populist politicians like Senator Christopher Dodd and Representative Barney Frank who used their coercive powers over the banking system to drive the finance and banking system into catastrophe.

But there is plenty of blame to go around.


T. Holford

Private Reply to Thomas Holford

Mar 04, 2010 12:17 amre: re: re: Economic Capture - Money Power in the World#

John Stephen Veitch
Thanks for that Thomas.

Your data demonstrates that the banking system as it's currently structured vacuums up all the economic surplus for itself. In the process it destroys jobs and industries and set up unrelenting competition for resources. No matter how hard the companies and the people work, they ALL LOSE, because the banks collect the winnings whatever happens.

James Booth has been worrying about this your some years. Generally he seems to have concluded that it's to do with the central bank, the Federal Reserve.

My view is that the problem has much more to do with general economic theory, and the role of banks in that.

Then we add on a complete failure to regulate banks and to keep them in their proper role, because we don't understand what real wealth is. (Too many of us think real wealth is money.)

SO we encourage MONEY and we destroy jobs and the environment, and justice, and social structures, and eventually the society in which we all live. It's the story of "The Golden Calf" (See the old testament) all over again.

What's the solution? De-schooling ourselves. Getting rid of all the wrong ideas that trap us in this destructive cycle of self made foolishness.

How? Well the new constitution of Ecuador, might give us some clues. So does this web site:
http://pachapeople.org/

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

Mar 04, 2010 2:14 amre: re: re: re: Economic Capture - Money Power in the World#

Thomas Holford
John Stephen Veitch sayeth:

> SO we encourage MONEY and we destroy jobs and the environment, and justice, and social structures, and eventually the society in which we all live. It's the story of "The Golden Calf" (See the old testament) all over again.


Call me simplistic, but it seems to me that there are really only two possibilities if a society is to have any kind of division of labor and system of commerce:

1.) a barter economy;
3.) a money economy

Personally, a barter economy would be very impractical for me, as well as for the Federal Reserve System, the U.S. economy, and western civilization.

So, whatever it's limitations and flaws, I'm willing to try to make a monetary economy work.

T. Holfrd

Private Reply to Thomas Holford

Mar 04, 2010 5:03 pmre: re: re: re: Economic Capture - Money Power in the World#

Joseph Lynders
" ~~~~~~~~~~~~~~~~~ ? ~~~~~~~~~~~~~~~~~~~~ "

"Fifteen years ago, the combined assets of our six biggest banks totaled 17 percent of our GDP. By 2006, that number was 55 percent. Right now, it stands at 63 percent."

I wonder if that above information is really as meaningless as it seems to be when you ask yourself the question; So what?

Now a better statement was made by John Veech.

"What's the solution?"

Maybe we could start with the book by Chesterton on the subject. "The Outline of Sanity"

It was written a while ago and is has been described as the best book ever written on the subject.

NOTE: Chesterton wrote a number of books that were described as the best written on various subjects. Chesterton died in 1939.

Have a good IDea today,

03/04/10 Joseph F. Lynders FTg/M/?

Private Reply to Joseph Lynders

Mar 05, 2010 12:49 amre: Economic Capture - Money Power in the World#

James Booth
.
Something has been abridged here, but we carry on ...

... like survivors in Chile or Haiti: we are where we are.

My apologies for not being able to keep up with the pace here.
_


"It's not clear to me what you're getting at."
> My post was in direct response to more than just one post which appears no longer to be on display.
_


"I'm particularly curious as to what the term "Money Power" encompasses."
> *Money Power* as I am using the term here is a force "above and beyond" what we think of as "government" but a power which largely usurps legitimate government through corruption of "elected" (selected) officials and of the very *election* process itself, then continues to have its way through the "obligation" of those same corrupted officials it has brought to power, and whom it maintains in office to maintain its own power, a power which is never equal to or greater than the *Will of The People* except that the "promise to pay" at every instant offered by Money Power is an enticement which keeps The People "in line" while suffering illusions put forth by that same *private* "power" which in most modern states *creates and emits* what we today accept as our "money".
_


" 'Money' is a very slippery concept. It is both very simple but
yet complicated, depending on what aspect you are talking about."
> Yes - agreed.

I grew up in a country which, as I was "educated" to believe, issued its own money, as according to the Constitution of the United States of America, and while I have continued to live in, and be citizen of, that same country now for 65 years, I have learned I live in - learned TO live in - a country very different from the one described to me in school.

As regards *money*: there were a couple times in U. S. history when the United States government; ie. The People, DID create and issue their own money, as in ancient times, but that has not been our *reality* since 1913.

Among other things we were taught in school was at least a "mild hatred" of "kingly rule" which is most often portrayed as tyrannical, and which it often has been during most of the past 5,000 years or so, with some exceptions
... but there was a time before that period.

