Thanks, Tim. That will keep me busy for a while digesting it.
From your Abstract, just two preliminary points:
1. Social Crediters tend to regard "global" trends that further diminish
national sovereignty as still further removal of the power of individuals to
control their own destiny. This is particularly the case when the issue and
control of each nation's money is in the hands of commercial institutions that
therefore can determine the actions of elected governments irrespective of the
wishes of their citizens. "Putting a number of faulty systems together simply
leads to establishment a bigger faulty system", or something like that.
2. Your proposals would find no favour with those who gain profit and power by
speculating in currency changes, so I wouldn't like your chances of having them
adopted.
But I presume the purpose is to establish your line of thought from the point
of view of the discussion in theis group, and I will look at it from that angle.
Regards. John R.
>From: "Tim Knight" <Tim_Knight@NTLWorld.Com> >Reply-To:
socialcredit@elistas.com >To: <socialcredit@elistas.com> >Subject: Re:
[socialcredit] Bank Administration - What do they Lend >Date: Sat, 30 Apr 2005
18:07:42 +0100 > >John Rawson wrote: > >OK Tim, my definitions of money, wealth
etc. don't work for you. Give me yours and we'll see if reasonable dialogue can
be based on them. > >Tim Knight now writes: > >Thanks for offering to meet my
halfway John. I really appreciate your persistent efforts to help me escape from
the treacle! > >I have no problem with the expression 'wealth', or even
'owed-wealth', 'owned-wealth' and 'net-wealth'. The only expressions with which I
have problems are those associated with 'money'. Unfortunately, I have no
definition to offer. The
trouble is I can't think of any worthwhile economic factor on which to 'hang'
the expression (I've said that far too many times already). > >A little while
ago, I wrote a paper in which I tried to deconstruct what the expression 'money
could or ought to mean. I drew a blank. That document is as near as I can get to
defining my position on wealth and 'money'. I have attached a copy to this
e-mail. I would very much appreciate any insight you feel able to offer. > >Best
Wishes > >Tim Knight >Tim_Knight@NTLWorld.Com > >----- Original Message ----- >
From: John G Rawson > To: socialcredit@elistas.com > Sent: Saturday, April 30,
2005 5:58 AM > Subject: Re: [socialcredit] Bank Administration - What do they
Lend > > > OK Tim, my definitions of money, wealth etc. don't work for you. Give
me yours and we'll see if reasonable dialogue can be based on
them. > > Regards. John R. > > >From: "Tim Knight" <Tim_Knight@NTLWorld.Com>
>Reply-To: socialcredit@elistas.com >To: "Social Credit"
<socialcredit@elistas.com> >Subject: Re: [socialcredit] Bank Administration -
What do they Lend >Date: Fri, 29 Apr 2005 13:06:34 +0100 > >John Rawson wrote: >
>Jack has a deposit at the bank of $100. Part of the money supply. He wants to
buy a pair of shoes worth $200, approaches the bank, who agree to give him credit
of the other $100. By some means he pays this to the footwear shop, who deposit
it in their account as a $200 deposit. Jack's $100 part of the money supply has
disappeared, the shop's part of the money supply has increased by $200. No other
deposit anywhere has been reduced to supply the other $100, it has been created,
as has a debt for $100 to the bank by Jack. The money supply has been
increased by $100 in this little facet of the economy. >Tim Knight now writes: >
>This merely confirms the fact that all M?s are completely spurious measures.
There is nothing there worth measuring. They are dragons in your nightmares. The
remedy is simple - ignore them! > >The following is a complete and exhaustive
description of the economically-significant factors in the scenario above: > 1..
Before the purchase: > 1.. Jack had: > 1.. Owed-wealth vs the footwear shop of $0
> 2.. Owed-wealth vs the bank of +$100 > 3.. Net owed-wealth of +$100 > 4..
Owned-wealth of $0 > 5.. Net-wealth of +$100 > 2.. The footwear shop had: > 1..
Owed-wealth vs the bank of $0 > 2.. Owed-wealth vs Jack of $0 > 3.. Net
owed-wealth of $0 > 4.. Owned-wealth of +$200 > 5.. Net-wealth of +$200 > 3.. The
bank had: > 1.. Owed-wealth vs Jack of -$100 >
2.. Owed-wealth vs the footwear shop of $0 > 3.. Net owed-wealth of -$100 > 4..
Owned-wealth of $0 > 5.. Net-wealth of -$100 > 2.. Following the purchase (with
changes emphasised): > 1.. Jack had: > 1.. Owed-wealth vs the footwear shop of
-$200 > 2.. Owed-wealth vs the bank of +$100 > 3.. Net owed-wealth of -$100 > 4..
