I prepared this
flyer for distribution at the Saturday Feb. 11,
1995 Anti-Tax protest at the old Ottawa
Tech high school.
"CUT DEBT SERVICE, NOT PEOPLE SERVICE"
We are told there are only two ways out
of our financial mess:
1) Raise taxes after paying the debt service;
2) Cut social service after paying the
debt service.
Never suggested is a third way:
3) Cut the debt service.
The Fraser Institute estimates Canada's
total government-incurred debt
at $1.8 trillion. $60,000 per head. To
service the debt in 1994, we
were all taxed about $180 billion. $6,000
a year each. $500 a month
each. Our efforts to pay interest dwarf
all other of our other
financial enterprises.
If a way can be found to reduce debt service
by ONE POINT from 10% to
9%, that's WORTH $18 BILLION. ONE POINT
WORTH 18 THOUSAND MILLION with
which to use in other ways. With two points,
the deficit is wiped
out. Three points, we have payment on
the principal, increased social
services and tax cuts. Four points or
more, we'll climb out of
debt very quickly.
The largest drain on our economy must be
dealt with first. The
solution is not to keep coming up with
ways to pay for it or then make
do without essential services. It is to
come up with a way for Canada
to get cheaper money. The Oct. 4, 1993
article by Walter Stewart in
the Toronto Sun explains how cutting debt
service has worked before:
"The way it works
today, almost all of our money supply is
created by the banks as interest-bearing
debt, with them on the
receiving end.
We can't solve
the deficit crisis thus created by slashing
expenditures or raising taxes, because
these measures bring the
economy crashing to a halt.
The idea is that
central governments should take back from the
banks the crucial role of creating money,
thus restoring sovereignty
to the state.
The government
should direct the Bank of Canada to issue credit
at low- or no-interest for building capital
projects. This is what the
Bank of Canada did during World War II
with great success.
The solution,
then, appears to be to substitute low- or no-
interest public funds for high-interest
private money.
Various levels
of government could borrow this newly-created
money to retire high-interest loans."
So it can and has been done before. The
Bank of Canada may directly
issue new loans for government bonds or
private property at very low
or even no interest. Housing presents
zero risk if properly insured.
But we all need a direct account at the
Bank of Canada if we are to
cut out the money middle-men and cut debt
service from the budget. We
can cut spending, lower taxes, have a
balanced budget. But only if we
tackle debt service first. The Abolitionist
Party promises that with
everybody having a direct Bank of Canada
account, sovereignty on
government spending will be restored to
the State and you'll never
have to deal with a money middle-man again.
To the tune: Glory Glory
To raise the tax or fire workers seems
the choice we get,
But never is considered cut to service
of the debt.
I'll pay my tax for army and police to
handle strife,
I'll pay my tax for doctors, nurses who
protect my life.
Cut the service of the interest,
Keep the service that we find is best,
Cut the service of the interest,
Or we will lose it all.
I'll pay my tax for all engaged repairing
road and sewer,
I'll pay my tax for social servants helping
out the poor,
I'll even pay my tax for bureaucrats with
no regret,
But I object to paying tax for interest
on debt.
Cut the service of the interest,
Keep the service that we find is best,
Cut the service of the interest,
Or we will lose it all.
The Toronto Sun, Monday October 4, 1993.
"NO INTEREST LOANS MAY SAVE US
1. WATERLOO -- At the risk of introducing
a new idea during an
election campaign, two professors at the
University of Waterloo want
to revive the Canadian economy by using
a scheme that has worked on
Guernsey.
2. The Island, not the cow.
3. The professors are Jack Kersell, who
teaches political science, and
Robert Needham, an economist and director
of the Canadian Studies
Program at Waterloo.
4. Their idea is that the government should
direct the Bank of Canada
to issue credit at low or no interest
for building capital projects --
roads, schools, hospitals, bridges, railways,
airports.
5. Actually, this is what the Bank of
Canada did during World War II
with great success and without causing
undue inflation. In addition,
various levels of government could borrow
this newly created money to
retire high-interest loans.
6. The result would be a vast improvement
in Canada's employment, a
sharp drop in the deficit, and a return
to stability and prosperity.
7. At a theoretical level, the proposal
has some impressive academic
backers, including William Henry Pope,
co-author of the classic
Canadian text "Economics," used in every
university in the country,
John Hotson of Toronto, founder of COMER,
the Committee on Monetary
and Economic Reform, and economist Allan
Schmid of Michigan State.
8. There is even a lobby group, called
"Sovereignty" which has
headquarters in Freeport, Ill., and which
has drawn up a piece of
legislation to "direct the US Treasury
to issue such funds as
interest-free loans to state and local
governments."
9. The idea is that central governments
should take back from private
banks the crucial role, which they had
until recently, of creating
money for the economy, thus restoring
sovereignty to the state.
10. The theory has been put into practice
on the isle of Guernsey,
since 1816, with, apparently, overwhelming
success.
11. I am not sure, given the differences
between Canada and a small
island state in the English Channel, whether
this lesson means we
ought to copy Guernsey or move there but
the "Guernsey Experiment" is
worth a look.
12. In 1816, Guernsey was in a hell of
a mess. The seawalls were
crumbling, there was no market-place,
roads were muddy and horrible,
and the local government was 19,000 pounds
in debt. Revenue came to
about 3,000 pounds annually, 2,400 pounds
of which went to pay
interest on debt.
13. Sounds like us except that, unlike
us, the Guernsey folks did
something about it.
14. They created and lent to the government
6,000 pounds of interest-
free money, and used it used it to fix
up the seawalls. This worked so
well that they went on doing it -- and
are still doing it -- to create
an economy with zero unemployment, a high
standard of living, low
taxes and very low inflation.
15. Gasoline, for example, costs about
one third of what it does in
England, about 120 km away.
16. What worked in Guernsey may not work
here, in a much more complex
and more exposed, economy.
17. Canada has long since lost control
of its own economic destiny. We
traded it to the U.S. for hamburger and
to the Japanese for VCRs, long
ago.
18. Just the same, the idea of looking
at debt, and the way debt is
created, is a worthwhile one, if only
because it will drive our
bankers crazy.
19. The way it works today, almost all
of our money supply is created
by banks as interest-bearing debt, with
them on the receiving end.
20. We can't solve the deficit crisis
thus created by slashing
expenditures or raising taxes, because
these measures bring the
economy to a halt.
21. The solution, then, appears to be
to substitute low- or no-
interest public funds for high-interest
private money.
22. The approach can hardly be any more
misguided than the pointless
lashing around that is all conventional
approaches have to offer us
today.
---
2) Third Way 1
Later, in article
#919, andersod@cadvision.com (David
Anderson) wrote:
:In article <johnturmel@yahoo.com (John Turmel) writes:
::
"CUT DEBT SERVICE, NOT PEOPLE SERVICE"
::We are told there are only two ways
out of our financial mess:
::1) Raise taxes after paying the debt
service;
::2) Cut social service after paying the
debt service.