A quote from Demosthenes seems as appropriate to our current situation as to those he spoke to then:

"In ancient days everything that belonged to the state was costly and splendid, and no
individual distinguished himself from the multitude; and the proof of it is, that if any of
you know the houses of Themistocles and Miltiades, and the famous men of that time,
he will see that they are not more magnificent than those of other people; but the
buildings and construction of the State were of such size and number, that it is not in
the power of succeeding generations to surpass them - the Propylaea, the Docks, the
Porticoes, the Piraeus, and other works with which you see the city adorned! But now
all who are concerned in the management of public affairs have a superfluity of riches,
that some have built private houses more magnificent than many public edifices and
some of them have purchased more land than all of you who are sitting in the court are
together possessed of; but your public buildings and works, it is disgraceful to tell how
scanty and contemptible they are. What indeed can be said of your works? What of
the parapets we throw up? - of the roads we construct and the fountains and trifles at
which we labour? ... Thus speaks the ardent enthusiast for the happiness and fame of
his country; his speeches of admonition might with a few alterations be adapted to the
present age, in which such vast sums have been squandered away without producing
anything useful or durable."

Therein lies a description of the State (any state) burdened with - whose people are burdened with - *money as debt* or a *debt based economy* such as we have in many countries of our world today.

Yes indeed - money is a much more "slippery concept" when it is such as we use today, money which is backed by nothing but the creation of debt.

The country in which I was led to believe I was growing up in, as I understood what was given to me as part of my "education" in those days, was a country in which money, yours or mine, represented an accumulation of our efforts, of our "blood, sweat and tears" that is, upon which we might, if we worked hard and saved our "money" as good citizens, one day "retire" to enjoy those "fruits of our labours" or perhaps pass on some portion of those "fruits" to help a next generation or two following us to more easily achieve whatever their individual goals we choose to further.

Money Power is in no way *beneficent* to any people anywhere except when a particular group, for as long as it does, acts to benefit, however temporarily, Money Power interests, and its continuation.

Prior to the clever tactics of some caravaneers whose travels associated them with Habiru (apparently a social designation rather than one ethnic or tribal) and earlier Hurrians, rulers were most often accepted by their people as a "wise parent" who measured "authority" for the welfare of "family" who could from "within" depose a tyrannical ruler at any time before the age of exterior forces - early Money Power - which subverted natural rule along with the entire natural order and relationship between any people and their (formerly) self-selected ruler.

_


"Is this your own formulation, or is this based on some external
analysis or book? If so, who is the author or what is the book?"
> The term *Money Power* I have found used by a variety of authors, and is also a term used by Abraham Lincoln to describe the "force" which was ultimately his demise.

Where some folks want to talk about "elites" of some sort, or blame certain individuals or an ethnic group, I am not interested in "blame" but instead am focused on understanding the *mechanics* of our enslavement through what we call "money" today, which is NOT the sort of money which represents the product of our Life Force, but which is in fact a tool used to drain the wealth of any people, or any group or nation, who are constantly pitted against some "other" group - both of which find themselves instigated to yet another war, all "sides" of which are *financed* by Money Power which cares not a whit who "wins" or lives or dies as long as it is paid in full measure.

This might help you to understand why a small group of New York "capitalists" financed the Russian Revolution which replaced the Tsar with Communism, and thus give you further insight to the subsequent "conflict" borne of that "union".

Those International Bankers (not to be confused with your hometown banker or bank manager) did not *give* the Bolsheviks any "money" or anything of actual substance, but extended them *credit* with which their purchases might be satisfactorily transacted.

On careful inspection, you will find those "purchases" - - for materials and weapons, etc. generally profited those same "extenders of credit" more than anyone else.

Repayment came to the New York bankers - in part - as actual substance: 60 million rubles of gold.

To which there is always some fool who will quickly say something such as, "That was the Tsar's money. He deserved to lose it!"

That 60 million rubles in gold was taken from the Russian people, NOT from the Tsar.

The *conqueror* (whoever that may be) shares the "spoils" of conquest with the Money Power which made it possible for the "conqueror" to succeed at all, and if it is soon to the benefit of the Money Power for that "conqueror" to "succumb" or be replaced, so be it: Money Power stands to profit the more there is disruption and upheaval.

That is how the system has worked for 5,000 years and continues today, as you realize when, say, you want to buy a "home" for which you are not able to pay "cash".

Your signature on the loan document does NOT result in your hands being filled with cash - NO!

All you get is a piece of paper which represents a "promise to pay" - a promise that the lender will satisfy the seller, and your promise to pay the lender an amount which will far exceed the *price* of the home (in our lifetimes we have seen interest on a 30-year home mortgage as much as two-and-a-half times the purchase price of the home).

The "money" which satisfies the seller did not exist until you "created" it with your signature on the loan document, after which that "money" exists as "debt" (what is owed the lender), not as actual "wealth".