Owned-wealth of $200 > 5.. Net-wealth of $100 > 2.. The footwear shop had: > 1..
Owed-wealth vs the bank of $0 > 2.. Owed-wealth vs Jack of +$200 > 3.. Net
owed-wealth of +$200 > 4.. Owned-wealth of $0 > 5.. Net-wealth of +$200 > 3.. The
bank had: > 1.. Owed-wealth vs Jack of -$100 > 2.. Owed-wealth vs the footwear
shop of $0 > 3.. Net owed-wealth of -$100 > 4.. Owned-wealth of $0 > 5..
Net-wealth of -$100 > 3.. Following the payment (with changes emphasised): > 1..
Jack had: > 1.. Owed-wealth vs
the bank of -$100 > 2.. Owed-wealth vs the footwear shop of $0 > 3.. Net
owed-wealth of -$100 > 4.. Owned-wealth of +$200 > 5.. Net-wealth of +$100 > 2..
The footwear shop had: > 1.. Owed-wealth vs the bank of +$200 > 2.. Owed-wealth
vs Jack of $0 > 3.. Net owed-wealth of $200 > 4.. Owned-wealth of $0 > 5..
Net-wealth of $200 > 3.. The bank had: > 1.. Owed-wealth vs Jack of +$100 > 2..
Owed-wealth vs the footwear shop of -$200 > 3.. Net owed-wealth of -$100 > 4..
Owned-wealth of $0 > 5.. Net-wealth of -$100 >That is a complete and exhaustive
description of the economically-significant factors in the scenario. No-one is
any richer or poorer. No wealth has been created or destroyed. There is no need
to mention 'money' or 'money supply'. > >What I still cannot understand is your
overwhelming compulsion to 'label' some of the debts and
transactions as 'money' and some as 'non-money', and to then subclassify the
'money' debts into M?s. What is the economic significance of such distinctions.
Who cares what the debts are called? A rose by any other name would smell as
sweet etc. If the money supply M1 would change if the bank changed the name of
Jack's account from 'Current' to 'Reserve' (or 'Tweedle-Dee' or 'Tweedle-Dum'),
that confirms the fact that M1 is a completely spurious measure. The same applies
to all other M?s. > >The idea that there was an economically-significant factor
on which to 'hang' the expression 'money' or 'money-supply' is a hangover from
the days of gold coins. Even then, the expression 'money supply' was a misnomer.
I could understand the expression 'quantity of money in circulation', but not the
expression 'money supply'. You could quantify the number of gold coins in
circulation. However,
I'm not sure you would have measured anything with any economic significance.
Gold coins were/are an economically-indistinct subset of owned-wealth, and their
use was an economically-indistinct subset of barter. > >However, now that we've
moved on from gold coins, and all finance is tracked through the global zero-sum
network of owed-waelth (including cash - owed by the issuer to the bearer), there
is no economically-significant factor on which to 'hang' the expression 'money'
or 'money-supply'. The total is zero by definition. I believe you are chasing
rainbows. > > >John Rawson wrote: > >If Jack pays it back out of his salary next
week, the $100 will simply be cancelled out of existence and the original
situation restored; in this little facet ... > >Tim Knight now writes: > >Jack
doesn't 'pay it back'. There is no 'it' to pay back. It's not like gold
coins. If Jack deposits his salary cheque, the bank would credit him and debit
his employer in a self-contained transaction. End of that other story. There is
no economic link between one transaction and another. > >John Rawson wrote: >
>There's a hell of a lot more money in circulation than there used to be. It
doesn't grow on trees and "farmers who grow food certainly don't buy the money to
buy it". And all the economists and bankers start screaming their heads off about
"inflation" if any government wants to issue any. So where on earth else could it
have come from? > >Tim Knight now writes: > >What on earth does this mean? What
is the 'it' to which you refer? Economists and bankers do not start screaming
their heads off about "inflation" if any government wants to issue any (like me,
they believe that the expression 'issue money' is meaningless). What prompts
such screaming is if any government wants to run an excessive current-accout
deficit, and quite right too (but no mention of 'money'). > >John Rawson wrote: >
>So where on earth else could it have come from? > >Tim Knight now writes: >
>There is no 'it', so the problem does not arise. > >John Rawson wrote: > >May
I suggest you come out of a forest of accountancy terms and have a look at the
individual trees? And as I stated earlier, there are good reasons why unlearning
is difficult. In regard to money, it can be painful. > >Tim Knight now writes: >
>I use only expressions with a clear economic-significance. There aren't many of
them (owed-wealth, owned-wealth, net wealth, account and debt as nouns, and
credit and debit as verbs). I do look at the trees, but I insist on looking at
the complete picture - see the 'accounts' above. I am
constantly open to comments that I have lost my way. May I suggest you come out
of a forest of 'money' terms and consider the possibility that they are all
spurious gobbledegook (no offence intended)? > >John Rawson wrote: > >Just to
finish, a little puzzle. You pay a $1,000 note in to your account at the bank.