::Never suggested is a third way:
::3) Cut the debt service.
:I agree with 3), but your ideas on how
to do it are weak to say
:the least. Who is going to loan the Canadian
government money at
:0 interest?
The same guys
who create new money and charge interest for
it. If you re-read the piece again, you'll
notice Walter
Stewart's article said:
::: "The way it
works today, almost all of our money supply
::: is created by the banks as interest-bearing
debt, with them
::: on the receiving end."
So the private
banks get to issue new chips into circulation
and charge interest.
::: We can't solve
the deficit crisis thus created by
::: slashing expenditures or raising taxes,
because these
::: measures bring the economy crashing
to a halt.
::: The idea is
that central governments should take back
::: from the banks the crucial role of
creating money, thus
::: restoring sovereignty to the state.
::: The government
should direct the Bank of Canada to issue
::: credit at low- or no-interest for
building capital projects.
::: This is what the Bank of Canada did
during World War II with
::: great success.
::: The solution,
then, appears to be to substitute low- or
::: no-interest public funds for high-interest
private money.
::: Various levels
of government could borrow this newly-
::: created money to retire high-interest
loans."
And why shouldn't
the Bank of Canada create and issue new
chips based on the same collateral that
the chartered banks would
create and issue. It's the collateral
that's the backing for the
chips.
Why represent
our collateral with their chips for a fee,
When we can represent our collateral with
our chips for free?
:It sure isn't going to be me, and I suspect
I wouldn't be alone.
Government should
be borrowing from its central bank and not
from people.
:To cut the debt service one needs to cut
the debt.
No. To cut debt
service, one needs to cut the interest rate.
Then one can cut debt by having payments
go against principal.
:To do that, like any individual, income
must be greater than
:expenses, which leads back to 1) and
2). I favor 2).
If you think
you can't cut interest rates, option 3), then
of course your options remain limited
to 1) and 2).
:If the government decides to print the
money to pay the debt, it
:would result in hyper inflation and interest
rates, unless of
:course your willing to pay $400 for a
BIC pen. A massive dollar
:devaluation would occur with interest
rates going well past 18%.
:The Canadian dollar will in effect do
a trip like the peso.
How is replacing
interest bearing debt with non-interest
bearing debt going to hurt things? Thinking
"inflation" will be
caused by any increase in money supply
is a knee-jerk reaction.
It meminds me
of Edgie the economist who used to play Poker
with me at the Taj Mahal in Las Vegas.
Every time someone came to
the table with a couple of trays of chips,
he couldn't help but
scream inflation. Economics trains the
mind to disassociate money
from collateral. Poker chips are the best
example of interest-
free money system I can propose for your
consideration.
:We can dream on about easy fixes to a
nasty debt problem, but one
:way or another the governments are going
to have to eventually
:cut spending big time.
And I suggest
they cut spending on debt service.
:Raising taxes will just drive out wealth,
leave fewer jobs and
:require fewer services from idividuals
who >have less money to
:spend. The circle is vicious and we are
in it.
And the only
way out is to cut debt service by replacing
high-interest privately-created money
by banks with no-interest
publically-created money by the Bank of
Canada.
In article #923,
jaustin@bcarh7ef.bnr.ca (John Austin) added
little to the discussion:
:I f*****g give up! A moronic tripe HAT-TRICK!
:John PLEEEZE find somewhere else to take
your bizarre behavior.
You have to wonder
where these guys come from. I thought
Stewart's article about the Economics
Professors' suggestion was
quite complete. Yet, this guy evinces
absolutely no understanding
and doesn't mind the whole world knowing
he can't keep up with
the discussion. Let's hope he keeps his
nose out of topics he
cope with.
In article #928,
ihodge@bnr.ca (Ian Hodge) adds:
:Think not that you can so easily silence
the harbingers of DOOM!
Actually, I'd
rather think of a suggestion for the use of
interest-free money as a harbinger of
hope. The hope of getting
out of debt by having all our payments
go against the principle.
It's easily done.
Not only is it being now done in Guernsey
but British "tallies" worked interest-free,
pre-revolutionary U.S.
"continentals" worked interest-free, Lincoln
"Greenbacks" worked
interest-free, Roman "Aes Grave" copper
money worked interest-
free and Local Employment Trading System
Greendollars work
interest-free.
There are many
Greendollar LETS sites to check:
http://www.u-net.com/gmlets/home.html"
http://www.u-net.com/gmlets/users/tml/tml.html"
http://www.u-net.com/gmlets/directry/home.html
http://titsoc.soc.titech.ac.jp/titsoc/higuchi-lab/icm/index.html
Ithaca
http://peg.apc.org/~gmorris
http://inet.nttam.com/HMP/PAPER/136/abst.html
Greendollar software
is available at
ftp://scorpion.cowan.edu.au/pub/mlets
There are several
LETS newsgroups on GreenNet and the other
affiliated APC hosts, Pegasus, IGC, Web,
etc in other countries:
lets.oz
Australia
lets.uk
UK
lets.can
Canada
lcs.letsgo
(write-only: contact lcs@mars.ark.com (Michael Linton))
lcs.letsoft software
discussion
lets.women
(moderated: contact kaarenp@peg.apc.org for details)
You can also join
the econ-lets digest by sending the
message:
subscribe econ-lets <your name>
to:
mailbase@mailbase.ac.uk
So, no matter
how many people can't seem to understand how
interest-free Poker chip money works,
the LETS Greendollar
software is poised to replace the interest-bearing
software now
being used by our chartered bank computers.
John "The Engineer" Turmel
---
2) Third Way 2
hluce@netcom.com
(Hudson Luce) wrote:
:johnturmel@yahoo.com (John Turmel)
writes:
:
::
"CUT DEBT SERVICE, NOT PEOPLE SERVICE"
::We are told there are only two ways
out of our financial mess:
::1) Raise taxes after paying the debt
service;
::2) Cut social service after paying the
debt service.
::Never suggested is a third way:
::3) Cut the debt service.
::
:: "The way it
works today, almost all of our money supply is
::created by the banks as interest-bearing
debt, with them on the
::receiving end.
:: We can't solve
the deficit crisis thus created by slashing
::expenditures or raising taxes, because
these measures bring the
::economy crashing to a halt.
:: The idea is
that central governments should take back from the
::banks the crucial role of creating money,
thus restoring sovereignty
::to the state.
:: The government
should direct the Bank of Canada to issue credit
::at low- or no-interest for building
capital projects. This is what the
::Bank of Canada did during World War
II with great success.
:: The solution,
then, appears to be to substitute low- or no-
::public funds for high-interest private
money.
:: Various levels
of government could borrow this newly-created
::money to retire high-interest loans."
: OK, suppose you loan me $1 million at
10% interest p.a. Suppose I get
: so many of these loans that I can't
afford to pay the interest, and I've
: already spent the principal. I offer
to do either one of two things:
:
: 1. Go bankrupt and leave you holding
the bag, having lost your money
: entirely, without
any sort of effective recourse.