One critical problem with this system, which, for those whose every breath is quoting from the Bible (worthy of respect as that is), IS *slavery* (Proverbs 22:7), is that the *money* which must pay the "rent" (interest) on the principal you have "guaranteed" (with your signature) to pay the lender, who, recall, gives you only a piece of paper which represents "legal possession" of something you do not own, and never will (there is no allodial title today), DOES NOT EXIST !

Nonetheless, that "interest" money has to be paid, and it has to come from somewhere - the only place it can be derived is from some other "authorization of debt money" which is why, when the "music stops" in a debt-based economy, someone always comes up "short" (without a chair to sit on).

Bankrupt, as is the entire system itself ultimately.


More than you wanted to know, I realize ...


JB

Private Reply to James Booth

Mar 05, 2010 1:48 amre: re: Economic Capture - Money Power in the World#

James Booth
.
"It's almost impossible to understand how the very biggest banks have
developed a system to capture all the economic surplus in the world."

Seems that way most of the time, yes, but is it really impossible ?


In short, here, I believe it important to remember:

One "class" of banks must "play by the rules"

Another "class" of banks MAKES the rules.

The former lives or dies by the rules of the latter.

On inspection, governments rise or fall by the rules of the latter.


JB

Private Reply to James Booth

Mar 05, 2010 3:13 amre: re: Economic Capture - Money Power in the World#

Thomas Holford
James Booth sayeth:

> *Money Power* as I am using the term here is a force "above and beyond" what we think of as "government" but a power which largely usurps legitimate government through corruption of "elected" (selected) officials and of the very *election* process itself, then continues to have its way through the "obligation" of those same corrupted officials it has brought to power, and whom it maintains in office to maintain its own power, a power which is never equal to or greater than the *Will of The People* except that the "promise to pay" at every instant offered by Money Power is an enticement which keeps The People "in line" while suffering illusions put forth by that same *private* "power" which in most modern states *creates and emits* what we today accept as our "money".


Interesting and suggestive. But too many dots and not enough connections for me to grasp.

I'm currently reading Murray Rothbard's "History of Money and Banking in the U.S." and I can say that at least through the Continental era, the various states seemed to have tried every hare-brained scheme imaginable to create "credit" and increase the money supply and to float paper money and depreciate currency.

I'm sure that by the time I finish the book I'll be totally discouraged about the possibility of ever having a trustworthy monetary system.

I have heard bits and pieces of speculation and suspicion about the vague forces you designate as the "Money Power". But I'm sure that there have been no shortage of people over the decades who have taken a stab at documenting and explaining the "Money Power" with specificity.

Can you identify any books or authors who have written seriously about the "Money Power"?

T. Holford

Private Reply to Thomas Holford

Mar 05, 2010 5:57 amre: re: Economic Capture - Money Power in the World#

James Booth
.
For time well spent ...

"The Babylonian Woe" by David Astle

Complete Title:
"The Babylonian Woe: A Study of the Origin of Certain Banking Practices, and of their effect on the events of Ancient History, written in the light of the Present Day"


See:
- http://www.yamaguchy.netfirms.com/7897401/astle/astle_index.html


JB

Private Reply to James Booth

Mar 05, 2010 5:28 pmre: re: re: Economic Capture - Money Power in the World#

Thomas Holford
James Booth sayeth:

> "The Babylonian Woe" by David Astle

> Complete Title:
"The Babylonian Woe: A Study of the Origin of Certain Banking Practices, and of their effect on the events of Ancient History, written in the light of the Present Day"


Thanks.

A very obscure book. And expensive.

$43 on Amazon. Used copies from $93.

Good news is that the full text seems to be available on the web:

http://turmelpress.com/babyl00.htm

It would be REALLY nice if there were a PDF file on the web that I could download to my Kindle.

Regards,

T. Holford




Private Reply to Thomas Holford

Mar 05, 2010 9:32 pmre: re: re: Economic Capture - Money Power in the World#

James Booth
.
I got mine for about $50 from alibris.com

- http://www.alibris.com/

Where I buy most of my reading materials ...


JB

Private Reply to James Booth

Mar 05, 2010 11:17 pmre: re: re: re: Economic Capture - Money Power in the World#

Thomas Holford
James Booth sayeth:

> got mine for about $50 from alibris.com

- http://www.alibris.com/


I found several full text PDF's at http://www.scribd.com.

I will download one to my Kindle. No need to get the Money Power involved.

T. Holford

Private Reply to Thomas Holford

Mar 07, 2010 12:07 amre: re: re: Economic Capture - Money Power in the World#

Joseph Lynders
" ~~~~~~~~~~~~~~~~~~~~ ? ~~~~~~~~~~~~~~~~~~~~~~~ "

"The Babylonian Woe: A Study of the Origin of Certain Banking Practices, and of their effect on the events of Ancient History, written in the light of the Present Day"

I didn't read this book but it sounds like it pretty much covers the origins of our problem.

