TURMEL: Social Credit Stream #9 50k

TURMEL: On Social Credit vs Greendollars

     On Nov 29 1995, Article #116325 of Newsgroups can.politics,
huyert@qed.uucp (Timothy Huyer) wrote:

:John Turmel (johnturmel@yahoo.com) wrote:
::      I keep repeating that a credit union or a savings and loan or a
:: private piggy bank work as intermediaries lending out their
:: depositors' savings. But chartered banks do not.
:And, as I had attempted to show in the banking model in my previous post
:that you are incorrect.  Please re-refer to that post.
     We're off the topic here of whether credits unions and savings
and loans do act like piggy banks. The question is whether the
chartered banks act like casino banks with a tap for new chips.

::      Repeatedly I've pointed out that the bank does "NOT loan out the
:: remainder." If it were lending out the remainder of the money in the
:: piggy bank, the money supply would not go up. Since it does go up when
:: banks make loans, they are not lending out the remainder but they are
:: lending out new money.
:I had mentioned regarding the definitions of money supply, although,
:since my field is not money and banking, I was admittedly terse and
:possibly vague.  In the model of the banking system in my previous post,
:M1, which would be cash and reserves, was $1, precisely the amount of
:money created by the central bank.  M2 is the amount of all deposits,
:$10.  So, since M2 > M1, one could state that the money supply has gone
:up.  However, the charter banks do not affect the size of M1, and M2 is
:fundamentally limited in size by the size of M1.
     Again, I don't care what you call the money coming out of the
banks' loan pipes. I just want you to admit that it's connected to the
tap and that it's new money, not old savings.

:    I had also word wise created a possible plumbing diagram.  In it,
:with liquid injected from the central bank (tap) to the charter bank
:which siphons a fraction to its reserves and loans out the remainder
:which cycles back to the charter back, the reserves eventually become the
:reservoir of all liquid.
     I specifically drew that example in my Oct. 30 1995 post. How
could he forget:

:A reader wrote
::O.K.  So now the bank has $100 (which you placed on deposit and so
::theoretically have access to)
:                                PIGGY BANK
:                   Deposits    Interest(paid)  Loans Paid
:Depositor              |             |             |
:          |------------|-------------|-------------|--------------|
:          |       |----|-------------|-------------|----|         |
:DS100     |       |     $100     RESERVOIR              |         |
:          |       |----|-------------|-------------|----|         |
:          |------------|-------------|-------------|--------------|
:                       |             |             |
:                  Withdrawals     Expenses      Loans Made
:     So the piggy bank has the 100 dollar bills and you have a deposit
:slip for $100.
::>::The person loaned the $90
:                                PIGGY BANK
:             Deposits    Interest(paid)  Loans Paid
:Depositors      |             |             |
:       |--------|-------------|-------------|--------|
:DS100  |   |----|-------------|-------------|----|   |       Borrower
:       |   | $10          RESERVOIR     IOU90    |   |         $90
:       |   |----|-------------|-------------|----|   |
:       |--------|-------------|-------------|--------|
:                |             |             |
:           Withdrawals     Expenses      Loans Made
::>:: buys goods from someone else, who deposits the $90 in the bank.
:                                PIGGY BANK
:             Deposits    Interest(paid)  Loans Paid
:Depositors      |             |             |
:       |--------|-------------|-------------|--------|
:DS100  |   |----|-------------|-------------|----|   |
:DS90   |   | $10          RESERVOIR     IOU90    |   |       Borrower
:       |   |      $90                            |   |          $0
:       |   |----|-------------|-------------|----|   |
:       |--------|-------------|-------------|--------|
:                |             |             |
:           Withdrawals     Expenses      Loans Made
::O.K.  now the grocer who sold the goods has $90, the person who spent the
::money has groceries but also owes the bank $90 plus interest. Now
::theoretically the Grocer still has access to the $90 he placed on deposit
::(and I still theoretically still have acess to the initial $100 for a total
::of $190 "deposited" in the bank between you and the grocer).  Let's hope
::that you and the grocer don't need to make big withdrawals becuase it get's
:     The person who borrowed the $90 out of your piggy bank replaces
:it with his IOU for $90. The grocer then deposits the $90 into the
:piggy bank and gets a deposit slip for $90.
:     It's true that the original depositor has his deposit slip for
:$100 and the grocer has deposit slip for $90 but the piggy bank still
:only holds $100 and the $90 IOU.
::>::The bank holds $9 to maintain cash reserves, and loans out $81.
:                                PIGGY BANK
:             Deposits    Interest(paid)  Loans Paid
:Depositors      |             |             |
:       |--------|-------------|-------------|--------|
:DS100  |   |----|-------------|-------------|----|   |
:DS 90  |   | $10          RESERVOIR     IOU90    |   |      Borrower
:       |   | $ 9                        IOU81    |   |         $81
:       |   |----|-------------|-------------|----|   |
:       |--------|-------------|-------------|--------|
:                |             |             |
:           Withdrawals     Expenses      Loans Made
:     Again, the person who borrowed the $81 out of your piggy bank
:replaces it with his IOU for $81.
::>::And so on.
:     The borrower spends the $81 and that vendor deposits it:
:             Deposits    Interest(paid)  Loans Paid
:Depositors      |             |             |
:       |--------|-------------|-------------|--------|
:DS100  |   |----|-------------|-------------|----|   |
:DS 90  |   | $10          RESERVOIR     IOU90    |   |
:DS 81  |   | $ 9                        IOU81    |   |      Borrower
:       |   |      $81                            |   |         $0
:       |   |----|-------------|-------------|----|   |
:       |--------|-------------|-------------|--------|
:                |             |             |
:           Withdrawals     Expenses      Loans Made
:     $8 is held in reserves and the other $73 is loaned out in
:exchange for another $73IOU
:                                PIGGY BANK
:             Deposits    Interest(paid)  Loans Paid
:Depositors      |             |             |
:       |--------|-------------|-------------|--------|
:DS100  |   |----|-------------|-------------|----|   |
:DS 90  |   | $10          RESERVOIR     IOU90    |   |
:DS 81  |   | $ 9                        IOU81    |   |      Borrower
:       |   | $ 8                        IOU73    |   |        $73
:       |   |----|-------------|-------------|----|   |
:       |--------|-------------|-------------|--------|
:                |             |             |
:           Withdrawals     Expenses      Loans Made
:     The borrower spends the $73 and that vendor deposits it:
:             Deposits    Interest(paid)  Loans Paid
:Depositors      |             |             |
:       |--------|-------------|-------------|--------|
:DS100  |   |----|-------------|-------------|----|   |
:DS 90  |   | $10          RESERVOIR     IOU90    |   |
:DS 81  |   | $ 9                        IOU81    |   |
:DS 73  |   | $ 8                        IOU73    |   |
:       |   |      $73                            |   |      Borrower
:       |   |----|-------------|-------------|----|   |         $0
:       |--------|-------------|-------------|--------|
:                |             |             |
:           Withdrawals     Expenses      Loans Made
::Exactly. Each time the loan is spent the loan is still owed to the bank and
::the deposit from which the loan was made is still owed to multiple
::investors.  If you can see that perhaps money and credit are one and the
::same then you ought to be able to see the new money being created.
:     At this point, the first depositor has his deposit slip for $100
:and the savers have deposit slips for $90, $81, and $73 but the piggy
:bank still only holds $100 in cash and the $90, $81 and $73 IOUs. I
:see no creation of any new money here. I see more deposit slips and
:more IOUs but no new money.
:     At the limit of the process:
:             Deposits    Interest(paid)  Loans Paid
:Depositors      |             |             |
:       |--------|-------------|-------------|--------|
:DS100  |   |----|-------------|-------------|----|   |
:DS 90  |   | $10          RESERVOIR     IOU90    |   |
:DS 81  |   | $ 9                        IOU81    |   |
:DS 73  |   | $ 8                        IOU73    |   |
:DS 66  |   | $ 7                        IOU66    |   |
:DS 59  |   | $ 7                        IOU59    |   |
:DS 53  |   | $ 6                        IOU53    |   |
:  |    |   |  |                            |     |   |
:  |    |   |------                      ------   |   |
:  |    |   | $100                       IOU900   |   |      Borrower
:  |    |   |----|-------------|-------------|----|   |         $0
:-----  |--------|-------------|-------------|--------|
:DS1000          |             |             |
:           Withdrawals     Expenses      Loans Made
:     Lots of new Deposit Slips and IOU slips but no new money, only
:the original 100 dollars in your piggy bank and $900 in IOUs matching
:1,000 in Deposit slips.
:     Get yourself a piggy bank and 100 dollars and no matter how many
:times you relend and reborrow that 100 dollars, you'll find that you
:don't end up with more money. If your piggy bank does manage to end up
:with more than 100 dollars, the government will certainly be knocking
:on your door.

     So I think it's pretty clear that I did deal with the bank as a
piggy bank model that he describes. I also show that the process of
passing the money through the piggy bank over and over again to create
new IOUs and new deposit slips does not create new money. There has to
be a tap.