:
: 2. Offer to renegotiate the loan to
a lower rate of interest, say 3%.
: Your income, once
$100,000 p.a., is now cut to $30,000 p.a. Will
: you do this because
I am a nice guy and you don't want to see me
: in difficulty?
You seem to have
missed the whole point. When you borrow
from a Greendollar bank at no interest
and a small Greendollar
service charge for the operator's time,
all your payments go
against the principal. At $30,000 a year,
you will manage to
repay your debt to the system in 30 years.
There are no
bankruptcies and only total incompetents
can't manage to repay a
loan without interest.
: Let's say that you choose option 2, to
lose $70,000 p.a. in income.
: I come back and say, "I'd like to borrow
another $2 million, and I'll
: pay you no interest for it. I will pay
it back next Tuesday." If other
: people offer you 5% and 6%, will you
loan it to me for free?
Why would other
people offer me 5% or 6% when they can
borrow their own currency for free. Remember,
Greendollars work
like Wampum beads used by North American
Indians. If a horse was
worth 100 hours work and you could print
up your own IOU bead
worth 1 horse, why would you borrow someone
else's bead?
: When you "substitute" low- or zero-interest
loans for loans which pay
: a higher rate of interest, what you
do is called "defaulting".
And when you find
one lender who lends you money at 8% with
which you repay your loan at 10%, would
you really call that
substitution defaulting?
az915@FreeNet.Carleton.CA (William G. Royds) also notes:
: My mortgage holder did exactly
that last year. When other
: institutions were offering 6% and my
mortgage was 9%, I said to
: them "I would like to re-negotiate,
if you don't I will pay the
: penalty and go to someone else". They
re-negotiated to a better
: deal than I could get elsewhere. The
government should do the
: same because it is much better for a
debtholder to have money let
: out at some interest rather than not
let out at all. It is the
: same principal as airlines do with standby
seats. The problem is
: that the government does not negotiate
with the money lenders. It
: allows them to set the cost and is a
price taker rather than a
: price setter. In any business, if you
are the biggest market, you
: set the price.
hluce@netcom.com (Hudson Luce) continues:
: Businesses
: which do this often find that their
creditors will sue to force them into
: receivership, so that they can seize
back collateral to cover their losses.
: They also find it very difficult, if
not impossible, to raise more money
: by selling their debt, at *any* offered
interest rate.
Yes, this is what
happens in an interest-bearing world. It
doesn't work that way in an interest-free
world.
: Governments which try to default on their
interest payments quickly find
: that no one wants to buy their treasury
obligations (notes, bonds, etc)
: even if they increase the interest rate
to 1000% after the attempted
: default. It's a quick way to balance
your budget.
So if no one wants
to by a $1,000,000 government bond at 10%
so the government can perform governmental
functions, why not
have the government directly pay people
with 0% $10 bonds which
could be traded like currency and used
by anyone to pay their
taxes. That in effect is all Abraham Lincoln
did with his
Greenbacks and pre-revolutionary American
states did with their
"Continentals." British kings used wooden
tallies in the same
way. Romans used Aes Grave copper money.
Guernsey Island uses its
own government created interest-free currency
in the same way.
If someone offered
you a $10 US bond you could pay your
taxes with, would you treat it in any
less favorable way than
you'd treat a US dollar you can pay your
tax with.
Thomas Edison
said:
"If our Nation
can issue a dollar bond, it can issue a
dollar bill. The element that makes the
bond good makes the bill
good also."
So similarly,
if you trust in the dollar bill, the element
that makes the dollar bill good makes
the dollar bond good.
: Tell you what... Do you have a mortgage
on your house? If so, what
: interest rate do you pay? Is it too
high? If so, make an offer to the
: bank to replace your present loan with
a non-interest-bearing loan, or
: maybe cut the interest to a more reasonable
figure, say 1 or 2%. Do
: you think they'll take the offer? If
they don't, if you don't pay the
: interest payment, do you think they'll
let you keep your house?
No I don't. That's
why it's going to take government backing
to force them to accept service charges
rather than usury.
: Why do you think people will treat Government
obligations any
: differently than those owed by individuals
and businesses?
Because they'll
be backed up with the very best collateral,
taxation power. As long as we can pay
our taxes with those pieces
of paper, everyone will accept them as
money. So why bring the
bond to the bankers and let them create
the bills and charge
interest when the government can allow
the Treasury to create the
bills and borrow them at no interest like
British Kings borrowed
their tallies from the British Treasury?
az915@FreeNet.Carleton.CA
(William G. Royds) also notes:
: If the federal government
stopped paying interest, it
: wouldn't have a deficit to need to borrow
money. It gets more
: revenue than it pays in program costs.
The whole federal deficit
: is due to interest. As a matter of fact
it could even
: significantly reduce the debt and become
more attractive to money
: lenders.
Of course, stable
money would be attractive but we wouldn't
need the money-lenders anymore.
It's evident that
hluce@netcom.com (Hudson Luce) hasn't
spent much time contemplating The Third
Way. The whole article
deals with how an interest-free system
would work and his whole
article dealt with the problems of an
interest-bearing system.
For a while,
could those who understood how an interest-free
Treasury bank would work handle a few
of the queries from others
who don't?
John "The Engineer" Turmel
---
3) Subject: Re: TURMEL: The Third Way
hawley@ibm.net
wrote:
johnturmel@yahoo.com (John Turmel) writes:
::: hluce@netcom.com (Hudson Luce) wrote:
::: OK, suppose you loan me $1 million
at 10% interest p.a. Suppose I get
::: so many of these loans that I can't
afford to pay the interest, and I've
::: already spent the principal. I offer
to do either one of two things:
:::
::: 1. Go bankrupt and leave you holding
the bag, having lost your money
::: entirely, without
any sort of effective recourse.
:::
::: 2. Offer to renegotiate the loan to
a lower rate of interest, say 3%.
::: Your income, once
$100,000 p.a., is now cut to $30,000 p.a. Will
::: you do this because
I am a nice guy and you don't want to see me
::: in difficulty?
::
:: You seem to have missed the whole point.
When you borrow
:: from a Greendollar bank at no interest
and a small Greendollar
:: service charge for the operator's time,
all your payments go
:: against the principal. At $30,000 a
year, you will manage to
:: repay your debt to the system in 30
years. There are no
:: bankruptcies and only total incompetents
can't manage to repay a
:: loan without interest.
:
:YOU are the one missing the point, John;
we owe the money now,
:and if we arbitrarily decide not
to repay it as promised we will
:face sure and certain evil consequences.
:
No, you are missing
the point.
I understand
that you owe the money to your usurers now.
I said that you'd
pay the money later to the your new
interest-free banker who loaned you the
money so you could pay
off your usurer now.
::: Businesses
::: which do this often find that their
creditors will sue to force them into
::: receivership, so that they can seize
back collateral to cover their losses.
::: They also find it very difficult,
if not impossible, to raise more money
::: by selling their debt, at *any* offered
interest rate.