I did read the Chesterton book and it pretty much covers the solution to our problems.

The Chesterton book costs a little less than half that of the other books estimated cost.

It is good to know both the origin and the solutions to our problems but not necessarily in that order.

Have a good IDea today,

03/06/2010 Joseph F. Lynders FTg/M/?

Private Reply to Joseph Lynders

Mar 07, 2010 6:25 pmre: re: re: re: Economic Capture - Money Power in the World#

Thomas Holford
Joseph Lynders sayeth:

> I did read the Chesterton book and it pretty much covers the solution to our problems.

Here is a review of Chesteron's book from a poster on Amazon.com:

G.K. Chesterton (1874-1937)wrote THE OUTLINE OF SANITY as a possible alternative to Big Capitalism and Big Communism. Chesterton offered an economic solution that was both "idealistic" and practicle. Bascially, Chesterton argued that, "Smaller is better." Chesteron knew that the economic arrangements in Great Britian and these United States had serious flaws that undermined small farmers, small shop owners, and industrial workers. He suggested that men should gradually attempt to reverse the trends that were taking place by restoring men as owners of small shops and small land holdings in place of large farms and monopolisitc owned factories which ruined so many people. Chesteron was clear that Big Communism an evil system which offered so actual solution.

Chesterton described Big Capitalism as a system whereby monopolists used a corrupt parliament and a corrupt legal system to condemn land and property to control economic activities and concentrate vast wealth in the hands of a few plutocrats. He described Big Capitalism as a system where the very wealth concentrated wealth in the pockets of a few while economic despoiling most people. He described Big Communism as a system where no one could have pockets because a politically powerful oligarchy of party hacks would run the economy and use and abuse the mass of people.

Chesterton also critisized the Machine Age, but he did not critisize machines or technology. Chestertoned that unfair and corrupt legislation resulted in Big Capitialism having access to factories and machines. He also noticed that the economic situation in Great Britain resulted in idle machines since so many men were unemployed. In other words, what good were machines without men to work them. Chesterton appreciated machines, but he was against worshipping machines.

Chesterton also critisized monopolists who wanted to make money (profits),but they wanted to lower wages and salaries. Chesterton wryly asked how could men buy what the monopolists produced with lower incomes. Part of Chesteron's solution was for people to boycott the Big Shops (Box Stores?)and patronize the Small Shops. Chesterton noticed that the Big Shops had poor service and inferior quality. However, the Small Shops had a "personal touch" and better made goods.

Another problem that Chesterton noticed was that Big Capitalists and Big Communists bitterly resented clear thinking, independent men. Both Capitialists and Communists wanted a standardized society whereby conformity and hypocrisy were substituted for honesty and independence. Big Capitalism ruined men by corrupting politicans and jurists. Big Communism ruined men by concentration camps and mass murder.

Chesterton showed concern that Big Capitalism and Big Communism dehumanized men. The monopolists wanted an utopia of stock brokers, and the communists wanted an utopia of utopian comrades, and neither of these existed or could exist. Chesterton want a practicle society of men who had a personal stake in their farms or shops and who had time to reflect on cultural attainments whether they be religion (for Chesterton the Catholic Faith) literature, song, dance, etc. Chesterton cited an example whereby Henry Ford, a Big Capitialist, did not know who Benedict Arnold was. For someone who touted "The American Way" and not know U.S. History was considered a sad state of affairs as far as Chesterton was concerned.

Chestertoned suggested a modified guild system where the rules were known by all men and where the plutocrats could not corrupt political representatives and jurists could restore a better economy and social order. Chesterton was clear that he respected free enterprise but not private enterprise. The latter abused the political legal systems to the disadvantage of everyone else.

While some writers argued that men should become gods or icons, Chesterton wanted me to be normal and free. Chesterton observed that while men had the vote, they had little else. Big Capitalists and Big Communists did not want men to have their own wives, children, or land. Both imposed legal restrictions on parents' raising chidlren and providing them with values and learning which functions were increasingly dominated by bureaucrats in the name of progressivism or socialsim.

One of the weaknesses of Chesterton' book is that he was not specific enough. Chesterton could have cited laws that literally robbed men of their land and wealth by having private property condemned in favor or Big Capitalists. Chesterton could have specified Acts of Parliament or the U.S. Congress that were designed to ruin small property owners such as recent U.S. Supreme Court decision that allowed a corporation to take private property which is beyond belief here in the U.S.