The money goes into your account and forms part of the money supply, a demand
deposit of $1,000. Did this DOUBLE the money supply, or is the note not part of
it while in the bank till? Can it get out again (legally) without being "filled
up" with actual money drawn out of your account or someone elses? If not, is that
amount of the money supply HALVED by that transaction? > >Tim Knight now writes:
> >A little welcome light relief on which to end! > >When you deposit $1,000 in
cash into your bank account: > 1.. The bank credits you, and debits the
state (in a cash account). > 2.. You credit the the state (in a cash account),
and debit the bank. > 3.. The state credits the bank (in a cash account), and
debits you (in a cash account). >In practice, of course, the state does not track
individual cash debts (or any other bearer bond debts) down to individual
holdings (it couldn't), but merely maintains a single total of cash in
circulation. That total appears in the national accounts and the national debt as
a liability. > >I will leave you to work out what the impact on whatever you mean
by the 'money supply'. To me, this anecdote merely confirms the fact that M1 is a
completely spurious measure, and so are all other M?s. > >Best Wishes > >Tim
Knight >Tim_Knight@NTLWorld.Com > > >----- Original Message ----- > From: John G
Rawson > To: socialcredit@elistas.com > Sent: Thursday, April
28, 2005 10:35 PM > Subject: Re: [socialcredit] Bank Administration - What do
they Lend > > > Thanks, Tim. I was a litttle loose in defining "money" as M1. I
should have use the term "money supply" as used by our Royal Commission. We can
get confusion be not pinning down exactly what we are talking about, and my basis
is this, M1, notes and coins in circulation and demand deposits at the financial
institutions. The supply of money available under that definition. > > Let's take
a fictitious small loan for simplicity. You can multiply all the figures by one
thousand if you wish, but I did hear a story of a bank manager here with a sense
of humour who made one of our "first settlers" wheel his bicycle into the bank
premises and lock it there as security for a little loan over the weekend. > >
Jack has a deposit at the bank of $100. Part of the money supply. He wants
to buy a pair of shoes worth $200, approaches the bank, who agree to give him
credit of the other $100. By some means he pays this to the footwear shop, who
deposit it in their account as a $200 deposit. Jack's $100 part of the money
supply has disappeared, the shop's part of the money supply has increased by
$200. No other deposit anywhere has been reduced to supply the other $100, it has
been created, as has a debt for $100 to the bank by Jack. > > The money supply
has been increased by $100 in this little facet of the economy. If Jack pays it
back out of his salary next week, the $100 will simply be cancelled out of
existence and the original situation restored; in this little facet ... > > But
of course, there is a much more general proof that banks create money, as that
done by Douglas by differential calculus. To a non-mathematician (I'm very much
on the outer fringes)
it goes something like this: There's a hell of a lot more money in circulation
than there used to be. It doesn't grow on trees and "farmers who grow food
certainly don't buy the money to buy it". And all the economists and bankers
start screaming their heads off about "inflation" if any government wants to
issue any. So where on earth else could it have come from? > > Not to mention the
fact that any good economics text these days agrees that they do.. > > May I
suggest you come out of a forest of accountancy terms and have a look at the
individual trees? And as I stated earlier, there are good reasons why unlearning
is difficult. In regard to money, itcan be painful. > > Just to finish, a little
puzzle. You pay a $1,000 note in to your account at the bank. The money goes into
your account and forms part of the money supply, a demand deposit of $1,000. Did
this DOUBLE
the money supply, or is the note not part of it while in the bank till? Can it
get out again (legally) without being "filled up" with actual money drawn out of
your account or someone elses? If not, is that amount of the money supply HALVED
by that transaction? > > Regards. John R. > > >From: "Tim Knight"
<Tim_Knight@NTLWorld.Com> >Reply-To: socialcredit@elistas.com >To: "Social
Credit" <socialcredit@elistas.com> >Subject: Re: [socialcredit] Bank
Administration - What do they Lend >Date: Thu, 28 Apr 2005 12:57:45 +0100 > >To
John Rawson, > >Thanks for the response. However, I'm afraid I don't understand
the import of what you say. That may well be because I'm dumb, but I'm afraid I
can't help that! > >Could you pin down more accurately the ($100) which 'become
($100 X 2)', and could you pin down more accurately the ($100 X 2)
itself. I cannot 'see' anything which could be aligned to either expression. Are
you talking about the balances of one and/or other of the accounts before and
after the transaction? If so, the aggregate change is zero (of course). > >Your
remarks about M1 merely confirm my belief that none of the M? aggregates have any
economically-significant meaning. They are all spurious developments of hangovers
from the days of owned-wealth 'money' (i.e.gold coins). They completely fail to
recognise that owed-wealth is fundamentally different from owned-wealth: > a..