::
:: Yes, this is what happens in an interest-bearing
world. It
:: doesn't work that way in an interest-free
world.
:
:In an "interest free"
world, nobody loans anybody anything
:because they can't
make money at it.
:
Again, you missed
the point.
Nobody borrows
from anybody else when the central
Greendollar system is willing to do it.
You keep forgetting that
there's a central Greendollar computer
that does it for everyone.
Ask any member of a Greendollar system
where they borrow their
Greendollars.
:We are already suffering from substantial
depreciation of
:our dollar (and resultant
inflation);
:
Evidently, you
didn't read the Mathematics of Debt Slavery
or the Grade 9 algebra was over your head.
In a properly
functioning casino banking system, there can
be NO INFLATION because the chips are
always backed one-to-one
with value.
Gamblers can
only laugh at guys like you who think that
chips inflate.
:these sorts of voodoo
economics to make debts
:disappear are simply not going to work.
:
Again, you are
confused between making debt disappear and
making debt disappear service. Try to
stay focused on what I'm
saying, not what you think I'm saying.
:Governments can either tax the citizens
for money, borrow the
:stuff, or print funny money.
:
For the record,
the creation of money can either be in the
medium of paper, metal or credits in a
computer but I'll refer to
all three types of creation of money as
"printing."
Where to you
think the guys from whom the government borrows
it get it from? The banks print it. Even
if some is obtained from
individuals, it was first created by a
bank. They create it right
in their banks' computers. Check any basic
Economics textbook for
an explanation of how banks create money
by making loans.
So why should
private banks printing money and charging the
government interest be serious and the
government printing the
money itself and saving the debt service
be funny?
Of course, "funny
money" is what bankers have trained their
economist chimps to scream every time
someone suggests that
anyone but their masters be allowed to
create the money. You've
simply been duped into laughing at a better
money system than
you're capable of comprehending.
:If governments spend more than they
:tax, then we get debts. If they print
more money than the economy
:can absorb, then we get hideous inflation
(Brazil or Argentina
:offer examples).
:
And no one's
suggesting the casino print more money than the
collateral the economy can produce. You
completely fail to grasp
how creation and issuance of chips does
not necessarily entail
inflation unless the chips are issued
without a collateral base.
I like to tell
the story of Edgie the economist who screamed
"Inflation" every time someone came to
our Poker table with a new
tray of chips. It seems to be a Pavlovian
response embedded into
an economists' psyche.
So we solve the
problem by promising to let them cash out
first and let the last guys suffer the
supposed inflation of the
chips. And yet, no one has ever failed
to cash in their chips for
the original value pledged. And no matter
how much we laugh at
the economists who scream "inflation"
every time they see new
chips being introduced into the game,
they just can't help
themselves.
You're a good
example.
:Your "third way" is just gussied-up funny
money.
:
See.
:Cogito, cogito, ergo cogito sum
:
Doesn't seem
to be much "cogito" going on.
John "The Engineer" Turmel
---
4) Third Way 4
:Subject: Re: TURMEL: The Third Way
:From: drasley@nbnet.nb.ca (Lazarus)
:
:On Wed, 21 Jun 1995 05:53:01 GMT,
johnturmel@yahoo.com writes:
::
:::We are already suffering from
substantial depreciation of
:::our dollar (and resultant
inflation);
:::
:: In a properly
functioning casino banking system, there can
::be NO INFLATION because the chips are
always backed one-to-one
::with value.
:
:Supply and Demand. You might have
a limitless supply of Greendollars/chips,
:but there is a finite supply of goods
and services available to be bought. If
:you only have 10 widgets and more than
10 prospective buyers, price goes up.
:Basic economic principal. The seller
sets the price which the market will
:bear, and a price which rises is *gasp*
INFLATION.
:
If you only have
10 widgets and the cashier only issued 10
chips, have fun bidding all you want.
If you want to give the
cashier two chips for one widget, I'm
sure he would mind taking
the other widget you could have had home
for himself.
But then again,
you forgot how many chips were issued when
the 10 widgets were pledged at the bank,
didn't you?
:Or, you are working hard for your Greendollars/chips,
yet you feel your work
:is worth more. You get a raise
from your understanding boss, who must raise
:his prices to cover his increased costs,
or suffer a decline in his own
:standard of living. Once again,
this sounds characteristically like
:INFLATION.
:
So the boss now
doubles the price for his product at the
cage where he receives two chips for that
widget with which to
pay you. Notice that the tokens have matched
the price increase.
If people think you worked hard and your
product is worth it,
when you spend your two chips with them,
they will spend those
two chips at the cage for your more valuable
effort. If it
doesn't sell at 2 and only for one, the
boss loses some of his
profit.
Think of this
chip money system like at two-part raffle
ticket with the Green part being the currency
and the Red part
being the price tag. For every dollar
your boss pays you, he
adds that component of price tag to the
item.
There can never
be an imbalance between the money and the
prices and if you retain that inflation
is a shift between money
and prices usually thought to be caused
by an inordinate growth
of money, it's obvious inflation can't
exist with a two-part
money-tag system.
I guess it's
an even better example than casino chips. But
chips really work essentially the same
way.
John "The Engineer" Turmel
-------------------------------
5) Subject: Re: TURMEL: The Third Way
hawley@ibm.net
(Glenn mor) wrote:
:
:In <DAIDoD.ECD@freenet.carleton.ca>,
johnturmel@yahoo.com (John Turmel) writes:
:
:: And no one's suggesting the casino
print more money than the
:: collateral the economy can produce.
:
:Tsk tsk... you are suggesting exactly
that when you propose to
:print funny money to
pay off current bondholders with. The
:amounts (including the interest,
which we still have to pay
:because we _contracted_ to
do so) are far in excess of what the
:economy could possibly absorb without
considerable inflation.
:
I disagree. Canada
has undeveloped and developed resources
that could easily act as base for new
chips.
If everyone who
had a mortgage on their home or business
pledged it to the Bank of Canada and received
in interest loan on
those resources with which to pay off
their interest-bearing
debts, again, the total debt wouldn't
change by this substitution
of interest-free funds for interest-bearing
funds but the debt
service would be eliminated.
:: You completely fail to grasp
:: how creation and issuance of chips
does not necessarily entail
:: inflation unless the chips are issued
without a collateral base.
:
:Getting off the rather silly poker
chip analogy,
:
To you the poker
chips are an analogy. To an engineer, they
are a model. Engineers use models because
it's the most efficient
way to considering the system. That you
think it's a silly
analogy when it's a perfect model says
a lot of your ability at
considering the system's engineering.
:it remains that
:there is no surplus
"collateral base" available for the
:government to draw upon in the
creation of all this funny money.
:
Government has
all the resources of the country, the leases
and the tax-collecting ability to draw
upon in the creation of
this serious money.
If converting
from interest-bearing debt to interest-free
debt can be done for housing, it can be
done for government-owned
assets too.