Yet, Chesterton's book THE OUTLINE OF SANITY is a hopeful antidote to Big Capitalsim and its corrupting influences or Big Communistm with its unworkable system and use of concentration camp brutality to gain compliance. While Chesterton died in 1937, this book is prophetic and useful. If men destroy their civilization in favor of unworkable systems, Chesterton's book is there for the record

Private Reply to Thomas Holford

Mar 07, 2010 6:33 pmre: re: re: re: Economic Capture - Money Power in the World#

Thomas Holford
Joseph Lynders sayeth:

> The Chesterton book costs a little less than half that of the other books estimated cost.


Chesterton's "Outline of Sanity" is available in PDF format for free download at:

http://www.scribd.com/doc/25499546/Chesterton-Outline-of-Sanity

T. Holford

Private Reply to Thomas Holford

Mar 15, 2010 7:46 pmre: Economic Capture - Money Power in the World#

John Stone
Very Interesting. Gentlemen you seem to be very well informed and articulate on this subject. I don't feel I'm on the same level as you, please help me understand.

Reading the posts, this is what I conclude.

Our current money is backed by nothing and the current monetary system only works if there is debt. When a person signs for a loan, say 100.00. The bank issues a piece of paper that tells the person they owe 100.00 plus a usury. The 100.00 is created out of thin air, because it has no backing with precious metals, but the usury is not created thus leaving the system short?

John

Private Reply to John Stone

Mar 16, 2010 2:03 amre: re: Economic Capture - Money Power in the World#

John Stephen Veitch
Hello John Stone

There is less knowledge and understanding here than you might imagine. Much of the discussion above deals with the propaganda of money supply and isn't really very informative after all.

In the last two weeks I have tried to come up to speed on this topic. Very few people understand money supply. Economists hardly understand it at all. For them money supply is a given, controlled by politics, and not part of their economic models. (Governments often neglect to adequately control the money supply. Political life is easier if there is too much money around. Hence inflation is normal. (Inflation robs everyone, but you can't see it happening.))

Economists, cleverly, never argue about the distribution of wealth in the same way. "Our concern is the efficiency of the system. The distribution of wealth is a political problem." (Governments usually neglect this duty.)

Now to pick apart your statement, John:

"Our current money is backed by nothing"
Not true. The money you have is backed by the confidence of the community that other people will accept it in return for goods and services. It's especially important that banks and the government will accept it as full and final payment on debt and taxes.

"the current monetary system only works if there is debt. When a person signs for a loan, say 100.00. The bank issues a piece of paper that tells the person they owe 100.00 plus a usury."
Remove the word "usury" and insert "interest" and that's valid except "only" is a bit strong. There is a legal arrangement between governments and banks. Banks create money out of nothing, it's just a number in a ledger. But there are rules about how they do this, because if they create too much, the money becomes worthless. That's also why banks are very tough to deal with if you default on your loan. They are maintaining the "value" of the currency.

There are lots of other ways to create money. (Hence "only" is wrong) But for this discussion the principle that "banks create money" is valid.

"The 100.00 is created out of thin air, because it has no backing with precious metals, but the usury is not created thus leaving the system short?"

The statement is 100% propaganda. It's commonly said, but it's wrong.

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

Mar 16, 2010 9:06 amre: re: Economic Capture - Money Power in the World#

James Booth
.
Mr. Stone's depiction I thought summed up our current monetary system well, and I particularly appreciated his use of "usury" in place of interest.

Early Christianity considered interest usury, and to this day many non-Christians consider it likewise - non-Christians having the same right to stake out a plot on this Earth as any Christian I ever met.

If anyone here thinks I am only dealing with or promoting propaganda, then perhaps it is time for me to cease contributing here, so please do let me know.

In the meantime ...

"Very few people understand money supply. [true - agreed] Economists hardly understand it at all. [I have wondered how many economists understand money supply better than they let on, to save their careers] For them money supply is a given, controlled by politics, and not part of their economic models. [needs work - since at least part of the time, money supply controls politics - "who" controls the money supply controls "government" and the moreso as that "government" is in debt to those who create and emit the money supply] (Governments often neglect to adequately control the money supply. [true - agreed - and sometimes a government gives control of the money supply to a private entity] Political life is easier if there is too much money around. [very true - agreed] Hence inflation is normal. [disagree - inflation results from failure to properly / responsibly control money supply which is a leadership obligation] (Inflation robs everyone, but you can't see it happening.)) [true - agreed - also it is a hidden tax, a tax not approved by any populace, and a drain on The People' wealth]"
_


" "Our current money is backed by nothing"
Not true. The money you have is backed by the confidence of the community that other people will accept it in return for goods and services. It's especially important that banks and the government will accept it as full and final payment on debt and taxes."