:However, the volume of liquid that is deposited
:in the bank, allowing some liquid to be double (and triple...) counted,
:was 10 times the actual amount of liquid physically in existence.  This
:is caused since the model is dynamic and the liquid has, for want of a
:better term, velocity.
     He keeps calling his volume which passes through the bank over
and over "double-counting." He's saying they use the same old 100
quarts of liquidity but by double-counting it as it pumps through
their piggy bank, they're actually doubling the real money supply.
     Notice that this falling back on "double- and triple-counting"
the money is only necessary if you cannot see a tap. Anyone prepared
to use my model with a tap has no need to speak of double-counting
since the depositors' savings are counted once and the borrowers
deposit if counted once.
     No matter how you cut it, putting the tap into the design
certainly explains the flows going in and out of a bank better than
working without a tap and believing that double-counting or triple-
counting is going on.
     As a matter of fact, I'd never read of the theory of double-
counting to create new money in any of the Economics books I'd read
before. In Economics by Lipsey/Sparks/Steiner, there's no mention of
double-counting. In Money & Banking by Boreham/Shapiro/Solomon/White,
there also is no mention of double- or triple-counting to create new
money. And I'm not checking anywhere else. Tim can provide us with a
reference to double-counting if he brings it up again.

::      And as I pointed out with the flows which Tim seems to have
:: failed to follow, it doesn't loan out the remainder. Seems we've been
:: over this umpteen times but it does prove my point that the question
:: is one of the major double-thinks of Economics, guaranteed to keep
:: them permanently confused.
:If charter banks didn't loan out money deposited into them, they would
:have a hard time making any deposits.
     So because they would have a hard time, they wouldn't? This is
not a philosophical question of how hard a time they would have if the
new loans come out of the tap or out of the reservoir. But this is a
technical question which you cannot face.

:I.e., we have positive transaction
:costs (the costs of tellers et al) and the costs of paying interest on
:deposits.  Obviously banks need revenue somewhere.  If it did not come
:from deposits (i.e., from loaning out deposits) then it would be strictly
:more profitable for banks to NOT accept deposits and loan out their
:alternate source of money only.
      Thank you for just proving my point better than I could have.
Since they don't lend from the reservoir but do lend from the tap, why
do they spend all that expense to keep the reservoir filled?
     You conclude that it would be illogical to fill the reservoir if
they weren't lending money from the reservoir and since they're
filling the reservoir, then loans must be coming from the reservoir.
     I conclude that they pay all those expenses to fool people like
you into refusing the believe what you see, that it's coming from the
tap, and continuing to believe that because they worry about keeping
the reservoir full, it has to be coming from the reservoir.
     And given the power banks get of okaying or refusing a loan from
the tap to needy borrowers, paying the expenses looking like you need
to keep the reservoir full so that the suckers don't know it's coming
out of the tap seems sell worth the investment for total economic

:Given that banks can be quite reasonably
:assumed to be profit maximizing or even approximately profit maximizing,
:one must conclude that some profit is generated for banks by using
:depositors' money.
     Given that banks spend money to profit doesn't mean that they're
not making their money by the lending. As I've explained, they get
their profits from money manipulations of the tap and hiding the tap
is the first most important thing to do in a world where everyone is
thirsting. So it costs to build a piggy bank cover for your casino-
style bank. So it even costs you all the interest you collect to pay
the interest on those unused savings, it still leaves you in charge of
an invisible tap in a desert of debt slaves. That's where the power
comes from and needlessly holding savings deposits and needlessly
paying those depositors' their interest is a great cover to hide your
control of the pump.

::      With zero reserve ratio, the money supply COULD be infinite.
:: That's how LETS and casino cages work with zero reserve ratio. No one
:: needs deposit old chips to the safety deposit section in order for us
:: to loan out new chips from our infinite supply in the cage.
:Actually, with positive reserve ratios, the money supply could be
:infinite, iff (if and only if) the central bank created infinite money.
:The central bank effectively does have unlimited money (corrollary, never
:worry about a cheque from the Bank of Canada bouncing!) just like the
:infinitely well supplied cashier in Turmel's casino model.
     When you're talking about a monetary system which has a zero
reserve ratio as well as zero interest, zero unemployment and zero
inflation, nobody cares what the reserve ratio can make the money
supply do in the inferior model.

::      Having an infinite supply in the cage doesn't mean that an
:: infinite supply is issued. It's always fixed to the finite amount of
:: goods and services so it follows that prices, i.e., inflation, is
:: zero.
:As is what the central bank attempts to do.  There is some error involved
:in estimating what the amount of goods and services are, hence, there is
:some inflation as a result.
     It is silly to say that making sure the collateral matches the
chips issued is a central bank issue when it is an "every-bank" issue.
And errors in estimating values in transactions are cancelled when the
valuation is done and the equity priced. If the buyer bought too high,
he incurs such loss. The value of the asset in the cage always remains
the same.

::      The amount of money people keep in cash on their person is
:: minimal. The bulk of the volume of transactions is done by check from
:: one account to the other.
     So engineers often find it easier to look at the flows which
represent 99% of the volume alone and the real world analogy would be
for the banks to cease cash and only allow checking. Then we'd have a
zero preference for cash.