Your continual
use of the denigrating term "funny money"
may have been been useful in the old days
of laughing at the old
Social Crediters but it hardly sounds
intelligent in the
discussion of engineering modelling. I
can't ever remember
standing around a blue-print or a model
and qualify it as
"funny."
As long as you
keep exhibiting a total lack of engineering
skills, call the model funny all you want
but I think what's
funny is trying to engage in a technical
discussion and failing
at every turn.
Just remember
that many of the more technically intelligent
readers of this thread get to understand
how you just can't cut
the mustard and are proud of it.
:"The economy" isn't where the government's
collateral comes from,
:unless you mean by that simply the power
to tax, and that's not
:at all the same as printing new money.
:
Printing money
based on the collateral of the power to tax
is how the Tallies worked, how Greenbacks
worked, how Aes Grave
money worked, how Guernsey currency now
works so in a sense, it
is.
:Any attempt at
magicking away our debt by subterfuge
or
:legerdemain will inevitably rebound
upon the government, and
:ourselves, with disastrous consequences.
:
I am not magicking
away our debt. I'll repeat it one more
time. As those who have followed this
stream, haven't I repeated
that the debt stays the same. Once more,
the debt stays the same.
Only the debt service is eliminated. What
is it that makes that
concept so hard for him to grasp that
he keeps insisting that
the debt will disappear.
I've mentioned
this over and over but it just doesn't seem
to have penetrated that dead mass between
your two ears
Of course, it
will eventually disappear as all payments go
against the principal but at the start
of the process, none of
the debt disappears.
Of course, to
someone who has absolutely no concept of
engineering modelling nor the ability
to remember statements in
previous posts, it's a natural but false
conclusion.
The only fortunate
thing is that your posts provide much
mirth in my discussions with people who
do understand poker chips
or engineering modelling.
John "The Engineer" Turmel
---
6) Subject: Re: TURMEL: The Third Way
hawley@ibm.net wrote:
: John Turmel wrote:
:
:: If everyone who had a mortgage on their
home or business
:: pledged it to the Bank of Canada and
received in interest loan on
:: those resources with which to pay off
their interest-bearing
:: debts, again, the total debt wouldn't
change by this substitution
:: of interest-free funds for interest-bearing
funds but the debt
:: service would be eliminated.
:
:The above doesn't even make sense, John;
mortgages are
:liabilities in the books of the home
or business owners and are
:not theirs to "pledge" to anybody.
:
1) Of course
they are. Don't you know that everybody who
refinances their homes with a new money-lender
does exactly that?
Have you never heard of the concept of
"refinancing" and paying
off the original mortgage holder?
:The owners and controllers are
:the persons who loaned them the money.
Those persons are going to
:insist on receiving the interest that
they contracted to receive,
:the same way any buyer of GIC's or depositor
in a bank expects to
:be paid the interest that is their due.
:
2) And I always
suggested that people borrow sufficient to
pay off the whole debt as it stands.
:The "debt service" has been contracted
in advance... we have
:guaranteed to bondholders that they would
be paid interest in
:return for the money, and we cannot simply
abrogate those
:agreements.
:
3) And I'm not
suggesting anyone abrogate their agreement.
If people regularly refinance their homes
with cheaper money if
they can find it, why won't they refinance
with cheapest money if
they can find it.
:: To you the poker chips are an analogy.
To an engineer, they
:: are a model. Engineers use models because
it's the most efficient
:: way to considering the system. That
you think it's a silly
:: analogy when it's a perfect model says
a lot of your ability at
:: considering the system's engineering.
:
:Well, ignoring the
gratuitous insults for the moment, a poker
:game is not a very good model for an
economy, John, much less a
:"perfect" one.
:
4) Wrong again.
I never said a Poker game was a good model
for the economy. I said a Blackjack game
was.
Actually, I'm
kidding. I never said any game was.
I said that the
poker chips are the model for the banking
system and never once mentioned poker
as the model for the
economy.
:Models, to be useful, must have
behaviours that
:mimic the phenomena they are supposed
to be modelling. The poker
:chips don't do very well in that regard.
:
5) Again, for
you to think that poker chips model the
economy when in actuality, they model
the monetary tokens, is
just another of your continual errors.
Please don't
try to tell an engineer about modelling when
it's evident you have no idea how modelling
should work.
So Glenn is wrong
five out of five times. And in ways that
obvious for everyone to see.
That's what I
used to love most about picketing the Bank of
Canada every Thursday on "interest-rate-setting"
day. Economists
would come out and argue with me in public
and I'd keep pulling
the rug out from under them at every statement,
just I have been
doing to Glenn.
I used to call
those who came back for more "gnurds," guys
who were convinced that it couldn't be
as easy as poker chips.
Sometimes, we'd have crowds of hundreds
gather around as I made
the crowd laugh at their inane arguments
and miscomprehensions.
And they'd come up with statements just
as ridiculous as Glenn's.
All who are getting
the same laughs out of Glenn's thoughts
here should appreciate the fun of having
instantaneous reactions
of laughter from the crowds during our
debates. Those were great
years though after a few years, the economists
got tired of being
laughed at and stayed away.
That's why I
take the time to correct Glenn here. It's
actually quite fascinating to see how
they just can't retain any
of the simple analogies and models offered
and don't mind the
whole world knowing.
This one was
a great example. Everybody who has ever held a
mortgage knows about trying to find a
cheaper mortgage to pay off
the first one. But Glenn says it can't
happen. Is there one
person out there who agrees with Glenn
that people can't pay off
their mortgages with new loans from others
because:
"mortgages are
liabilities in the books of the home or
business owners and are not theirs to
"pledge" to anybody?"
Is there someone
out there who did just that?
This has got
to be one of the more ridiculous objections
I've ever heard but I'm never surprised
at the inane reasonings
these guys can come up with. That someone
would actually say this
is really funny though. Only an economist.
John "The Engineer" Turmel
---
7) Subject: Re: TURMEL: The Third Way
hawley@ibm.net wrote
(John Turmel) writes:
:
::: The "debt service" has been contracted
in advance... we have
::: guaranteed to bondholders that they
would be paid interest in
::: return for the money, and we cannot
simply abrogate those
::: agreements.
:::
:: 3) And I'm not suggesting anyone abrogate
their agreement.
:
:John, John, John...
you've said that we should replace these
:contracted debts (some of them long term)
with new money created
:for that purpose, and which does not
pay the promised interest. If
:we do not continue
to pay the interest, we have abrogated the
:agreement.
:
So find anywhere
where you think I say that the next loan is
not to be used to be paid the accumulated
debt. Don't all people
who refinance their past debts do so on
the basis of satisfying
the total former debt. That's what I've
always said. As the debts
come due, they are paid off. So why are
you saying "which does
not pay the promised interest?"
Did I not in
last post write:
:: 2) And I always
suggested that people borrow sufficient to
::pay off the whole debt as it stands.
So where do you
get off concluding that I'm suggesting that
people NOT borrow sufficient to pay off
the WHOLE debt? Or did
that statement go in one ear and out the
other?