> I agree the Dollar (that response was addressing an Ohioan whose currency is the Dollar) IS "backed by the confidence of the community" (currently the "global" community) while such confidence lasts. Perhaps when the Dollar finally crashes we will see what is actually "backing" it today. Yes, the Dollar "greases the skids" of our commerce and it does "satisfy" debts and taxes, but we are aware "confidence" in the U. S. Government is wearing thin worldwide. Banks have no choice but to *accept* the Dollar; government does have a choice.
_

" "the current monetary system only works if there is debt. When a person signs for a loan, say 100.00. The bank issues a piece of paper that tells the person they owe 100.00 plus a usury."
Remove the word "usury" and insert "interest" and that's valid except "only" is a bit strong. There is a legal arrangement between governments and banks. Banks create money out of nothing, it's just a number in a ledger. But there are rules about how they do this, because if they create too much, the money becomes worthless. That's also why banks are very tough to deal with if you default on your loan. They are maintaining the "value" of the currency. "

> "... that's valid except "only" is a bit strong" ... ???
The "legal arrangement" in the United States right now regarding issuance of money is that money is created only as debt is created; it has been that way since 1913.

Instead of issuing its own money, as it did twice in our history, today the U. S. Government "borrows" (rents) its money supply from a privately held corporation, allowing that entity to use The People's "mints" and printing presses and computers to create coins, paper "currency" and digital money. NONE of that money exists, however, without an "appropriation" - a Congressional "authorization" to "appropriate" (borrow, as it has to, since it no longer creates its own). Words are used to hide from our full understanding what is actually happening. That Congressional "authorization" is essentially just a signature, which is what you must provide if you want a loan from a bank to purchase a car, or a home, or some other major "consumer" item for which you do not have sufficient "cash" accumulation. In either case, NO *money* exists prior to approval of the loan, just as was said in the third post in this thread:

"Our economy is built on credit."

Taken to an extreme, it could be argued there is no "money" - only credit, currency in the form of IOUs. While some of us grew up believing bank loans were made against deposits of other bank customers, in fact, when the *fractional reserve* is 10% banks can loan up to ten times the amount of "high-powered" Federal Reserve money; however, banks do not get to keep all the interest collected on that "inflated" money supply generated by borrowers signatures, since most (not all) depositors expect a "return" on their deposited funds. In my view, the word "usury" is much more applicable to the fractional reserve system than it is to the collection of interest.

Having said that, money which is to be paid as interest (rent) by borrowers does not come from the same place which provides interest paid to depositors - not exactly - yet either way, that "money" does not exist, because in a debt-based monetary system such as we have here, there is no "signature" to create that "extra" money. Nonetheless, the bank(s) expect it to be paid right along with that money which IS created by indebtedness. It is beyond the scope of this post, but in a debt-based economy, that "interest" money is just one of many mechanisms which suck the wealth from a society or a people / population.

A more severe hidden tax is inflation itself. To say banks "are maintaining the "value" of the currency" is to say "I do not understand the role of banks" in this system. Only The Federal Reserve has ability to "maintain" the value of the Dollar, and it is not going to do that; in fact, the Fed ceased publishing money supply statistics because "confidence" in the Dollar would sink faster as the world was aware how worthless each Dollar is relative to all the new dollars being created - in paper or digital form. Banks farther down the hierarchy of our banking system have absolutely NO control over the overall money supply.
_


" "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?"

The statement is 100% propaganda. It's commonly said, but it's wrong. "

> Please enlighten me how that is wrong.

How IS the "interest" money created then ?

I need to know if I am to communicate truth rather than propaganda.


JB


Private Reply to James Booth

Mar 16, 2010 12:34 pmEconomic Capture - Money Power in the World#

John Stephen Veitch
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

Mar 16, 2010 6:35 pmre: Economic Capture - Money Power in the World#

Thomas Holford
John Stephen Veitch sayeth:

> 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.


I don't know that I would agree that the connections to the Queen of England is "nonesense". At this point, I would simply say that they are "obscure" and poorly understood.

Very, very obscure.

The one square mile old "City of London" is the historic financial center for England. It is one of the major financial centers of the world.

Through a curious arrangement of "abjuration", the merchant banks of the City seem to operate outside of the regulatory governance of the British government, and hence, outside of the regulatory governance of anyone. They are, in effect, true financial buccaneers.

http://www.grin.com/e-book/33971/the-role-of-london-as-an-offshore-financial-centre-in-the-liberalisation

"This innovative way of financing, developed by the merchant banks, was only possible by the ‘abjuration’ of sovereignty by the British state. The fact that the British state placed all transactions in foreign currencies outside the oversight of British authorities – mainly exchange rate and reserve regulations – created a paradoxical situation, because as these transactions were carried out within British territorial boundaries, they were protected from regulation by any other state. In fact, this decision of the British authorities had the effect, that these transactions were outside the regulation of any state. In this way the Euromarkets created a whole new kind of money in the respect that the money was held and used outside the country where it has the status of legal tender (e.g. the United States or Switzerland) and traded in a market which exists and operates outside any national banking regulation – outside the system of state sovereignty."


