| Subject: | [socialcredit] deconstructing Hermann's "debt virus" theory | | Date: | Sunday, August 1, 2004 13:20:53 (-0700) | | From: | william_b_ryan <william_b_ryan @.....com>
|
John's Hermann's original posting to this "debt virus"
series is at
http://www.elistas.com/list/socialcredit/archive/index/21/msg/27/
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------------------
But let's say that a bank receives a deposit in
transfer
from another bank. The clearing bank credits the bank
for the deposit; the other bank is debited. The bank
in turn credits its customer for the deposit. In this
case there is no credit expansion.
-
[Hermann]
Correct. To complete the statement one should say
that reserves are also transferred between the
banks,
in addition to the monetary transfer.
-----------------------------------
[Reply] There is only one transfer between the banks,
John, accomplished at the clearing bank. The bank's
account at the clearing bank is credited; the
corresponding bank's account is debited in the same
amount. The bank then credits its customer in that
amount. It is all the same transaction. You seem to
think there are two separate transfers between the
banks.
---
So the money supply in a fractional reserve system is
two-tiered: one is for clearings between banks; the
other
is for clearings between members of the public.
-
[Hermann]
If by "clearings between banks" you mean the
transfer of reserves then you are not talking about
the money supply -- hence there are not two tiers
of the money supply as claimed...
-----------------------------------
[Reply] There are two tiers, John, where one is
included in the other. So they are not added
together in the statistics because that would be
double counting. Remember, we are not talking about
physical things, but contractual relationships. The
credit to its clearing account at the clearing bank
is the asset that the bank has received in the
transaction. The credit it makes to its customer's
loan account is the equal liability. What is
happening is that contractual relationships are
evolving; not that a "medium of exchange" is
"circulating."
---
[Hermann]
Perhaps it is valid
to say there are two tiers of the monetary system
- monetary transactions and reserve transactions -
but that is not the way you phrased it.
-----------------------------------
[Reply] Reserve transactions are monetary
transactions between banks. It's not rocket science,
John, but does require a slight ability to think
abstractly, and a modicum of knowledge about the
techniques of double entry accounting. You have to
have both. That will require a little effort on your
part. Without either you're like a fish out of
water. Every dollar transferred between banks
represents a dollar debited or credited to customer
accounts.
---
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deconstructing Her
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