:: 4) Wrong again. I never said a Poker
game was a good model
:: for the economy. I said a Blackjack
game was.
:: Actually, I'm kidding. I never said
any game was.
:: I said that the poker chips are the
model for the banking
:: system and never once mentioned poker
as the model for the
:: economy.
:
:Which fails to address
the central problem, that neither the
:games, nor the chips, nor the players
successfully model even
:banking, much less the rest of the credit
economy.
:
The Engineer
says chips do, the non-engineer says they
don't. Chips are of different colors or
denominations. What
better model have you got to suggest to
model money of different
colors and denominations?
:: Economists
:: would come out and argue with me in
public and I'd keep pulling
:: the rug out from under them at every
statement, just I have been
:: doing to Glenn.
:
:Ah, yes. With some kindness, John,
it should be pointed out that
:those who feel the need to cry out that
they are "winning" a
:discussion are generally not doing very
well at it.
:
Generally? Why
don't produce an example?
Seems to me that
people with the nerve to state they're
winning are the guys who have the last
word in that discussion.
We haven't heard much more from hluce@netcom.com
(Hudson Luce)
since very few losers are willing to stand
up and tell the world
they're winning when the world has been
listening.
And I think The
Engineer is winning this discussion on what
is a good engineering model and what is
not based on the fact
that I've suggested and engineering model
and you haven't.
John "The Engineer" Turmel
---
8) Subject: Re: TURMEL: The Third Way
fche@elastic.org (Frank Ch. Eigler) wrote:
:John Turmel (johnturmel@yahoo.com)
wrote:
:: That's what I've always said. As the
debts come due, they are
:: paid off. [...]
:John, how do you propose to convince non-nationals
to accept
:payment by poker chips?
If the poker chips
are accepted through the whole country
and backed up one-to-one with wheat, oil,
metals, I think they
would prefer a $1,000 receipt which can
purchase the same asset
today and next year rather than a $1,000
bill which can purchase
that asset today buy but less next year
after inflation.
Just because
I say that the Canadian money system should be
run on the same algorithm doesn't mean
they have to look like
Poker chips. They should look just like
Canadian money looks
today in which case, the only difference
would be that their
value would be stabilized.
:Also, are you not worried that the interest
free one-to-one
:collateral scheme would limit the availability
of credit?
:Companies would not be able to borrow
money against future
:income (as opposed to backing loans by
their existing
:capital).
:
There's no reason
money-chips cannot be loaned against
future income. It's the same as a casino
issuing chips based on
collateral offered and based on the borrower's
marker. His
promise to pay. So though backing up loans
by their existing
capital is a start, so is backing it up
with future income.
:The interest system encourages adventurous
bankers
:to issue money for such enterprises,
at an appropriate level
:of risk and reward to the banker.
:
But the interest
itself creates the risk which is why mort-
gage comes from the French words "mort"
and "death."
If everybody
borrows 10 and everybody owes 11, the demand
for the 11th token of money which was
never put into circulation
creates an automatic shortage which causes
foreclosure of the
losers.
In my earlier
"Mathematics of Debt Slavery" post,
you'll notice the examples of "Interest
Island" versus "Service
charge Island":
GAME MODEL: SERVICE CHARGE VS. INTEREST
In his book `The Theory of Games and Economic
Behavior', John Von
Neumann, one of this century's top mathematicians,
stated that "important
questions in economics arise in a more
elementary fashion in the
theory of games." In the business war
for markets, the economy decides
who sells their goods and who fails to.
Models used by economists are
flawed by guesses and approximations about
what the economy will
choose. The only way to perfectly model
the economy is to use fair
chance to pick the winners and losers.
TO PLAY MORT-GAGE:
The necessary game equipment for "mort-gage"
is 1) a box to represent
the market economy); 2) 3 types of tokens
to represent food, shelter,
and energy (the tokens can be mints, napkins,
cutlery); 3) a fair
chance mechanism like a coin, cards, dice,
straws, etc.; 4) matches or
tokens to represent currency.
In the Interest Game, all owe the bank
11 for every 10 tokens they
borrow and have to inflate their prices
to repay both the principal
and the interest.
Step 1) Have all the players wishing to
get into business pledge their
watches to borrow 10 matches from the
bank at an interest rate.
Step 2) Have all players spend 10 matches
into the market box in
exchange for a token representing the
product of the economy's labor.
Step 3) Have pairs of players, those with
similar tokens first, use
chance to decide which will win a market
share out of the box large
enough to pay the principal and the interest
necessary to survive the
bank's demand.
Step 4) When the market runs out of currency,
let the bank seize the
tokens and watches of the losers.
Step 5) Record the percent of those knocked
into unemployment and the
collateral seized.
In the Service Charge Game, all owe 11
for every 11 they borrow with
the 11th paid immediately to the bank
employees as a service charge.
Step 1) Have all the players wishing to
get into business pledge their
watches to borrow 11 matches from the
bank.
Step 2) Have all players spend 11 matches
into the market box in exchange
for a product token, 10 for the services
of those who produce the
goods like on Interest Island, but also
1 for the services of the bank
employees who facilitated the transactions.
Follow Step 3), 4) and 5) and note that
in the Service Charge Game,
unlike in the Interest Game, everybody
can sell all their goods
because the 11th unit of money entered
the market through the bank
employees. The very subtle difference
between systems is that in the
Interest Game, the bank demands payment
of money it did not create
while in the Service Charge Game, the
bank demands payment of money it
did create. With exactly enough markets
to match the prices of goods
produced, there can be no foreclosures.
I hope this analysis
has helped clear up many of the formerly
misrepresented and misunderstood aspects
of the usury banking system
as well as explain why usury has been
condemned throughout history as
the greatest crime against humanity. It's
the only thing standing
between mankind and abundant salvation.
I hope this simple
demonstrattion shows how service charge
loans do not create a death-gamble with
a determinable percentage
of losers like usury and where every producer
may survive.
John "The Engineer" Turmel
---
9) Subject: Re: TURMEL: The Third Way
cbbrown@io.org (Christopher B. Browne) wrote:
:In article <DAyp0n.FEH@freenet.carleton.ca>,
:John Turmel <johnturmel@yahoo.com>
wrote:
:: I hope this
simple demonstration shows how service charge
::loans do not create a death-gamble with
a determinable percentage
::of losers like usury and where every
producer may survive.
:
:Similarly, one can demonstrate that "rent"
on any kind of property
:is also a "death gamble,"
:
Go ahead and
demonstrate it.
:indicating that we really ought to
:move back to a completely self-reliant
society in which each
:person ekes out a meagre existence cultivating
the land passed
:down from their parents.
:
Why do you say
a self-reliant society means people have to
eke out meager existences cultivating
the land. Go ahead and
demonstrate.
My whole point
is that a high-tech self-reliant society can
provide abundance for all.
:The problem with the demonstration is
that it ignores the
:*time* element.
:
If you'd read
my post "Mathematics of Debt Slavery," you'd
have noticed that I deal in both exponential
functions which
deals with the time element and differential
equations which also
includes time. I don't know how you could
have missed the "time"
variable if you had read the material.