What significance this has for the global financial, banking, and monetary systems (and the "Money Power") is . . . unclear. But I'm inclined to believe that it is very significant.


T. Holford

Private Reply to Thomas Holford

Mar 19, 2010 8:30 pmre: Economic Capture - Money Power in the World#

James Booth
.
Perhaps a most relevant question at this point ...

Is any of this information of use to anyone ?

Since I am still not as clear as I would like to be regarding what, amongst what has been presented here, is propaganda or "other than true" I would like to touch upon a number of items.

I worked my way through this thread from top to bottom to provide the following.

For the benefit of collective understanding and communication, and further discussion, from what I have learned, to the best of my current knowledge, the following is true:


- It is *intentionally* "almost impossible to understand how the very biggest banks have developed a system to capture all the economic surplus" - or the majority of surplus.

If most of us - if "most people" - knew how it was done, we would have stopped it long ago
... or at least at some earlier point in time.

Much of what is done by Money Power is done in secret, or on the sly; an example being the "midnight session" which passed the Federal Reserve Act; another example being the PR campaign in which "big" bankers "opposed" the FR Act even though it was almost word-for-word the same as the Aldrich Bill which was quashed earlier.

If the "doings" of Money Power were actually beneficial to any population, would they not be aboveboard with all their plans and schemes, rather than posing "experts" who use language the public finds too difficult to understand to convey "what is happening" with the economy ?


- "Our economy is built on credit" - true, although some of us prefer to say it is built on "debt" because the word "credit" is used in this case to make it all sound "sweeter" than it is.


- Banks are corporations which we should expect to make a reasonable profit for their shareholders - true.


- Banks make "obscene" amounts of profit because of the "multiples" of interest receipts from fractional reserve banking - false, because most (not all) deposits require banks to pay OUT interest, though at lower rates than banks charge (some depositors receive no interest at all).


- Banks "lending money to more risky ventures" generally do so under duress, as result of legislation or regulation (or lack of regulation in some cases) generated by political forces, which in turn are put in place (or removed) by *big* (international) banks (Money Power) at the top of the banking hierarchy, which are very different from local "community" banks - the latter being "regulated" by the larger *banking system* at center (or top) of which is (are) the Federal Reserve Bank(s) with U. S. Treasury acting as "front" to give the *privately held* FRS "legitimacy" as a central bank; consequently, "community" banks (subscriber banks dependent on a larger bank in order to do business out of state) which "have tried to find new sources of money" often wind up with the short end of the stick as central banks schemes are crafted to benefit only "big" banks or central bank, and this system continues the destruction of small banks which are bought at "firesale" prices by larger banks, continuing the "consolidation" of the banking system as a whole.


- So-called "economic surplus" seems always (for 5,000 years or more) to have been a main focus of "central banks" (or Money Power) which drive out "good" money with "bad" money, and employ a variety of means to deprive any nation or population of "blood, sweat and tears" WEALTH.


- It may be more accurate to say "Modern banking has become a *super-predator* on the real economy" because there is actually a setup in which supercomputers belonging to "investment banks" have an actual set order of access to manipulating the markets - before any "public" has access to "buy and sell" activities - which means the entire market is more rigged than ever.


- That "human beings are inexorably tempted to do selfish, unethical things" may or may not be true, to some degree either way, and I suppose it is up to the "viewer" to have decided whether man is naturally *good* (predominant Nineteenth Century view, to which I adhere), or *evil* (predominant view particularly after the rise, and demise, of Adolph Hitler).


- There are always "greedy and unethical" members of any group one can describe - perhaps there always will be - which does NOT mean that any particular group is in ANY way "greedy and unethical" on the basis of its including some "bad apples".


- "Trust, but verify" is just plain common sense, is it not ? - "Buyer Beware"


- The perception that politicians use "their coercive powers over the banking system to drive the finance and banking system into catastrophe" I believe is an illusion, again, addressing the situation in the U. S. (if you live elsewhere, please do comment and inform the rest of us), because NO "politician" today in the U. S. sits for long in any "elected" (selected) office without "approval" of Money Power which can, and does, so easily BREAK ANY politician's "career" - in fact, to BE a "successful politician" in this climate REQUIRES an individual to be either *compromised* or *compromiseable* [is that a word?]; in other words, "malleable" or "easily blackmailed" or otherwise "relatively unprincipled" (to put it more kindly); and having said that, such required "malleability" has kept "politicians" (and presidents, prime ministers, kings and queens) living longer for many centuries.