Each item of owned-wealth is an asset in one set of 'books'. > b.. Each item of
owed-wealth is a zero-sum asset/liability pair in two sets of 'books'. >There is
no economically-significant subset of owed-wealth. The main purpose of the M?s is
to allow economists, central bankers and poilitians to obfuscate. Every time
anyone takes them seriously, they acquire further spurious credibility. Instead,
every time anyone quotes them, we should ask 'so what?' and demand an answer. >
>Best Wishes > >Tim Knight >Tim_Knight@NTLWorld.Com > >----- Original Message
----- > From: John G Rawson > To: socialcredit@elistas.com > Sent: Wednesday,
April 27, 2005 10:01 PM > Subject: RE: [socialcredit] Bank Administration - What
do they Lend > > > Tim, just one point. "... deposit provides the bank with
precisely enough money to lend ..." > > The deposit is, by definition, M1 money,
and is not reduced when the loan is made. The loan creates a new deposit,
provided the account it is paid to is not in overdraft. ($100) has become ($100 X
2) New money has been created. I believe a lot of economists try to disguise this
by referring to "The multiplier effect" rather than calling
it creation. > > John R. > > >From: "Tim Knight" <Tim_Knight@NTLWorld.Com>
>Reply-To: socialcredit@elistas.com >To: <socialcredit@elistas.com> >Subject:
[socialcredit] Bank Administration - What do they Lend >Date: Wed, 27 Apr 2005
15:52:10 +0100 > >There has been much discussion recently on the list about
whether banks 'lend their deposits' or whatever. It seems to me that these
discussions rather miss the point of modern, debt-based finance. > >With modern,
debt-based finance, all trade/employment is self-financing: > 1.. Initially, the
buyer/employer borrows from the seller/employee (recorded in payables and
receivables accounts). > 2.. When the buyer/employer 'pays' the seller/employee
via the banking system, the bank debits the buyer and credits the seller as part
of a single, self-contained, integrated, indivisable, closed
circle of zero-sum double-entry book-keeping postings. >There are no backward or
forward implications. There is no need for an earlier deposit to provide the bank
with enough 'money' to lend to the buyer/employer. There is no need for the bank
to find someone to whom it could lend the seller's/employee's deposit. In effect,
the seller's/employee's deposit provides the bank with precisely enough 'money'
to lend to the buyer/employer, so that the buyer/employer can 'pay' the
seller/employee, so that the seller/employee can make his deposit - all in a
single, self-contained, integrated, indivisable, closed circle of zero-sum
double-entry book-keeping postings. > >Although the global network of owed-wealth
is zero-sum, its capacity to intermediate individual debts is infinite. There are
no economic constraints at all. Without administrative limits (such as a the
fractional reserve
requirements), any tinpot bank could intermediate a virtually-infinite number of
virtually-infinite debts as above. The books would balance. Owed-wealth assets
would be equal to owed-wealth liabilities. > >However, if any of the owed-wealth
assets went belly up, the books would be out of balance, and the tinpot bank
would be unable to honour all of its owed-wealth liabilities. Hence the need for
administrative limits (such as the fractional reserve requirements). >
>Originally, with gold-plus-debt finance, many saw the fractional reserve
system as a 'multiplier' or 'catalyst' in increasing the 'money supply' each time
the gold came back in and went out again. In fact, it never was. It was always a
prudential limiting factor, limiting the total of owed-wealth assets a bank was
allowed to administer to a multiple of gold deposits actually held. More
recently, with debt-only
finance, the fractional reserve system is a prudential administrative limiting
factor; limiting the total of owed-wealth assets a bank was allowed to administer
to a multiple of equity. In all cases, the fractional reserve system is intended
to ensure that if some of the bank's owed-wealth assets go belly-up, it is the
shareholders who suffer rather than the depositors. > > >Best Wishes > >Tim
Knight >Tim_Knight@NTLWorld.Com >
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