Besides, all
games deal with time since time elapses
between the start and the end of the contest.
Considering how
time is one of the essential elements of my
analysis, this statement is lacking in
grasp.
:In order to use the "token" method, we
have to have a situation
:where nobody really has a *need* to borrow
money, merely a static
:preference for the idea of borrowing
money. Moreover they need
:to not have any preference for *not*
lending their money out.
If you insist
we "have to have" something that won't make it
work, then as long as guys like you are
involved, it won't work.
This gibberish is not worthy of reply.
:Since both of these tendancies aren't
that common in human
:beings, the demonstration really just
doesn't work.
:
We're talking
about a system malfunction, not a human
frailty. This is not a competent technical
analysis.
Ask any 12-year
old who has ever used Poker chips to explain
it to you. Better yet, try to explain
to him why Poker chips
don't work.
John "with-patience-to-suffer-fools" Turmel
---
10) Subject: Re: TURMEL: The Third Way
fche@elastic.org (Frank Ch. Eigler) wrote:
John Turmel (johnturmel@yahoo.com)
wrote:
:: [...]
:: :Also, are you not worried that the
interest free one-to-one
:: :collateral scheme would limit the
availability of credit?
:: :Companies would not be able to borrow
money against future
:: :income (as opposed to backing loans
by their existing
:: :capital).
:
:: There's
no reason money-chips cannot be loaned against
:: future income. It's the same as a casino
issuing chips based on
:: collateral offered and based on the
borrower's marker. His
:: promise to pay. So though backing up
loans by their existing
:: capital is a start, so is backing it
up with future income.
:
:But, I thought, backing the poker chips
against present physical
:capital was your means of ensuring that
their value does not
:decrease. If I can start borrowing
against my future income,
:wouldn't the money supply explode just
as with fractional reserve
:banking, or interest-based loans, leading
to similar inflation?
:In fact, isn't borrowing money against
money equivalent to the
:present system?
:
Yes, the present
system allocates credit on people's
collateral and on their word.
The present Greendollar
systems allocate Greendollar credit
on the basis of only their word.
Yet, this doesn't
cause any inflation because the credit is
backed up one-to-one with a promise to
pay which is valued at the
same value as collateral.
Besides, what
do you do with the money you borrowed? Your
debt account went up and your cash account
went up. You purchased
things meaning that though your cash account
went down and your
asset account went up.
What do people
who have sold you something do with that new
money. Their cash account went up and
their asset account went
down. Then they paid their debts incurred
for the production and
their cash account went down and their
debt account went down.
The net result
is
that you owe the system instead of the
person who supplied you with the asset.
Quite equitable and with
no eventual change to the money supply
so why should there be any
inflationary shift?
:: :The interest system encourages adventurous
bankers
:: :to issue money for such enterprises,
at an appropriate level
:: :of risk and reward to the banker.
:
:: But the
interest itself creates the risk which is why mort-
:: gage comes from the French words "mort"
and "death."
:: If everybody
borrows 10 and everybody owes 11, the demand
:: for the 11th token of money which was
never put into circulation
:: creates an automatic shortage which
causes foreclosure of the
:: losers. [...]
:
:But there is no burden on anyone to ensure
that everyone must be
:a winner. The losers get there
because they generally deserve
:to.
:
I draw a distinction
between people becoming losers because
they're lousy producers and people becoming
losers due to a fixed
rule of the game.
10 robots all
borrow $100,000 to buy the wherewithall to
produce identical shoes. All 10 robots
owe $110,000 and hence
must price their shoes at $110,000. The
economy which has
received 10x($100,000) paid by the robots
for the production of
the shoes can only but 10x($100,000) out
of a total prices of
10x($110,000) leaving $100,000 worth of
shoes unsold.
One of the robots
must fail and be foreclosed on and it is
not a case of bad management so that it
deserves to be the loser.
One of the robots is foreclosed upon because
there was
insufficient money issued into circulation
to purchase all the
shoes.
It is this fixed
amount of failure with no regard to good or
bad management that I object to.
Of course, looking
at the good or bad management masks the
fact that there is a ratio of producers
pushed into foreclosure
independent of their management.
:Besides, it is never the case that `everybody
borrows 10 and
:everybody owes 11' in the present banking
system. The banks,
:being members of the `everybody' set,
borrow 11 and owe 10,
:balancing the numbers.
:
Please. This
is a first. Borrowing 11 and owing 10? I've
heard of bankers getting preferential
interest rates borrowing
$100 and owing $101 while everyone else
would owe $110 but I've
never heard of anyone borrowing 110 and
owing 100.
And even if somehow
some bankers could do that, it certainly
wouldn't be anywhere close to the volume
of loans that go to the
mass of borrowers in the economy.
You'd better
provide some proof as right now I think it's a
pretty ridiculous statement.
:: [...]
:: GAME MODEL: SERVICE CHARGE VS. INTEREST
:: [...] The only way to perfectly model
the economy is to use fair
:: chance to pick the winners and losers.
:
:Are you saying that the market is completely
random? What of
:competitive
:
No, but I'm saying
that to fairly model the economy, it is
better to use a fair gamble, model the
test thousands of times
and use statistical analysis to derive
the general result than to
guess at variables in an econometric model.
Why, are you
saying Von Neumann was wrong when he said that
"important question in economics arise
in a more elementary
fashion in the theory of games?"
John "The Engineer" Turmel
---
11) Subject: Re: TURMEL: The Third Way
fche@elastic.org (Frank Ch. Eigler) wrote:
:John Turmel (johnturmel@yahoo.com)
wrote:
:[...]
:: :[...]
:: :If I can start borrowing against my
future income,
:: :wouldn't the money supply explode
just as with fractional reserve
:: :banking, or interest-based loans,
leading to similar inflation?
:
:: Besides,
what do you do with the money you borrowed? Your
:: debt account went up and your cash
account went up. You purchased
:: things meaning that though your cash
account went down and your
:: asset account went up.
:
:Well, if I were playing with your proposed
system, I could borrow
:money now against my entire lifetime's
earnings, and spend it all.
:If others do the same, we'd have an explosion
of the money
:supply, no? Immediate inflation,
no? (And corporations have no
:lifetimes to limit them.)
:
Spend it all
on what? If you buy a house, the house is the
collateral for the chips issued. If you
buy a car, it is too. All
we ask is that you repay your loan as
fast as the collateral
depreciates.
Sure there would
be an explosion on the money supply but all
backed up with collateral or markers.
There would be
a commensurate explosion in employment and
economic activity.
You must lose
the "Edgie the economist" knee-jerk reaction
that an increase in chips necessarily
means inflation. It doesn't
if there is collateral to back up the
new chips or that your
economic enterprise is capable of repayment
of the depreciation.
:: :Besides, it is never the case that
`everybody borrows 10 and
:: :everybody owes 11' in the present
banking system. The banks,
:: :being members of the `everybody' set,
borrow 11 and owe 10,
:: :balancing the numbers.