:but note that, given wealth w and environment e, f(w|e) > 0 in
:general (and at worst is non-negative).  All that the analysis requires
:is that if F is the aggregate demand for cash and W aggregate wealth,
:F(W|e) > 0 for at least some environments e.
     Sorry. Here you lost me since you don't define the operator "|"
or the units for wealth (though ergs would do) or the units for
environment (which I've never heard of), or the units for demand for
cash. I can only paraphrase how I tried to read it:

Note that demand for cash f is the function | of w and e always
greater than zero.  If aggregate
demand for cash F is the function | of aggregate Wealth and e greater
than zero, that's all the analysis requires.
     And now that the analysis got what it required, what does it end
up saying? All I said that was 99% of money is e-money in chartered
banks computers and that the study of the demand for 1% in cash was
not of major utility.

::      He talks about the banks needing to have cash on hand and looks
:: at it from the point of view of one bank imagining that all the
:: depositors take out their money leaving his accounts all empty. The
:: point is that all those deposits go into other similar bank accounts.
:(1)  I never made a claim that all deposits are withdrawn.  In fact, I
:made almost no assumptions regarding the cash demand function f (i.e.,
:it need not be everywhere differentiable, for one).  Note that f(w|e) is
:necessarily bounded, as noted above.
:(2)  It can be assumed, but is not necessary, that all cash eventually
:ends up in banks.  However, at any particular point in time, banks
:perceive demand for cash to be some random variable over the bounded range.
:I.e., all money in anyone's wallet is, at that precise moment, not in a
:bank. This does not depend upon the number of banks in existence.
     But it's still 1% of the peanuts. 99% is sitting in bank
computers at all times.
     How many times in these discussions have I said "let's
concentrate on the bulk" and he keeps getting into the trickles?

::      And even though nothing would have happened if all the deposits
:: had ended up back within the same bank, having them all leave would be
:: cause for termination of the operation hurting the economy as a whole
:: even though savings simply splashed from one bank's accounts to
:: another bank's accounts rather than from one bank's accounts back to
:: it's own bank's accounts.
:Somewhat correct.
     NOT somewhat. It is correct. If half the savers in a bank cut
checks for all their money to other accounts in that bank, nothing
happens. If half the savers in a bank cut checks for all their money
to accounts in other banks, then the bank has to start calling in
loans. Most banks don't lend out all of the tap money they're allowed
to because their allowance could be reduced if deposits go down.
Strong banks lend out 80% of their allowances, they have plenty of
reserves. If large withdrawals are made which would cause a bank whose
reserves have fallen below the allowable limit and have to start
calling in loans to weather the storm since not all their loans were
out when the reduced allowable amount came in.
     Making the volume of your loans dependent on savings is a
ridiculous control system. In LETS with a zero reserve ratio, the
volume of chips issued into today's game has nothing to do with the
volume of chips saved from yesterday's game. It has only to do with
the collateral you have on you or your credit.
     Isn't this a beautifully tricky way to disguise a casino model
tap banking system as a piggy bank no-tap model and have it react to
the outside world in exactly the same way a piggy bank would. "Alas,
there's no money left in the piggy bank. We can't lend."
     One guy looking for a solution who peeks through the slot at the
top into the inner plumbing of the piggy bank screaming "Hey, I can
see a tap" is not what they're particularly happy about.
     But if finding a tap to fund environmental repair, to fund
infrastructure repair, sick-bay repair, engine repair, then scream
"Here's the money tap" I'll forever continue to do.

     Throwing in another example of how major societal problems would
be saved when everyone gets their own interest-free credit card, let's
take my example.
     My father was a Polish survivor of World War II. A steel-worker.
He worked hard, he drank hard and when he did, and only when he did,
he did his talking with his fists. With state-sponsored alcohol sales,
my mother had to run with the kids.
     We went through years of poverty as mom worked and we went to
school. It's a struggle I'd bet most single-parent families go
     If my mother had had her own interest-free credit card as should
all mothers today, she would have had the credit to relocate, retrain,
in comfort as should mothers of today. Without such access to money
life-line where all life-support is bought with life-tickets, millions
of women are today shackled into violent relationships they would
never take if they had the support funds to leave and start somewhere
else with society's access to training and materials.
     With every child having their own credit card and all their
satisfied economic needs scored to their money-account, a more logical
and amical division of custody might be attained. I find the squabble
over matrimonial assets one of vilest result over poverty. You just
can't blame the guy who's lost the house and the car and three
quarters of his pay-check who is thrust into a life of more poverty
and stress to feel about the courts doing it to him. And you just
can't blame the woman who couldn't survive without breaking him. They
don't see that it's the same old mort-gage "him-or-me" game going on.
Many just give up, lose their jobs and don't have any incentive to
find another. The state then takes over with welfare payments to both.
     I've been a pauper and I've been rich more times than I will
tell. I had always been ashamed of being poor until I learned how
interest stacks the deck against us. Knowing it's a rigged in the game
and not that humankind is particularly inept at survival which is the
reason for our predicament also has the happy implication that the
game can be fixed while inept people would be harder to solve.
     Last July, I had posted an article "I'm a pauper" just before all
my postings everywhere were deleted. I think I'll repost it
     I've always believed that people had princes and princesses
within which were not functions of money. I've always believed one can
be a prince or princess even if a pauper if you can play fair and
score high within your circumstances.
     I've seen honor and integrity in so many simple people and I've
seen greed in the eyes of so many of our leaders. After all, if you're
not running for leader with a plan to fix things, why are you running
at all?