- My "view" (according to John) that the Federal Reserve (Bank) "vacuums up all the economic surplus" [we could, perhaps should, devote an entire thread to this] is based on the fact that the Federal Reserve is NOT *federal* - is not "government" - though it uses The People's Mints, and printing presses, (ownership of Fed computers is in question, although it is unimaginable the "taxpayers" did not "fund" their purchase) for "legitimacy" to mask the fact the Federal Reserve is a private corporation, outside of, beyond, "above" government, which must pay interest TO the Federal Reserve as "rent" for use of the money supply which is "created and emitted" (and withdrawn) by the Fed; debt-money, distinctly different from "real" or "good" money - The People's money - as was the situation when U. S. citizens could take their own (mined in the U. S.) silver, or gold, to the mint to be pressed into coin; also distinctly different from the Greenback issued by President Lincoln to finance the Civil War (instead of borrowing Money Power money at twenty-something percent), or Colonial Scrip, which worked extremely well but prohibition of which (by King George) was the *actual* cause of the Revolutionary War - NOT the Tea Tax [read Benjamin Franklin].


- Who, in the U. S. presently, after all, CREATES the "general economic theory" but the "ministers" or "priests" of the Federal Reserve System themselves ?


- "Too many of us think real wealth is money" - true, and what IS money ?
... a "store of wealth" or a "medium of exchange" ... or both, and more ? and what IS wealth ?


- A primary "justification" for establishing the Federal Reserve System was to end the "boom and bust" cycle of U. S. banks - runs on small banks (which went bust for not having sufficient cash on hand, a fractional reserve deficiency); however, evidence indicates the Fed knowingly created too much money following the First World War during the "irrational exuberance" of the 20s, and then began calling in loans - too fast - when the economy was "overheated" - apparently an intentional move, in part to further consolidate "banking" (cull smaller banks which survived imposition of Federal Reserve Notes) among those "big" banks which were behind the Federal Reserve Act (and the accompanying income tax scheme, without which the Fed would not have been viable).


- "De-schooling ourselves" is a solution, and I believe that we are attempting to do that here.


- Posing "a barter economy" in contrast to "a money economy" as an "either / or" is unnecessary: a vibrant economy can include both, and more, "means of exchange" - but more important is that human beings be free to transact with each other, in whatever form on which they mutually agree.


- Making "a monetary economy work" is not limited to a *debt-based* economy such as the U. S. "enjoys" today: twice in U. S. history the U. S. government "created and emitted" its own money, and some of that was real money, backed by metal - even if the "paper" was sometimes just an IOU at least there was something there more than an empty promise as we have today.


- If it is true "the combined assets of our six biggest banks [now] stands at 63 percent" and you ask, "So what?"
... perhaps you have nothing to lose.


- Murray Rothbard's "History of Money and Banking in the U.S." I have yet to read, but I am convinced Rothbard is capable of instilling encouragement.


- Nor have I read Chesterton's "The Outline of Sanity" but apparently he was aware that "monopolism" can, and does, buy "political control" and thus take that control away from The People who authorize *legitimate* government, so that "monopolism" becomes a cancer on society.


- 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" describes what is known as "fiat money" or, "any money declared by a government to be legal tender[1]" [or] "state-issued money which is neither legally convertible to any other thing, nor fixed in value in terms of any objective standard.[2]" - "unrelated to any physical quantity [of "specie" - coin, metal, which has real value, even if minimal]"
[http://en.wikipedia.org/wiki/Fiat_money], but does not describe all money.


- "There is a sound reason ... for government borrowing from banks and paying interest on the money borrowed" ONLY when money is not created BY *government* which CAN and (according to the Constitution of the United States of America, in the case of the U. S. government) legally should be creating its own money.


- The relationship between Money Power, Bank of England, the Queen (or King) of England, and the Crown, is not something on which I will offer "opinion" here except to say the role of the Queen in our "financial woe" is overrated.


- The role or "true character" of the "City of London" relative to British, United Kingdom, or other, world, finances or "economies" is not clear enough to me to comment on at this time.


JB

Private Reply to James Booth

Mar 25, 2010 8:07 pmre: re: Economic Capture - Money Power in the World#

Joseph Lynders
" ~~~~~~~~~~~~~~~~~~ ? ~~~~~~~~~~~~~~~~~~~ "

A second book to read is "What's Wrong with the World" also by Chesterton.

Oddly he answers most of JB's questions and he answers them just 100 years before JB asked them.

A strange coincidence.

Have good IDea today,

03/25/2010 Joseph F. Lynders FTg/M/?

Private Reply to Joseph Lynders

Apr 13, 2010 3:19 pmre: Economic Capture - Money Power in the World#

AtelierTerritorio SRL Multilevel Territorial Strategy
Dear mr. Veitch,
i agree with you, because working in small creative groups is more efficient.
i want focus on the work with friends and trusting people: if i admire my friends' professionality and i work with them i can find the better way to collaborate with them.
For example a society created from members who are friends each other, has more possibility of gain than other company.

Private Reply to AtelierTerritorio SRL Multilevel Territorial Strategy

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