::
:: Please.
This is a first. Borrowing 11 and owing 10? I've
:: heard of bankers getting preferential
interest rates borrowing
:: $100 and owing $101 while everyone
else would owe $110 but I've
:: never heard of anyone borrowing 110
and owing 100.
:: You'd
better provide some proof as right now I think it's a
:: pretty ridiculous statement.
:
:Okay, by example. Person A invests
$200 in Bank B. It
:promises to pay him 5% interest.
(Thus the bank borrows $200,
:owes $210, so far). Bank B makes
a loan of $200 to person C. It
:charges that person 10% interest.
(Thus the bank has a new $220
:as a debit, $20 profit) In total,
the bank `borrowed' $200+$20,
:but owes $210.
:
:In other words, the borrow/owe relationship
is inverted for a
:net lender when compared with a net borrower.
:
Of course, when
I say that people borrow 100 and owe 110, it
necessarily implies that the banker loaned
out 100 and is owed
110.
But to say that
because the person owes an extra 10 which
was never issued into circulation and
because the bank is to get
and extra which was never issued into
circulation doesn't mean
the loans therefore balance.
Besides, the
banks do not lend out their depositors funds.
Each and every time a bank makes a new
loan, new bank credit is
created, brand new money. (Graham Towers,
Governor of the Bank of
Canada to the Banking Committee in 1939)
Check any Economics
textbook on how banks create new money.
So if they're lending out
new money, they're not lending out their
depositors old money.
:: :Are you saying that the market is completely
random? What of
:: :competitive
:: [...]
:: Why,
are you saying Von Neumann was wrong when he said that
:: "important question in economics arise
in a more elementary
:: fashion in the theory of games?"
:
:The theory of games does not use randomness
in every problem.
:A `game' != `game of chance'.
:
But important
questions in economics do arise in a more
elementary fashion using a game to model
economic activity with.
J.C. Turmel
---
12) Subject: Re: TURMEL: The Third Way
On Jul 10 16:44,
1995, fche@elastic.org (Frank Ch. Eigler)
wrote:
:John Turmel (johnturmel@yahoo.com)
wrote:
:[...]
:: :Well, if I were playing with your
proposed system, I could borrow
:: :money now against my entire lifetime's
earnings, and spend it all.
:: :If others do the same, we'd have an
explosion of the money
:: :supply, no? Immediate inflation,
no? (And corporations have no
:: :lifetimes to limit them.)
:: Spend
it all on what? If you buy a house, the house is the
:: collateral for the chips issued. If
you buy a car, it is too. All
:: we ask is that you repay your loan
as fast as the collateral
:: depreciates. [...]
:
:How about spending it on entertainment,
going boating, going to the
:moon and back, hiring a dozen masseurs
with accompanying
:belly-dancers. In other words,
*services*. Or perhaps *renting*
:equipment or a home. I'd own no
more physical property than before
:the massive loans. (Thus I don't
have to repay the loan on the
:account of depreciation.) But I
could enjoy the value of the money
:regardless! All for a loan that's
given against my iffy future
:income.
:
So if you joined
a Greendollar barter system where people
trust that if you obtain services from
them, you'll service them
back, you're saying you'd enjoy the value
of the money and not
bother trying to pay those services back.
It's true that
Greendollar systems have experienced problems
from people who act like you say you would
but they're quickly
thrown out and people won't trade with
them. But such welchers
are very rare. Most people are quite prepared
to repay work for
work and that is the trust we count on.
But Greendollar
systems don't allow people to have their
whole life's potential earnings to blow
so they can stiff the
system for the maximum amount.
Yet, I think
that liberating the industrial capacity of
those who want to work will produce so
much abundance that just
as we won't mind golden-agers spending
their twilight years or
slower cousins living decent lives on
an open credit line
provided for by the youth, I don't even
think many will mind the
odd lazy drone who wants to end his life's
score-card in the
negatives with the slower cousins.
:: Sure there
would be an explosion on the money supply but all
:: backed up with collateral or markers.
:
:Not necessarily!
:
And when the
weaker members of society and the drones die,
we can take their negatives and spread
them throughout the whole
database of producers deducting a small
amount from each of the
more worthwhile members. That's how we
can take care of the old
and the weak and the useless without getting
in the way of the
workers.
:: :In other words, the borrow/owe relationship
is inverted for a
:: :net lender when compared with a net
borrower.
::
:: Of course,
when I say that people borrow 100 and owe 110, it
:: necessarily implies that the banker
loaned out 100 and is owed
:: 110.
:
:Yes, and your scenarios consistently
exclude the banker as one
:of the players, leading to the seeming
imbalance.
:
I just don't
know where you see balance between money and
debt. Count up the debts of the world
and count up the money and
you'll see there's just no balance.
Besides, this
is the most unheard of suggestion I've ever
heard.
:: But to
say that because the person owes an extra 10 which
:: was never issued into circulation and
because the bank is to get
:: an extra which was never issued into
circulation doesn't mean
:: the loans therefore balance.
:
:Why not? It seems to exactly add
up, if you agree that the
:bankers are just one of the bunch.
:
Again, this is
ridiculous. No one can possibly believe that
because the bankers are owed what the
borrowers don't have makes
things balance.
:: Besides,
the banks do not lend out their depositors funds.
:: [...] So if they're lending out new
money, they're not lending
:: out their depositors old money.
:
:Why does this matter?
:
It matters because
all new money coming into circulation is
matched with a debt which grows beyond
the original amount.
On Mon Jul 10
12:00, 1995, Steve_Salter@mindlink.bc.ca
(Steve Salter) wrote:
:: Besides,
the banks do not lend out their depositors funds.
::
:: Each and every time a bank makes a
new loan, new bank credit is
:: created, brand new money. (Graham Towers,
Governor of the Bank of
:: Canada to the Banking Committee in
1939) Check any Economics
:: textbook on how banks create new money.
So if they're lending out
:: new money, they're not lending out
their depositors old money.
:: J.C. Turmel
:
:Banks don't lend out their depositors'
funds?
:Read an annual report from any of the
banks, then report back to
:this newsgroup with your findings.
I notice that my bank has
:this big old sock lying in the back of
the employee coffee room.
:I wonder.....!!!??
:
If the banks
are not lending out new money when they make
loans, the money supply would not go up.
I say that the money
supply goes up when they make loans and
hence, they're not
lending out depositors funds.
That they've
made up a rule that says they can't lend out
new money until new money has been deposited
has fooled many
people into thinking that they loans they
are getting are the
deposits the bankers were seeking in order
to enable them to make
the loans of new money. Quite a scam.
Since the newspapers
regularly report that the money supply
goes up and down, if you say it isn't
when banks make loans, then
tell us when the new money is authorized
and where it comes from.
:Back to school J.C.
:
All you have
to do is read any elementary Economics text-
book on how banks create new money making
loans through the
fractional reserve system.
Back to school,
Steve.
John "The Engineer" Turmel