:Since reserves are only a fraction of deposits, if
:demand for cash exceeds reserves, banks cannot meet that demand.  In the
:1930s, this caused runs on banks with the infamous collapse of banks as a
:result.  Subsequent to that catastrophe, central banks have become
:"lenders of last resort".  That is, even if a charter bank does not have
:sufficient reserves it can borrow unlimited money from the central bank
:at the bank rate.  Since borrowing from the central bank costs money,
:charter banks choose to maintain strictly positive reserves.
     Yes, they keep a float. But since they're not borrowing the money
to lend it to depositors, loan money comes from the tap, they're
borrowing it only to raise their reserves which raises their allowable
loans out.
     Why should a pump have any governor on its operation regulated by
the reservoir level when there is no upward limit on the reservoir's
     Best way I've ever put the problem yet.

::      The reserve ratio doesn't change. It is set by legislation.
:I repeat, pursuant to the last change in the Bank Act (I am not certain
:of the year, could be 1990, definitely under Mulroney's govt), the
:minimum reserve ratio was abolished.
     In fact, didn't I way I was pleased but also asked why we're
still talking reserve ratios. No more is it "They put 10 aside and
lend out the other 90." It's "They lend out the whole 10." And I ask
are they lending out the whole 10 of the depositors savings as you
show in your piggy bank model or do they lend out 10 new dollars out
of the pump as I show in my casino-bank model.

:In fact, even prior to that point,
:the legislated reserve ratio was merely a minimum, and banks could be
:allowed to adjust their reserve ratios  provided they remained above the
:minimum.  One argument for abolishing the legislated minimum was that it
:was never binding; charter banks were always maintaining reserve ratios
:strictly higher than required by law.
     And that was my whole point. Then the central bank reserve ratio
was merely a minimum and they issued 2% and the chartered banks issued
98%. Now the chartered banks can issue as much more as they want no
matter how much the central bank issues. It I was arguing that 2% was
too small to really dwell on and your pointing out that it's now 0%
sure completes my point.

::      If they did that and a depositor withdrew $10, the amount legally
:: allowed out of the tap would be reduced from $90 to $81 and the bank
:: would have to call in part or the whole loan. For this reason, the
:: banks leave themselves a float of reserves upon which the tap may be
:: operated in case of a "run on the bank."
:Correct.  This is a reason why reserve ratios will typically fluctuate
:within a given range.  If reserves drop too low, banks will stop issuing
:loans (it is very rare that a bank will actually call in a loan),
     It's not as rare as all that. They don't wait until their float
is gone before they start calling in loans. They start to pick and
choose as soon as their float goes down with the excuse that they're
just protecting the bank. Which is true within the rules of their
accounting game.
     I think the ugliest of mechanisms are the demand mort-gages most
businesses take out where the bank can call the loan within 30 days.
If you don't find another lender, and usually others lenders happen to
be calling in their loans too, then they foreclose.
     These stories make the news all the time. Some going concern has
his death-gamble called in, can't find new financing, and they shut
him down while he had been making a profit and while he had been
making his payments.
     Usury's bad enough but a 1-month notice is virtually certain
economic death for many and the bankers pick and choose who lives and
who dies in the death-gamble. Actually, a 1-year mortgage is really a
1-year notice which might not be that long for many in a tight credit
     Is it any wonder bankers don't want the people to know they're
sitting on a pump as they tell them "Tight liquidity. No money going
out today." Imagine when they're hearing "Tight liquidity. No pump
today." Once dying people find the pump, no banker is going to stand
in their way. That's the reason I'm betting on LETS Greendollar pumps.

     I don't know if you really realize what I have done. Since 1979,
I've said interest-free credit was a miracle lubricant. Worked with
casino chips, it could provide interest-free inflation-free
unemployment free currency. I've run in record-number-breaking
elections to explain interest-free credit whether with a computer tap
or a paper or metal one.
     Wherever you a new LETSystem setting up operation, you're seeing
a new Greendollar pump installed. If the people choose to come and
borrow from it currency good within the group and pay no interest to
reduce the borrowing costs of money for goods not in the group, the
opportunity is there.
     And this new pump design is delivered to needy economic pools all
around the world through Internet telephone lines.
     No you might not want to admit that the design with the tap of a
chartered bank is the same design of the LETSystem but it is.
                     LETS Service Charge
            Deposits     Interest(in)   Loan Payments
                |             |            |
       |        |             |        |---|---|     |
       |   |----|-------------|----|   | DRAIN |     |
       |   |                       |   |-------|     |
       |   |       RESERVOIR       |                 |
       |   |                       |   |-------|     |
       |   |----|-------------|----|   |  TAP  |     |
       |        |             |        |---|---|     |
                |             |            |
          Withdrawals   Bank Expenses  Loans Out

     Both now have no reserve ratio. The only difference therefore
between the LETSystem software and the current banking software is
that LETS does not charge interst on loans out of the tap while banks
     Please realize that people who understand LETS Greendollar
accounting software know that loans are credits out of nowhere that
end up in someone's reservoir while your IOUs end up in yours. And
there's splashing of payments between reservoirs. With no interest.
     Charge interest on the liquidity in the above plumbing and you
have a chartered bank. Without reserve ratios, chartered bank plumbing
like LETS plumbing has no governor on the tap. The only difference is
interest, a very useful test with only 1 variable difference.
     And as more and more little bits of Greendollar Heaven spring up
around us through more and more LETS financial life-boats, I think the
answer will be clear.
     Interest-free Greendollar software exhibits none of the genocidal
characteristics of the present positive-feedback usury software while
providing the identical service demanded of both media of exchange.

:increase interest rates to discourage borrowers and encourage people to
:deposit money.  Through controls like this, banks will maintain control
:over their reserve ratios.
     Why are you dealing with what goes on in the reservoir of
savings? We don't have reserve ratios anymore. You said the control
had been cut between savings and the reserve ratio of loans. You can't
talk control after saying you now have zero control. With no reserve
ratio, there is no savings governor on the pump.

:        Banks, however, will always try to keep the minimal reserves
:possible.  This is because reserves earn no revenue and the deposits that
:created the reserves cost the bank.
     But since the reserves they are required to keep is now zero,
why are they keeping minimal ones?

::      But you chose balancing the interest growth in the debt with new
:: chips to the money supply as the solution. That's my point. When faced
:: with the 11 for 10 dilemma in my game-theoretic model, you chose the
:: same solution chosen by the Socreds in real life.
::      Since debt is more than money, up the money to match it.
:Turmel is commenting in regards to an error that I had made some time
:ago.  In his 11 for 10 dilemna I had first erroneously proposed that the
:problem lay in fixed wealth.
     No you weren't proposing what the problem was, you were proposing
what the solution was. And just because the fact your solution would
have worked goes against your training which insists nothing can
doesn't mean you can't trust in your initial attempt to solve the 11
for 10 riddle.
     How to pay 11 for 10? Do you get deeper in debt or stiff him for
what's not there?
     In all the bank foreclosure defences I helped with in the last 15
years, it always boiled down that the defendants were stiffing the
banks for the interest the Defendants never got while accepting
responsibility for the principal which the Defendants did get. I calle
the money they did get, the principal, the social credit portion of
the debt and the interest, the money they didn't get, the anti-social
credit portion of the debt.
     That's another problem with old Social Credit. They think Social
Credit is the solution to social debt while I feel Sociable Credit is
the solution to anti-social credit. To me, credit is both positive and
negative. It's not the being negative that is bad, (Nehemiah: No
money? Come, buy and eat), it's being anti-social that's bad. And only
interest makes credit anti-social.
     Just note the difference between usury credit and Greendollar
credit. Would you say that today's credit which forecloses and
destroys its participants is anti-social? Would you agree by the rave
reviews of the effects that Greendollar Credit which enables all to
participate is social?
     I've always thought of social credits as the generic name for the
many manifestations of friendly credit. From the interest-free loan
from a parent or great friend, from Greendollars to Greenbacks, from
tallies to Aes Grave, from Poker chips to warehouse receipts, these
are all social credits systems because they have the same Laplace
Transformation: 1/s.
     1/s is the Laplace Transform of the Letsystem and since the only
difference between the plumbing of the Greendollar bank and the
chartered bank is interest, 1/(s-i) is the Laplace Transform of the
chartered bank.
     You have to understand Tim. I've been modelling this stuff with
pipes for you like any engineer would. But I've been modelling this
stuff with electrical circuits for me. Since electrical circuits can
be modelled with plumbing and plumbing modelled with electrical
circuits: current, voltage=pressure, resistance=pipe-width.

:The correct criticism, which I adopted
:later, was that the 11 for 10 dilemna was irrational.
     And what you can't face is that it's prime rule of what's going
on within every mort-gage death-gamble signed anywhere on the planet.
It is irrational to continue going to the interest-bearing money pump
when you can go to the interest-free Greendollar pump.

;I apologize for
:the confusion that my error caused, and it proves that I should actually
:read and think prior to posting.
     Upon your first impulse, you came to the right conclusion. You
saw there was an insufficiency of money for everyone to repay 11 for
10 and saw the solution as adding some to every pot to balance the
     Only after you had time to think prior to posting did your
education in Economics kick in to remind you that no matter how many
people played 11 for 10, adding money is incorrect because inflation
shows there's already too much money out there.
     I'm sorry. I got with your first natural impulse. "Promising to
pay 11 and only get 10 is irrational" and one way for the banker to
fix the imbalance was to add 1 to everybody's pot. The Social Credit
National Dividend.
     Now that you've apologized for getting it right and given it more
learned thought:

::      Take a poll of all Canadians who have ever played the game and
:: borrowed at interest to see how many were strictly worse off as a
:: result of playing the "11 for 10" game. This stupid game is going on
:: in real life. Ask anyone around you. The whole world is your test
:: tube. The effects of interest and insufficient money are all around
:: you. Open a newspaper. Imagine how tallies would have helped the 90%
:: of the stories there on poverty.
:A simple way of testing the rationality of the 11 for 10 game/dilemna, is
:to invite ten people over, play the game several times, and find out how
:quickly it takes before people exercise the option of not playing.
     Make them all put up their bus-passes and once hooked, there's no
way out but to play and hope you're a winner rather than a loser in
the death-gamble.

:will find that some people, possibly all, will play the first time, but,
:after learning, they will all stop playing (might take a few games,
     Not if their bus-pass or their house is at stake. Once you're
hooked, they use the law to enforce the rules of the game. You keep
paying your interest or you lose everything. Tim's thinking the banker
induces people to play his game as if there were another game in town.
The banker coerces people to play his game because you need his chips
to get into the game and because so many slaves before you are in the
same predicament and have given up ever hope of getting out of the
game. And at that stage, the rules of "him-or-me" blur as it becomes a
law of the jungle where the strongest survive to the detriment of the

:     If the model requires that people must behave irrationally in
:order to give something that resembles real life, then the model is
     The model doesn't require irrationality. It allows and handles
the irrationality of those who sign mortgages and play 11 for 10.
     Do you think murder in the streets, robbery, crime, violence,
suicides from people is behaving rationally? My model explains how the
automatic shortage of money causes a poverty which pushes people to
those acts and what happens to even the people who do accept this
irrational death-gamble and survive.
     Then I note that most people in the real world compete to accept
this irrational mort-gage. I therefore say that the elimination and
foreclosure we see for the participants in the death-gamble model is
happening to the real participants in the real mort-gage model.
     You certainly are helping us see how your courses are teaching
you to think. It's amazing that he doesn't see that the game we call
11 for 10 is what is going on all around him.

:You need a new model that explains why people take out loans.
:See (I) in my previous post for such a model.
     You talked about them happy to pay interest for taking out loans
because everyone profited, how usury was beneficial in organizing
pools of idle money to be put to profitable use.
     Yes, some debt slaves might made it out of the pit to share with
the master but most got into their mortgages because it was the only
way to get chips to get into the game, everybody else was doing it
(this is an amazing impetus) and now they've invested too much to give
up and lose everything. So they keep playing.
     Let's see what would happen to the housing market when we give
each homeowner his own interest-free credit card directly accessing
the central bank's computer through his chartered bank provider.
     As soon as the mortgage was due, he'd borrow interest-free credit
and pay it off thereby exchanging an interest-bearing debt for an
interest-free one. It would be like having a new chip cage open up and
as your mortgage game due, you pledged your home to the interest-free
cage for interest-free chips like all your neighbors are doing. Money
from bank pumps will be retired as Greendollar pumps take over the
     What would happen to debtors. Surely there were some kids who
stiffed you for money when you were a kid. There might be friends
who've defaulted on loans or simply never could pay them back. Most
paupers have had to stiff people for their debts.
     We can ask the paupers to settle up their debts on their
interest-free credit cards. They could write checks on their accounts
to everyone they ever had to stiff. They'd probably get checks from
people who've had to stiff them. If some guy forgets you, email him a
reminder that he promised to put $10 gas in the tank when be borrowed
your car in 1973. He may have forgotten but I bet you he'd pay. There
would be a general acknowledgment and accounting of honorable debts on
a voluntary basis. You'd find out how positive or negative you're
starting out with. Even contentious debts are trivial within the
potential of enough interest-free credit of your own.
     I'm taking the time to "dream" out loud. But I feel quite
confident that it's a practical dream. LETS gardens sprouting up from
alleys of despair are great test results. Dreaming connection to a
national or international financial database is not far-fetched at
all. Dreaming that it is access free of interest is dream of a
Heavenly world of freedom rather than a Hellish world of debt
     I love doing this fire-and-brimstone stuff. It shocks people when
I say look around and tell me you don't see hell. People cold and
starving in the streets with stores begging them to buy.
     I think we are at the juncture in history where the paradigm
shift from a race of debt slaves to a race of wealth owners is only a
switch of a software disk away.
     No matter how much the police-slave state expands from the Third
World to our richer nations, no matter how great the concentration of
wealth into the hands of fewer and fewer people while billions starve,
no matter one man ends up having everyone else in debt bondage, it's
that much easier to get the consent of the master to free the slaves.
     See Tim, though it's scary to have to admit that what you've
learned is wrong but isn't the future we're presently facing of
environmental self-extinction far worse. Isn't the possibility that
the world's 50 richest men, perhaps the world's richest 3, have it
within their power to turn the earth's industrial engine on to full
power while freeing the steering to aim at consumer rather than war
     I can guarantee that as soon as pools of Chinese peasants are
waving time-based credit and not just the generals, Massey Ferguson
Tractors would soon lure away engineers from tank makers catering to
the generals. Sure 10 generals might outbid 100 farmers for the steel
for a tank rather than a tractor but how would 10 generals share out
the duties on their tank. Sure 10 admirals might outbid 100 sailors
for the steel for a destroyer rather than a freighter but how much
harm could they do with one destroyer?
     Major Douglas was right. Giving the monopoly on the issue of
credit is too much power for private enterprise and should be a
government social service. And when credit is socially available to
everyone, everything changes. Peasants outbid generals for resources,
peasants outbid generals for selection. People waving their own
purchasing power will inevitably wave it at consumer goods and not war
and security machinery. With all people working to satisfy all those
people waving their demand, there is no time for war.
     Douglas always said that the war for markets inevitably leads to
real war. Fighting in the money jungle inevitably leads to fighting
for real. Because them foreclosing on you hurts more than them
foreclosing on him and it hurts enough that most people fight for

::      But you insisted on your right to pay the interest demanded if
:: your refusal meant not getting your loan. So how foolish is it? People
:: do it every day since they don't get the loan if they won't sign their
:: mort-gage death-gamble.
:If you are better off without the loan (and hence, without paying the
:interest) then no one is forcing you to take out a loan.
     Being better off without the loan because it avoids the interest
is not really better off if your kids are starving. The only time
you're better off without the loan to not pay interest is when you've
already got enough. But it's true that if the rich man doesn't need
money, he's not forced to borrow any.
     This totally ignores the group of the participants who don't have
enough and have to borrow. And again, you're dealing the small percent
of the rich, not majority of the paupers who have to borrow.

: Economics
:generally assumes that actions freely undertaken are only done so if they
:are expected to be of benefit, utility.  I mean, why do something if it
:is of zero or negative benefit?
     Because though it may be of zero or negative benefit to the
players, it is of positive benefit to those who bank the game. And if
it takes buying politicians, judges, government with the money tap as
well as reward those who propound the false cover for what's really
going on in the money plumbing,
     It's not "Why do something so destructive?" It's "No getting out
once hooked." This coercion of financial survival in the death-gamble
takes liberation from above. I see no possibility of freedom from
     It takes interest-free lines of credit to allow all debt slaves
to convert their debts from interest to non-interest bearing debts.
Though it's growing from below as more and more small pockets are
slipping off their debt chains and jumping onto LETS life-boats, this
is the slow way and to avoid the ecological catastrophes implied in
continued exponential growth of debt, it will take the financial power
of the Owners to save their own enterprise even if the price is having
to share out its abundance.
     Last note on current attempts to build emoney systems, they're
anticipating that not everyone will have an account with spending
power. Theft and Security are their main concerns.
     People might steal because they don't have enough of their own
but I don't believe that there has ever been a recorded theft of
Greendollars anywhere in the world in over 10 years operation.
     Imagine. No one's managed to steal Greendollars. Since positive
balances always add up to negative balances, how can you steal without
leaving a trail. "Hey, $100 disappeared from my account into his. Get
it back."
     The current emoney system builders are hoping to get you to pay
interest to use their credits and have you treat this new emoney like
you adored your old money. But with LETS springing up as examples of a
sound emoney system, I doubt they'll last long.
     If anyone ever brings up "gold" as any kind of solution, they're
not on our wavelength. If they want to use gold chips, fine, but I'm
staying with plastic. Private banks have been using the taps of real
e-money for decades where all real money is created in the computer
with tokens made available to further the metallic myth. Lets is
giving people their own taps to their own credit without the middlemen
loansharking it out. Think about it. You can liquefy your credit for
500 computer dollars at the Royal Bank and pay interest to use it or
you liquefy your credit for 500 computer Greendollars at the LETS bank
and pay a once-only service charge to use it. LETS simply lets you tap
into your own credit. It provides a way for you to issue your own
wampum, your own IOU, acceptable throughout Greendollar society. No
loansharking middlemen.
     To those who have written to me to express appreciation for the
important and often unique discussions on monetary reform, I do say
that anything you like may be reproduced without my permission as I
treat everything, postings and email, as not copyright since public
postings and mail are evidence in Canadian courts.
     I must admit that Tim has forced me to use my plumbing in several
ways. Really esoteric topics keep fitting the pipes. I hope you've
enjoyed these new angles on the problem as much as I've enjoyed being
forced to focus in from them.

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